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March 14 News: Why Twenty-First Century Oil Will Break the Bank — and the Planet

By Energy Interns on March 14, 2012 at 8:50 am

"March 14 News: Why Twenty-First Century Oil Will Break the Bank — and the Planet"

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Other stories below: Great Barrier Reef ‘at a Crossroads’; Slowing Brazil’s rainforest destruction lowers greenhouse burden

Why Twenty-First Century Oil Will Break the Bank — and the Planet (Michael Klare)

Oil prices are now higher than they have ever been — except for a few frenzied moments before the global economic meltdown of 2008. Many immediate factors are contributing to this surge, including Iran’s threats to block oil shipping in the Persian Gulf, fears of a new Middle Eastern war, and turmoil in energy-rich Nigeria. Some of these pressures could ease in the months ahead, providing temporary relief at the gas pump.  But the principal cause of higher prices — a fundamental shift in the structure of the oil industry — cannot be reversed, and so oil prices are destined to remain high for a long time to come.

In energy terms, we are now entering a world whose grim nature has yet to be fully grasped.  This pivotal shift has been brought about by the disappearance of relatively accessible and inexpensive petroleum — “easy oil,” in the parlance of industry analysts; in other words, the kind of oil that powered a staggering expansion of global wealth over the past 65 years and the creation of endless car-oriented suburban communities. This oil is now nearly gone.

The world still harbors large reserves of petroleum, but these are of the hard-to-reach, hard-to-refine, “tough oil” variety. From now on, every barrel we consume will be more costly to extract, more costly to refine — and so more expensive at the gas pump.

Those who claim that the world remains “awash” in oil are technically correct: the planet still harbors vast reserves of petroleum. But propagandists for the oil industry usually fail to emphasize that not all oil reservoirs are alike: some are located close to the surface or near to shore, and are contained in soft, porous rock; others are located deep underground, far offshore, or trapped in unyielding rock formations. The former sites are relatively easy to exploit and yield a liquid fuel that can readily be refined into usable liquids; the latter can only be exploited through costly, environmentally hazardous techniques, and often result in a product which must be heavily processed before refining can even begin.

The simple truth of the matter is this: most of the world’s easy reserves have already been depleted — except for those in war-torn countries like Iraq.  Virtually all of the oil that’s left is contained in harder-to-reach, tougher reserves. These include deep-offshore oil, Arctic oil, and shale oil, along with Canadian “oil sands” — which are not composed of oil at all, but of mud, sand, and tar-like bitumen. So-called unconventional reserves of these types can be exploited, but often at a staggering price, not just in dollars but also in damage to the environment.

… Further evidence for this shift was provided by the International Energy Agency (IEA) in a 2010 review of world oil prospects. In preparation for its report, the agency examined historic yields at the world’s largest producing fields — the “easy oil” on which the world still relies for the overwhelming bulk of its energy. The results were astonishing: those fields were expected to lose three-quarters of their productive capacity over the next 25 years, eliminating 52 million barrels per day from the world’s oil supplies, or about 75 percent of current world crude oil output. The implications were staggering: either find new oil to replace those 52 million barrels or the Age of Petroleum will soon draw to a close and the world economy would collapse.

Of course, as the IEA made clear back in 2010, there will be new oil, but only of the tough variety that will exact a price from us all — and from the planet, too.  To grasp the implications of our growing reliance on tough oil, it’s worth taking a whirlwind tour of some of the more hair-raising and easily damaged spots on Earth.  So fasten your seatbelts: first we’re heading out to sea — way, way out — to survey the “promising” new world of twenty-first-century oil….

And don’t forget the final cost: If all these barrels of oil and oil-like substances are truly produced from the least inviting of places on this planet, then for decades to come we will continue to massively burn fossil fuels, creating ever more greenhouse gases as if there were no tomorrow.  And here’s the sad truth: if we proceed down the tough-oil path instead of investing as massively in alternative energies, we may foreclose any hope of averting the most catastrophic consequences of a hotter and more turbulent planet.

So yes, there is oil out there. But no, it won’t get cheaper, no matter how much there is. And yes, the oil companies can get it, but looked at realistically, who would want it?

Great Barrier Reef ‘at a Crossroads’

Australia’s Great Barrier Reef draws millions of tourists to its colorful coral and tropical fish. Recently it has been attracting another kind of visitor—big resources companies looking to export coal and gas.

A Unesco delegation is assessing for environmental impact several liquefied natural gas projects and coal-port expansions, valued at US$80 billion, either under way or planned inshore of the world’s biggest network of coral reefs.

“The Great Barrier Reef is definitely at a crossroads and decisions that will be taken over the next one, two, three years might potentially really be crucial for the long-term conservation,” said Fanny Douvere, head of the United Nations Educational, Scientific and Cultural Organization’s Paris-based World Heritage Marine Program, which arrived in Australia last week.

The monitoring mission will report to the World Heritage Committee, which will decide this year whether to add the reef to its list of sites in danger.

African Nations Back India on Emissions

A tectonic shift in the global climate negotiations got underway with the African group of countries siding with India in demanding that equity and ‘common but differentiated responsibilities’ be embedded in the talks for a future climate regime.

The re-alignments became evident with several key groups of nations submitting their views on how countries should increase their ambition levels for cutting emissions in the coming years.

The submissions from Association of Small Island States (AOSIS) and the Least Developed Countries (LDCs) show that they are in closer and open alignment with the European Union while the major developing economies from Africa have transited openly to throw their weight behind the emerging economies and especially back India.

Brazil Slowing Rainforest Destruction Cuts Greenhouse Gas Burden for All

As world political and business leaders ready for the Rio+20 U.N. sustainability conference in June, Brazil’s leaders are debating policy changes that could jeopardize the leadership it has earned from reducing Amazon deforestation and greenhouse gas emissions.

Since hosting the 1992 “Earth Summit,” which produced the first international agreement on forest protection, Brazil has risen from the ninth- to sixth-largest economy, ahead of the U.K. and just behind France. Deforestation in the Amazon last year fell to the lowest rate since government began monitoring the world’s biggest rainforest in 1988. The rate is down almost 80 percent in six years.

“A decade ago, almost everyone would have said efforts to get Brazil to stop cutting down the Amazon were a total failure,” said Doug Boucher, head of the Tropical Forest and Climate Initiative at the Union of Concerned Scientists. “Thanks to a shift in political dynamics and rise of a strong environmental movement, it became a huge success story.”

European Airlines and Airbus Seek to Ease Emissions Rule

Airbus and Europe’s biggest airlines on Monday called on the European Union to find a compromise on aviation carbon curbs, warning that Europe’s emission limits on foreign carriers could lead to retaliation.

Airbus, the world’s biggest maker of civil aircraft, and eight airlines including Air France-KLM, Lufthansa and British Airways urged European leaders to “use their influence” and push for a global agreement to tackle emissions from the industry and avoid an escalating trade conflict, according to a letter sent to the prime ministers of France, Germany, Spain and Britain.

“The situation is becoming intolerable for the European aviation industry,” according to the letter. “We have always believed that only a global solution would be adequate to resolve the problem of global aviation emissions.”

China Explores Possibilities of Low-Carbon Future

As China tunes down its growth expectations, the Asian economic powerhouse is trying to leave itself more room to improve the way in which it grows, and a low-carbon economy is certainly among its major goals.

With the country’s lawmakers and political advisors gathering to discuss future plans and possibilities, China has presented its determination to further reduce emissions and give shape to a new low-carbon scheme.

“We will show the world with our actions that China will never seek economic growth at the expense of its ecological environment and public health,” said Chinese Premier Wen Jiabao in a government work report delivered during China’s annual legislative session.

Carbon emission trading would be one of the major steps, as in Wen’s report, the Premier pledged to start trials of such a trade system and a cap-and-trade scheme for pollution rights, and move faster toward establishing “a compensation mechanism for ecological damage.”

Farmers Battle Water Scarcity as Food Demand Grows, UN Says

Farmers will need 19 percent more water by 2050 to meet increasing demands for food, much of it in regions already suffering from water scarcity, according to a United Nations report.

“In many countries water availability for agriculture is already limited and uncertain, and is set to worsen,” according to the fourth United Nations World Water Development Report published today. “Concerns about food insecurity are growing across the globe and more water will be needed.”

he UN Food and Agriculture Organization has said food output must rise 70 percent by 2050 to feed a world population expected to grow to 9.3 billion from 7 billion now and as increasingly rich consumers in developing economies eat more meat. A quarter of world farmland is “highly degraded” by intensive agriculture that has depleted water resources, reduced soil quality or increased erosion, according to the agency.

The UN’s latest warning about water shortages comes as the World Water Forum begins today in Marseille, where ministers, industry representatives and non-government organizations will discuss resource management, waste, health risks and climate change.

UK Opposes 2030 Renewable Energy Target

The UK government wants nuclear power to be given parity with renewables in Europe, in a move that would significantly boost atomic energy in Britain but downgrade investment in renewable generation, according to a leaked document seen by the Guardian.

The move would in effect remove the most important prop from the beleaguered renewable energy sector – the Europe-wide targets stipulating that a proportion of each member state’s energy must come from renewable sources.

That target should be scrapped when its current phase – requiring member states to generate 20% of energy from renewables – runs out in 2020, according to a secret submission to the European commission.

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12 Responses to March 14 News: Why Twenty-First Century Oil Will Break the Bank — and the Planet

  1. Will Fox says:

    Why is nobody talking about peak oil??!

  2. Tom King says:

    RE: Oil Prices.

    Oil prices will rise until the economic advantages of renewable energy are unavoidable. Beyond that point oil prices will plummet. We will have changed our energy substrate.

    • Lou Grinzo says:

      No, oil prices will not plummet. They will decline at least somewhat, but as soon as they moderate back below the price of renewables (accounting for the overhead of transitions), demand will shift back to oil and prop up oil prices.

      Barring any major public policy shift, as in a significant tax or other limitation that pushes people away from oil, we’ll be in this dance with renewables and oil for decades to come.

    • Mark Shapiro says:

      Good summary.

  3. Dennis Tomlinson says:

    Tongue-in-cheek:

    In an email recently hacked from a server at HADCRU, originating from a cloud server in… “the clouds”, addressed to “staff”, and sent by God, He purportedly announced his intention to intervene in the global warming crisis, thereby preserving His human-kind experiment. The Man Upstairs purportedly chastised His creation’s inability to deal with the catastrophe on its own. In paragraph two, The Big Guy stated, “I have populated all the earth with a new creature of My making ye shall call COTWO.” He further describes COTWO as his angels of sequestration, dispatched to His earth in order to inhale excess CO2 and CH4 – and to exhale O2 and H2O, sequestering the carbon in defecated piles, which COTWO then buries in hidden middens. Old Yahweh ends the email with a warning to mankind NOT to interfere with the work of His angels, “lest ye suffer the fate of eternal damnation, and all the earth shall vanish into Lucifer’s Hell in flames, floods, petulance, and bolts of lightning”.
    Thus far, things seem to be adhering to His plan, except for a remote tribe in Borneo who have taken a liking to the furry little creature’s colorful coat, and some residents of rural Mississippi who, after running over a COTWO or two with their pick-ups declare, “Them’s shore funny lookin’ road kill, but danged if they don’t taste real good with some taters, onions, greens, and gravy all cooked up in the pot.” And finally, the McDonald’s Corporation, which seems hell bent to subvert His will by introducing COTWO McNuggets as their latest menu innovation.

    You get the point. If the BBC hasn’t started production on this year’s April Fool’s Day video, they are welcome to this one. Refinement and embellishment welcomed.

  4. Joan Savage says:

    People have been talking about thorium reactors instead of uranium reactors with the kind of enthusiasm that some have when buying a hybrid and bidding farewell to a gas guzzler. I’m no authority on them, but it might help to know what nuclear technology the UK has in mind. The devil’s in the details, including what Joe Romm already pointed out about price for the big nukes and Bob Costanza about uninsurable risks for those, too.

    • David B. Benson says:

      So far there are no thorium reactors.

      UK is planning to build several PWRs, most likely Areva EPRs. Despite the impressive price tag the units will run reliably for 60+ years and comparisons to older nuclear technology are largely irrelevant.

      Despite noise from the rumor machine, NPPs in the USA are currently insured against a variety of hazards.

  5. Paul Magnus says:

    Nobel economists urge Obama: back EU carbon limits
    http://www.reuters.com
    ‎* EU plan would charge airlines for carbon emissions* Economists urge Obama to drop opposition to plan* Aviation bosses have lobbied against carbon chargeBRUSSELS, March 13 (Reuters) – Top U.S.
    http://www.reuters.com/article/2012/03/13/eu-us-airlines-idUSL5E8EDC6T20120313