Comments on: Oil and the Future - A lunchtime address by John Hess http://www.aspousa.org/index.php/2009/10/oil-and-the-future-a-lunchtime-address-by-john-hess/ Truth in Energy Thu, 09 Feb 2012 04:26:56 +0000 http://wordpress.org/?v=2.6.2 By: gordong156 http://www.aspousa.org/index.php/2009/10/oil-and-the-future-a-lunchtime-address-by-john-hess/#comment-3420 gordong156 Sat, 31 Oct 2009 10:45:21 +0000 http://www.aspousa.org/?p=2672#comment-3420 Hess: - understates the importance of tax revenues from oil to governments (about 30% in the UK). Our public services depend on them. - makes no mention of the monopoly that Western corporations have over refining energy resources. This adds a huge slab to the cost of the end product, so it is no good at all pointing fingers at poorer countries which have to subsidise the price of cooking fuel and petrol for their citizens as a result. - doesn't say explicitly that, all things being even, when shortages begin, the world's greediest per capita energy consumer of oil will find it hardest to adjust. Hess:

- understates the importance of tax revenues from oil to governments (about 30% in the UK). Our public services depend on them.

- makes no mention of the monopoly that Western corporations have over refining energy resources. This adds a huge slab to the cost of the end product, so it is no good at all pointing fingers at poorer countries which have to subsidise the price of cooking fuel and petrol for their citizens as a result.

- doesn’t say explicitly that, all things being even, when shortages begin, the world’s greediest per capita energy consumer of oil will find it hardest to adjust.

]]> By: Bill Simpson in Slidell http://www.aspousa.org/index.php/2009/10/oil-and-the-future-a-lunchtime-address-by-john-hess/#comment-3416 Bill Simpson in Slidell Fri, 30 Oct 2009 02:28:37 +0000 http://www.aspousa.org/?p=2672#comment-3416 Noble goals, but let me tell you what I fear will happen in the real world. People have been programmed by evolution to be selfish and to seek power over others so as to maximize their chances of survival. So why did we develop morality and laws? To organize, so as to be able to protect ourselves from the greed of other groups. One reason that Neanderthal man is extinct might be because modern humans realized that they needed to organize in order to compete for resources against a physically stronger hominid during the last ice age. We are greedy by nature. We shouldn't expect that to change for oil. Human nature has not changed, so today we organize into countries instead of tribes. We thus protect our possessions, social systems, and concepts of morality from what we think are external threats. So how does this selfishness relate to future oil availability? Up until recently, the supply of oil could be thought of as being unlimited. If you needed more oil, you just went out, did some seismic work, and drilled more wells. Remember what happened after the first oil shock in the 1970's. Before then, the oil importing countries just assumed that all the oil they needed could be obtained by drilling more wells in the Middle East. But suddenly the rules were changed by an oil embargo, and an extensive worldwide search for more oil was launched. Within about a decade, enough oil was found to severely depress the price of oil for about 20 years. Some of the new oil producing countries were ruled by autocratic regimes. Once oil was found, the new oil producers had every incentive to produce as much oil as possible, as fast as possible, in order to live as comfortably as possible. After all, life is finite. And why remain mired in poverty when easy oil money is available. There was no incentive to restrict oil production by the new producers, many of whom were not OPEC members, since the reduction of output by one oil producing country would not increase the oil price. If one country cut oil output, other countries would soon take up the slack. Your wealth could only be maximized by producing as much oil as possible. At the same time, industrial development gradually spread from Europe, Japan, Russia, and the USA to many other countries all over the globe. The demand for oil increased until today, without the current recession, the supply could barely meet the demand. Once it becomes obvious that peak oil has been reached, a new selfish oil production logic will soon begin to manifest itself. Once the supply of oil can no longer meet the new demand from the rapidly developing countries in Asia and Africa, oil exporting countries will find it in their self-interest to reduce oil exports, not to increase them, as the oil importing nations now naively expect. They will do this for two logical reasons. First, the less oil that is produced, the more the price will increase. The oil exporters know that the oil importing countries can only cut back on fuel usage so much, before their entire economies collapse. People have to go to work, grow and transport food, etc. The oil exporters know that it will take the importers decades to replace liquid fuel with natural gas, coal to liquids, algae, or something else. This will be a very dangerous new development. I don't know that it has ever happened with any other critical resourse, but it may have. There aren't many things, where the less of it you produce, the more wealth an individual producer can accumulate. Second, it doesn't take a rocket scientist to figure out that the oil under your country is finite. Once it is gone, the flow of easy money into your country will stop. If you don't have the ability to replace that oil with another export, you will find yourself back in the undeveloped third world in a hurry. Why would you not slow down you oil exports as the price continually increases? As you cut back your exports and the price rises, your income will at least remain constant, if not still increase. Only a fool would not try to save their oil as long as possible by slowing exports under such conditions. The leader of Brazil has recently practically said as much, repeating that the recent sub-salt discoveries were for Brazil's use, first. That is code for, 'if we ever get really desperate for money, we might export whatever we don't need, until we get back on our feet.' It is rather difficult to force countries to sell oil. Does anyone think that the US would have supplied the world with exported oil until after WW II, if the concept of peak oil had been accepted back then? I hope that I have demonstrated that the world of oil is about to undergo a profound and dangerous change. After peak oil, it will no longer be in the best economic interest of the oil exporters to produce more oil. For the first time since the Texas oil boom, all exporters will gain if only one small exporter decides to trickle it out. The trick will be for the exporters to prevent a cataclysmic worldwide economic collapse, brought on by a price explosion as a result of too little oil production, as many exporters decide to try and cash in by lowering exports at the same time. It amazes me, that I have never heard this scenario discussed in the mass media. Nor do I recall reading it in any books on peak oil. But if I can figure it out, you can bet that others have, long ago. I just hope that it is being discussed at the highest levels of government, just in case that I might be right. Noble goals, but let me tell you what I fear will happen in the real world. People have been programmed by evolution to be selfish and to seek power over others so as to maximize their chances of survival. So why did we develop morality and laws? To organize, so as to be able to protect ourselves from the greed of other groups. One reason that Neanderthal man is extinct might be because modern humans realized that they needed to organize in order to compete for resources against a physically stronger hominid during the last ice age. We are greedy by nature. We shouldn’t expect that to change for oil.
Human nature has not changed, so today we organize into countries instead of tribes. We thus protect our possessions, social systems, and concepts of morality from what we think are external threats.
So how does this selfishness relate to future oil availability? Up until recently, the supply of oil could be thought of as being unlimited. If you needed more oil, you just went out, did some seismic work, and drilled more wells. Remember what happened after the first oil shock in the 1970’s. Before then, the oil importing countries just assumed that all the oil they needed could be obtained by drilling more wells in the Middle East. But suddenly the rules were changed by an oil embargo, and an extensive worldwide search for more oil was launched.
Within about a decade, enough oil was found to severely depress the price of oil for about 20 years. Some of the new oil producing countries were ruled by autocratic regimes. Once oil was found, the new oil producers had every incentive to produce as much oil as possible, as fast as possible, in order to live as comfortably as possible. After all, life is finite. And why remain mired in poverty when easy oil money is available. There was no incentive to restrict oil production by the new producers, many of whom were not OPEC members, since the reduction of output by one oil producing country would not increase the oil price. If one country cut oil output, other countries would soon take up the slack. Your wealth could only be maximized by producing as much oil as possible.
At the same time, industrial development gradually spread from Europe, Japan, Russia, and the USA to many other countries all over the globe. The demand for oil increased until today, without the current recession, the supply could barely meet the demand.
Once it becomes obvious that peak oil has been reached, a new selfish oil production logic will soon begin to manifest itself. Once the supply of oil can no longer meet the new demand from the rapidly developing countries in Asia and Africa, oil exporting countries will find it in their self-interest to reduce oil exports, not to increase them, as the oil importing nations now naively expect. They will do this for two logical reasons.
First, the less oil that is produced, the more the price will increase. The oil exporters know that the oil importing countries can only cut back on fuel usage so much, before their entire economies collapse. People have to go to work, grow and transport food, etc. The oil exporters know that it will take the importers decades to replace liquid fuel with natural gas, coal to liquids, algae, or something else. This will be a very dangerous new development. I don’t know that it has ever happened with any other critical resourse, but it may have. There aren’t many things, where the less of it you produce, the more wealth an individual producer can accumulate.
Second, it doesn’t take a rocket scientist to figure out that the oil under your country is finite. Once it is gone, the flow of easy money into your country will stop. If you don’t have the ability to replace that oil with another export, you will find yourself back in the undeveloped third world in a hurry. Why would you not slow down you oil exports as the price continually increases? As you cut back your exports and the price rises, your income will at least remain constant, if not still increase. Only a fool would not try to save their oil as long as possible by slowing exports under such conditions. The leader of Brazil has recently practically said as much, repeating that the recent sub-salt discoveries were for Brazil’s use, first. That is code for, ‘if we ever get really desperate for money, we might export whatever we don’t need, until we get back on our feet.’ It is rather difficult to force countries to sell oil. Does anyone think that the US would have supplied the world with exported oil until after WW II, if the concept of peak oil had been accepted back then?
I hope that I have demonstrated that the world of oil is about to undergo a profound and dangerous change. After peak oil, it will no longer be in the best economic interest of the oil exporters to produce more oil. For the first time since the Texas oil boom, all exporters will gain if only one small exporter decides to trickle it out. The trick will be for the exporters to prevent a cataclysmic worldwide economic collapse, brought on by a price explosion as a result of too little oil production, as many exporters decide to try and cash in by lowering exports at the same time.
It amazes me, that I have never heard this scenario discussed in the mass media. Nor do I recall reading it in any books on peak oil. But if I can figure it out, you can bet that others have, long ago. I just hope that it is being discussed at the highest levels of government, just in case that I might be right.

]]> By: Oil and the Future - A lunchtime address by John Hess :: ASPO-USA … : PlanetTalk.net - Learn the truth , no more lies http://www.aspousa.org/index.php/2009/10/oil-and-the-future-a-lunchtime-address-by-john-hess/#comment-3410 Oil and the Future - A lunchtime address by John Hess :: ASPO-USA … : PlanetTalk.net - Learn the truth , no more lies Wed, 28 Oct 2009 14:20:53 +0000 http://www.aspousa.org/?p=2672#comment-3410 [...] View post: Oil and the Future - A lunchtime address by John Hess :: ASPO-USA … [...] [...] View post: Oil and the Future - A lunchtime address by John Hess :: ASPO-USA … [...]

]]>