Guardian UK: IEA probes fears that oil will run out

[marmar]

IEA probes fears that oil will run out
Inquiry will examine 'narrow margin' in 2012



Richard Wachman The Observer, Sunday May 25 2008


The International Energy Agency has ordered an inquiry into whether the world could run out of oil, The Observer has learnt. It will consider whether fears about global shortages are real.

Observers say that the IEA, which provides authoritative research to OECD countries, is concerned that the supply of oil could fail to keep up with demand driven by the fast-industrialising economies of China and India. The investigation comes at a time of mounting concern that the sky-high price of oil could derail the global economy and plunge the world into recession. Oil hit $135 a barrel last week, the highest price on record, forcing airlines to cut back on flights to save fuel and pushing up the cost of living around the globe.

Lawrence Eagles, head of oil markets research at the IEA, said the situation was complex but added: 'Our findings will form part of short- and long-term forecasts that we intend to publish in July and November. Up to now we have believed that supply can cope with demand. One caveat is that we don't know for certain whether estimates of reserves in countries such as Saudi Arabia are entirely accurate.'

John Waterlow, analyst at oil research consultancy Wood Mackenzie, said: 'Many oil-producing countries are closed, secretive societies where it can be difficult to pinpoint the level of provable reserves.'

Analysts disagree about cause of the jump in oil prices - some have blamed commodity speculators but others point to surging international demand from Asia and South America as factors that have pushed the price higher.

IEA researchers have warned that even if there is enough oil under the ground, which is probable, supply difficulties could emerge because national oil companies and Western multinationals have failed to invest sufficiently in the equipment and pipelines needed to extract oil and convey it to consumers.

The IEA is worried about an extremely narrow capacity margin by 2012, when demand is expected to have reached 95 million barrels a day. At that point spare capacity could be at just a million barrels a day - which may not be enough to make good any sudden interruption of supply from volatile countries such as Nigeria or Venezuela - or Iraq, which is now estimated to have overtaken Saudi Arabia as the largest holder of reserves.


http://www.guardian.co.uk/business/2008/may/25/oil

[Ezlivin]

1. Ignorance is the only thing of which we have an infinite supply

Maybe it's just me but the phrase "ordered an inquiry into whether the world could run out of oil" is ridiculous.

Of course we can run out. We live on a finite planet with finite resources. Damn. Is that so hard to understand?

Like Ripley said when she returned to earth after a 50 year absence: Did IQs sharply drop while I was away?

[JohnyCanuck]

2. I hope the IEA understands the mathematics of exponential growth

This is a snip from an earlier post of mine on the consequences of a continuous exponential growth in world oil consumption

Economists, in general, seem to insist that there can be no viable economic system that can provide society an acceptable standard of living and full employment without continuous economic growth. When we stop having economic growth for more than short periods of time we have recessions and even, in the worst cases, economic depressions with all the human misery that entails, such as widespread unemployment, homelessness, family breakups, and malnourishment (or even in extreme cases starvation).

In tandem with continuous economic growth over the years we have had a continuous growth in oil consumption as well. This makes sense as oil is our civilizations prime source of energy and it takes vast amounts of energy to fuel modern industrial economies. Over the past 15 years or so world oil consumption has increased on average around 2% per year.

Now, on the surface, a 2% per annum growth in consumption doesn't seem like it would be that significant an amount.However there is one implication of exponential growth in consumption of a resource that most people are quite unaware of, and that is, starting at any point in time, if you have a continuous exponential growth in consumption of a resource you will reach a point in which consumption of that resource has doubled. Now here is the real kicker: for each doubling period, the amount of the resource consumed in that single doubling period is greater than all that resource consumed in history up to the start of the doubling time. So what is the doubling time in oil consumption with a 2% per annum growth pattern? It's easy enough to figure out. You divide the number 70 by the percent increase in consumption per year to get the number of years it would take for consumption to double. So 70/2 = 35. Therefore if we start today in April 2008 and world oil consumption continues to increase at 2% per year, world oil consumption would be twice what it is today by April 2043. Furthermore the amount of oil consumed in that single 35 year period from 2008 to 2043 would be more than all the oil consumed in history from the start of the oil age in the late 1800s to 2008.

If, due to the increasing demand for oil from China and India etc, world oil consumption increased from 2% to 3% per year, the doubling time would shrink to 23.3333 years (70/3).

If you think I've got to be kidding that in one 35 year doubling time we could consume more oil than we have consumed in history in the (approximately) 150 years between the start of the oil age (the first commercial oil wells came on stream in the early 1860s) to the current year 2008, you can easily verify for yourself how it works with a chess board and a few grains of rice. Put one grain of rice on the first square of a chessboard and then double the amount of grains on each succeeding square. Therefore, put 2 grains on the second square, 4 grains on the third square, 8 grains on the 4th square. 16 grains on the fifth square etc.

Now note that in the doubling from say square three to square four we went from 1+2+4 = 7 grains of rice on the chess board to 15 grains of rice on the chessboard as we added 8 grains to square 4. So in that one doubling we had to use more grains of rice than previously existed on the entire chessboard. So for those who assure us there is lots of oil, if only the oil companies and the OPEC countries would stop hoarding to jack up prices and stiff us, just be aware that you, by implication, must believe that there is enough oil available to easily provide the world for the next 35 years with more oil than it has consumed in the last 150 years. If you qualify the idea that there is lots of oil, by saying that there is lots of oil at current consumption rates, then explain how you are going to maintain economic growth and the continuing industrialization of China and the rest of Asia without growing oil supplies, or alternatively explain how world economies are going to be changed to a model that does not require continuous economic growth. Keep in the mind that the news making "big find" recently announced by a Brazilian oil company of a new deep water off-shore field was announced as up to 33 billion barrels. That is roughly the amount of oil, the world uses in slightly over 1 year, and it lies in very deep water and very deep underground, all of which will it make it difficult and very expensive to produce compared to traditional, shore based oil.

If you say that we will switch to alternates to take the place of oil, be aware that not only do we have to provide enough alternative energy sources to replace the current existing demand for oil, but also to provide for an overall per annum increase in world energy equivalent to a 2% per annum increase in energy that would normally be provided by oil (or switch our economies to a steady state model instead of a perpetual growth model).

Some more resources:

Watch the presentation by retired physics prof. Albert Bartlett on exponential growth and resource consumption here (Real Player format only, but audio only MP3 also available): http://globalpublicmedia.com/dr_albert_bartlett_arithmetic_population_and_energy

Here is a link to a paper prepared by Bartlett which covers much of the same ground as his lecture: Forgotten Fundamentals of the Energy Crisis

[Ezlivin]

3. Cargo Cultists won't believe you

They will say something akin to "We could put a man on the moon..." because in their minds technology can always provide a solution.

A neighbor and I were discussing the "end of oil" and he said "Oh, we'll come up with a replacement for oil." When I noted the problems with reproducing what nature took millions of years to create and some of the other shortcomings of "oil replacements", he shrugged it off.

People have such an ineluctable attraction to our professed technical prowess that they do not see the problem with physical limits. When discussing oil with the aforementioned neighbor, I mentioned that a barrel of oil only has a finite amount of energy. "Bullshit!" he responded and then went on to educate me on how we've gotten more and more energy out of a barrel of oil. When I tried to explain that we've gotten better at extracting and using the energy but that the barrel still only has a fixed, finite amount of energy he would have none of it.

Mention Peak Oil in certain circles and you'll quickly get dressed down and informed about abiotic oil. It's as if they believe that our Earth's core is nothing more than a giant vat of oil.

[JohnyCanuck]

4. kick n/t