Peak oil crisis: approaching the cliff
Last weekend across southern South Dakota the pumps went dry. Gas terminals from Sioux Falls to Yankton to Sioux City were empty. "There is simply not enough fuel coming down the pipeline into the delivery system" said a BP station owner. Eventually the tankers were sent to Nebraska to find gas. A minor glitch in the distribution? Possibly, but more likely a harbinger of more serious problems to come.
Meanwhile, I would like to tell you that Congress, which has been debating energy bills for the last two weeks, is getting ready to pass legislation that will make our lives easier during the troubled years ahead. Sadly, I cannot. From their public pronouncements and posturing, it is unlikely more than a dozen members of Congress have the slightest idea of what 2007 energy legislation should be trying to accomplish in an urgent manner.
Many of the just-barely-in-the-majority Democrats, especially in the Senate, are on the right track, with proposals to improve average gasoline consumption, and to increase the use of renewable energy. Scattered here and there are conservation measures and R&D money for more efficient something or others, but from the perspective of imminent oil depletion, the proposals are too little, too late. Setting efficiency goals for 10 or 15 years from now is absurd when the problems to solve may be upon us in 15 or 20 months, or, if the real alarmists are right, in 15 or 20 weeks.
However inadequate the Democrats' proposals may be, they pale in comparison to the absurdity of the opposition to energy legislation forming on Capitol Hill. Detroit, in conspiracy with the coal and electric industries, is mounting a full court press to see that little gets through this Congress to upset the status quo - mild efficiency standards, no greenhouse gas regulation, no renewable energy mandates. From the opposition's point of view, if Congress wants to do anything, then it might be OK for them to bankroll the R&D so we can convert good old American coal into our gasoline; don't even think about taxing energy, but a few more subsidies might be nice.
With crucial Senate votes scheduled for later this week, it is still too early to judge what the final legislation will look like, but it is starting to look as if we are going to arrive at the precipice of oil depletion without Congress having done much of anything to mitigate the situation. The American automobile industry is clearly on its way to committing suicide; the coal industry does not seem to realize its days are numbered; and the electric industry seems to have no notion that, within a lifetime, fossil fuels and perhaps even some forms of nuclear energy are going to have to be replaced.
As a civilization, we are all to blame. Most Americans are showing little inclination to cut back on driving. In study after study we tell interviewers we are willing to spend our last nickel, mortgage the farm, and deprive our grandchildren before we will give up driving. We are all heading towards the cliff together.
Not much happened in the last week to tell us just how close we are to the cliff. There is a general strike going on in Nigeria that so far does not seem to be affecting oil production. Nigerian strikes are usually settled quickly, but there is a new president in charge so there could be surprises in store. In the Niger Delta, the insurgency bubbles along, despite the nominal ceasefire, with still more oil being shut-in by the insurgents during the past week.
From the perspective of oil production, Iraq continues to hold its own. OPEC is still refusing to consider production increases and the Chinese imports of crude oil continue to increase.
This week's U.S. oil status report was a strange one. U.S. refinery utilization plunged to what should be an abysmally low 87.6 percent, but at the same time the refineries managed to produce the same amount of gasoline as the week before. Unless there is something wrong with the numbers, this confirms that improvements made to our refineries in recent years are now allowing them to squeeze considerably more gasoline out of each barrel of crude -- a definite plus. Imports increased a bit, resulting in U.S. gasoline stockpiles growing by 1.8 million barrels last week. There are still major shortages along the East Coast and the summer driving season is almost here. There seem to be some unusually large anomalies in this week's report, however, so there may be revisions ahead.
In general, the gasoline stockpiles situation now can be categorized as serious rather than dire. We seem to be getting the gasoline we need without our refineries working too well and so far we seem to be able to find enough gasoline to import. From here through Labor Day it depends on how much we all drive and of course the hurricanes. None are yet in sight.
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