Cheap Oil Is History

(From the Gloom and Doom Department)

Here are some facts that you can base your future plans upon: (None of which you will hear from any presidential candidate)

American oil consumption is at its highest yearly rate ever, and there is no end in sight. Its not just cars. 70% of our electrical production comes from burning oil.

China, India and Indonesia are entering the market as major oil consumers.

China’s oil consumption rose by 26%. Its main oilfield, Daqing, is in decline.

Russia’s oil minister has claimed that its major producer, Yukos output will fall in 2005.

Saudi Arabia oil reserves are now half of what they claim to have underground.

British North Sea oil production has peaked and is declining faster than expected.

Expect continued Iraqi pipeline attacks.

Expect continual Nigerian oil strikes.

Venezuela, the fifth largest oil producer, may soon be cutting all its oil production.

Major oil fields are withering everywhere.

Supplier countries are already pumping at their production limits.

No major oil fields have been discovered for two years, despite increased technical innovation.

“It could be that the long awaited peak in oil production is either here or about to arrive. We are seeing that no one has the capacity to increase production. Once you are producing flat-out as the market is today, there is nothing you can do about disruptions.” – Dr. Colin Campbell, former Vice President of the oil company Trend.

The outlook?

Expect in the next five years:
$100 a barrel for oil.
$10 a gallon for gas.
Major oil shortages far greater than the 70’s.
Much higher electric utility bills.

You should probably expect a major recession in the next five years too.

Better sell that RV and SUV. Better buy a Prius, or begin walking everywhere.

What about Hydrogen powered cars? Expect them in ten to twenty years. Remember, currently it takes a lot of oil, burned in electrical generating plants, to convert that Hydrogen so that it can be used as fuel in those advanced hydrogen powered economy cars.

Why would oil affect anything else in the economy? A ton of wheat takes ten barrels of oil to produce. When a trucker has to pay a thousand dollars to fill his big rig with a hundred gallons of gas, who do you think will have to pay more for what he is carrying? Everything is connected to oil. Most of our oil comes from foreign sources.

There are uncounted billions of barrels of oil up in Canada, but it is all bound in rock shale. It would take a decade or more to begin to get to it.

A far better thing for all of us to do is to figure out how to live with less of it. That, and try to prepare for a great increase in the cost of about everything we consume.

(Note: People who practice critical thought concerning debt and survival of recession and inflation recommend that you pay off all your credit debt as soon as possible, and all your other debt, such as a home, expeditiously. Then you will probably have enough to live on in any economy.)

Regards,
Roger Born
Sorry, no refunds.