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Investing in the Future
Source: George Wand
Posted: May 18, 2004
"Fuel for Thought"
"Gasoline prices are governed by the law of supply and demand", is the official explanation. Did you ever experience the oil companies supplying more than the market demands, to keep prices level? It must be your and my generosity, and that of motorists and consumers around the world, which is increasing the amount we give for every tank-full of fuel, because it is not the greediness of the oil companies, we are told. They sure have us over a barrel (of oil).
Since the start of the industrial revolution half of the earth's oil supply has been used up. Because fuel consumption has steadily increased during the last century, and will rise even faster when countries like China and India become more industrialized and motorized, it will only be a few more decades before 'the well runs dry'.
Oil experts like Colin Campbell, who spent a lifetime discovering oil for Texaco and Amoco, explains that "it's not a matter of when are we running out of oil, but of when does oil production reach its peak"? He continues: "If you look at the world, minus the Persian Gulf, all the world's smaller oil-producing countries are producing at full capacity. We calculated that they peaked at about the turn of the century. The problem is that when you peak, you don't see the peak. It's only [apparent] when you start to decline."
"Recent statistics tell us that the world consumes 23 billion barrels a year and that is increasing fast. At this rate, we'll run out of 'conventional' oil in about 25 years. By and by we'll be facing increasing cost and escalating scarcity", says Campbell.
There are five Persian Gulf states that will have a stranglehold on the market before long. Their share of world production is now more than one third, but their production won't peak for about a decade. So, when the production is diminishing in the other parts of the world, the Middle East will be able to control the price of oil.
"I would say that's the time that these five countries will effectively control the supply of oil, and thereby the price," Campbell declares. "I think the major oil companies see the picture very clearly. The world has now been so extensively explored, that it's almost inconceivable that a major oil zone remains to be discovered. I would predict a period of great price volatility as the world gradually comes to understand the predicament in which it finds itself," he continued. "When the end comes, the oil industry will fade out, disappear. There will be large amounts of petroleum left in the ground, but the reasons will be economic," Campbell concludes.
A debatable 'safety net' could be Canada's 'oil-sands' in the province of Alberta. The area contains 300 billion barrels of oil, as much as Saudi Arabia has. If all the oil could be extracted from the sand, Canada could satisfy world demand for a decade. But, there is one problem, according to the oil professionals: Once the oil price is high enough for the oil-sands to become profitable, world demand for oil is expected to shrink
The stone-age did not end for lack of stones; humans advanced to a higher level.
Aware of this evolution, oil consuming as well as oil producing nations, even in the middle-east, are preparing for the gradual conversion to the 'hydrogen age'. Schools are preparing children for the upcoming change; Colleges and universities are teaching the skills and knowledge needed in this new age; Companies are creating new products based on hydrogen as a fuel; New industries are coming to life and co-operate with governments for new standards and regulations, and countries are combining forces in preparing for the yet untapped possibilities of the new 'hydrogen economy'.
For some time we have known that new technologies are required to reduce pollution as well as stretch the limited supply of oil. Those technologies are now essential to ease our dependence on petroleum products. Gasoline or Diesel hybrid-electric vehicles will only reduce the need for oil - not end it. They are one step on the path toward the hydrogen age.
At this time, let's envision a motor vehicle that uses the most common element in the universe as its fuel. An automobile that runs almost silently. An engine that produces just one emission, clean drinkable water: the fuel-cell, a sort of battery that runs on hydrogen.
Creative thinkers and practical people around the world are in the process of constructing and testing these devices, which only a few decades ago were literally so 'out of this world' in cost and know-how, that only astronauts and cosmonauts had access to them.
Two things about hydrogen and fuel cells are certain: They will replace petroleum-fuel engines, and they will contribute to a healthier climate around the world, ecologically and economically.
In up-coming pieces we'll explore different milestones on the on-ramp to the hydrogen highway.
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