Tuesday, February 28, 2012

Oil Remains King; When it Comes to Energy Production It's A Case of Drill or Be Drilled

Reverend Harper: "Have you ever tried to persuade him that he wasn't Teddy Roosevelt?"
Abby Brewster: "Oh, no."Martha Brewster: "Oh, he's so happy being Teddy Roosevelt."Abby Brewster: "Do you remember, Martha, once, a long time ago, we thought if he'd be George Washington, it might be a change for him, and we suggested it."Martha Brewster "And do you know what happened? He just stayed under his bed for days and wouldn't be anybody."
--"Arsenic and Old Lace"

By Barry Rubin

Here’s what you need to know about the current U.S. debate on energy. Stick with me through some numbers and we’ll arrive at a very important conclusion.

According to the U.S. Energy Information Administration (EIA), the official government agency for such statistics, world energy consumption will rise by 53 percent between 2008 and 2035, mostly (85 percent) due to non-Western use. Petroleum—and this is according to Obama’s “employees,” will only decline from 34 percent in 2008 to 29 percent of the total world energy use over that period.

In other words, over the next almost quarter-century, only 14 percent of current petroleum usage will be replaced by all other fuels, including algae, nuclear, solar, vegetable, and wind.  And because overall consumption is rising, oil consumption will actually rise from 85.7 million barrels a day in 2008 to 111.2 in 2035.

What does this tell us?

Despite all of the vast amounts of money plowed by government decision into alternative energy sources, the transition away from petroleum will take a century and will go very slowly. During our lifetimes, oil production will be increasing.

--Given rising demand, insecurity of supply, and the using up of currently exploited reserves, prices should remain strong. Even if the current Iran war scare evaporates, there will be plenty of crises in the Middle East to maintain that insecurity.

--The advantage of private enterprise is that companies and businesspeople have an incentive to produce innovations and new technology if they can make a profit on it. This system has worked very well in American history.

--That is why “green energy” companies will almost inevitably end in scandal and bankruptcy. The money can line the pockets of the executives favored by the Obama Administration but cannot magically produce successful businesses or make effective technology magically appear, especially within the short time needed to survive economically. Remember ethanol?

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