So it would appear that the bungling of the Iraq occupation has now led, in a chain-reaction sort of way, to increased attacks in Saudi Arabia on their oil infrastructure.
Meantime, over in Iraq:
So, the Iraq war has crippled the oil industry in Iraq, which has the second largest reserves in the world, and is threatening the stability of Saudi Arabia, which has the largest reserves in the world.
I think it’s fair to say we’re at a crisis point. The situation isn’t hopeless, but it’s certainly desperate.
No, it’s not desperate yet. There’s still oil flowing into America, just not at the prices we want to pay, but we’d damn sure do something fast, or it will get desperate.
A crisis point? Why? Because in inflation-adjusted dollars we really aren’t paying that much more (if any more at all) than peak prices in the 1980’s.
From the article you linked:
Going from 3.5M to 2.8M this close after a major war is “crippled”? “Crippled” isn’t even in the linked article, so that is your opinion, correct? My opinion is that producing 80% of the pre-war peak is not “crippled” at all.
I actually would not mind a significant increase in gas prices, but not high enough to cause economic collapse. Say, something like Europe. This would get people off their asses as far as alternative energy sources goes, and the faster that happens the sooner that the middle east becomes marginalized in world influence. I think that no longer being in the center of everyone’s interest due to their control of a scarce and vital resource would allow them to develop at their own pace. As it is we have the western world willing to prop up some very nasty individuals just so long as it keeps the oil flowing.
Well, if high prices are supposed to bring more research into alternative fuels, then other than gravitating to more diesel driven cars, why hasn’t Europe been on the leading edge of developing alternative fuels? Why are they still as dependent on fossil fuels and petroleum as we are?
Heh. I posted a semi-rant in the Pit recently and got raked over the coals for suggesting a tax on gasoline to be devoted to alternate fuels research. I expect that you’ll have the same people do the same to you here.
Your point on alternate fuel development w.r.t. automobiles is quite valid, but remember that unlike the US, Europe is limited quite a bit in the area of biofuels research by the sheer fact that they don’t have the arable land to devote to large-scale efforts.
Sadly, I don’t agree with your assessment on relative dependence. Can you give a cite that says that per-capita gasoline consumption in Europe is on par with the US, or per-capita coal or natural gas consumption? How about comparing fleet average fuel economy of vehicles on the road? Average electrical use and gas use of homes in Europe when compared with equivalent climate zones in the US? I really think that if you do some comparisons you’ll find that it really is a different world in Europe, compared to the US.
Una: everything in context. My point is that the botched occupation has now, it would seem, opened a supply line into Saudi Arabia from Iraq for terrorists. This in the context of an increasing frequency of attacks in Saudi Arabia:
So this was not an isolated attack, but part of what increasingly looks like a pattern of attacks. The militants, it seems, are determined to keep attacking until they do major damage. Given their track record in re their determination when they focussed on the World Trade Center, I wouldn’t underestimate their determination or their resourcefulness in causing such damage if that’s what their after.
Also, that 2.8 million barrel number in my cited article above for Iraq is a bit high (the only other mention I can find anywhere near that high cites it as the maximum production capacity of the country if everything is repaired), but even going with that number, it’s less than the 3.5 million they were producing before the first Gulf War, which in the context of rapidly rising Chinese demand ("China imported 3.162 million barrels per day in February, up 283,000 from January, the IEA said. The United States is now the only country to consume more oil than China. The Paris-based agency raised its prediction for global demand for oil in 2004 to 81.98 million barrels per day. It was the fifth successive monthly increase in the IEA’s world oil demand projection."Chinese demand boosts global oil consumption ), is completely inadequate.
And, Iraqi oil production only goes over 2 million per day when everything has been repaired from the last act of sabotage to take place, which is the current situation, only in place for about the last week:
So Iraq is only able to export to its maximum potential when all the damage from what has turned out to be a constant stream of sabotage. (from the above article: ***Postwar instability has also compromised Iraq’s ability to export oil from the north through a pipeline to the Mediterranean through Turkey. Iraq has managed to export only 14 million barrels from the north since the U.S.-led invasion 14 months ago. The pipeline, which has also been the target of sabotage, carried 800,000 barrels per day before the war. ***)
China’s demand for oil, meantime, continues to increase relentlessly. There is a chance that it may lower soon, as the Chinese government is attempting to put the brakes on that economy.
So we’re reduced to hoping the Chinese slow down and that their are no more successful acts of sabotage in Iraq and that the internal al Qaeda rebellion in Saudi Arabia, now receiving supplies from Iraq as a result of the botched occupation, doesn’t succeed in causing any major damage to their petroleum infrastructure.
That’s a lot of things that have to go right, and all it would accomplish is to keep prices about where they are now. The odds of higher prices, significantly higher prices, look a lot better to this pessimist.
With respect, the context was the article you structured the second half of your own OP around.
I think that view perhaps sells short two of the realities of how oil production works.
First, oil doesn’t just go to the US, it goes to many countries - many which have no serious quarrel with Al Queda or anyone else in the region.
Second, the oil provides an outrageous amount of revenue to the governments of the entire Middle East. The governments of those countries have been accused by both sides of not being tough enough on terrorists. If the Saudis see a potential loss of tens of billions of dollars in disrupted near-term oil revenues, I think Al Queda and other groups would see a very large stepping up in efforts to grind them out like a cigarette butt.
That Times Online article is very sketchy, and does not contain any analysis of seasonal cycles of use, annual trends, long-term trends, any tie to GDP, etc. It’s somewhat interesting as a data point but it’s not something I’d base an entire OP on.
which I expect market pressures to do anyhow, should prices stay high for more than 6-9 months.
People not in the industry, especially those who write purely for business journals, are sometimes hysterical over claims of skyrocketing prices. I wouldn’t be concerned about high prices remaining high unless they remain this high in mid-October, when all Summer travel is finished and done with. Then is when I would start to be concerned.
Because prices aren’t high enough to matter. Even more so in the United States because we pay a ridiculously low price for gas. If it goes much over $3 a gallon in the US you will probably see a trend toward fuel efficient SUV’s.
A little hi-jack but IMO the new Ford hybrid SUV will start that trend early when people realize that the they aren’t really using the “Sport” in “Sport Utility Vehicle”. They just want a big honking vehicle with some bells and whistles. Let me be the first to call them HLUV’s for Hybrid Luxury Utility Vehicles.
I don’t understand what amount of “arable land” has to do with research on alternative fuels?
Sorry, poor phrasing on my part. What I meant was that if the oil supply were cut off to Europe, their economies would stop functioning and crash, just as ours would. Western Europe consumes about 3/4 the amount of oil that the whole USA does 15 million barrels daily vs. 20 million for the USA (Ref link). These figures are for 2002. Comparisons are difficult to do because Europe or the EU are composed of a variety of different countries while the USA is one country. Out economies are not the same nor are our tax philosophies.
But I specified “alternative” fuels, not necessarily “Bio-fuels”. Europe will never have more land. So if arable land is a prerequisite then they will never be able to develop alternative “bio-fuels”. So they should concentrate on other types.
Which brings us back to the original point. Europe haven’t done much of anything in producing commercially available alternatives for the masses, despite their gas prices being more than double what the USA has. So by this observation, it would appear that we here have a long way to go before we’ll get motivated enough to put real effort into alternative fuels. Maybe when we reach $10/gal?
Well, you know, here’s the rub, there’s a lot of controversy over just how economical producing biofuels are. With both sides banding about figures which contradict the other, but neither side giving a definite answer. There was another thread not too long ago about biofuels, with Una saying she wasn’t buying any of the costs associated with it and that if she could find the time she was going to look into the matter. Now, Una’s our resident expert on such matters, so if she’s not certain, I’m not going to speculate on what the actual costs might be (besides, she’s packin’ heat!).
If the transportation costs are low enough, than it’s certainly a viable possibity that Europe could import it (though why not simply have it processed in a low-wage environmentally unfriendly place like China), but that’s a bit of an unknown at this point.
OK…there’s fossil fuel, biofuel, and…refuse and waste are about the only ones that fit the bill that are not either fossil (which would be redundant grenhouse-wise) and biofuel (which you don’t want to consider). Now, given that waste fuels aren’t in especially high supply (when compared to, say, gasoline energy consumption) and they already use quite a bit of them (such as dewatered sewage sludge, automobile plastic fluff, sawdust, refinery waste, pulp and paper mill waste including liquor, and grain processing waste, I wonder what sort of fuels you have in mind. That’s why I focused on biofuels.
The economics of biofuels have changed for the better, but are still not able to compete with fossil, all claims of the turkey waste polymerization people notwithstanding. If certain prices are applied to certain intangibles (such as carbon neutrality) then the equation can change.
I won’t post on economic specifics one way or another since my laptop with my files is not in the same country as I am right now.
But we are back at the original query to your point, which is what should Europe have been doing? My belief is that for direct replacement of gasoline and diesel as prime-mover fuels there is little that can be done (that does not use fossil - I’m not considering LNG or LPG here) outside of leveraging biomass.
In regards to the question driving this - if you can imagine that biofuels production is often not economic here, on-site, then adding transport costs, loading/unloading, terminal, insurance, tariffs and taxes, etc. makes it even less so.
I don’t have my 14GB of biomass pricing and feasibility files here, but I will just say that I am changing my mind a bit, and thinking that in some limited cases there can be small-scale competition that works. However, every study I’ve personally done or been involved in has failed by a factor of perhaps 4:1 or greater compared to the cost of fossil fuel. The new depolymerization process people are making some big claims, but to the best of my knowledge produced no product whatsoever that competes in price with oil, at any quantity. I don’t think anything is wrong with their process and science if they are using the system I think they are, but I simply do not see the economics. I’ve been involved in one study using a depolymerization system where the producer actually issued a press release saying that their studies showed it cold produce oil at $20 a barrel", but of course failed to mention that this assumed a capital cost of $0, O&M costs of $0, and looked only at the raw material cost, transport and handling cost, waste disposal cost, and assumed a CO2 allowance credit of $5-$10/ton which currently does not exist. So the actual cost was around $200/bbl…
Every situation is different, and I’m becoming more hesitant to immediately dismiss ideas now, as things are advancing. I guess I’ll believe it when they reach a pilot scale of maybe 1,000 bbl a day at anything less than $80/bbl, including all operating costs, capital costs, and only considering credits that exist. That’s not that large an amount - it’s just over 0.1% or so of what we currently use.
Well, I’m no expert in this area, but where do the always talked about fuel cells and hydrogen fit in? I know it is still expensive to commercially produce hydrogen in the volume needed to totally displace oil (at least for driving), but where is Europe vis-a-vis the USA in research on this?