Global oil consumption hit record high in 2010

Demand is outpacing supply as demand increases drastically causing supply shortfall

By Michael Smith (Veshengro)

Some illuminating new stats on global oil production, consumption, and the shifting landscape of oil producing nations.

Reports show that global oil consumption was up in 2010, bucking the trend for the two previous years under the grips of the Great Recession, increasing 2.7 million barrels per day (mbd )to a new record high of 87.4 mbd. Increases in global oil production, however, fell short of that by 900,000 barrels per day.

In other words, rising supply in not at all keeping pace with rising demand and consumption, something which everyone from the US military, to the IEA, to oil industry execs, and plenty of doom and gloom peak oil researchers (who likely will be more accurate than the technology optimists out there) have been saying for some time.

Exemplifying that growing supply and demand gap, and the dwindling supply of easy to get oil accompanied by the rise of tar sands and other so-called unconventional sources of fossil fuels, is Norway.

Once in the top 10 oil producing nations of the world, and one of the few nations which managed to escape the resource curse of oil while also having solid green credentials, in 2010 Norway's oil output dropped more than any other nation, by 9.4% to roughly 2.1 million barrels per day. It now occupies the 13th position.

Something which obviously doesn't sit well with Statoil, which has just released a statement saying that it expects to raise production “to above 2.5 million barrels of oil equivalents per day by 2020” and is positioned for long term growth.

Britain's North Sea oil (and gas) fields are also coming to an end of their productive lives and new sources do not seem to be forthcoming, not in the North Sea nor elsewhere. The trip to the Islas Malvinas, the Falkland Islands, and the surrounding waters, also drew a blank.

The rejiggered oil production rankings now have Russia leading the world (10.27 mbd) and Saudi Arabia in second (10 mbd). The US produces 7.5 mpd (and consumes a bit under three times that). China is now in fifth place, seeing the largest increase in production, with a bit over 4 million barrels per day.

Saudi Arabia, according, to sources, is, however, on the brink of running dry as well and that does not bode well for a lot of things.

The entire problem is not being helped one bit now by the crisis in Libya meaning that things will get worse in time to come. Then again oil is the very reason that we, that is to to say the USA, the EU and NATO are involved in supporting the Libyan rebels.

The action in Libya has about as much to do with human rights as the war against Saddam Hussein had anything to do with weapons of mass destructions. If it was human rights we were concerned about why are we not intervening in the former Rhodesia, now referred to as Zimbabwe, or Syria or Bahrain. In two out of the tree mentioned there is no oil and Bahrain is needed as a base for the US and British war ships thus we could not possibly upset the ruling family there. But I digressed. It was oil we were talking about and the disparity between demand and consumption and supply.

In order to level things out, it would appear, the US has, at the end of June 2011, released stocks from their strategic reserves. This was also a move in order to bring down gas prices at home and quieten unrest amongst motorist.

The fact that such reserves had to be released also seems to point to the fact that – unless the oil producing countries are sitting on their stuff (aside from no oil coming out of Libya) – the demand cannot be met anymore by current level of production.

Is the “end of oil” upon us sooner rather than we had assumed? It might just be.

© 2011

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Recession is 'inevitable' as long as UK economy is dependent on oil

by Michael Smith (Veshengro)

First the UK's economy must break free of its dependence on oil in order to make a sustainable recovery from the current credit crunch.

This is the warning issued by University of Liverpool expert Simon Snowden, who said the world is heading for a "supply plateau".

Mr Snowden, who recently addressed the All-Party Parliamentary Group on Peak Oil and Gas, said that the accelerating cost of oil marks the approach of a peak in oil production, and that demand will soon outstrip supply to the extent where world economies will begin to fail.

The price of oil has, in the past 12 months, risen from just above $50 a barrel to a record of nearly $139 a barrel recently.

A recent report, however, from Goldman Sachs mentions that the possibility of $150 to $200 a barrel is increasingly likely in the next six to 24 months.

Mr Snowden said that, unnless we completely cut our dependence on oil, we could see years of almost non-existent growth for the UK economy. Any recovery will be short-lived and at ever lower levels.

He further stated that the cost of goods will rise even more sharply and the economy could stagnate into a recession for several years.

In order to overcome this dependence on oil we must invest – heavily – in alternative forms of energy and transport. Changing our economy in such a fundamental way, however, will take years, and therefore, in this sense, a recession is inevitable.

While this may be so it must be a definite requirement that the elderly and the poor, as well as the farming industry, be safeguarded and protected from fuel poverty.

In the United States we begin to see farmers to bring back draft animals for use in the fields as they can no longer afford to run their fuel-guzzling tractors and other machinery.

The great paradox is that the UK exports oil and gas and then imports it again rather than to keep the oil that we produce. This does not make sense. Someone said once, when I questioned him on this, that it would be too difficult to store the oil and especially the gas until needed. Why?

Is the truth not more like that the Treasury gets a nice sum from the export of British oil and gas and that that really is why we do not keep our own, home-grown, so to speak, oil and gas. It is much more beneficial for the Treasury and therefore the government's coffers to sell the oil and gas and then to have the petrochemical companies import oil and gas from elsewhere.

It has nothing to do with being difficult to store, I am sure. In the same way that we destroyed our coal mines in this country – thanks Mrs. Thatcher – and import cheap coal that is low grade and very high in sulfur content. British coal was and is high quality coal that burned well and with today's technology could be the world leader in clean coal power stations and such like. However, most of the collieries will be finished for ever as they cannot even be reopened because they were permitted to be flooded and the gas was allowed to build up in there.

© M Smith (Veshengro), June 2008

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The Age of Peak Oil has arrived

It's time to batten down the hatches - the age of peak oil is upon us and we'd better take action fast. The price of oil will feed into just about everything you can imagine. Can you think of a single thing you use in your everyday life that is not in some way dependent on oil?

We may see some fluctuations in the price but the tendency will be for the price to push relentlessly upwards. The reason is that demand is outstripping supply by a few million barrels a day and the gap is getting wider. Global crude oil production peaked in 2005 - inventories are now being desperately wrung out and reserves drained to fill the gap. It's time to face the facts, we need to be far more resource efficient. Because oil is in some way embodied in just about everything, even if it's only transport, improving resource efficiency is essential to manage the impact of rising costs. But to be more resource efficient we need the entire workforce on board and that means more emphasis on training and motivation.

We've had oil shocks before and a look at how they developed will help to manage the coming storm and put it in context. The Shot in the Dark training DVD "It's Easy with Hindsight" helps to paint the picture. The DVD uses a compilation of 8 trigger videos to connect the audience to their dependence on natural resources using the examples of oil, forests and fish, including:

"From Dreams to Nightmares" 6 videos that trace the growth of the oil economy from the 1930's through the 1970's oil embargo to the inevitable decline as we hit 'Peak Oil'.

"Live 4,000 Years - Die in a Day" - a stunning five minute video that looks back on the destruction of the Great Redwoods and continuing world-wide deforestation.

"Where's the Catch?"
A short video on the fall and rise of the Alaskan salmon catch.

The videos have a core length of between 3 and 7 minutes to accommodate tight training schedules and each title can be used with or without the director's introductory comments.

Shot in the Dark director Alan Owen said: "The programmes use recently unearthed archive footage that show how naive and wasteful we have been. For example, we found in one early clip that showed at one time they used to think gasoline was a waste product and poured it in the river! What do we discard today that will mystify future generations? Plastics? Wood? Electronics? Training is more effective if you can engage the audience and make it an emotional experience - make it fun, make the audience smile and make them think.

These videos can be used to lighten the mood of training sessions, as much of the content is rich in unintentional humour, for example, one scientist in the 1930's - clearly very nervous of being in front of the camera - states that one day they will develop engines that can do 300 miles to the gallon! I wonder what happened to that aspiration? Comments like that stimulate audience discussion and help to break down barriers - so they are an essential tool for introducing resource efficiency workshops and awareness courses."

Shot in the Dark is a video production company specialising in the production of environmental training materials.

The DVD is available direct from Shot in the Dark via their website www.shotinthedark.co.uk or phone 01484 651111.

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