Posted on 11/25/2007 2:51:23 AM PST by familyop
With world oil prices nearly touching $100 a barrel in the past week, we are living through the third great energy shock of the post-war era. But this time, demand from India and China means that prices are unlikely ever to go down again.
Since 2004, oil prices have risen on a scale similar to that of the first oil shock at the start of the 1970s, and double that of the second oil shock at the end of the 70s.
China's oil consumption has doubled over the past decade and India's has increased by two thirds.
A new Australian study says the problem in the two earlier oil shocks was with supplies of oil. This time, study author Professor Michael Wesley says, the problem is that demand is unlikely to subside.
"The growth in the consumption of oil and oil products by predominantly the United States, China and India is rapidly outstripping the ability of the oil market to supply those amounts and this will inexorably drive up the price of oil," he said.
Professor Wesley predicts that this time, the prices won't drop back.
"The previous two oil shocks in 1973, 74 and in 1979-1980 were supply-side shocks," he said.
"They were generated by the inability or the unwillingness of key suppliers to put adequate supplies of oil onto world markets.
"Now they were stopped and stopped reasonably abruptly when the suppliers simply restored supplies to world markets.
"There are supply-side problems this time, but even if all of those problems are resolved tomorrow, the demand-side pressures will continue to grow and will continue to put upward pressure on oil prices."
He says this time, rising demand in the growing economies of India and China and other countries in Asia means that higher prices will just continue.
"To give you an example, sales of cars in China are rising by 25 per cent, year on year," he said.
"There are expanding middle classes in both countries, in both China and India, and they are demanding lifestyles and modes of transport that are using modern energy.
"By modern energy, I mean both oil and oil products, gas and electricity - all of which are fossil-fuel-produced.
"So there will be an inexorable rise in demand for these products and it will continue to put upward pressure on prices."
Security, war implications
Professor Wesley predicts Asian countries will start factoring energy into their security calculations, but does not see oil wars on the horizon.
"I think the major powers of Asia certainly are starting to factor energy into their calculations, but they have also made the judgment, I think, that this is not something that any one country can do on its own," he said.
"Even if China were to use its military force highly effectively and try and sew up large parts of the oil-producing regions of the world for its own consumption, the energy economy is so intertwined with the broader global economy that the powers of Asia realise that it is best managed via the market and that the oil market and the energy markets will have flow-on effects to other international markets as well.
"So it is simply not possible, or it's simply self-defeating for any one country to try and think that it can solve all of these issues for itself and by itself."
He argues that neither India nor China will give in to economic nationalism and seek to assert themselves: they will rely on the international market instead.
"I think both countries have already ultimately made the judgment that if they act too aggressively on world energy markets it starts to set up countervailing reactions," he said.
"The Chinese in particular are very, very aware of international perceptions of their rise, and they're very worried that if there are international reactions of fear about China's rise and China's aggressiveness on world markets, it could set up countervailing reactions that starts to limit what China can do in the global economy, be it the energy economy or the broader economy."
China's 'perception management'
Professor Wesley says China knows it needs to be subtle in the way it goes about its energy market purchases.
"A good example of that was when one of China's biggest oil companies, CNOOC [China National Offshore Oil Corporation] tried to takeover the US oil giant, Unocal [Union Oil Company of California]," he said.
"In the face of major opposition from the US Congress, it quietly withdrew the offer, and I think perception management was a very big part of that."
He says Asian countries are recognising the importance of energy security alongside national security, military security and economic security.
"The great powers of Asia, the great energy consuming powers of Asia - Japan, China, India - are starting to take a much greater interest in broader diplomacy, particularly into oil-producing regions," he said.
"The upsurge in creative diplomacy from these three countries into the Gulf region, into North Africa, into West Africa, into Latin America, has been noticeable in previous years and it will continue."
Professor Wesley notes that these are regions in which the United States has been the paramount power until now.
"One of the issues that we are going to confront, I think, is how the United States reacts to this: how it reacts to other diplomatic suitors coming into regions of its predominant power," he said.
"When in the course of human events..."
This is why it takes more to buy the same amount of oil.
When a product is a dog it moves from Macy's to the Family Dollar Store where it is heavily discounted.
Look out here comes the Fed again, lowering interest rates, telling the world that the Dollar belongs at the Flea Market.
Two generations of politicians and eco-freaks are responsible for our tight energy supplies. At some point, perhaps when gas reaches $5/gall, when plastics and food prices double, perhaps the people will get rid of the grandstanding blowhards and elect people who put their country first.
In two to three more years there will be plenty of home/building energy products that will be lowering the amount of heating and cooling - this is where 60% of our energy expense is not in cars. The City of Dallas has new commercial building codes that will require better building efficiency.
The end of the stone age did not happen because of a lack of stones.
Oil is a global commodity. The world's population increases annually by 57 million people a year [the equivalent of adding a new Italy every year] and will continue to do so until at least 2050. The growing affluence of countries like China and India will also increase demand. OPEC will have no problem selling its oil for many years to come.
The US imports about 60% of its oil. Yes, growing costs will make other sources of energy more viable, but that is a long term effort that will take generations. The US is the biggest user per capita of energy. Our population will grow another 167 million by 2060, thus increasing our demand for energy significantly. Increased energy costs will also have a negative impact on our economy impacting the costs of goods and services.
“”OPEC is in the process of killing themselves. We should stay out of their way.””
I’m not so sure that OPEC is making a mistake here. They know that it will take most of the western world 30 to 50 years to transition away from oil. Meanwhile they are gaining new customers in the third world (China and India). They also see a movement by countries to tax oil at a higher rate. So, they are doing the right thing for them...they are driving up the price of oil to a level that will make them global finacial leaders...the whole world will be coming to them for financing for ther next 30 or 40 years.
“”There is a huge untapped domestic oil supply.
If the environmentalists were to start freezing in the dark and change their views we would be floating in oil within ten years.
Congress needs to look in the mirror if they want to know why the price of oil keeps rising in the United States.””
You are absolutely correct!!! Because of Congess’s resistance to allow more domestic oil production the uSA is going to slide into a VERY LONG recession that will hurt a lot of people. I wish we could punish the fools in Congress who have been resisting opening up more reserves to drilling, but unfortunately they are going to get a way unpunished.
How will solar panels replace your personal consumption of oil?
No we would not. If we could get ANWR on line in a week we would still be importing millions of barrels of oil each day.
ANWR will never be able to produce enough oil to significantly offset the price of oil.
Don’t forget nuclear. If we’d use nuclear to produce electricity, we’d save a bundle of NG and oil for cars and heat.
I can’t disagree with anything in this article - as far as it goes. Aliphatic hydrocarbons, including all petroleum-based fuels - are remarkably simple compounds. A chain of carbon atoms, (atomic weight 12) either straight or with short branches, with hydrogen atoms (atomic weight 1) attached to each open bonding point on the chain. Each carbon has exactly 4 bonding points, so the general formula looks like:
H-(CH2)n-H
“n” is a number from 1 to 30 or 40 or so, and defines the total length of the carbon chain.
n=1 defines Methane (CH4), the active ingredient of natural gas. A single carbon with 4 hydrogens, it is 25% hydrogen by weight.
N=3 defines Propane (C3H8). Its molecular weight is 44, and it contains 18.2% hydrogen by weight. Propane is produced as a “petroleum liquid” - a byproduct of refining crude oil - and is used almost exclusively as a fuel. It is a gas at ambient temperatures, but easily liquified by moderate pressure - less than 200 PSI.) It boils at -44F, and has a critical pressure of 625 PSI at its critical temperature of 205F.
Liquid propane at 70F has a density of .51, or 4.2 pounds per gallon. Thus a gallon of liquid propane contains 0.765 pounds of hydrogen, at ambient temperature and a pressure of less than 300 PSI.
n=4, 5, 6, or 7 - Butane, hexane, pentane, and heptane - are similar compounds, with properties that are progressively more like gasoline and less like propane. Small amounts of each are commonly included in the mixture sold as gasoline.
n=8 - Octane (C8H18)- is the prototypical gasoline molecule. The pure iso-octane molecule is highly branched - something like the diagram below, if you ignore the underscores and extra dashes, which are there for spacing only. Each carbon has 4 connection points, and at least 1 of those must connect to another carbon.
________H__________H
__H__H-C-H______H-C-H__H
H-C——C —————C——C-H
__H__H-C-H______H-C-H__H
________H__________H
But the formula is still the same, and so is the energy content when it burns in air. Octane is 15.8 percent (18/114) hydrogen, and has a density of 0.703, or 5.625 pounds per gallon, which contains 0.888 pounds of hydrogen! LIQUID hydrogen has a density of 0.071, or 0.568 pounds per gallon - at a temperature of -465F and a pressure of about 180 PSI.
Thus GASOLINE is a cheaper and safer way to store hydrogen than as pure liquid hydrogen, and the same size tank holds more than 56% MORE HYDROGEN than the pure liquid! It certainly does weigh more, by about 5.1 pounds per gallon, but it also contains the combustible carbon, which can be burned in air for additional usable energy.
n=9 or more - these are the heavier, less volatile components, and are present in crude oil in varying amounts. These heavier oils, even in low concentrations, are an important part of diesel fuels, where they provide “lubricity” at the higher compression levels found in diesel engines. Higher compression produces greater efficiency - by as much as 50%.
As a result, I believe that the fuel of the future is almost identical to the fuel of today - middle-weight liquid hydrocarbons. Except for truly exotic applications, such as access to space, pure-hydrogen fuel is a pure boondoggle - a sinecure for scientists to while away a research career that will never produce a worthwhile technological solution.
What will change is the source of these hydrocarbon fuels. Today we find, extract, and refine crude oil, whis already in the form of a hydrocarbon mixture. But it is such a simple molecule that we could synthesize it, from simple raw materials - hydrogen from ocean water and carbon from coal, organic wastes, limestone deposits, or even atmospheric carbon dioxide, like plants do. Plus the key ingredient; large amounts of energy, from any of several sources. These include direct solar energy, collected as electricity, concentrated thermal energy, or even photosynthesis; nuclear, as heat or electricity; and hydroelectric, wind, tidal, and geothermal, collected as electricity.
Such synthesized products would no longer be primary fuels, releasing energy that was present in the original raw materials. They will be energy VECTORS, a method of transferring energy from a primary source to a secondary application. And we will have to pay for that energy content that we have been getting without cost. But we will pay for it, whenever we feel that our need or desire for such convenient and portable energy is worth the cost. Because we certainly can and will develop the means to produce hydrocarbon transportation fuels, because that is the only way we are going to fly in airplanes or drive in private cars.
Take note - a major sector of commercial transportation ALREADY operates almost 100% on hybrid technology, and could be moved to stationary power generation whenever it makes economic sense to do so. Our trains run by electric motors driving the wheels, and some of them get their electricity from trolleys or third rails, although most generate it on board using diesel powered generator sets. Electrifying the tracks would reduce our diesel consumption significantly, shifting it primarily to coal and nuclear electric generation.
The expected production from ANWR (1.5 MMBPD) is larger than most of the changes in quotas OPEC has used to manipulate oil price through most of their history.
NYMEX crude is 98.66 right now, up 0.48
The rest of the article can safely be ignored.
Haven't seen the sun in several days. There is a general yellowish glow to the south and the sun might be there for a couple hours around local noon, but it wouldn't get above the trees. So, even if I put up five acres of solar panels they would be producing zero watts these days.
Yes, I think it’s going to hit over $100 tonight or early in the morning, but we’ll see. I don’t have money in oil and don’t know much about stock markets, but I do pay attention to foreign relations and macro-macro-economic information.
What are some of these new home/building energy products that will lower the cost of home heating? I could use some of those right now.
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