There's no shortage of bleak predictions in the oil industry these days. Here's the April 7 version.
Fereidun Fesharaki is the well-known chairman and CEO of Hawaii-based Facts Global Energy. He has been co-chairman for many years of the Middle East Petroleum & Gas Conference, taking place this year in Doha, Qatar. His association with the meeting is strong enough that is has been called "the Fesharaki meeting."
His annual commentary on the state of the market was ominous at this year's MPGC meeting. His major points were:
--The practical peak to global oil production is 95 to 110 million b/d. (Production now is about 86- to 87-million b/d.) He estimated we're about five years short of the limit.
--Oil needs to get to $150/b before demand "chokes" on the high price.
--OPEC's natural rate of decline is at 1.5 million b/d, and to counter that and meet increased demand, the organization's member countries are going to need to add 15 million b/d every five years, an "impossible task."
--Only one country can slice demand enough to allow the rest of the world to grow so global needs can be met: the US. Fesharaki's projection on the amount that the US is going to need to cut is 4- to 5-million b/d, and that's off current consumption of approximately 21 million b/d. In the understatement of the year, Fesharaki said: "This is a huge number."
--Economic recession only puts off this day of reckoning for a few years. It doesn't change his basic formulation: if the US does not reduce its consumption, "there is not enough oil for the rest of the world to grow."
--As for alternative fuels, "there is nothing on the horizon to give us confidence." But he did say "look-alikes," including oil sands and biofuels, can add another 5- to 8-million b/d of supply by 2020 to 2025. Of course, these numbers are already included in the International Energy Agency's estimates of liquids; crude that comes out of the oil sands is counted no differently than crude out of a Nigerian well.
--A move in the US to diesel consumption, although it would increase energy efficiency, would create a diesel crisis. The world already is short diesel; just look at the price compared with gasoline.
--A program of higher taxes, tighter CAFE standards and so on, with a big dose of political bravery, will be needed to accomplish these goals.
--The natural gas/LNG market does not face the same sort of crisis date as oil. Part of that is because there are alternatives to natural gas as a fuel to generate electricity; there aren't alternatives to oil in transportation.
All this doom and gloom is just unreasonable. Some people just like to stir up some drama. I suppose it helps in getting publicity. Going from a Hummer to a Prius, one can almost quadruple MPG. Going from the current Prius to the next version is another double. There may be no alternatives with the scale to replace oil, but on the conservation side there are no limits.
The price of oil can double from here, but if the Honda civic driver (already a fairily fuel-efficient car) switches to a Prius, his or her price per mile has not changed.
Why do these analyst always ignore the obvious solutions. One is the conversion of coal to liquids. They also failed to forsee technological progress and social change. Having lived through the late '70's and early '80's "energy crisis" I have heard all these dire warnings before. According to the media then we should all be living in caves by now! Mike