Entering the Age of Energy Scarcity

When former President George W. Bush indicated in several interviews that “history will be my judge” — referring to the reasons his administration went to war — a disturbing number of people still seem to believe that our invasion of Iraq has something to do with stopping terrorism in the Middle East, instead of “fighting them at home” and spreading freedom and democracy in that region.

If that were true it should’ve been a priority, and relatively easy, to convince our pals, the House of Saud, to give up their monarchy and become a democracy. But because our presence in that region is about protecting “our national interests” (that would be a steady flow of oil, especially from the Kingdom of Saudi Arabia) and ensuring we get our fair share (though that share is larger than any other country receives), having a strategic position in the Middle East is what Bush was driving toward, and is now counting on, as historians review his focus on protecting a dwindling resource vs. an all out effort to find replacements for oil.

One of the sites I follow is called The Oil Drum, a site run by oil geeks who run article after article that are highly detailed and often over my head. That said, it’s one of the few places I can go to understand the incredible complexity of the energy marketplace and read opinions by those in-the-know and gain some insight.

It’s not hard, however, to ascertain one fact from all the prognostications and writings within this site: we’re either just past, now at, or damn close to peak oil production and that by 2020 we’ll begin to see a major dropoff in world oil production.

2020!?! That’s less than 11 years from now and with What happens when demand outstrips supply? If you paid attention in 7th grade you’ll know that prices increase in that scenario, if you can even get some. Take in these points as food for thought and you’ll see why I own a rechargeable lawn mower, drive a Prius, and am targeting 2012 to buy a plugin hybrid electric vehicle (PHEV):

• The United States Energy Information Administration (EIA) published an update in April of this year that starts out with the fact that the USA imports 58% of our oil and that, for example, we produce 10% of the world’s petroleum and consume 24%

• The EIA’s Annual Energy Outlook 2009 — a remarkably benign document that makes it appear that we have all sorts of options for energy and everything will be OK — though it does contain this money quote:

Despite the recent economic downturn, growing demand for energy — particularly in China, India, and other developing countries — and efforts by many countries to limit access to oil resources in their territories that are relatively easy to develop are expected to lead to rising real oil prices over the long term. In the AEO2009 reference case, world oil prices rise to $130 per barrel (real 2007 dollars) in 2030; however, there is significant uncertainty in the projection, and 2030 oil prices range from $50 to $200 per barrel in alternative oil price cases.

• Did you know that according to the most recent numbers (2006) from the US Bureau of Transit Statistics there are 250,851,833 registered passenger vehicles in the US. Out of these roughly 251 million vehicles, 135,399,945 were classified as automobiles, while 99,124,775 were classified as “Other 2 axle, 4 tire vehicles,” presumably SUVs and pick-up trucks. Yet another 6,649,337 were classified as vehicles with 2 axles and 6 tires and 2,169,670 were classified as “Truck, combination.” There were approximately 6,686,147 motorcycles in the US in 2006.

• To give you an idea on how demand for oil is, and will continue to, increase dramatically, just look at how China and India automobile sales are accelerating (no pun intended). According to this BusinessWeek article from August 3rd, “GM auto sales in China soared 78% in July compared with last year, propelling Chinese car sales for General Motors’ mainland joint ventures in the first seven months by nearly 43%, as sales of locally made Buicks and especially 0f low cost minivans under the local Wuling brand. Total sales reached 959,035 vehicles.“

• The overall passenger vehicle market in India is expected to grow from 1.7 million units in 2008 to 2.4 million units by 2013, surpassing the markets in Italy and Spain. By 2012, annual car sales worldwide will increase by about 11 million units per year, with India expected to account for 20 percent of that increase. At that point, India will become the world leader in small-car market growth (from a Booz & Company 6/09 report entitled, “Revving the Growth EngineIndia’s Automotive Industry Is on a Fast Track” (PDF)).

There are several good videos to watch like this documentary, but in the interest of your time and hopefully scaring the beejeezus out of you, here’s a short one to end this post and give you food for thought: