Thursday, August 26, 2010

Imported Oil & Energy Costs

From the recently published US Annual Energy Review:

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Notice that Canada leads as oil supplier to the US at 2.5 million barrels/day. All the other suppliers are shrinking while supply from Canada is stable. The funny thing is that when you say "oil" most Americans think of Saudia Arabia and the Middle East. They don't think "great white north, land of igloos and polar bears".

The report is full of graphs and tables to delight any fact fanatic. One thing I enjoy is the graphs showing "peak production". Lots of peaks have been passed. But no crisis. No collapse. That's the funny thing about fear mongers. They can sell an idea but it doesn't mean that facts conform to the doomsday scenarios painted by the fanatics.

The following graph of real, constant dollar electricity prices demonstrate that the doomsters who claim that we are coming up against the limits of everything aren't reflected in the prices:

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What the graph demonstrates is that in "times of trouble" prices rise. The 1970s show a price rise and the early 2000s show a price rise. This says more about the psychology and politics of a society than it does of its underlying technology or the state of natural resources.

If you look at figure 56 in the report, you will discover that despite all the chest thumping about "renewable energy", it is a mere blip. The growth in use of renewable energy is tiny and mostly confined to transportation. What isn't stated is that billions of dollars in subsidies is buying a place for ethanol in America's fuel tanks (at the expense of a growth in world hunger and rising costs to American consumers for food on their table).

Meanwhile, those who gloat over "peak oil" and the soon-to-be disappearance of oil have to contend with this graphic. What it shows is that the "proven reserves" have a very nasty tendency to stay like a carrot on a stick, just out in front, always looking like the reserves will soon be exhausted, but puzzlingly never quite running out:

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In fact, it isn't profitable to discover reserves until they will soon be needed. That's why it always appears that within 10-20 years the reserves will be exhausted and "all the oil will be gone". It will go, but not that soon. Probably within this century, but by then other energy sources will have replaced it. So those worries about "peak oil" have been a big waste of time.

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