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Oil Price Distant From 1980s Agony When U.S. Income Adjusted

Moming Zhou and Shobhana Chandra, Bloomberg News via SF Chronicle
Oil at $110 a barrel is taking only half as big a bite out of Americans’ pocketbooks as it did in 1981, the last time Iranian shipments were disrupted.

The cost of a barrel of crude in the U.S., adjusted for total disposable income, was $107.92 in January of this year, compared with a peak of $213.44 in the same month in 1981, according to data compiled by Bloomberg and the Energy and Commerce Departments. Oil consumption was 4.8 percent of income in 2010, compared with 9.7 percent in 1981, the data showed.

For all the concern over the fallout from sanctions against Iran and the prospect of gasoline topping $4 a gallon in a U.S. election year, the distress caused by rising oil prices is being mitigated by improved household purchasing power, a strengthening economy and America’s growing energy independence.
(9 March 2012)

Why Not Frack?

Bill McKibben, New York Review of Books
The End of Country
by Seamus McGraw
Random House, 245 pp., $26.00

Under the Surface: Fracking, Fortunes, and the Fate of the Marcellus Shale
by Tom Wilber
Cornell University Press, 272 pp., $27.95 (to be published in May 2012)

a documentary film by Josh Fox
Docurama, DVD, $29.95

In one sense, the analysts who forecast that “peak oil”—i.e., the point at which the rate of global petroleum extraction will begin to decline—would be reached over the last few years were correct. The planet is running short of the easy stuff, where you stick a drill in the ground and crude comes bubbling to the surface. The great oil fields of Saudi Arabia and Mexico have begun to dwindle; one result has been a rising price for energy.

We could, as a civilization, have taken that dwindling supply and rising price as a signal to convert to sun, wind, and other noncarbon forms of energy—it would have made eminent sense, most of all because it would have aided in the fight against global warming, the most difficult challenge the planet faces. Instead, we’ve taken it as a signal to scour the world for more hydrocarbons. And it turns out that they’re there—vast quantities of coal and oil and gas, buried deep or trapped in tight rock formations or mixed with other minerals.

Getting at them requires ripping apart the earth: for instance, by heating up the ground so that the oil in the tar sands formation of Canada can flow to the surface. Or by tearing holes in the crust a mile beneath the surface of the sea, as BP was doing in the Gulf of Mexico when the Deepwater Horizon well exploded. Or by literally removing mountaintops to get at coal, as has become commonplace across the southern Appalachians.

Or, in the case of the books under review, by “fracking” the subsurface geology in order to make natural gas flow through new cracks. The word is short for “hydraulic fracturing” and in the words of Seamus McGraw, it works like this: having drilled a hole perhaps a mile deep, and then a horizontal branch perhaps half a mile in length, you send down a kind of subterranean pipe bomb, a small package of ball-bearing-like shrapnel and light explosives. The package is detonated, and the shrapnel pierces the bore hole, opening up small perforations in the pipe. They then pump up to 7 million gallons of a substance known as slick water to fracture the shale and release the gas. It blasts through those perforations in the pipe into the shale at such force—more than nine thousand pounds of pressure per square inch—that it shatters the shale for a few yards on either side of the pipe, allowing the gas embedded in it to rise under its own pressure and escape.

This new technique allowed the industry to exploit terrain that it had previously considered impenetrable.
(accessed 8 March 2012)

An elemental force: Uranium production in Africa, and what it means to be nuclear

Gabrielle Hecht, Bulletin of the Atomic Scientists
Uranium from Africa was, and remains, a major source of fuel for atomic weapons and power plants throughout the world. Uranium for the Hiroshima bomb, for example, came from the Belgian Congo. During any given year of the Cold War, between 20 percent and 50 percent of the Western world’s uranium came from African places: Congo, Niger, South Africa, Gabon, Madagascar, and Namibia. Today, there is a renewed uranium boom throughout the continent. The author writes on the ambiguities of the nuclear state, and the state of being nuclear, and why the nuclear designation matters. She looks at two countries to uncover different dimensions of nuclearity: Niger, which has long struggled with France over the price of its uranium; and Gabon, where cancer and other illnesses related to four decades of uranium production remain invisible.
(March/April 2012 issue)

Peak oil starts to bite the budget
Rolf E. Westgard, Energy Bulletin
Drivers cringe as they watch the numbers roll higher on the gas pump meter. They feel even worse as they see news stories projecting gas at $4 or even $5 as the weather warms. No problem, says candidate Newt Gingrich with a promise to return the price to $2.50 if elected president. This is the same Newt who, while beating the war drums for an attack on Iran, said “that with all the various sources of oil we have in the United States, we could literally replace the Iranian oil.” But a record number of US oil rigs are currently busy, attracted by oil’s high price. As a result we would struggle to add many new crude oil barrels to our 5 million or so annual production – let alone replace Iran’s 2.2 million barrel annual exports.

The fact is that oil and gasoline prices may never look back, as we gradually enter a decline phase in fossil fuel availability, especially with oil. There is still a lot of oil in the earth’s outer crust, but it is much harder to extract. Therefore the slow rate at which we can produce it won’t match the demands of 70 million new people/year, along with the growing aspirations of billions in the less developed world. Oil is not just for transportation but also for the hundreds of products like plastics, rubber, medicine, fertilizer, pesticides, etc, made from petroleum feed stocks.

So far, humans have burned a little over one trillion barrels of this highly concentrated energy fuel. Geologist’s estimates of total original oil in place on earth range from 2 trillion barrels to 4-5 trillion, depending on how much effort, energy, and money we want to spend to recover it. Our first trillion was the easiest. The rest is deep beneath the ocean floor, under Arctic ice flows, in very low grade deposits like the oil sands in Alberta and the Orinoco Basin of Venezuela, or in the even lower grade toxic oil shales of the Green River Basin in Colorado and Utah.

In recent years, world crude oil production has stabilized at a little over 70 million barrels/day(mb/d). In the meantime, General Motors is selling more Buicks in China than they do in the US. And the rest of Asia is leaving the rickshaw for the automobile.

In its annual Energy Outlook, the International Energy Agency(IEA) forecasts no significant increase in world oil production in coming decades. The IEA states, “The cost of bringing oil to market rises as oil companies are forced to turn to more difficult and costly sources to replace lost capacity and meet rising demand. Production of crude oil will remain at current levels before declining slightly to around 68 mb/d by 2035. To compensate for declining crude oil production at existing fields, 47 mb/d of gross capacity additions are required, twice the current total oil production of all OPEC countries in the Middle East.”

We are producing substitute biofuels, but 40% of the US corn crop provides just 7% of our gasoline demand. Worldwide, hundreds of millions of personal cars and trucks are now at the food table, with part of their diet biofuels made from the fruit of the plant. We can attempt to make cellulose biofuels from non-food biomass like grasses and corn stover, the residue stalks and leaves left after the harvest. But nature’s law requires some residue to stay on the land, protecting the soil from erosion by wind and water. And every ton of decaying corn stover offers ten pounds of nitrogen, two pounds of phosphorous, and forty five pounds of potassium to the soil.

Congress in 2007 passed the Energy Independence and Security Act, requiring 100 million gallons of cellulosic biofuel in 2010 and 250 million gallons in 2011. We struggled to make 5 million gallons in each of those years as there is no effective production process for cellulosic biofuel. The same shortfall will occur on the 500 million gallon legislative mandate for 2012. The Laws of Physics and Nature are not easily repealed.
We’ve been spoiled by the surplus energy available from fossil fuels deposited over millions of years. We have spent much of that fossil fuel inheritance, and we are now facing substantial sacrifices to deal with a new energy reality.

We’re not hearing much about that or other substantive issues as candidates attack each other during this election season.
(11 March 2012)