By: Christine Felz
Volatility in crude oil prices over the past year has prompted research and development of alternative energy sources. Congress took action this past year with the American Clean Energy and Security Act of 2009, passed by the House of Representatives in a vote of 219 to 212. Waiting to pass the Senate, the Act identifies several Greenhouse Gases to be regulated as well as targets for emissions caps. These steps are in an effort to produce clean energy, energy efficiency, reduce global warming pollution, transition to a clean energy economy, and promote agriculture and forestry offsets (PEW Climate). The American Clean Energy and Security Act comes at a moment when all countries, rich and poor, must prepare for a future with limited oil supply.
The book “Twilight in the Desert” by Matthew Simmons projects a future Saudi oil shock that will transform the world economy. Simmons bases his argument off the secretive nature of Saudi Aramco (Saudi Arabian owned oil company) and their proven oil reserves. Since the 1990s, Saudi Aramco has withheld production rate information. Current numbers, generated from estimates of oil well production rates, are unreliable for forecasting the supply of oil. In addition, water intrusion issues and pressure reduction in the oil wells indicates the giant oilfields will be depleted much quicker than Saudi Aramco will admit.
Contrary to Simmons, previous Saudi Aramco oil reserve manager, Nansen Saleri, argues with new technology and investment, oil supply will be plentiful for at least another 40, 50, even 60 more years. He maintains that Saudi Arabia contains more oilfields that can be put into production with the right research and investment.
While Saudi Arabia is not the only producer of oil in the world, they maintain great leverage in the world’s oil market. Even if, as Mr. Saleri suggests, Saudi Arabia can produce oil for the next forty years, the United States must take concrete action in preparation for any coming oil shock. Influenced by geopolitical conflicts, technical challenges and environmental concerns, oil’s future remains unstable. The U.S. can only ensure reliable energy supply by turning to alternative energy, which has more benefits than simply energy security. Alternative energy can help begin to slow the release of greenhouse gases as well as create new markets within the United States’ economy. Whether oil is available for many decades to come is irrelevant. Oil’s shaky history should stand as an indicator for the need to put Clean Energy at the forefront of today’s policy debates.
5 comments:
Our oil usage creates two major problems: foreign dependency on oil and climate changing emissions. Your suggestion of alternative energy use is right on. We do need to start relying more on alternative types of energy to get away from oil use. We should not turn to other ways of getting oil (oil shale or offshore drilling) to decrease our foreign dependency. Instead, we need to supply our energy needs with renewables (solar, wind, hydroelectric etc). In addition to turning to renewables I think we need to cut down on our consumption and start conserving more and practice more sustainable methods by changing our lifestyles (driving less, recycling, consuming less etc).
I am unsure why exactly Saudi Aramco is keeping their numbers secret. This will indeed cause a crash, both for the world and Saudi Arabia, once it is suddenly announced the world's largest oil producer has run dry. Perhaps they wish to keep it for themselves as the world gets more and more desperate, but you're right, the best option would be to break our addiction to oil. Even if they still have 40 years worth, that's still not a lots of time for the world to transform its global economy. So does anybody know why bills such as the Clean Energy and Security Act do not have overwhelming support from all of our country's leaders?
Although renewable resources are perhaps the best alternative to oil, their low energy density and relative efficiency issues make them (realistically) impossible to rely on solely within the next century, especially given the fact that you would need to offset growth rates alongside replacing current demand.
A portion of what is needed is to transform our oil and coal facilities to run off of natural gas. It is the "cleanest" burning of the fossil fuels and our nation's infrastructure is more equipped to adjust to its use.
Not that I'm against renewable sources, it'd be my dream too to be able to run a global economy off of solar, wind, wave, hydro and ocean thermal energy. Realistically though we just can't expect our economy to make such a great leap in a 50-100 year period.
We need to start with small steps first: getting rid of coal and oil.
Someone from my section did a presentation on this exact problem and the economic impact on an unexpected oil crisis on this scale would be catastrophic. Just like Lukas, I am a bit confused as to why companies are projecting higher than realistic reserves. I suppose that part of it is attributed to stock prices and market share. They want to have positive projections so people will continue to invest in them. I would also imagine that they don't want people to aggressively seek energy alternatives that may put them out of the market sooner than they would hope. Finally, countries with rich oil reserves have more global (political and economic) power since they are able to control the markets. These are just some ideas, but I am not even close to being sure as to the real motivation that these producers have.
I've never considered over hyping or hiding numbers about oil reserves to slow down the search for alternatives.. Its just crazy enough that it could be a real motive.
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