NPC Report Predicts Energy Challenges Ahead
Ronald R. Cooke
The Cultural Economist
www.tce.name
July 25, 2007
When I started working on oil depletion in 2003, there were a handful
of lone voices in the wilderness sounding the alarm. Since then, the
IEA, EIA, multiple government agencies in several nations, and several
oil industry executives have determined oil shortages are possible.
Multiple reports and books have been written. Congress has taken
testimony. Key figures in Washington have made speeches. Although there
are some differences in the details, they are trivial in comparison
with the broader perspective.
At some point, perhaps very soon, oil demand could exceed oil supply.
A draft of the U. S. National Petroleum Council’s report “Facing the
Hard Truths about Energy, A comprehensive view to 2030 of global oil
and natural gas” was released July 18, 2007. It was balanced, well
written, and informative. Oil reserves are plentiful. The Independent
Oil Companies believe it is possible to increase oil production. Their average estimate – including OPEC production - is 107 Mbl/day by 2030 versus an estimated demand of 138 Mbl/day, a 23% shortfall. However, there is a caveat. To quote from the Executive Summary: “Over
the next 25 years, risks above ground—geopolitical, technical, and
infrastructure—are more likely to affect oil and natural gas production
rates than are limitations of the below-ground endowment. This range of
outcomes emphasizes the need for proactive strategies to manage the accumulating risks to liquids delivery in 2030.” Assuming these risks do not disrupt production, supplies appear to be adequate through 2015.
Precisely the points I make in “The Report on Oil Depletion”. The NPC
has confirmed that by 2030, oil demand will only equal oil supply if
there is substantial demand destruction. Furthermore, accumulating above ground risks could disrupt oil deliveries between now and 2030.
The NPC has acknowledged the importance of dealing with CO2 emissions
and Global Warming. The report includes a long list of specific
recommendations, including many which deal with energy efficiency and
conservation. (Yes. The oil industry is actually telling us to use less
oil.) The report conveys a sense of urgency. The NPC has effectively
called on Congress to establish a comprehensive energy policy for
America that includes the creation of a clearly defined regulatory and
legal environment, and urges energy become an key factor in American
foreign policy.
The outlook for natural gas is more encouraging. Assuming the unrestricted flow of LNG, supplies will be adequate through 2030. The outlook for coal is also encouraging. Assuming
we agree on an ecologically responsible and energy efficient
consumption plan, there is enough coal to satisfy America’s through the
end of this century.
Like many of my “Peak Oil” associates, I am disappointed the NPC did
not give us more specific information, and I am very disturbed that the
world’s largest independent oil companies do not
have better resource data. Never-the-less, the NPC has opened the door
to having a positive, constructive, dialogue about the oil challenges
that lie ahead.
Now that the oil industry has confirmed tough times lie ahead, let us focus on three things:
1. We need to be sure we take an integrated approach to contemporary
concerns about global warming and fossil fuel depletion. Global warming
and fossil fuel depletion are in fact evil twins, and if we want to
make intelligent choices, we need to deal with them as a package.
2. We need to push our elected officials into the formation of an oil
and natural gas consumer’s union. Start with the United States, Canada,
and the European Union. Invite China and India. This will give our
nations the leverage we need to deal with supplier cartels, and –
hopefully – lead to resource sharing agreements. I firmly believe
working together is a far better option than the existing perilous
alternative.
3. We need to find a way to deal with the Middle East. No. It will
not be easy. The region overflows with insidious virile hatred. But
the unpleasant fact is this: the future of the world’s oil and natural
gas supplies depend on what happens in the Middle East. For the sake of
world peace, we must control the outcome.
The NPC report confirms what we all knew. It is time to move on. We must work together to mitigate the impact of oil depletion.
As for our political leaders, there is absolutely no excuse to ignore
the energy challenges that lie ahead. Time is running out. We need
positive, constructive, legislative leadership. And we need it NOW.
Ronald R. Cooke
July 25, 2007
The Cultural Economist
