Monday, March 29, 2010

Washington is Talking About Peak Oil

Sorry for the article, it's been translated from its original French (it comes from Le Monde, a French newspaper). But if the article is accurate, this means that the Obama administration believes that a decline in oil production could come as soon as next year.

"The U.S. Department of Energy admits that “a chance exists that we may experience a decline” of world liquid fuels production between 2011 and 2015 “if the investment is not there”, according to an exclusive interview with Glen Sweetnam, main official expert on oil market in the Obama administration.
This warning on oil output issued by Obama’s energy administration comes at a time when world demand for oil is on the rise again, and investments in many drilling projects have been frozen in the aftermath of the tumbling of crude prices and of the financial crisis."

Also, going into 2015, only 6 of the 15 biggest oil producers in the world will be able to maintain or expand their oil output. Big oil-producing nations such as Russia, Mexico, Iran and Venezuela are headed towards a projected reduction in output, if they aren't there already. The Department of Energy expects that the largest increase of production would have to come from us, the United States, ourselves. The problem, of course, is that our oil production peaked 40 years ago and has been in a copious decline ever since.

No problem, our government says, because this increase can be achieved through what is called "the ethanol ramp-up." That means taking more of the crops that we had grown for food, and using them as biofuel. This could have negative consequences when it comes to the affordability of food.

The article is quite informative and is worth reading. Needless to say, this is a HUGE admission, with much potential for fallout. We're not going to take this lying down, and will attempt to secure our share of oil any way we can. Another thing that I found interesting, is that the cost of oil falling last year was really a double-edged sword. Yeah, it helped ease our "pain at the pump", but it also put the kibosh on many production projects that might have helped alleviate the price shocks that are bound to come.

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