Message-ID: <003001bd1f03$bfd4d000$240567df@jay95> Date: Sun, 11 Jan 1998 16:42:37 -1000 From: Jay Hanson <mailto:j@QMAIL.COM> Subject: Political Reserves To: mailto:DEVEL-L@AMERICAN.EDU
From: Stan Sandler <mailto:sandler@auracom.com>
>>oil will suddenly be in strong demand and the traders will
>>hourly mark up its price as more buyers than sellers appear in
>>the bullpen. Probably, as prices rise the buyers would at first
>>hold back, but since their physical stocks are now so low, they
>>could not do so for long.
>
>The items you post seem to make sense Jay, BUT the price of oil is NOT
going >up. In fact, the per barrel price just fell again, and is now the lowest
it >has been in a long time. If your postings regarding the timing of the peak
>of oil reserves easily extractable are accurate (and I am not saying they
>are not) what is the reason that the price is not rising?
>
>Regards, a puzzled Stan
Well Stan, let's see if we can figure it out. Two possibilities:
#1. The dinosaurs and their pals are still "producing" oil. OR #2. The price of oil has virtually nothing to to with the amount of oil left in the ground.
I think we can rule #1 out, that just leaves #2.
Obviously the market reflects supply and demand for oil in the "market" -- not in the ground. The price wont leap until there actually IS a production shortfall because no one knows for sure how much oil there really is. The best guess comes from Petroconsulants and their huge databases.
Countries overstate their proved reserves -- "political reserves":
----------------- Political Reserves All government petroleum ministries have an inherent interest in announcing the "good news" of large national hydrocarbon reserves, inasmuch as large reserves are useful for national political prestige and in negotiations for OPEC production quotas, World Bank loans and grants, etc. Sudden unsubstantiated reserve increases announced by any government ministry should be viewed with considerable skepticism. They may be mostly the puffery of "political reserves" that will increase a nation's paper reserves but have no effect on ultimate oil production. [ L.F. Ivanhoe http://dieoff.org/page90.htm ] -----------------
Here is some more info:
=================================================================
I have updated my systems crash curve using Duncan & Youngquist's new global oil production forecast. You can even download the models and run them yourself. See http://dieoff.org/page5.htm
Energy files of special interest at my site:
THE WORLD PETROLEUM LIFE-CYCLE: Encircling the Production Peak, by Richard Duncan, Institute on Energy and Man, Seattle, WA, 1997 *NEW* http://dieoff.org/page133.htm
THE COMING OIL CRISIS, by C.J. Campbell; Multi-Science Publishing Company & Petroconsultants, 1997 ISBN 0906522110 http://www.amazon.com/exec/obidos/ISBN=0906522110/3088-4711339-639335 *NEW* See a sample at http://dieoff.org/page131.htm
GeoDestinies, by Walter Youngquist PhD & Chair Emeritus, Department of Geology, University of Oregon; National Book Company, 1997; ISBN 0894202995 http://www.amazon.com/exec/obidos/ats-query/4520-3664168-414119 *NEW* See a sample at http://dieoff.org/page132.htm
The Olduvai Theory: Sliding Towards a Post-Industrial Stone Age Richard C. Duncan, Ph.D. Institute on Energy and Man, June 27, 1996 *UPDATED* http://dieoff.org/page125.htm
Get Ready For Another Oil Shock!, By L.F. Ivanhoe; THE FUTURIST, January/February, 1997 http://dieoff.org/page90.htm =================================================================
Read what Richard Duncan sees in our future:
Global oil production increases briefly, then eases off to the World all-time peak at 28.5 Gb/yr in 2005. Decline begins gradually, then avalanches in 2009 as both OPEC and non-OPEC go into steep-slide. By 2040 World production has fallen to 10.9 Gb/yr—down 62% in 35 years.
"It's not that other energy sources aren't feasible. It's that none will be on-line by 2005. And continuing our present course, none by 2050 either." [ http://dieoff.org/page133.htm ]
"As I read it, the descent into the [New Stone Age] will be steep and swift. A scenario of Phase 3, the Post-Industrial Phase, is sketched in Figure 1 (i.e., from point 1 onward) wherein Industrial Civilization has disintegrated into farming villages, kinship tribes and rogue bands. The surviving population will have 'achieved' permanent sustainability -- at the subsistence level."
"Of course, other scenarios are possible. For example, 'The human species may follow the road to extinction rather than revert to the berry-picking stage' (Georgescu-Roegen, 1971). Or more recently, 'The danger of extinction is real ... It is time to face the facts' (Leslie, 1996)."[http://dieoff.org/page125.htm ] -----------------------------------------------------------------
Read what Joseph Tainter sees in our future [all direct quotes from http://dieoff.org/page134.htm ]:
Energy has always been the basis of cultural complexity and it always will be. If our efforts to understand and resolve such matters as global change involve increasing political, technological, economic, and scientific complexity, as it seems they will, then the availability of energy per capita will be a constraining factor. To increase complexity on the basis of static or declining energy supplies would require lowering the standard of living throughout the world. In the absence of a clear crisis very few people would support this. To maintain political support for our current and future investments in complexity thus requires an increase in the effective per capita supply of energy-either by increasing the physical availability of energy, or by technical, political, or economic innovations that lower the energy cost of our standard of living. Of course, to discover such innovations requires energy, which underscores the constraints in the energy-complexity relation.
CONCLUSIONS
This chapter on the past clarifies potential paths to the future. One often-discussed path is cultural and economic simplicity and lower energy costs. This could come about through the "crash" that many fear-a genuine collapse over a period of one or two generations, with much violence, starvation, and loss of population. The alternative is the "soft landing" that many people hope for-a voluntary change to solar energy and green fuels, energy-conserving technologies, and less overall consumption. This is a utopian alternative that, as suggested above, will come about only if severe, prolonged hardship in industrial nations makes it attractive, and if economic growth and consumerism can be removed from the realm of ideology.
The more likely option is a future of greater investments in problem solving, increasing overall complexity, and greater use of energy. This option is driven by the material comforts it provides, by vested interests, by lack of alternatives, and by our conviction that it is good. If the trajectory of problem solving that humanity has followed for much of the last 12,000 years should continue, it is the path that we are likely to take in the near future. -----------------------------------------------------------------
Read what L.F. Ivanhoe sees in our future [all direct quotes from http://dieoff.org/page90.htm ]
By the year 2000, global population will be 50% greater than in 1975, with a corresponding increase in demand for crude oil. The industrializing countries (China, India, etc.) will soon become hard competitors with Western nations for world crude exports.
It is reluctantly concluded from the USGS's global discovery statistics (Figure A) that the world's total oil production might peak about the year 2010, after which the normal decline of the world's oil fields will take over. By 2050, oil production will be a small fraction of today's bounty.
The critical date is when global public demand will substantially exceed the available supply from the few Persian Gulf Moslem oil exporters. The permanent global oil shortage will begin when the world's oil demand exceeds global production -- i.e., about 2010 if normal oil-fields decline occurs, or as early as 2000 if the world's key oil producer, Saudi Arabia, has serious political problems that curtail its exports. World oil production will thereafter continue to decline at a dwindling rate. (See Figure B.)
This foreseeable energy/oil crisis will affect everyone. Governments will have the highest priorities for transportation fuels during an emergency. A sudden global crude oil shortage of 5% could bring back the gasoline lines of the 1970s -- to the American public's surprise and dismay. But this time the oil shortage will be permanent.
Thus the question is not whether but when the foreseeable permanent oil crunch will occur. This next paralyzing and permanent oil shock will not be solved by any redistribution patterns or by economic cleverness, because it will be a consequence of pending and inexorable depletion of the world's conventional crude oil supply. Few economists can bring themselves to accept that the global oil supply is geologically finite.
The global price of oil after the supply crunch should follow the simplest economic law of supply and demand: There will be a major increase in crude oil and all other fuels' prices, accompanied by global hyperinflation, rationing, etc. After the associated economic implosion, many of the world's developed societies may look like today's Russia. The United States may be competing with China for every tanker of oil, with the Persian Gulf oil exporters preferring Chinese rockets to American paper dollars for their oil.
The economic and social ramifications of the coming oil shock will require serious planning worldwide.
The global oil shortage we now can foresee will differ from the 1973 and 1979 oil-price surges, which were the result of political moves by the exporting countries. Then, global buyers began searching immediately for oil supplies during the Iran-Iraq War, which produced the world's greatest-ever oil exploration effort, from 1979 to 1985. Unfortunately, their discovery rate was much lower than earlier, and few giant fields were found. The oil field "whales" had all been fished out. -----------------------------------------------------------------
Some of us older folks have been there before, for us it will be
BACK TO THE FUTURE TIME January 14, 1974 It looked like a hand grenade, so the Albany, N.Y., station operator played it safe and assumed that it was a hand grenade. He gave the man who was toting it all the gas he wanted. Attendants elsewhere last week faced curses and threats of violence, sometimes backed by suspicious bulges in the pockets of jackets. When a huge bear of a man warned a Springfield, Mass., dealer, "You are going to give me gas or I will kill you," the dealer squeezed his parched pumps to find some. "Better a live coward than a dead hero," he said.
Such incidents were not exactly common last week, but they occurred often enough, especially in the Northeast, to indicate an outbreak of a kind of gasoline madness. The New Year's weekend was the first time that many drivers became really desperate for gas. Many stations ran out of their monthly allotments as the weekend started and closed until they could get new deliveries after the holiday. Those that stayed open backed up long lines of drivers whose tempers sometimes exploded -- especially if they found the pumps dry when they finally got to them.
The gas shortage is sparking other types of deviant behavior. Flouting of the law is on the rise. In New York City, two gasoline tanks trucks, each loaded with 3,000 gallons, were hijacked within a week. Price gouging by station owners has become distressingly common. Miamians complain of having to pay $1 a gallon or being charged a $2 "service fee" before a station attendant will wait on them.
At best, many gas station owners and attendants have become unapproachable to strangers; they will wait only on longtime customers. Some issue window stickers to the regulars; others sell by appointment only. Oregon Governor Tom McCall last week rolled into a Union 76 station only to be told by the manager: "Sorry, Governor, we're only selling to our regular customers." So the Governor meekly drove to the end of the line at a nearby station that was taking all comers.
************************************************************** Please copy and reprint or crosspost this article as much as you can. Be sure to include the BRAIN FOOD invitation in the article. This article and others are archived at: http://dieoff.org/
Please join my BRAIN FOOD mailing list. The purpose of this list is to distribute my essays and news. I expect that there will be no more than four of five mailing a year.
My work is dedicated to the Common Good. My essays may be freely reprinted and my ideas may be incorporated into other works without credit.
The major themes on this list are "systems" and "philosophy". Subtopics may relate to specific disciplines such as politics, economics, theology, and ecology.
This is not the type of list where subscribers can enter into a dialog with other list members. This is a manual list that I am running from my home.
To join this free list, send : "subscribe BRAIN FOOD" to mailto:j@qmail.com
If you are already on my list, there is no need to re-subscribe.
Jay