Tuesday, October 9, 2007

Running to Stand Still

An article in today's New York Times appears to celebrate the discovery of new natural gas fields off Norway in the Arctic Ocean, but some passages toward the center of the article indicate why the search for fossil fuels is now taking place in some of the most inhospitable parts of the world (whether politically or in terms of climate). The article notes that production costs are rising rapidly as a result of these difficult conditions (or rising costs of doing business with assertive nations), and that only under the assumption of permanently higher prices can the energy industry justify the massive investment to extract resources from these challenging areas. According to one industry leader - who echoes almost verbatim a recent phrase by Michael Klare, as I've noted here - "there are no easy barrels left. The only barrels are going to be the tough barrels," said J. Robinson West, chairman of PFC Energy, an industry consulting firm in Washington.

While we Northeasterns can take some comfort in the knowledge that the furnaces will continue to run, the massive investment by Norway in complex and expensive new forms of extraction and transportation must be understood as further definitive proof of impending peak oil (and peak gas). Without the assurance that prices will stay high and continue to rise - that is, that "there are no easy barrels left" - one can be certain that Norway would not have spent upwards of 200 billion dollars on this new form of extraction. The article notes that approximately $15 of the overall increase of the price of a barrel of oil over the past seven years is due solely to rising production costs (itself a function of harder to get oil over that period), and projects like this one are sure to further contribute to increases in the price of oil.

As I've written before, we will experience peak oil in the form of higher prices and not as immediately as a kind of "running out," but in reality this is merely the leading indicator of the deeper truth that there is less overall energy for our use in the world. The article notes that energy executives believe that "there is plenty of oil left underground" - the kind of statement that peak oil deniers love to point out - but rising production costs is simply another way of saying that we are using more overall energy to extract the untapped energy that remains. It takes ever more oil to extract a barrel of oil - including, in this instance, freezing the natural gas at 260 degrees below zero in order to liquify it for transportation. The fact that there are no more easy barrels means that there are no more cheap barrels, and that further means that, for every barrel we continue to extract, we will use more oil in that barrel to get it out, long before it reaches our furnaces. We are going to be running harder to stand still, and yet I continue to hear all our political candidates of both parties telling us that they must restore "optimism" in America. I'd say that what we actually need is a good dose of realism.

1 comment:

Defensor Pacis said...

What do you make of recent comments by McCain and others touting France's reliance on nuclear energy as a possible model for us to follow?

I don't know if such a "solution" is feasible, and I'm confident that there are substantive moral/cultural reasons for Americans to change their lifestyles anyway, but I was curious as to what you thought about that route.