peak oil production in 2009? - what next? 18

[davefitz]

There are rumblings that the peak in world oil production may occur in 2009, and that the demand for oil is increasing very rapidly in developing countries ( China , INdia) .

There does not seem to be any effort being made in the USA to reduce the rate of consumption or to reduce demand. Simple efforts such as the following are not being used :
a) increase CAFE ( auto gas mileage )
b) improve mass transit in major cities ( Seatle, Houston, LA, etc)
c) propaganda which is aimed at changing attitudes toward energy consumption.

What is the most likely end result in 2009 if noone takes steps to prepare for this event?

 

[sacem1]

I would like to know if there is more information around about the use of CNG as there is a big project for implementing that fuel here in Peru for use in all type of personal and bussines vehicles.

We have been using LPG in many taxis and light commercial vehicles for several years now but a big source of NG is being brought from the highlands to the capital city of Lima by a big gas line and one of the propossed uses which is being heavily promoted is using it in cars as CNG but if the rate of accidents is that high maybe we should be informed better.

Please give me the most information on the safety of using CNG in light vehicles.
Thanks

SACEM1

 

[GregLocock]

I know of several pilot programs using it, but not much has been published.

This seems fairly detailed:

http://www.afdc.doe.gov/pdfs/ups_cng.pdf

I have heard that CNG had safety issues, but there seems little hard evidence. In a crash diesel is probably better, as it is not pressurised and once the tank is ruptured since it is more likely to run off the road and into the gutter, even in the presence of flames.

It looks like the refuelling technology is now ready for mainstream use, but it is new technology, and will be more expensive.



Cheers

Greg Locock

 

[DSRT]

If at all posible try not to buy fuel on May 19.

 

[jmw]

I'll bite. Why May 19th?

JMW

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Please see FAQ731-376 for tips on how to make the best use of Eng-Tips Fora.

 

[GregLocock]

He's probably complaining about the rather low price of gas at the moment, in historical terms. It is 2/3 the price that it reached in 1981.

Cheers

Greg Locock

 

[StressGuy]

Indeed, but the world economy is far more dependant on fluctuations in fuel prices now as well. All that money we don't spend on gas gets spent on other things. So, talking about how "cheap" gasoline is compared to some inflation adjusted historical number is not very meaningful.

Edward L. Klein
Pipe Stress Engineer
Houston, Texas

All opinions expressed here are my own and not my company's.

 

[zdas04]

StressGuy,
Why isn't it meaningful? You look at your own real wealth based on values relative to some inflation-adjusted historical number. When my parents bought their first house, the portion of their income that was tied up in their monthly payment and the number of years salary the capital investment required were both very similar to what I paid for my first house.

Why can't we look at gasoline prices in terms of hours worked to buy a gallon of gas? Or the minutes worked to travel a set distance? When I was a kid the $1.00/hour I was paid for back-breaking farm labor represented just under 3 gallons of gasoline. My son is working in a typical high-school job and an hour of salary buys just over 3 gallons of gaoline. His vehicle gets way better gas milage than mine did, so his cents per mile is about half what mine was. Seems meaningful to me.

David

 

[GregLocock]

"the world economy is far more dependant on fluctuations in fuel prices now as well."

Really? In 1981 the proportion of the first world's GDP spent on fuel would have been higher wouldn't it? After all, we weren't buying computers, software, cell phones, DVDs, CDs, home theatres, VCRs etc etc.

I'm struggling to find global data, for the USA I get the following

OK, here's how I looked at it:
1981
USA GDP: 3Trillion
consumption of oil: 17 million barrels/day
Price of oil:$37
% of GDP: 7.6
2003
USA GDP: 11Trillion
consumption of oil: 20 million bpd
Price of oil: $41 (use today's price)
% of GDP: 2.7

I really struggle to believe that non linear effects in the price of oil can overcome a factor of almost 3 in cost relative to GDP.


Cheers

Greg Locock

 

[CajunCenturion]

Although it is not in the near future, I find this rather fascinating.
Power from Waste

 

[davefitz]

I beg to differ. The future is now. The rate of increase in deamnd for fuel oil ( primarily driven by increase in demand from China) is rapidly exceeding the rate of increase in production. In addition, the peak rate of production of oil is expected to be reached in 2009, and then after that approx date the rate of oil production is expected to decrease.

Bottom line: Between now and 2009 , we are going to have to get used to sharing the oil with developing countries, meaning each of us will be using less oil on a per capita basis. The Western developed countries oil consumption per capita basis might need to decrease by as much as 30% by 2009 if the current increase in demand by China etc continues unabated.

 

[StressGuy]

Greg,

I think your numbers just about make my point for me. The money we spent for oil consumption was a larger percentage of the U.S. economy in 1981 than it was today - i.e. we bought gas and didn't buy other things.

Now, because we haven't had to pay as much for gas/oil, we have had money to spend on other things - computers, cell phones, CD/DVD's. Our economy grew because we had effectively more disposable income.

If gas/oil prices continue to increase, people are going to have to make cuts in other areas because their vehicles need to be fueled, and, all those devices I mentioned above are largely plastic, so prices have to rise to cover the material costs.

So, that is why I say our economy is more dependant on gas prices now than before and the arguement that gasoline is "cheap" now in relative turms is a weak one.

Edward L. Klein
Pipe Stress Engineer
Houston, Texas

All opinions expressed here are my own and not my company's.

 

[zdas04]

StressGuy,
I'm still not buying it. In the '80's disposable income was disposable income just like it is today. Your argument seems to be that "way back then" we didn't have stuff to spend our non-fuel money on. There was stuff. We bought what we could and lusted after the rest.

There never has been a time in the history of mankind that people didn't have to make choices on the distribution of their resources. If fuel becomes a significant portion of an individual's income then they'll make a choice - do I go or not go to some optional location? Do I (dare I say it) walk to the corner store intstead of driving? Do I leave my truck running when I jump out for a few minutes?

Many will also make a choice to sell the SUV (if the oil embargo of the '70's is an indication, they'll sell it at a loss if they have to) in favor of a hybrid (thereby reducing the portion of their income spent on fuel dramatically - even at higher prices and leaving even more money for important things like CD/DVD's).

Cheep fuel has led us to many life-style decisions. Less-cheep fuel will cause the re-evaluation of those decisions. Big Deal.

My read is that the trade balance, the environment, and real wealth would be significantly enhanced by $8/gallon gasoline (that was not a typo). As someone who has spent a career in Oil & Gas I would like for the difference to go into exploration, but I would be fine with it going into the gaping maw of the government. The only thing that is ever going to change poor energy-consuming habits is for those habits to become prohibitivly expensive in real terms.

David

 

[jmw]

I can't help but think that looking at gasolenes prices in isolation is a very simplistic way to try and undertsand our oil economy. It's for sure the way some politicians would like us to think but gasolene prices are only the tip of our fossil fuel bills iceberg.

Gasolene is the loss leader at the refineries, they have no margins to absorb fluctuations in the crude oil price and the way tax is calculated aggravates the problem. In the UK tax is around 80% of the cost. But it isn't a fixed tax per litre, it is weighted on the cost price. So a butterfly flapping its wings in the oil fields is like an windtunnel at the pumps.

Gasolene isn't the only product from crude its the main purchase we make directly. Everything else comes from indirect purchases or taxation. The rest of that barrel of oil isn't exported to Mars. We use it down to the last drop. The refiners say there are no wasted products. The residuum is either cut back for heavy fuel oils or blown for bitumens and asphalts. Who pays for the roads and the roofing shingles?

When we come to divorce ourselves of fossil fuels, we'd better have a damned good exit strategy for all the other products we derive from fuels because, for me anyway, you'll have a hard job pursuading me that cutting down rain forrest so we can produce gasahol isn't going to be the solution. I don't value buying three screws in a blister pack from Home Base that highly, or at all.

Buying gasolene and only looking at the gasolene cost is a bit like buying a scanner printer from Lexmark for $80. You have to figure in the ink costs.

JMW

http://www.viscoanalyser.com

Eng-Tips: Pro bono publico, by engineers, for engineers.

Please see FAQ731-376 for tips on how to make the best use of Eng-Tips Fora.

 

[GregLocock]

So Edward, you are saying that if the USA spent a greater proportion of its GDP on oil then it would be less sensitive to changes in the price of oil? That's the way I read your note and it seems rather unlikely.





Cheers

Greg Locock

 

[StressGuy]

Apparently, I'm having trouble articulating my point. Perhaps the proper wording will come to me over the weekend and I can take another shot at it.

Edward L. Klein
Pipe Stress Engineer
Houston, Texas

"All the world is a Spring"

All opinions expressed here are my own and not my company's.

 

[zdas04]

Edward,
I really don't mean to be picking on you. It is just that there is so much bad information on the popular media (and too much bad information in the technical media) that I get defensive.

I'll look forward to your post on Monday.

David

BTW: is there any connection between "All the World is a Spring" and Art Montmayer's home town?

 

[StressGuy]

Alright, gentlemen.

Let's see if I can explain my thinking. I believe there's a bit of confusion. As I am thinking of oil, I'm not thinking of it just as a fuel source, but also as the basis for a wide variety of products made from plastics. Everything from CD's, computers, cell phones, cameras. Because oil has been historically cheaper for the last 20 years, all kinds of new products have come to market. I heard someone say on the radio this morning that, adjusted for inflation, compared to the early 80's, our gas prices should be well over $3.00 gallon with oil prices to go along with it.

Had we seen that kind of pricing for oil and gas over the last 20 years, I don't think our economy would have grown to the size that it has because that pricing would have made the development of these products less favorable and more expensive (in addition to the earlier point that we would also be spending more oil dollars for fuel instead of other items).

An economy grows as money moves through more quickly as goods and services are bought. Higher prices tend to reduce the overall movement of money, even though more money is moved for a given transaction. Our economy has grown sigificantly based on the availability of "cheap" oil and that is why I argue that it is more sensitive to the increases in pricing that we're seeing now.

As the prices at the pump rise and costs for oil based products rise, people will consume less of them, particularly as many products (cell phones, cd's, dvd players, etc.) are items that are "wants" that we buy with excess income vs. "needs" that we require to survive. But, much of the great size of our economy these days is based more so on the purchasing of wants rather than needs. Cutting back on the wants because oil gets more expensive has the potential to cascade and put a big dent in the size of our economy.

Had oil prices followed the trend over the last 20 years to get to where we'd be paying over $3.00 gallon by now, I don't think our economy would have grown nearly as big as it has and therefore would not have as far to fall to get down to the simple "needs" level.

That's still not as coherent as I'd like it to be, but hopefully makes it a little clearer where I'm coming from.

Edward L. Klein
Pipe Stress Engineer
Houston, Texas

"All the world is a Spring"

All opinions expressed here are my own and not my company's.

 

[zdas04]

Edward,
Interesting view from the "short-term consumer" side of the equation. Even from a short-term perspective there are different ways to look at it. If oil prices had kept pace with inflation, then plastic grocery bags (for example) would have been too expensive to produce in the billions of tons/year that they've been produced. Maybe more stores would have taken the Sam's Club approach and not offered them. Maybe you wouldn't see three screws in a bubble wrap. Resources consumed for plastic bags and packaging have increased at many times the average inflation rate. That could only have happened with feedstock prices out of balance with frivolus uses.

From the "Producer" side, margins 20 years ago were 3-4 times what they are today. 20 years ago an oil company could afford to explore for new sources of oil and gas and the one-success-in-seven-tries the industry saw was well compensated by the "windfall profits" (to use an offensive term). Today, one-success-in-three is seen to be an unacceptably low success rate because margins have been cut too far to allow for risk. Consequently the industry is often spending decades gathering and processing data before a new-field wildcat well is drilled. Companies are not replacing the reserves that they produce and the health of the industry is teetering on the edge of an abyss. In 1980, the Oil & Gas industry was outraged that imports were approaching 40% of consumption. That year the domestic reserve-replacement-rate droped to below 2 times production for the first time ever. Today it is closer to 1.0 and dropping. The "high" prices are far too low to allow for a healthy industry. And the industry is not healthy. Petroleum-engineering departments are being closed in many universities due to low enrollment, I don't know of anyone in this industry who encourages their children to go into the field at any level. The "mega-mergers" have increased the overall level of financial caution to near gridlock. Top manangement is spending so much time catering to stock analysist that we've gone from the "flavor of the month" to the "flavor of the hour", and look fondly back to the days when we complained about micro-management (from today's vantage point of nano-management).

From the "Long-Term Consumer" viewpoint, 60-70% of the U.S. oil consumption (for fuel and all other uses) is imported. That means real dollars, and real wealth leaving the country in huge quantities. With $8/gallon gasoline, the first big cut in consumption will come at the expense of imports. With time, the margins on production would increase to support the risk of new-field drilling and the imports would further decrease. The result would be a stronger economy with more wealth staying in the country and more people having more wealth to buy stuff.

There are two sides to every transaction. The current oil transaction has the producer complaining about low prices and unacceptable returns for the risk while the consumer is complaining about ridiculously high prices. This is an untenable situation. The saddest thing about it is that government energy policy is still operating on the principle that drilling in a couple of sensitive locations and using the laughable "strategic energy reserve" (2-3 days worth of consumption) will fix the mess as soon as they can get the Democrats out of the way.

David

 

[ghamish]

zdas04, are you saying that oil exploration and new well finds have fallen largely due to the very low price of oil over the past 10-15 years rather than what some of the peak oil doomsdayers are saying, which is that exploration & finds have dropped off because there isn't much more to be found?

If oil stays at around $35-40US a barrel is that price high enough for increased exploration, or is there enough oil in places like Iraq & some of the former soviet states to not make further exploration worthwhile for a few more years yet?

Interesting discussion, I asked a similar question on another forum & got similarly diverse responses varying from "we're all doomed" to responses from people in or connected to the oil industry saying not to panic there's still plenty left.

 

[jmw]

http://www.daviesand.com/Perspectives/Forest_Products/Oil_Reserves/

This scenario has a publication date a the height of a rise and predicts a decline.

Any internet search will show that peak oil production has been forecast many times and each time the deadlne passes unproven.

This isn't necessarly because the forecasts are wrong but because they are interpreted against a background where technology is changing all the time and where oil price is a defining factor in what is recoverable and what is not.

None the less, that there is a finite limit is not doubted. The uncertainties are how much oil we can discover, how much we can recover and how long it will last.

As one website source says " asking how much oil is left is like asking how long is a piece of string."

80-100 years appears to be a reasoned current estimate depending on source.

The range of attitudes is from the "bomb shelter/stockpile/militia" mentality which presumably will decide who can have SUVs and who walks, to those in denial and those who think it is someone esles problem.

It is difficult to make a rational exploration from any extreme and those that attempt it are often castigated by the extremes. Interesting to see some of the "doom and gloom" sites do actually represent a rational position expressed in an alarmist manner, presumably to frighten others on board. Perhaps it isn't the truth but the language the issue is discussed in, that matters to some.

Certainly, when discussing gas prices a US Governement energy site refers to gas prices as a "political lightening rod". Other sites show the barrels of oil per capita produced and consumed though, as ever, care is needed with any of the data presented as there are anomalies that need to be understood.

http://www.cato.org/dailys/04-08-04.html

http://news.bbc.co.uk/2/hi/business/3590137.stm

http://www.hubbertpeak.com/

The Hubbert peak website addresses the issue of oil depletion here. Interesting to note the paralleling of some comments in this thread.

http://www.nationmaster.com/graph-T/ene_oil_res

A source of data on energy resources.



JMW

http://www.viscoanalyser.com

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