Let's talk about oil as a strategic resource

[x SF med]

Broadsword-
My thought is that hydogen would be used for the coal/gas/oil fired electric generating plants - not autos. Solar the same way, I use a solar panel to keep the battery on my boat charged.

tk-
I've read a little about it - I've got a friend who's really into biodiesel, he probably knows a lot more - he actually is part of a biodiesel co-op, and they're making their own. I think they're using saponified WVO not distilling directly from rapeseed or soy.

A few notes:

Vehicle fuel is not a particulary large problem. The infrastructure to support the replacement is.

Bio-fuel (bio-diesel) has some issues in temperate and cold climates. It crystalizes when it gets cold.

The two areas that the energy companies make the largest profits on are lubricants and synthetics. In both of those areas, there is no sign of a viable replacement for oil. The energy companies would like to be able to use other products to fulfil the fuel needs because it would increase their profits.

First algae bio-diesel test : link

[tk27]

Originally Posted by pegasus

First algae bio-diesel test : link

Thanks, very cool. An unclassified JASON report for the DoE just got made public, it said there is potential for using microorganisms to produce fuels. Also related to this thread a group called the Energy Security Leadership Council chaired by Fred Smith (CEO of FEDEX, former Marine aviator) and Gen. P. X. Kelley (former commandant of the Marines) have called on congress and the White House to reduce the importance of foreign oil this week.

[vsvo]

For better or worse, looks like BMW is putting some hydrogen-powered 7 Series on the street next year. Check out the refueling apparatus for that thing. Every time I see that, it reminds me of the picture of the Team Sergeant and his pet snake.

[tk27]

Blow for beer as biofuels clean out barley, Financial Times, February 25 2007
Secondary: We'll run out of beer before we run out of oil
I feared this as an unintended consequence of ramping up ethanol.

Just saw this today:

T Boone Pickens said he believes we are at or near the worldwide daily production capacity peak of oil.
And found this graphic representation showing the awesomness of oil:
Joules, BTUs, Quads—Let's Call the Whole Thing Off, IEEE Spectrum, January 2007
Secondary: That cubic mile, The Oil Drum


Also related to this thread: This is an interesting article about MEND in Nigeria by Sebastian Junger. As production capacity nears peak, security is becoming more and more important to the buisiness model. I saw where Triple Canopy has set up an office in Lagos.

[nmap]

1. To what extent are we dependent on oil from the Middle East?

We exist in a global marketplace for oil. Since the Middle East is presently a major exporter, and the U.S. a substantial importer - and since our economy is highly dependent upon abundant cheap energy - we are quite dependent.

2. If the Saudi government falls and SA goes the way of Iran, can we replace our imports of Saudi oil? How? At what cost?

If the new Saudi government were to choose not to sell oil, a lower supply of oil would be offered to the world. The price would increase such that enough demand was destroyed to bring supply and demand into balance. However, oil shows remarkably little elasticity of demand with respect to price. This implies a wrenching increase in price. It seems unlikely that the U.S. could avoid a deep recession along with real economic distress under this scenario.

That said, the KSA has a rapidly growing population, and the oil revenues must support that population to some degree. So an incoming government would need to get revenue somehow; I suspect that means they would keep selling into the global market. The price would be high, and might be denominated in Euros, implying negative economic consequences for the U.S.

3. Was the invasion of Iraq calculated to give us a long-term alternative to Saudi Arabia as a supplier of oil? Can it? Will it?

I don't know, of course. But my suspicion is that the U.S. perceived a need to stabilize the region. Whether that will come to pass is indeterminate; however, given the political trends and the apparent trend of public opinion, I must question whether stabilization will be accomplished.

4. What about Venezuela? Mexico?

Venezuela produces heavy, sour crude not suitable for most refineries. Worse, they are in decline. Still worse, the Chavez government will probably drive competent oil companies out. I would not count on substantially increased production from Venezuela.

As for Mexico...I think it is a tragedy in the making. Cantarell is in decline - rapid decline, actually. PEMEX doesn't have the technical skills needed to improve production, but the political situation precludes bringing in outside expertise. Add in that the government of Mexico gets about 36% of its revenue from PEMEX, and that revenue is down (and likely to continue lower) and one can perceive the possibility of a crises in the next few years.

A less stable Mexico has implications, social, political, and economic for the U.S. However, a massive migration of Mexican citizens northward may, likewise, be problematic.

5. Is the Strategic Petroleum Reserve big enough to do anything for us? Should we be expanding it?

One might ask whether it was worthwhile to have a couple weeks of food stored, just in case. The SPR might soften some shocks - it is not a solution for long term supply issues.

If one believes the world is likely to become more volatile, expansion of the SPR seems wise.

6. Anyone opposed to drilling in the ANWAR?

Drill it like a swiss cheese - but there isn't enough to long satisfy global demand. If we kept it all for the U.S. it would last longer - whether that would be diplomatically viable, I do not know. I suspect not.

Or whatever else you want to discuss, of course . . .

I found an interesting report from the Army Corps of Engineers. Pages 5-13 same to address the issue. The document is in PDF format.

LINK

[incarcerated]

In a blog entry dated October 27, 2009
http://www.heatingoil.com/blog/could...reach-100-102/
"....Energy industry analysts cited in the article say that oil’s recent climb above the $80 mark is unsustainable because it’s not supported by supply and demand. Demand has yet to pick up due to the ongoing recession and worldwide supplies of oils are at record levels. Inventories of crude oil are over 27 percent higher than they were a year ago. The Strategic Petroleum Reserve is larger than it has been at any time over the past 27 years. And OPEC says that an estimated 125 million barrels of oil are being stored in oil tankers around the world, a figure that is quite incredible since, in normal circumstances, this number is closer to zero...."

This is echoed here:
http://www.123jump.com/economy-story...es-Rise/35042/
September Crude Inventories Rise
Last Update: 3:46 AM ET October 28 2009
"Crude oil inventories at the end of last week increased 0.8 million barrels to 339.9 million barrels. Motor Gasoline inventories increased 1.7 million barrels last week end and inventories of finished gasoline decreased and distillate inventories decreased by 2.1 million barrels."

In the past two weeks, the President has made two conciliatory gestures towards the somewhat politically hostile (insofar as it doesn't vote Democrat) American military, traveling to Dover AFB for an early morning photo op
http://www.daylife.com/photo/0glsg1c...?q=dover+obama
http://www.daylife.com/photo/027E1Gu...?q=dover+obama
and granting honors to an 11th ACR Troop for action in Vietnam.
http://www.latimes.com/news/local/la...,3522913.story
I'll be looking for more of these gestures. He strikes me as a man who wants something of the military and is priming them for it.


Yesterday, Sec State HRC told Iran that ""Patience does have finally its limits and it is time for Iran to fulfill its obligations and responsibilities to the international community...."
http://www.reuters.com/article/lates.../idUSJER002074
(I can clearly remember President Carter telling them the same thing in January and February of 1980, prior to his rescue attempt).

In a story about Obama signing legislation to punish Iran, Forbes reports that the Strategic Petroleum Reserve will be topped off by January:
http://www.forbes.com/feeds/reuters/...SANCTIONS.html

On one level, it's all saber rattling. When these noises stop, that's when I'll begin thinking that we are going to have a problem soon.

[GratefulCitizen]

China is going silent.
http://www.reuters.com/article/rbssO...16809420091103

Maybe they are trying to hide a faltering economy.
Maybe they are getting ready for some other move...



The Saudis seem to be tiring of the games played in US financial markets.
http://www.thepeninsulaqatar.com/Dis...9110383712.xml

A key point not often mentioned in the oil debate:

The refineries have also moved towards heavier crudes, which contributed to 75 percent of US oil imports last year, up from 60 percent in 1985.

If oil becomes less of a hedge against a weak dollar, what's next? Gold?

[nmap]

Originally Posted by GratefulCitizen

If oil becomes less of a hedge against a weak dollar, what's next? Gold?

Looks like gold is heading up a lot...

[The Reaper]

Originally Posted by nmap

Looks like gold is heading up a lot...

That is the dollar coming down, and heavy buying by both nations and scared investors.

TR

[GratefulCitizen]

Hmmm...
A weak president, economic problems, etc.

I was pretty young during the late '70s.
Gold made quite a move then, too.
http://www.inflationdata.com/inflati...tion_chart.htm

What, exactly, is scaring investors?

[nmap]

Originally Posted by The Reaper

That is the dollar coming down, and heavy buying by both nations and scared investors.
TR

Absolutely true...

Originally Posted by GratefulCitizen

What, exactly, is scaring investors?

Bondzilla.

Let's say that the dollar goes down just 5% per year. That means that one needs a return of 5% to stay even. And if we lose our reserve status, 5% might be modest.

Can the U.S. pay the interest on such debt? In just 10 years or so, given current projections, we'll owe about 20 trillion. So 5% means 1 trillion a year in debt service.

There is a risk that no one will want our bonds at a reasonable rate, whatever that might be. That means that we either cut our spending by about 50%, raise our taxes some large percentage, or print. Printing takes us down the same path as Zimbabwe. That's bondzilla.

By the way - quite aside from my favorite subject of peak oil - if the dollar declines, we could easily see $5 gasoline again. That should help the economic recovery.

Scared yet? I am....

[Pop Alexandra]

Oil policies always drive the war effort, so I guess we should look at recent history when making predictions.

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