Q and A about crude oil and gas prices

Q: Do you think governments are allowing oil fields to decline? What alternatives are there to the government’s action/inaction.

A: How would the government prevent oil fields from declining? The presence of oil is due to geological processes not political will.

Oil fields are not like tanks that can be easily emptied. They are more like sponges. (Picture using a straw to extract all the water from a sponge!) Extracting oil depends on pressure inside the field forcing the oil out. This works well enough at the start, but as pressure decreases, less oil comes out. Sometimes pressure can be maintained by injecting seawater or carbon dioxide. However, you can never extract all the oil from a field. There always comes a point when more effort is put into extracting the oil than is economically justifiable.

Q: Aren't we discovering more oil fields all the time?

A: Yes, but not enough to keep up with what we're using. Worldwide discovery peaked in 1964. Every year after that, we have discovered less than the year before. Right now we discover 1 barrel of oil for every five barrels of oil we use.

Q: What is per capita oil production and what significance does it have?
A: The amount of oil produced per person. Per capita oil production began declining in the late 1970s. If world population had remained constant, we would now have more oil available per person. But because the world population is rapidly increasing, there is less oil available per person than there was in the 1970s.

Q: The U.S. has 200 years of coal left, so why can't we just replace the oil with coal?

A: If coal were to replace oil then it would last closer to 50 years than 200. Also, while coal can be used for some applications that oil is currently used for, oil is the best fuel for transportation. It would be impractical to power cars with coal.

Oil Production Trend Not Going Up

It is becoming more and more apparent that the era of ever increasing oil production is over. The world is in a now six year period of flat oil production. This failure to increase production occurs at a time when prices are at unprecedented highs. Here we have the clear signature of peak oil setting in ... it would appear that we are now very near the peak. Prognosis: in the near future global oil production will not be able to hold up, and will actually start to decline. This means we will be forced to save on gas whether we want to or not ... so we would be best off to start learning how to save on gas before we absolutely have to. Like the old saying goes, forewarned is forearmed.

Floating on an Ocean of Imports

The US imports a lot of crude oil to keep our vehicle fleet fueled. Currently we are at about 9 million barrels per day. At a price of $80 per barrel, that is costing the nation $720 million each and every day. The Illinois state debt of about $120 billion could be paid off in half a year with what the nation spends on importing oil. Now that says something. Not only do we spend a fortune on foreign oil, but we are so badly in debt that even the fortune we spend on oil is not enough to pay it all back quickly! It is safe to say that we are consuming money and resources well beyond healthy limits.

Trans Alaska Pipeline Pumping Less

The Trans Alaska Pipeline is a 800 mile long tube carrying crude oil from Prudhoe Bay on the north coast of Alaska to Valdez, a seaport on the southern edge of the state. It was constructed to help satiate the overwhelming thirst for gasoline after the oil embargo of the 1970's. It has given us 30 or so years of service delivering petroleum. But now the Alaskan oil fields are in decline, leaving the pipeline with only a trickle to deliver. The chart above, taken from Wikipedia clearly shows the decline in oil output from Alaska. The youngsters of today, who are just now starting to own and drive cars, are experiencing from the beginning higher gas prices. In a decade or two, when Alaskan oil production drops to levels so low the pipeline can no longer be used, they will see a huge 800 mile long empty, rusting pipe and wonder at the waste of energy, effort and materials that went into it. But for the older folks, that pipeline gave us 30 years more of cheaper gas. This growing gap between the older and younger members of our population highlights the fact that we do not use resources for the long term ... our society thinks about what we can get today. One cost of this orientation towards short term profit will be a painful generational divide in society.

The Story of the Alaska Pipeline

The United States built an 800 mile long pipeline to help deliver the oil from Alaska's Prudhoe Bay and North Slope to the Continental 48. Here is the story of how that came to be. Particularly interesting is the segment around the 2:30 mark discussing the attempt to use an icebreaking tanker for carrying oil through the icy Arctic waters. That plan did not work out: the tanker could not manage the ice. Today, with global climate change bringing warming to the Arctic it might soon be possible to navigate tankers through the newly ice free Arctic waters. Ironically, now that it may be possible, there is very little oil to deliver! The Alaskan oil fields are all in decline, having already produced the majority of their petroleum. That petroleum is now in part contributing to the carbon dioxide levels in the atmosphere, helping to ensure even higher future temperatures.

The Story of Petroleum

Here is a great 3 part series of videos that show how the oil business was in the United States about ninety years ago.

Oil Getting Harder To Get

All of the easy to drill oil fields on the planet are either in production or used up and dying. So in the endless search more oil to slake the growing thirst for it, oil companies have been turning to harder and harder to produce oil fields. This difficulty and cost of production means the oil companies must have a high oil price to make a profit. So as we are forced into oil patches that would have been considered worthless decades ago, we will have to pay more and more at the pump. The video below is an excerpt from a National Geographic special detailing the problem.

To get some perspective on the difficulty getting this marginal oil, consider this from the video. Chevron is producing the Kern River oil field by using a technique requiring the injection of steam to liquefy the thick petroleum enough to extract it. The amount of energy they use in the hot steam is enough to power all the air conditioners of the world. That is some tough oil to get!

Checking In On the Strategic Petroleum Reserve

Most US citizens have heard of the Strategic Petroleum Reserve. It is an emergency stockpile of crude oil maintained by the Department of Energy. It was initiated in 1975 as a response to the oil embargo earlier imposed on the United States in response to US involvement in the Yom Kippur war. Other countries also maintain petroleum reserves, for example China and Japan. The idea is that the Strategic Petroleum Reserve could keep the Pentagon war machine running temporarily even during a war in which all imports to the country were cut off. It is not meant to act as an economic buffer, helping to stabilize oil prices (by releasing oil at price highs and buying at price lows). The US Energy Information Administration maintains charts showing how much crude oil is in the reserve. A current chart is shown above. As you can see, there is currently somewhere about 700 million barrels of oil in the reserve.

Synthetic Oil Could Help Your Truck Use Less Gallons Per Hundred Miles

If you have a big, gas hungry truck what can you do to save on gas? Well, one option could be the use of low friction synthetic oils. This video shows a dyno test run with a synthetic oil called Royal Purple. The dyno showed that immediately after replacing the oil with the Royal Purple synthetic the drive train friction was reduced. You might want to try it out too. One thing to keep in mind is that if you are replacing old oil, you could see an improvement without a synthetic. Oil oil is probably going to result in more friction than new oil. So on the dyno, you would really want to empty the old oil, replace it with new oil and then run the numbers. Then replace the oil with the synthetic and see what numbers the dyno posts up. Then you can compare fresh oil to fresh synthetic. The use of a dyno makes this result valuable. Only a dyno can give you a clear number.

Oilwatch Monthly

The Oil Watch Monthly is a publication chock full of data about the state of the world's oil supply and demand. Included above is one of many charts and graphs. This one shows the recent slump in global crude oil production. Anyone who has any interest in the future gas situation would be very interested in reading over the Oil Watch Monthly!

Global Oil Consumption

This video represents the oil consumption of each country with a three dimensional stack or pile above its land surface. This does not show oil consumption per area or per capita, just overall oil consumption. The height is the only thing that has meaning ... do not look at the volume of the colored areas. The thing that immediately stands out is just how high the red tower is over the US territory. A good sign we should be thinking of how to save on gas.

World Map of Peak Oil Production

Many of the oil producing regions of the world are in decline. The moment at which their oil production was greatest was in the past. The video shows a presentation which includes a time sequence showing oil production versus time for the major oil zones of the world. The hollow part of the bar at the top is the amount of production less than the peak production. Looking at the video you can see a lot of bars with hollow space at the top. Not a good sign for the future. Better that we learn to save on gas now before too many more of those bars go hollow.

It's Tough to Get Oil

It is pretty easy to fuel up your car. You just pull into a gas station, grab the pump handle and that is about it. Makes it look easy. But it is not at all easy to get the oil that the gasoline is made of. Oil production involves working in some extreme conditions. And the conditions are getting worse and worse every year as the easy oil is just about all used up. The video below shows an oil rig in a storm in the North Sea. The idea is to try to portray the immense challenges facing us as we extract oil. Hard and getting harder challenges mean one thing is for sure: oil is going to get more and more expensive.

Oil Producers Consume Too

Most countries of the world depend on oil imports to meet their needs. For imports to be available, there must of course be a few exporting countries to supply that demand. And of course those exporting countries have populations that want to use oil in their own cars as well. There is the rub. The handful of oil exporters are experiencing increasing internal consumption as well as stagnant or declining oil production. That means the amount they can export must drop.

Consider for example the case of Saudi Arabia, the world's foremost oil exporter. The following statistics from 2005 show their growth:

Growth in GDP

6.3%

Growth in Oil Consumption

11%

Growth in Population

2.18%

Median Population Age

21.4

Growth in Auto Sales

10%

Trade Surplus

$120 Billion

Clearly Saudi Arabia is a young country and they are flush with cash from selling all their oil. And they want to buy cars and use some of that oil for themselves. As would anybody. The result is clear. A rich country that is increasing auto sales by 10% and internal oil consumption by 11% a year as its young kids seek the modern lifestyle will not be able to keep up its exports. Examples like this make it clear that we can expect permanently higher oil and gasoline prices in the near future. So let's start learning how to save on gas now while the pain level is low!

OIl Producing Countries in Decline

Gas comes from oil, and it looks like very soon the global production of oil will not be able to satisfy the demand for it. This simple idea is known as Peak Oil. The International Energy Agency (IEA) has warned us that the day of supply less than demand is coming. Here is data taken from the IEA Oil Market Report of September 2009 showing the declining output in some oil producing countries.

Oil Producing Countries With Declining Output

Country	Year (Million Barrels per Day)
	1998	2003	2008
Nigeria	2.11	2.15	1.95
Venezuela	3.12	2.36	2.35
United States	8.37	7.83	7.52
Mexico	3.50	3.79	3.16
United Kingdom	2.84	2.28	1.56
Norway	3.14	3.26	2.46
Australia	0.71	0.67	0.56
Indonesia	1.55	1.71	1.03
Argentina	0.90	0.83	0.75
Colombia	0.82	0.55	0.59
Oman	0.90	0.82	0.75
Yemen	0.40	0.45	0.31
Syria	0.57	0.53	0.39
Gabon	0.35	0.25	0.21
Egypt	0.87	0.71	0.65
Totals	30.15	28.19	24.23

Lower production of oil means less gasoline, which in turn means much higher gasoline prices. As each new country sees its production decline it will necessarily go looking for imports. The more importers there are in the market, the higher the oil price. These numbers are good motivation for starting to save on gas now!

Happy 150th, Oil! So Long, and Thanks for Modern Civilization

August. 27, 1859 the first oil well in the world was sunk in Pennsylvania. Over the following 150 years, the energy provided by oil has allowed the development of cars, highways, plastics and and modern agricultural revolution. Now we are facing the end of that era. It looks like global oil production is now at an all time high - a phenomenon known as peak oil. From now on, the total oil produced every day will go down. Whether the decline is fast or slow remains to be seen, but down it will go. This means we will be forced to find a different path for the future. Either we must find new energy sources or learn to use less. In a time of concern over rising carbon dioxide levels we must make sure that any future change in energy sources is not a big CO2 producer.

I think the recently passed 150th birthday of oil is something we should all be aware of. The role that oil and modern fuels play in our lives is enormously important and despite that it is all to easy to not be aware of their impact. Better to at least know by name what you depend on!

What Does Engine Oil Do?

The picture shows that sometimes we need friction so we don't go sliding out of control. One place where we do not want friction is in our engines. Engine oil is there to lubricate the metal surfaces and get rid of friction. In a properly working engine, a thin layer of oil separates all metal parts so that there is no metal-metal contact. Instead we find metal-oil-metal contacts. But reduce friction is not all that oil does.

Oil also helps to cool the engine. There are places where the water cooling system just can't reach, like down in the crankcase. Oil gets in these areas and removes the heat. Another role of oil is to help the piston ring seal the combustion chamber or head off from the crankcase. Oil also scavenges tiny metal particles which are worn off when engine surfaces work against each other. These particles are then removed from the oil by the oil filter. Acids can be formed by chemical processes occurring in the combustion of fuel. All gasoline has at least a small amount of sulfur in it. This sulfur can react with water (brought in with the air) to produce sulfuric acid. The sulfuric acid is dissolved in the oil, which has acid neutralizers in it.