Emergency #1: Energy
Oil prices are on the devil’s own roller coaster, but the big picture is that we are still in a head-on collision with peak oil. What’s more, the cheap, easy-to-pump oil is fast being used up.
To be sure, there were plenty of oil discoveries in 2009, especially in Brazil and the Gulf of Mexico. A whopping 10 billion barrels of oil was added to reserves, the highest rate since 2000. However, the world is consuming around 83 million barrels a day, which equates to 31 billion barrels a year. So, even in a good year, we barely replaced one third of the oil we consumed.
The world is producing 83 million barrels per day, but production at existing wells is declining at up to 8% a year. That means we have to add more than 6 million barrels per day every year to keep production flat. Five years down the road, we’ll have to replace 30 million barrels of production. That’s more than three times the amount of oil (8.1 million barrels per day) that Saudi Arabia produced in 2009.
That means we have to drill a lot more wells. And the oil we find is very deep and therefore very expensive. Oil companies are now putting drills down 4,000 feet in the Gulf of Mexico to then drill through 35,000 feet of rock. These wells are deeper than Mount Everest is tall! Assuming that significant finds are made, it will still be 7 to 10 years before the wells go into production.
Demand Is Rising
Meanwhile, demand is rising in emerging markets including China and India. Demand is being driven by car sales — in March, car sales in China overtook those in the U.S. for the first time, and sales are averaging 1.1 million new units a month. This is roughly twice the level of China’s 2005 car sales.
In the auto-loving United States there is a little less than one car per person in the country, but China’s ratio is a little over one in 10. If China starts to approach our level of car ownership, the increase in fuel consumption will be huge.
The Council proposes as much distributed energy sysem development as government will allow and promote especially in north-central Florida where 2 RC&D Councils operate. That’s 15 counties. Please consider joinign the Council with a $25 membership.