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Oil Problems
Monday, April 21, 2008
Since there are occasional claims that current oil prices are not accurately reporting the market, and indeed it is possible that oil could experience another significant price drop short-term, the following information reminds us about long-term realities. And, yes, there would be more production if politics did not prevent modern technology from being applied to the oil industries in many nations, but those political issues are real and don’t show signs of going away.
In yesterday’s Week in Review section in the New York Times, the lead story, “Barreling Along: The Big Thirst,” included this:
Oil prices rose above $116 a barrel last week…“This is the market signaling there is a problem,” said Jan Stuart, global oil economist at UBS, “that there is a growing difficulty to meet demand with new supplies.” …At a recent energy conference, John Hess, the chief executive office of Hess Corporation, the international oil company, warned that an oil crisis was looming if the world didn’t deal with runaway demand and strained supplies…The number of [motor] vehicles in China rose sevenfold between 1990 and 2006, to 37 million…China…is set to overtake the U.S. by around 2015. China could have as many as 400 million vehicles by 2030…The United States is the only major industrialized nation to see its oil consumption surge since the oil shocks of the 1970s and 1980s…
Among several accompanying graphs, one showed these oil consumption changes since 1980: U.S. +21%; U.K. +2%; Japan +0.2%; France -14%; Germany -20%.
Last week, a Russian oil executive suggested he might not live to see the day when Russian oil production would exceed the 2007 level. A decline in production this year would be Russia’s first in ten years. Russia’s first quarter output this year was down 1% from a year ago. Russia is the world’s second largest oil exporter.
Financial Times today reports that Saudi Arabia’s “most powerful policymakers have said [the nation] has put on hold any plans to further increase long-term production capacity from its vast oil fields.” FT said these statements, including one by the king himself, “will harden the view of those skeptics who argue the kingdom is unable to boost production because of the high decline rates at its fields.”
Theories that Saudi oil production has peaked are not new. MSN Money in 2004 ran an article, “Is Saudi Arabia running out of oil?” There is a huge article, “The Breaking Point,” in the NYT Sunday magazine of August 21, 2005, by Peter Maas.
Near the end of his NYT article, Maas wrote:
The most worrisome part of the crisis ahead revolves around a set of statistics from the Energy Information Administration, which is part of the U.S. Department of Energy. The E.I.A. forecast in 2004 that by 2020 Saudi Arabia would produce 18.2 million barrels of oil a day, and that by 2025 it would produce 22.5 million barrels a day. Those estimates were unusual, though. They were not based on secret information about Saudi capacity, but on the projected needs of energy consumers… [Capon note: Today’s FT article quoted above has this from Saudi Arabia’s energy minister: “We are idling at around 9 million barrels per day and we will reach capacity of 12.5m by 2009…As far as I know, all the latest projections, at least up to 2020, do not require anything higher than that.” The article goes on to say that International Energy Agency forecasts “reach a different conclusion.”]
More from the end of Maas’s article:
It would be unfair to blame the Saudis alone for failing to warn of whatever shortages or catastrophes might lie ahead. In the political and corporate realms of the oil world, there are few incentives to be forthright. Executives of major oil companies have been reluctant to raise alarms; the mere mention of scarce supplies could alienate the governments that hand out lucrative exploration contracts and also send a message to investors that oil companies, though wildly profitable at the moment, have a Malthusian long-term future. Fortunately, that attitude seems to be beginning to change. Chevron’s ‘’easy oil is over” advertising campaign is an indication that even the boosters of an oil-drenched future are not as bullish as they once were.
—Ross Capon
Posted by NARP
Tags: energy, news media, oil,Oil consumption since 1980: U.S. way up; Europe down
Tuesday, May 06, 2008
To quote again from that April 20 New York Times article, “Barreling Along: The Big Thirst” [the following quote picks up at the end of the quote in Ross Capon’s April 21 blog entry]:
The United States is the only major industrialized nation to see its oil consumption surge since the oil shocks of the 1970s and 1980s. This can partly be explained by the fact that the United States has some of the lowest gasoline prices in the world, the least fuel-efficient cars on the roads, the lowest energy taxes, and the longest daily commutes of any industrialized nation. The result: about a quarter of the world’s oil goes to the United States every day, and of that, more than half goes to its cars and trucks.
An accompanying graphic showed the following changes in oil consumption from 1980 to 2007: Denmark -33%; Sweden -32%; Germany -20%; Switzerland -18%; France and Finland -14%; Italy -13%; Japan +0.2%; U.K. +2%; United States +21%.
Last night, Stephen Colbert addressed the various proposals for a summer holiday on the federal gas tax (see last week’s Hotline) through The Wørd, “proposing” free gas for everyone:
Colbert remarks:
I’m sure you’re asking, folks, “How will we pay for unlimited free gas?” Well, the answer is simple: I don’t care! Besides, have you forgotten about a little thing called ‘our grandkids’? Because they are very generous, even though they don’t know it yet. They can be the generation that walks to work or uses public transportation! They’ll have to, because without a gas tax to pay for infrastructure, there won’t be any roads.
—Matthew Melzer
Posted by NARP
Tags: energy, news media, oil, the colbert report,Barron’s and Kiplinger’s Acknowledge Passenger Trains
Friday, August 08, 2008
Two periodicals have train-related stories of interest. In the weekly Barron’s (cover date August 4, but will soon be off news stands), the cover story is “ALL ABOARD! With gas prices high, traffic gnarly and imports buoyant, railroads look like terrific long-term investments. Just ask Warren Buffett. Why we like Bombardier, Burlington Northern and Canadian National” (“Ticket to Riches” in the online version).
Text does acknowledge Amtrak’s ridership (“up 12%”) and says “Wabtec, a brake manufacturer, is the only U.S.-traded play on passenger travel.”
Also, as noted in our September newsletter, the September issue of Kiplinger’s Personal Finance magazine (now on news stands) sports a letter from editor (and NARP member) Fred W. Frailey which discusses the decline of air travel and the need for passenger trains. Publisher Knight Kiplinger (editor in chief of this and two other publications) also has a column with good comments on the U.S. and its use of energy.
—Ross Capon
Posted by NARP
Tags: amtrak, energy, news media,Star-Telegram Op-Ed: Trains are the ideal stimulus
Wednesday, November 26, 2008
In a brilliant op-ed piece Monday in the Fort Worth Star-Telegram, Spending on rail would be a wise move, Andrew Warren makes the strong case that investments in commuter train systems represent an ideal form of economic stimulus, one that “generates multiple short-term and long-range benefits.” He hits on the necessarily domestically-sourced labor that would be put to work in a wide range of professions designing, building, and operating the systems, the environmental and energy efficiency benefits of trains, and the superior land use effects versus highway construction. He ends the column with this fine point on what’s worth our taxpayer money:
We could give tax breaks or refunds to be spent on Chinese shoes, Thai clothes and Korean TVs. Or we can invest in a better, cleaner, more secure future and create American jobs at the same time. Washington should fund this national security program that stimulates our economy and protects our environment.
This is essential reading as Congress and President-Elect Obama consider the optimal, most efficient uses of public funds in an economic stimulus package.
—Matthew Melzer
Posted by NARP
Tags: commuter rail, congress, economic stimulus, energy, environment, land use, president,Lessons from GM’s Bankruptcy on the Consequences of a Fly-Drive Transportation System
Thursday, June 04, 2009
For decades, NARP has argued that America’s “fly-drive” system, that is, a transportation system over-reliant on highways and aviation and neglecting trains, was bad policy. We focused heavily on the importance of giving citizens more choices, on environmental impact and—as the opportunity opened—on energy supply issues. We also argued that highways and aviation enjoyed significant public subsidies even as many politicians kept telling themselves and the public that such subsidies did not exist, mistakenly believing that user-funded trust funds completely supported those systems. The fly-drive mentality also contributed to the nation’s overall economic problems, to the extent that the housing bubble encouraged construction and purchase of exurban homes in pedestrian-unfriendly surroundings—actions that would not have taken place if people had known where the price of oil was headed. Finally, we said one of the biggest subsidies in transportation was from airline shareholders to passengers enjoying cheap, non-compensatory fares.
Now, the stories of General Motors and Chrysler have made clear fly-drive’s financial unsustainability. Government subsidies and loans to GM and Chrysler now total over $50 billion, including loans which GM and Chrysler may not repay, and the forms government aid has taken have been varied.
Even today, some still say NARP should apologize for the fact that Amtrak requires government funding. Would airlines be profitable if governments did not maintain airports and air-traffic-control systems? Would bus companies be profitable and driving be affordable if government did not maintain the roads? Would the making of the very vehicles that carry the bulk of American travelers have been profitable without repeated help from Uncle Sam? The transportation system upon which our economy is built requires public funding and is one of the best investments we make as a society. The impact of these investments would be maximized if we had a proper balance between the modes to achieve the most efficient outcomes.
The billions that the government is ready to spend to bail out bankrupt GM are only the latest in a series of large public subsidies to automakers. GM has already received $13.4 billion in taxpayer funds, with Chrysler getting another $4 billion, and both companies’ suppliers got a total of $5 billion. The government guarantees manufacturers’ warranties for GM & Chrysler cars, and the Recovery Act provided a tax credit of $49,500 to consumers who purchase new autos. Furthermore, the climate change bill recently passed by the House Energy & Commerce Committee includes a “cash for clunkers” program, which offers tax credits encouraging drivers to trade in existing cars for more fuel-efficient models. This latter program—which, though sold as promoting energy efficiency, does not take into account the energy costs associated with prematurely scrapping useful cars—has been described as a subsidy to manufacturers, their workers and car buyers.
Some incentives for the production and consumption of more fuel-efficient vehicles are necessary to address our energy problems as long as most Americans continue to live in communities planned in such a way as to make driving a virtual necessity. It is also important for the government to help struggling communities that are dependent on auto manufacturing to get back on their feet. But we need strong efforts to minimize the worsening consequences of increased congestion and urban sprawl. More attention should be paid to the goals set forth in S. 1036, the Federal Surface Transportation Policy and Planning Act of 2009—increased use of freight and passenger trains and mass transit and reduced, and reductions in national per capita motor vehicle miles traveled on an annual basis, in national motor vehicle-related fatalities (50 percent by 2030), in national surface transportation-generated carbon dioxide levels (40 percent by 2030) and in national surface transportation delays per capita.
We need a stronger focus on investing in the infrastructure that support those goals and would give Americans more travel choices. Many forward-thinking commentators have envisioned Midwestern factories retooled to produce wind turbines and solar panels. To that list we should add locomotives, railcars, light-rail vehicles, streetcars, subways, and other rail infrastructure. Surely federal investments to correct transportation priorities are at least as worthy as efforts to maintain specific automobile companies. The “priority-correction efforts” would support more quickly achieving President Obama’s vision of an enhanced role for trains in our mobility network. Such spending would yield dividends for years to come, perpetually benefiting people, our economy, and the environment.
—Ross B. Capon and Malcolm Kenton
Posted by NARP
Tags: auto industry, bankruptcy, chrysler, congress, detroit, energy, gm, highways, mobility, oil, transportation,Flag Stops: Foresight and Oversight
Monday, August 10, 2009
Our slightly-delayed news and views roundup shows that going green does save green, that oil production may peak sooner than expected, and that LaHood’s thinking is still on the right track.
—Malcolm Kenton
Posted by Malcolm Kenton
Tags: alternatives, carbon, china, climate change, economics, energy, high-speed rail, peak oil, petroleum, roundup, trains, travel,Flag Stops: Informed Decisionmaking (Or Lack Thereof)
Friday, January 15, 2010
Many reasons cited for car ownership drop, a way to show that conventional intercity trains actually do make money, Schwarzenegger’s missteps, and more.
—Malcolm Kenton
Posted by Malcolm Kenton
Tags: amtrak, automobiles, budget, california, car ownership, cars, congestion, energy, financial, green, passenger train, profitability, recession, traffic, train,Young Train Supporters Make Waves in Montana
Monday, May 17, 2010
Demonstrated support from those who would benefit from a government action is an essential ingredient in any advocacy campaign. In the case of our campaign—along with other like-minded organizations—to expand the national passenger train network, we can all learn from the example being set by students at the University of Montana in Missoula, who have held many rallies and have otherwise vociferously pushed for the reinstatement of Amtrak’s North Coast Hiawatha. This train plied the then-Northern Pacific (now BNSF) main line through southern Montana and North Dakota until 1979, as a complement to the Empire Builder, with stops at Helena, Bozeman, Missoula and other locales. Under Congressional mandate, Amtrak studied [PDF] the impact its revival would have on ridership, revenue and costs.
The students—with the assistance of the student government and the Montana Public Interest Research Group (MontPIRG)—held a well-attended rally in mid-March that was covered by the local CBS affiliate TV station:
They have gathered signatures on a petition to state and federal leaders to find the funding to bring the train back as quickly as possible. The cause has already won the support of both Montana Senators, particularly Sen. Jon Tester (D), and of the state’s at-large Congressman, Denny Rehberg (R), who appeared at NARP’s Capitol Hill Reception in late April. During meetings with NARP Council members, staff members for North Dakota’s Congressional delegation also expressed support for the route. NARP is working with their offices to make sure that funding for the route is included in the fiscal 2011 spending bill.
Not only is the student activism an effective example for other Route Support Teams to follow, it is also shows how young people are shaping our future for the better—by working for more convenient, affordable, enjoyable and sustainable transportation choices—thereby leaving America better prepared to meet our 21st-century energy, environmental and mobility challenges.
—Malcolm Kenton
Posted by Malcolm Kenton
Tags: amtrak, energy, environment, media, missoula, montana, north coast hiawatha, restoration, students, television, trains, university, young people,Misdirected Priorities
Tuesday, July 06, 2010
The New York Times reminds us of the extent to which oil extraction is one of America’s most heavily-subsidized activities. Imagine how much the quality of our lives and our environment would improve if these perverse subsidies were eliminated and part of the savings redirected to investments in an expanded network of modern passenger trains.
—Malcolm Kenton
Posted by Malcolm Kenton
Tags: deepwater horizon, energy, environment, oil subsidies, petroleum, priorities, transportation,©2010 National Association of Railroad Passengers | » NARP website
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