When Will The World Run Out Of Gas?

When Will the World Run Out Of Gas? By William Cate

When it takes a barrel of oil to produce a barrel of oil, our Civilization will have run out of gas. It's too simplistic to estimate the known oil reserves and divided that figure by annual oil consumption and project that in about thirty years, we'll be out of gas.

In January 1901, the Texas Spindletop Field was brought into production. Initially, this one oil field produced more oil than Russian produces yearly, now. This discovery lead to the end of the Rockefeller Oil Monopoly. It introduced a century of global oil exploration. We have probably found all the cheap oil available to us. American's oil production peaked in 1969. World oil production is expected to peak around 2015. Meanwhile, oil consumption has risen by over fourfold since 1960. It is expected to continue to rise during the next decade. When demand exceeds dwindling supplies, the result is higher prices. It doesn't necessarily mean the end of the gas-guzzler. There are folks willing to pay fifty or one hundred dollars a gallon for gas.

There are no doubt undiscovered oil fields. Odds are these fields are small, deep and far more costly to develop than those of the 20th Century. It's impossible to project how much oil we haven't found. Whatever the amount of undiscovered petroleum, we will no doubt find it in the next thirty years. That oil may add a few weeks or years to our cheap oil needs.

The popular concept of profit oriented oil companies doesn't fit with the facts. The goal of the oil companies seems to be to maximum revenues, not maximum profits. In 1953, the U.S. Postal Service postcard cost one cent. In the same year, a gallon of regular gas in the San Francisco Bay Area cost thirty-four cents a gallon. Today, a USPS postcard costs twenty-four cents. Using the same price move on regular gas, I should be paying about $8.16/gal at the pump. It's evident that gas prices are agreed upon among the oil companies. However, the goal has always been maximum consumption, not maximum profit. It's a policy that will cost us dearly in this Century.

A better measure of the cost of oil, or any energy source, is the amount of energy required to produce it. Economists, geologists and physicists call this quantity the "energy return on investment" or E.R.O.I. As the average E.R.O.I. of an economy's energy sources drops toward 1 to 1, an ever-larger fraction of the economy's wealth must go to finding and producing energy. The energy return on investment for conventional oil, which provides about 40 percent of the world's commercial energy and more than 95 percent of America's transportation energy, has been falling for decades. United States production leads this trend. America is where petroleum resources have been exploited the longest. In the United States, from the early 1970s to today the return on investment of oil and natural gas extraction has fallen from about 25 to 1 to about 15 to 1. It will continue to fall toward 1 to 1 over the next three decades.

Without a doubt, mankind can find ways to push back these constraints on the global energy supply. But we probably can't push them back indefinitely, because our species' capacity to innovate, and to deliver the fruits of that innovation when and where they're needed, isn't infinite and our resources are finite. We will lose the energy race in this Century.

America is the Saudi Arabia of coal. Unfortunately, burning coal currently creates more pollution than using oil. We have built dams everywhere they should have been built and many places where they should never have been built. More dams in unworkable locations won't solve our oil problems. There is nuclear energy, but what do you do with all that radioactive waste? It's a question that Dr. Edward Teller and all those who have followed him haven't answer. At present, solar power is uneconomic. There should be a Manhattan Project to make solar costs and efficiency competitive with the current price of oil. There are only so many windy hills and thus wind-powered energy production is limited. None of these alternatives will meet the world's growing need for cheap oil.

We live in a finite world. Our capacity to consume nonrenewable resources appears to be infinite. The two paths will cross in this Century. The finite world path will be the only one that continues into the 22nd Century.

About the Author

He is the Managing Director of Beowulf Investments [http://home.earthlink.net/~beowulfinvestments/]. He's the Executive Director of the Global Village Investment Club [http://home.earthlink.net/~beowulfinvestments/globalvillageinvestmentclubwelcome/] He's a Venture Capital & Equity Finance Consultant [http://home.earthlink.net/~beowulfinvestments/williamcateventurecapitalampequityfinanceconsultant/]