Building a world of
resilient communities.

MAIN LIST

 

Permanent Oil Shock

Dear Friend,

In 1949, the then unknown geophysicist Dr. Hubbert made the startling prediction that the “oil age” would be short-lived. He was ridiculed in 1956 when he predicted that US oil production would peak in 1970 and decline thereafter.

No one is laughing now. His predication was dead-on. Today his “Hubbert Curve” shows the peak in world production to be around the years 2000-2010. In fact, if not for the OPEC monopoly the peak would have occurred in the mid 1990’s.

The peak in production is the point at which any resource becomes more valuable and expensive. Demand remains but supply falls off. Prices go through the roof. Those of you who were driving in the US in 1972-73 will vouch for the rapid changes that occurred across the board due to the decline of US oil output.

The optimum price for Saudi Arabian oil is US$25 per barrel. Currently it is at US$40 per barrel. This is 60% above the price at which alternative energy sources and alternative oil extraction methods become cost productive.

***It is in the deep.

The only oil left to find is underwater. In fact, the planet’s proven untapped deepwater oil reserves could more than triple in the next 20 years. According to experts, proven deepwater reserves could jump from the current 50 billion barrels to 114 billion barrels.

This is an ongoing trend. BP in its annual statistical review estimates total onshore and offshore oil reserves at 1,148 billion barrels at the end of 2003, up from 723 billion barrels 20 years ago.

Natural gas reserves were 1,105 billion barrels, up from 583 billion barrels at the end of 1983. That’s equivalent to the proven reserves in Iraq.

There are about 200 exploration wells a year being drilled in deep water, adding about five billion barrels of oil a year.

It may surprise you that leading deepwater company by values isn’t based in the US, Europe or even Russia. It’s in a turnaround South American economy that has fallen off Wall Street’s radar. But the real money will be made in small explorers and new technology companies that make working 3,000 feet underwater a profitable enterprise. I’ll tell you all about it in next month’s Red Zone.

Cordially yours,

Christian DeHaemer
Founder and Editor, The Red Zone

Editorial Notes: Actually Hubbert was quite well known, at least for a geophysist, having solved a geophysical riddle in 1937 by proving mathematically that even the hardest of rocks on the earth's surface, subject to the immense pressures occurring across large areas, will respond in a manner similar to soft muds or clays. www.tsha.utexas.edu/handbook/online/articles/view/HH/fhu85.html EnergyBulletin.net recommends investing in skills and community building to prepare for peak oil, not the stock market. -AF

What do you think? Leave a comment below.

Sign up for regular Resilience bulletins direct to your email.

Take action!  

Make connections via our GROUPS page.
Start your own projects. See our RESOURCES page.
Help build resilience. DONATE NOW.


Shales vs. solar: An investment perspective

But perhaps the real proof of a new energy paradigm shift lies in the fact …

Peak Oil Review - July 28

A weekly review including Oil and the Global Economy, The Middle East & …

The Changing Face of World Oil Markets

My conclusion is that hundred-dollar oil is here to stay.

IEA Oil Market Forecast: Optimistic Assumptions And An Economy Unable To Grow Out Of Its Problems

The International Energy Authority does does its best to paint a rosy …

Energy Crunch: Global debate heats up

News that last month was the world’s hottest June on record provided …

Divest! - Then What?

Divestment is one of the great campaigns of our times.But the question then …

World Oil Production at 3/31/2014-Where are We Headed?

The standard way to make forecasts of almost anything is to look at recent …