| sep 20 2007 | | Oil again. | Just out is a landmark report by the U.S. National Petroleum Council entitled Hard Truths About Global Energy. The study projects global energy demand will grow by at least 50 per cent by 2030. The majority of that demand will come from developing nations. Oil industry representatives from Europe, Latin America and China have agreed with the conclusions of the report. This is a classic supply – demand problem. The added problem in calculating the available of supplies is the refusal of nations to allow audited resource of proven and probable reserves. Saudi Arabia in particular is obviously lying about its reserves and its ability to supply future demand.
Exxon, Shell, Total and leaders of Canadian and international oil producers agree that meeting these projections is a challenge requiring growth in hydrocarbon, nuclear and renewable fuels. Renewable fuels can only satisfy a small part of demand. In addition, the reality is that the net energy contribution of corn- and grain-based ethanol - after deducting the hydrocarbons used for tillage, fertilizer and distillation – if any is very small. Whereas the social impacts that skyrocketing corn and grain prices have had on food for the poor, as well as the widespread burning of the world's tropical rain forests so as to plant oil palms in response to huge demand for biodiesel is another unintended consequence.
What this debate fails to address is the decline in supply. It is all very well being able to calculate the growth in global demand with such a degree of accuracy but it becomes meaningless when it fails to notice the 800 pound gorilla of diminishing supply in the room. Until nations allow independent auditing of their reserves we will not know how fast we should be adapting our energy use to the coming crisis.
It is fair to say the market for oil going forward will be extremely volatile but the trend is your friend and the trend is decidedly up.
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