Mar 10, 2014
A Tough-Oil World
Posted on Mar 14, 2012
By Michael T. Klare, TomDispatch
This piece originally appeared at TomDispatch.
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.
In the oil business, this reality was first acknowledged by the chairman and CEO of Chevron, David O’Reilly, in a 2005 letter published in many American newspapers. “One thing is clear,” he wrote, “the era of easy oil is over.” Not only were many existing oil fields in decline, he noted, but “new energy discoveries are mainly occurring in places where resources are difficult to extract, physically, economically, and even politically.”
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% 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.
1 2 3 4 NEXT PAGE >>>
Previous item: Russia Expects More From Putin
New and Improved Comments