|The Myth of Peak Oil|
|Sunday, 02 May 2010 17:46|
For decades, we've heard the call of "peak oil", that we're facing an ever-decreasing supply of oil. The US simply cannot maintain it's current usage of oil because we are on the verge of a collapse of apocalyptic proportions because the last oil in the ground is being used right now. Makes wonderful news copy, and is a great way to castigate the energy industry and justify entire reworking of the economy, but there's a problem: it's not true.
The solution actually lies within the US. Actually, within Colorado, Utah, and Wyoming. For we have 276+ YEARS of 100% of our oil needs within those three States alone. That's right, we can eliminate 100% of the pumping going on now - Alaska, California, Pennsylvania, Texas, offshore, what-have-you - and supply 100% of our needs with just the states of Colorado, Utah, and Wyoming.
How? It's simple. It's called oil shale. And the US has enough to run 100% of our needs for nearly 3 centuries. There are somewhere between 2.8 an 3.3 TRILLION barrels of oil in shale worldwide, and the US has 62% of that. Assume the middle - 3 trillion barrels. That means the US has about 1.9 TRILLION barrels of shale oil. And nearly all of it is within the three states listed above.
Consider that number. One point nine trillion. 1,900,000,000,000. It's a mind-boggling number (well, maybe not so much any more, given that our budget deficits are around the same size!). It would be 271 barrels of oil for every single person on the face of the earth, or more than 6,300 barrels per person in the USA. Since there are 42 gallons per oil barrel, this represents about 266,000 gallons of oil per person in the US. Think about it. You know what a gallon of milk is like; imagine just over a quarter of a million of them! If you used a gallon a day every day, it would take 728 years for you to use it all.
What does that scale up to? Well, we use about 20 million barrels a day as a nation. Divide 20 million into 1.9 trillion and we find we have oil for 95,000 days. Or at least 260 years. And remember, this is the middle estimate value. Yes, we have oil shale for 260 years, minimum. A truly staggering timeline. If we started 100% of our consumption of oil from this reserve, and started in 2020, we'd finally be running out around 2250, sometime around the 110th President of the United States is elected.
\Many will talk about how it's too expensive. But is that correct? Consider that today, May 2nd 2010, oil is selling for about $82 per barrel. Suddenly the estimated cost of $21-$25 per barrel, we could cut our oil expenses by 70% or more. A massive savings for the nation, amounting to over $1 billion dollars a DAY in reduced oil expenditures. Over $400 billion a year in savings, about 3% of our GDP.
And it goes beyond that. Currently the US produces about 8 million barrels a day of oil. Rather than consuming that oil, we could, in fact, sell it (since we get our oil from shale). At a sell price of $82 per barrel, that would represent the ability to export $656 million dollars a day of crude, adding $240 billion to the positive side of our trade deficit. And because we're no longer importing 12 million barrels a day, that reduces our purchases by nearly $1 billion a day, for a total change in our trade deficit by $600 billion. The US nearly becomes a net exporter, and that would immensely improve our economic standing in the world.
And it goes beyond the change in the trade deficit; we could cut the costs of gasoline and heating oil by 4; the boost to our economy by bringing gasoline to less than $1.00 per gallon would be immense. Remember the peak in 2008, when gasoline reached above the $4.00 per gallon barrier? That - along with the housing crisis - was a prime reason the recession of 2008 hit so hard and so deep. Cutting our internal energy costs by a factor of 4 frees up a massive amount of dollars internally for other economic activity.
The facts are clear: the US has nearly 3 centuries of oil sitting within its shores; we have the ability to tap that massive reserve in 10 years; we could become one of the largest exporters of oil in the world; we could nearly eliminate the trade deficit; and we could severely cut the dollars we spend on energy within these United States. Peak oil - and the hysteria that goes with it - is a myth within at least the borders of the US.
|Last Updated on Sunday, 02 May 2010 18:28|