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July 24, 2007

Big oil crys uncle

A picture says a thousand words. The US simply has been sucking down more oil than it can produce for many many years and the trend is only up and to the right for demand and down and to the right for supply. Finally the oil industry mouthpiece the National Petroleum Council is starting to "leak" a report it started working on in 2005 which admits the facts that the rest of us know. Oops, there is not enough oil and we have to develop alternatives. Here is part of the leak from the WSJ:

"World oil and gas supplies from conventional sources are unlikely to keep up with rising global demand over the next 25 years, the U.S. petroleum industry says in a draft report of a study commissioned by the government.
In the draft report, oil-industry leaders acknowledge the world will need to develop all the supplemental sources of energy it can -- ranging from biofuels to nuclear power to oil extracted by unconventional means from the oil sands of Canada -- to meet soaring demand. The surge in demand is expected to arise from rapid economic growth in such fast-developing countries as China and India, as well as mounting consumption in the U.S., the world's biggest energy market. 
Tight Times: World oil and natural-gas supplies are unlikely to keep up with rising demand over the next 25 years, the U.S. petroleum industry says in a draft report. 
Needed Alternatives: The world will need supplemental sources like biofuels and nuclear power to meet demand, the report says. 
Price Pressure: The findings suggest high energy prices are likely for decades to come.
The findings suggest that, far from being temporary, high energy prices are likely for decades to come.
"It is a hard truth that the global supply of oil and natural gas from the conventional sources relied upon historically is unlikely to meet projected 50% to 60% growth in demand over the next 25 years," says the draft report, titled "Facing the Hard Truths About Energy."
"In geoeconomic terms, the biggest impact will come from increasing demand for oil and natural gas from developing countries," said the draft report, a copy of which was reviewed by The Wall Street Journal. "This demand may outpace timely development of new supply sources, thereby pressuring prices to rise."
The study, which was requested by U.S. Energy Secretary Samuel Bodman in October 2005, was conducted by the National Petroleum Council, an industry group that advises the secretary.
The conclusions appear to be the first explicit concession by the petroleum industry that it alone can't meet burgeoning global demand for oil, which may rise to as much as 120 million barrels a day by 2030 from about 84 million barrels a day currently, according to some projections. (U.S. gasoline prices are on the rise. See related article1.)
These conclusions follow hard on the heels of a medium-term outlook by the Paris-based International Energy Agency this month, which suggested a supply squeeze will hit by 2012. The fact that the American petroleum industry is warning of a crunch could have an even greater impact on the debate over energy policy."

Uh, DUH!

Posted by Martin at July 24, 2007 9:30 PM

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