With gasoline prices at $3.68/gallon it seems hard to believe that they could ever go back down. It seems that our only hope is alternative fuels, or is it?
A few weeks ago news broke about huge oil reserves that were found off the coast of Brazil. Additonal research as to their size has led to some interesting conclusions. Here are a few excerpts from a fascinating article found on Bloomberg.com:
By Joe Carroll
April 24 (Bloomberg) -- Brazil's discoveries of what may be two of the world's three biggest oil finds in the past 30 years could help end the Western Hemisphere's reliance on Middle East crude, Strategic Forecasting Inc. said. Saudi Arabia's influence as the biggest oil exporter would wane if the fields are as big as advertised, and China and India would become dominant buyers of Persian Gulf oil, said Peter Zeihan, vice president of analysis at Strategic Forecasting in Austin, Texas.
Commenting on two particularly large oil fields the author says...
Tupi and Carioca
Brazil's state-controlled Petroleo Brasileiro SA in November said the offshore Tupi field may hold 8 billion barrels of recoverable crude. Among discoveries in the past 30 years, only the 15-billion-barrel Kashagan field in Kazakhstan is larger.
Haroldo Lima, director of the country's oil agency, last week said another subsea field, Carioca, may have 33 billion barrels of oil. That would be the third biggest field in history, behind only the Ghawar field in Saudi Arabia and Burgan in Kuwait.
The article ends with this comment:
More discoveries will follow in Brazil's offshore basins, most of which have yet to be opened to exploration, Zeihan said. Repsol YPF SA, Exxon Mobil Corp. and Devon Energy Corp. are among the producers scouring Brazil's waters for reserves.
``The finds they've got so far are just the tip of the iceberg,'' Zeihan said. ``Brazil is going to change the balance of the global oil markets, and Petrobras will become a geopolitical supermajor.''
With oil at $120/barrel investors will be lining up to tap into these offshore fields. No doubt Brazil has an interest in seeing these fields developed too. While it will still take years for this oil to reach the marketplace it seems obvious that we won't be running out of it anytime soon. Read the rest here:
Bloomberg.com: Latin America
4 comments:
Higher oil prices means more oil will be recovered. So will that drive prices back down to where they were? Maybe not.
Demand for energy grows constantly, and it is accelerating as more of the "developing" world develops. Demand is probably increasing more than supply.
Energy conservation never works because of the iron law of supply and demand. When people conserve energy, demand for it drops, thus lowering the price, thus encouraging more consumption, which increases demand, thus raising the price, .... Why does this remain a mystery to so many people?
Ethanol is a joke, basically taking more energy to produce than it creates (and driving up food prices in the meantime). Wind and solar are drops in the bucket. Electric cars have to be plugged into ... electrical outlets, generally powered by coal- or gas-burning plants.
The most abundant "alternative" fuels are nuclear. While severe political roadblocks hamstring that energy source, expect high fuel prices.
Energy has been cheap because demand has been low. Demand is really what is changing.
Sorry to hijack your blog!
Joe
I'm not an economist so its good having someone with your viewpoint come alongside and help me with blindspots.
Conventional wisdom for the last 30years has said that we are running out of oil so we must develop alternative fuels. Large finds like this show a different perspective.
Perhaps because we haven't yet changed from an oil based economy environmentalists have also changed tactics -- instead of saying 'we're running out of oil' now they say 'we shouldn't burn oil because of global warming.' As yet I just don't see that mankind is causing global warming. I agree with you that ethanol is impractical for a number of reasons.
I wish that we could muster the political will to drill our own oil in all of those places that are deemed off-limits (ANWAR, off California & Florida, etc.). I also wish that we could build the refineries necessary to refine that oil. Our economy and nation would be better off. I just don't see a viable alternative to gasoline powered cars coming along anytime soon (though I enjoyed the Prius hybrid we rented last week. We got close to 50 MPG).
A great new book called "Gusher of Lies" makes some of the same points that you do. We need to recover, and refine, the oil we know we've got.
Among other things, the book argues that fossil-fuel avoidance is a fantasy at present. Consider this stunning fact: Every single year China adds to its electrical grid the equivalent of the entire electrical consumption of FRANCE! And virtually all of that new Chinese power comes from burning coal.
Discovered, but unrecovered, reserves are huge. The Canadian tar sands are just one example. But recovering that oil isn't profitable at lower oil prices.
Global warming controls have extremely strong support because the whole Left finally realizes that whatever they have always wanted to do -- raise taxes, control industry, build public transit, ban cars, control suburban growth, etc. -- can now be done in the name of saving the planet from imminent apocalypse! Their entire political agenda now has urgent moral authority! Brilliant!
Joe
Brazil is either very smart or very lucky to have found this oil now. And While I look at the oil crisis as a double edged sword, good because its forcing us to conserve and innovate new technologies but bad because these high prices are really ravaging people with low incomes, I think that America should be drilling for oil off our coasts. While it will be an eye sore and probably not too great for the ocean it might be able to alleviate some of the pain until we find the alternative energies we can use safely, cleanly, cheaply, and cost efficiently. This article I read, called Brazilian Oil Discovery — New Offshore Drilling Needed In U.S., gives some great reasons for why it would be a good idea to at least scout out our coasts to know if we have oil to drill just in cast oil prices really get out of control. Plus I would imagine its much cleaner than coal to liquid conversion I’ve been reading a lot about lately. And while I would hope this could end dependence on the middle east for oil, I really don’t see that happening cause don’t we get our oil from multiple places?
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