February 26, 2007


Why the Economy Is Weathering Oil's Swings: A return to peak price levels would hamper U.S. GDP, but overall the economy needs less oil to be productive (David Wyss and Beth Ann Bovino, 2/26/07, Business Week)

Although there has long been talk of energy shortages looming, such worries are misplaced. There's plenty of energy on and in the planet Earth. What's in short supply is cheap crude oil.

The Energy Information Agency (EIA) of the U.S. Energy Dept. estimates that there are 6 trillion barrels of conventional petroleum in the world. Of that, however, 5 trillion are concentrated in areas that are either difficult to tap (offshore or in the Arctic), politically unstable (the Middle East, Nigeria), or environmentally sensitive.

Among other forms of fossil fuels, nonconventional oil sources--such as tar sands and shale oil--could contain another 3 trillion barrels, and reserves in North America could exceed Saudi Arabia's crude reserves. Natural gas deposits probably exceed oil deposits; proven reserves are at about a 65-year supply at current production levels, according to the International Energy Agency (IEA).

Estimated coal reserves are at a 155-year supply at current production levels. Although such quantities seem abundant, estimates are highly uncertain. In addition, these other fossil fuels are more expensive to use than conventional petroleum, which provides energy in a form that is relatively easy to extract, transport, and burn. [...]

[O]il has dropped to 36% of the world energy supply in 2003 from 44% in 1971, with most of the drop offset by increased use of natural gas and nuclear power. This indicates that even if oil supplies become scarce, energy will still be available.

Peak oil is like SS bankruptcy.

Posted by Orrin Judd at February 26, 2007 8:40 AM
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