My busy eating, drinking & breathing schedule prevented me from going down to Houston for CERAWeek this year. It’s funny how that works—something seems to come up every year. So I’ll have to use news reports to get a feel for how this year’s exciting oil & gas Schmooze-Fest went. Tuesday, March 9th was Oil Day. From the Houston Chronicle—
On one side was the oil and gas industry, which said fossil fuels will be the dominant energy source for decades and that improving technology and abundant natural gas supplies hold the potential to extend that life further.
Vastly outnumbered on the other was Energy Secretary Steven Chu, who said the U.S. must accelerate efforts to wean itself from oil in what will amount to a “new industrial revolution,” or risk losing the clean technology race to other countries and doing further damage to the environment.
“Time is running out, and the train is leaving the station,” Chu said in a speech at CERAWeek, a premier industry conference hosted by IHS Cambridge Energy Research Associates.
I certainly agree that time is running out. Or has run out. But what does Chu mean when he says that? And when Chu says the train is leaving the station, I’m wondering which train he is referring to. It appears from the quote that Steven means the so-called “cleantech” train. I can think of other trains that have left the station, or soon will. (Not counting the “get a clue” train, of course!)
- the cheap oil train left the station sometime in 2005
- the U.S. domestic oil production train left the station in 1970
- the global “peak oil” production train will leave the station in 2012, ±4 years
- the climate mitigation train left the station sometime around 2005, ±5 years
Some of you may question my date assessments—U.S. peak oil production excepted—but we would only be arguing about a few years either way, which is an insignificant amount of time in the Grand Scheme of Things. (You don’t actually believe what Saudi Arabia tells you, do you?) All these dates will be known with greater precision sometime in the future—in the “rear view mirror” as it were.
And what about the oil price shock of 2007-2008? The one where global demand exceeded supply? The one that helped bring the world economy to its knees? It’s already forgotten. And what about the next one, which is due by my calculations in 2012 ±1 year? I couldn’t find this topic anywhere on Tuesday’s CERAweek agenda.
heatingoil.com gives us another report on Oil Day.
While a positive assessment of the future of oil and gas might be expected from energy insiders, some of the oil and gas industry’s central claims about the continuing potential and relevance of fossil fuels were confirmed by Secretary of Energy Steven Chu. He talked about the promise of natural gas, which can be used for power generation and burns cleaner than coal, as a “bridge” fuel that can play a role in the “transition to other fuels” in the future. Oil, too, will retain its place in the energy mix, according to Chu: “Oil is an ideal transportation fuel, so it will be with us for decades.”
Oil will be with us for decades. That’s surely correct. The question is how many barrels will be available to us everyday. I’m also glad the Energy Secretary bolstered the spirits of the oil & gas industry. They are constantly worried about the continued “relevance” of fossil fuels. The real threat to ExxonMobil or Saudi Aramco is that we might entirely replace our need for oil & gas in a few short years with solar, wind, ethanol, liquids from algae and other advanced biofuels.
CERAweek also addressed the thorny problem of meeting future demand in the developing world.
Growing economies in Asia, particularly China, and the Middle East, will shape the supply and demand dynamic of everything from oil and gas demand to electricity to the development of renewable energy sources.
“What will fill the demand?” asked Xizhou Zhou, a China expert with IHS CERA.
“The answer to that question is, really, everything.”
When you read that the answer to the question “what will fill the demand?” is “everything,” you should be aware that this response is code for “who the fuck knows?”
I’m sure there were many other “informed” discussions that time & space prevent me from reporting on here. Another year, another successful attempt to avoid reality at CERAweek.