Colin's Cornucopia

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Oh yes it will

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So you think the oil is not going to run out? Take another look. Take another think.

oil reserves

This graph (Ivanhoe 1997) shows oil discoveries on the left. The peak year for oil finds was around 1960 and we are now finding virtually nothing. The area under the bell on the left shows the total amount of oil ever to be found on earth. All genuine data follows a bell shaped curve. This equates to about 1.5 trillion barrels. Other people claim there is more, but they are in the business and have good political and economic reasons to lie. Even if you accept their distortions it only puts off the crunch by a maximum of about ten years.

The graph on the right shows how much oil we have been pumping from the ground. The area under the right hand graph can never be greater than that on the left. It is impossible. No amount of praying, politicking, lying or cheating or technical wizardry can change that.

We could go on burning oil the way we are now until around 2020 and on the 1st April 2021 we shall all have to drive home, park the car and die. All eight billion of us.

This will, of course, not happen but the things that will happen may not be much more acceptable. Oil shipments are going to start reducing any day now. There are good technical reasons about pumping oil from diminishing wells which will force this. The price of oil is going to rise as a mirror image of that falling dotted line on the graph above. Quite soon you will not be able to afford to drive. Note that all this happens within twenty years - well within your lifetime.

A society based on the car and truck and oil that has taken over a century to construct will have to change radically in much less than twenty years.

So what do we have to do to replace the oil?

There are many things we can try. The British government has just sanctioned four new coal fired power plants. This is a step in the right direction - but only a tiny little shuffle. The government has also stipulated that these new plants must bury their carbon. Fat chance. It may be technically feasible but the high cost will divert much needed resources from other new build. The cost of energy will rise so much that there will be riots in the streets.

If we are very conservative we can say the global oil flow will reduce at the rate of about one billion barrels per day each year. This is equivalent to 23 Gigawatts per year assuming 100% conversion.

To replace this energy from other sources will require eight new one- gigawatt power stations every year for 30 years. These are quite big power stations.

At this point we should point out that these figures are considering only the USA and Europe and the "developed" world. We have not even begun to consider China and India yet.

We could build 4,000 windmills every year if we can find the money, materials, manpower, factories and space to put them. Then we have to build the infrastructure to connect to them and service them and about 4 pumped storage dams every year to smooth out the fickle wind flow.

Then we can grow crops to make oil. Some claim this is carbon neutral. Ha! If we could grow just palm oil we would only need around 2% every year of the arable world to do it - but palm oil will only grow in a few places - and these are mostly already well used. Even at 2% we would completely swamp the world within a few years. We have to choose between running our cars and air conditioning or starving half the world to death.

If we grow Maize (Corn) rather than palm oil then we need to add around 60 percent of the arable world every year for twenty years. Clearly this is not going to work.

The 1 gigawatt power plants referred to above will probably be coal fired initially but coal supplies will suffer a similar fate to oil within twenty five years. The only way is nuclear power plants. Even if this were to be successful the world supplies of uranium are by no means certain. We should last 50 years but it highly unlikely to be more.

Even if we can do any of this we still have to find a way of converting electricity to run cars. There are plenty of boys playing with their toys in the marketplace. We need to convert about 50% of car production to electric within five years - starting now. This will require a massive extension to the distribution grid and the provision of tens of thousands of charging points not to mention the huge demand for exotic materials for batteries. You should also note that losses in transmission and batteries will further up the power demand by at least 5%.

There are not enough technologists, engineers. manufacturers and contractors to undertake a civil engineering project on this scale. Eight stations a year every year for at least 30 years. Or 4,000 windmills every year. It cannot happen.

All this fantastic engineering activity has to take place just at the point that the west has deliberately run down its manufacturing industries and now we have populations that consider manufacturing work to be a dirty word.

In short, we are not going to do it. We are in deep do-dah. Very deep. And it's about to hit the fan.

Now we get to the really nasty bits. All the above assumes that the West goes on its merry way while actually managing not to increase its economic activity and consequent increase in the use of oil. That will not happen voluntarily. I believe it will happen - but we will call it not a recession or a slump but rather a disaster. It may have already started.

But now it gets very nasty. Both China and India have made plain their desire to "catch up" with the West. Both have been expanding their industrial activities - and use of materials - at a pace that leaves us gasping. They have temporarily run out of steam (interesting simile, that) but will be determined to get back to 6% expansion every year. Between them they have a third of the population of the planet and they outnumber the West by at least two to one.

If they get anywhere near our rate of energy use, the above scenarios are out of the window. There will be no oil for the West at all. All of Africa's resources will head east rather than west and China, already the richest nation on earth - in cash terms - will buy whatever it wants. It is rich because we have given it our industrial production and borrowed money from them to finance our profligacy. They have become producers. We have become consumers. The equation does not balance.


Imagine the scene at the G2 meeting in 2020

Chin China.

" We require 8 % more oil next year. Our internal resources will decrease by 2% next year and we can get an extra 4% from our contract with Iran. That leaves us needing another 6% and the only source we can see is Saudi Arabia or Kuwait."

Uncle Sam.

" We require 4% more next year but as you know, Several of the Saudi wells ran dry last year and OPEC is struggling to maintain production at any level. There is nothing to spare"

"Anyway, we do not like the exclusive agreement you have with the enemy state of Iran and you have already secured more than your fair share from Venezuela and Africa. We developed all these fields and you are horning in on our action."

"Also you have made extensive deals with Russia that have put our supplies from that source is jeopardy and upset our NATO allies in Europe. 25,000 people died of hypothermia in Europe last winter when the Russians turned the gas off."

Chin China.

"We are simply buying what we want in the market that you have controlled through your acolytes in OPEC for the last 65 years. You have operated it to suit yourself and effectively controlled all the oil producing countries to satisfy your greed. We are not surprised that Osama is hopping mad. You have been raping them for half a century - all we want to do is join the gang bang."

Uncle Sam.

"We don't like that sort of talk. What we have done is to control the price of oil and the oil flow to ensure that our consumers and their suppliers got the best deal available in a free market."

"Anyway, we are in complete accord with the free and friendly state of Saudi Arabia which wants to sell us its oil at a price fair to both of us. The independent state of Kuwait has joined us in this accord and Iraq soon will do so - even if their criminal dissidents still keep killing each other and destroying the pipelines."

"We have control, sorry, OPEC has control of 50% of the remaining world reserves and we, sorry, they are keeping control of their reserves. You know perfectly well that increasing output from the Middle East will simply run down the reserves even faster."

Chin China.

"That has always been the case. But it did not stop you shipping vast amounts of the stuff when you wanted it. It was perfectly clear in 1968 that the oil crunch was coming but you have continued to increase your use of oil regardless. Do not complain. You caused most of this problem."

"Now we want our share of the action. We can afford to pay for it and you cannot. Your nation is so heavily indebted that you cannot continue to survive unless we fund you."

Uncle Sam.

"Well, we have reciprocal mutual protection pacts with all the oil countries, sorry, sovereign states in the Middle East. We have the military power to protect them and we will do so under any terms."

Chin China.

"We don't think your accolyte oil states, sorry, friendly neighours in the Middle East will be very keen on your protection when they discover we are paying more than double the price per barrel that you are. Remember, we can afford it. We don't squander it like you."

"Make a deal with us for access to oil now or we will send the spot price up by a factor of ten. Now."

"Maybe you should remember what happened seventy years ago when you denied Japan access to Indonesian oil. Pearl Harbor you called it. "

Uncle Sam.

"Are you threatening us?"

Chin China.


"We outnumber you by at least three to one"

"We hold your markers to the tune of billions of dollars"

"We are now much stronger than you in every respect."

"We have built and nurtured our industry. You have destroyed yours.

"We can survive without you. Can you survive without us?"

"We have already cornered half the world's oil supplies, half the world's coal and half of most other minerals. We have half of the remaining uranium. You have nowhere to go without us."

"Under the terms of our Mutual Defence pact with Iran we have stationed 250,000 well armed troops in that country - less than 100 miles from your oil."

"You think you can take us? Do you remember what we did to the cream of the French Army at Dien Bien Phu? They do.

"Deal or die."

Colin Walker

8 May 2009

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