Economides on Geopolitics and Oil's Future
By Vladimir Posted in alternative energy | Energy | Peak Oil — Comments (1) / Email this page » / Leave a comment »
Dr. Michael Economides, Professor of Chemical and Biomolecular Engineering at the University of Houston, and consultant to the likes of CNOOC, is no shrinking violet when it comes to his opinions about energy supply, global warming, and alternative fuels.
As I noted elsewhere, I saw his talk yesterday morning at the annual meeting of the Louisiana Oil and Gas Association. I thought you might getting a sampling of his comments.
Economides is no "peak oiler", but neither does he think that $30 oil is coming back anytime soon.
“What is the price at which people will walk away from the pump?” he asked.
“My answer is $7.50. We are not even close to that.”
[snip]
As for culprits [for high oil prices], Economides points readily to global consumption, with China’s energy demand representing “the single most important geopolitical pressure point for the next three decades.” In his estimation, world politics already exacts about a $45 premium on the price of a barrel of oil, and that influence shows no signs of waning.
[snip]
Outgoing Russian President Vladimir Putin has “re-Sovietized” that nation’s oil industry, creating a state of energy imperialism and a blatantly corrupt government, Economides said. Russia won’t be able to supply all the energy it has guaranteed to China and Europe, and the result could be Europeans paying natural gas prices of $20 per million BTUs, more than twice the current U.S. price.
[snip]
Economides didn’t spare a fellow Democrat, Al Gore, for spreading what he called the “hoax” of global warming. And he blasted a Newsweek magazine story on the subject as “the vilest, most venomous piece of journalism” in U.S. history.
Oil companies, however, like the rhetoric of global warming, because it gives them a cachet of consumer responsibility when they embrace it, said Economides.
[snip]
In reality, Economides said, hydrocarbon-based fuel is here to stay for decades, and alternative fuels can’t be produced sufficiently to keep pace with world energy demand. Solar and wind energy won’t account for more than one-half of 1 percent of that demand in a world where the only energy access 2 billion people have is wood, charcoal and cow dung, he said.
[snip]Politicians notwithstanding, the prospect of the United States ever achieving energy independence is a myth, he said, with the country importing more oil by 2010 than is consumed annually by the nation’s entire transportation sector.
One Band-Aid — allowing drilling in the Arctic National Wildlife Refuge in Alaska — might lower the price of oil by $25 to $35 a barrel, but a headline on the order of “Israel attacks Iraq” could produce $150 oil overnight, he said.
Hey, I'm just the messenger.
I remember running the numbers on ANWR a couple years back. Once it's up and running at full capacity (which would take several years), ANWR would increase U.S. production by maximum 1,000,000 b/d. To put that in perspective total non-OPEC production for 2006 was 51,000,000 b/d and OPEC kicked in another 29,000,000 b/d. (However, I just read some more recent figures from utah.gov that are less optomistic.)
So in terms of its effect on prices, I highly doubt that a 1.3% increase in global production (by 2006 measures) would lower prices by $25-$35 dollars, especially when global demand is now increasing by the same percentage.
Also, Economides doesn't appear to be keeping up with the changes in technology that effect the oil industry. Here's just one example of our military charting a post-petroleum future:
"Austere, intolerant, well-armed, and blood-thirsty, in their own regions the Wahhabis are a distinct factor which must be taken into account" - Winston Churchill, 1921