Thursday, 15 October 2009

One more thing not to worry about

John Mangun
Outside the Box
Business Mirror

As a kid growing up in the 1950s, I guess I was about 6 when it dawned on me that I was going to be part of a special generation that would live to witness a turn of the century. A part of me wondered if I would live long enough to the old age of 50 to see that event happen.

Being a “baby boomer” in the US back then, the world was probably not the best psychological environment for a child. The possibility of a nuclear Armageddon was literally part of everyday life, with bomb-shelter drills as common at school as a fire drill. Of course, living in California, we also had earthquake drills.

But as that little kid grew, I always had year 2000 in the back of my head.

Those times were not easy times to be optimistic about the future. Pollution, pesticides and population were all potential killers of my dream of seeing the 21st century. But with each new disaster that was supposed to happen in the next few years, you finally realized that no matter how persuasive the arguments of doom and gloom were, the world seems to keep moving on just fine.

No matter how bad people told us that it was going to get, the disaster never came.

Ten years ago when the global-warming hoax was invented, my young sons came to me with great concern. Because the data and science supposedly behind global warming was kept secret, the best I could tell them was that I had heard similar dreadful predictions before that had not come to past. I told them to always hold faith that ultimately the world was in God’s hands, serving at His pleasure and will, no matter how hard mortal men try to ruin things rather badly.

Now that last month the famous Al Gore “hockey stick” chart of global warming has been shown to be based on falsified and manipulated data from the famous Yamal tree-ring study, another doomsday scenario has been proven false (See for the facts).

One of the most interesting “end times” economic scenarios revolves around our main energy source, crude oil. No one thought much about oil until the 1973 Middle East oil embargo. Then suddenly people started conserving oil because the higher price had made it truly “black gold.”

In 1956 a geoscientist with Shell named M. King Hubbert came up with the theory that eventually, oil production would peak out and then decline because of oil being a finite resource. Naturally, other “experts” (including Al Gore) jumped on this theory and each had his own year that production would start irreversibly declining to the point where we would all be riding carabaos and using candles. Well, we wouldn’t be using candles since they are made from a crude-oil byproduct also. But you get the point.

During the 1970s, I worked in the oil industry. No, not getting my hands dirty but raising investment funds for oil exploration and drilling. I remember one project off the tip of the peninsula of Baja, California. The geologists assured the investors that everything was right geologically for a major discovery. After a few tens of millions of dollars had been spent, they announced that there was no oil. In spite of “perfect” conditions, they said that a few million years ago, the oil had simply leaked out.

Other industry experts that I came in contact with surprised me with the fact that no one really knew much about oil. That is, no one knows if oil is a finite resource in that all the oil that ever existed is just sitting there under the ground and eventually we will find all of it. This is the “biogenic theory.” Or perhaps oil is produced continuous by some process we know nothing about deep within the earth and is somehow pushed near the surface, the “abiogenic” theory.

Whatever the truth is, 2009 is turning out to be a boom year for discovering new oil. More than 200 new discoveries of oil have been made this year. British Petroleum announced what may be the largest field ever found in the Gulf of Mexico. A potential 2 billion barrels of oil have been found in northern Iraq. Brazil’s recent monster discovery could eventually mean another 100 billion barrels added to world reserves.

Furthermore, newly developed technology to extract natural gas from shale and methane beds will unlock the energy equivalent of 1.2 trillion barrels of oil, a 60-year world supply. The US is using this technology to such an extent that US imports of liquefied natural gas (LNG) from Trinidad and Qatar have almost stopped. Spot prices for some LNG deliveries have dropped to 50 percent of pipeline contracts. From the UK newspaper the Daily Telegraph: “The US energy department expects shale to meet half of US gas demand within 20 years, if not earlier. Projects are cranking up in eastern France and Poland. Exploration is under way in Australia, India and China. Texas A&M University said US methods could increase global gas reserves by nine times to 16,000 TCF [trillion cubic feet].”

As I really did not have to worry as a child about seeing the year 2000, I know now that I am not going to have to worry about getting around on horseback or using whale oil to run my computer. I won’t be around when the world runs out of oil in 50 years.

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