The fall of petroleum
will take place primarily
in the U.S. as it is most dependent on limited resources.
Helpful in understanding trends is an honest assessment of alternative energy,
in terms of potential for a given population size and number of decades
Additionally, U.S. foreign policy can be glimpsed more and more clearly in its
drive to maintain its oil-fueled, corporate-based empire.
Why have prices of crude oil gone up?
Denis Frith, May 20, 2004, revisited March 3, 2005
The upward trend in the price of
oil is doubtless due to the weighted combination of a number of factors in the
minds of those making the decisions to purchase this critical source of energy
for industrial society.
These factors probably include:
uncertainty about the ability of OPEC to continue to increase their
export capability, despite their rhetoric
concern about the level of Iraqi supply over the next few years
concern about political stability in the Middle East, particularly
Iran, Syria and Saudi Arabia
worry about the exports to US from Venezuela and Nigeria
reduction in the estimates for Caspian Sea area compounded by technical
the impact of the North Sea decline on global supply
speculation of money players on the soundness of the view of economists
that the market will ensure the current trend is just a blip by encouraging
exploration and reducing demand. There is no real sign of decreasing demand in
the US while it is increasing rapidly amongst the Asian giants.
worry about the plans of the Russians: do they intend to get a bit of
their own back by cutting the supply of oil, so hitting the US economy, whilst
helping the long-term Russian economy by keeping more of their oil for their use
worry about Chinese, Indian, Japanese, Korean, Brazilian increases in
demand and the measures they are employing to ensure they can compete with the
US in getting their share of the remainder. They are doing business with
countries such as Venezuela and Sudan.
reading the signs from the major oil companies that are covertly
covering the difficulties in discovering sufficient new resources to cover the
decline in existing fields
noting that many oil exploration and service companies are contracting
due to the growing technical difficulties and the loss of experienced staff
interpreting the hype about how advances in technology are enabling oil
to be extracted from deep water, oil sands and other difficult sources as
spelling out that most of the easy oil has been used
recognition that there are countries that are seriously looking at
alternatives to oil, particularly China, Japan and in Europe because they
appreciate that peak oil has almost certainly arrived
recognition that some countries,
particularly US, Canada, Australia are dangerously addicted to the use of oil
for transportation and food production yet have insufficient activity in place
for a timely transition to some unproven alternatives, mainly because their
leaders will not face up to biophysical reality
awareness of how long it took the community to wake up to the dangers
of smoking, despite numerous warnings, because of the obfuscation of the tobacco
companies and the negligence of the politicians. Big oil seems to have learnt a
lot from the tactics employed by the tobacco companies.
awareness of the problems of rapidly increasing demand (with very
likely decreasing supply) due to increasing population as well as the
consumption of the emerging Asian economies
awareness of the global reaction (so-called terrorism) to countries
getting more than their fair share of an irreplaceable resource, especially as
this resource has often been obtained from the owners by very dubious political
and business means
recognition of the geophysical fact that the supply of oil is limited
and that about half of it has been used up in a very short period of time and
the rate of usage is increasing at a tremendous ecological as well as economic
cost this cannot continue
I expect that there is an increasing number of informed people responsible for
major decisions who are aware of some of these factors and are acting
accordingly. The momentum is clearly building up, covertly, and despite
protestations about business as usual by the prejudiced.
It seems very likely that the
volatility in oil prices is partly due to the increased speculation in oil
futures but that does not hide the upward trend from the discerning.
However, I very much doubt whether some of the factors (particularly the last)
are given their due weight, yet.
There could well be an explosive growth
in oil price at any time due to some trigger event amongst the above.
Denis Frith, Melbourne 42S 148E Australia
Frith is a researcher and commentator participating in energyresources listserve.
Dear Culture Change,
Re.: Why have prices of crude oil gone up?
I applaud Denis Frith for sharing his insights of reasons he believes oil prices
are rising. Let's distill the barrel:
Oil prices are higher because
** the world's oil production has very likely peaked; ** (in the) U.S. gasoline
production facilities are essentially fixed; and
** China and India are competing with other nations, buying more. Increasing
demand from increasing populations and living standards against fixed or
decreasing supply means higher prices.
Note that nearly all increases in U.S. energy consumption is due to massive
legal and illegal-immigration. Higher prices and consumption (supply)
limits also suggests political instability. The world's oil situation will
progressively worsen. However, "over time" implies some opportunity to
deal with it.
In Canada and the U.S., oil is the crisis du jour issue whereas natural
gas is the genuine calamity issue (Mexico is beyond hope). Our favorite
energy source, North American NG is rapidly running out!
Today, TODAY, even average weather means
electricity brownouts and the occasional blackout. Today, the consequences
of merely an average summer followed by a cold winter would be difficult to
imagine. In two or maybe three years, regardless of weather, Canadian and
U.S. blackouts will become common and widespread.
May 24, 2004
Articles on this website:
oil industry has plans for you: blow-back by
Peak oil: A turning point for humankind
by Colin J. Campbell
oil crash and you by Bruce Thomson
Additional information resources
For perspective on the Iraq War by those intimately familiar with
The war was a military solution to a financial problem for the U.S.
The second annual meeting of the Association
for the Study of Peak Oil&Gas in Paris in May was quite a success. Read
the summary at their website: www.peakoil.net