The Long Crisis

Humans are a peculiar breed. Ignoring all of the copious evidence of the worldwide demand for crude oil being closely balanced or in excess of supply, even in a period of recession, the denial of peak oil abounds. The entire theory of peak oil remains viewed by many otherwise intelligent people as some sort of hoax. Events in the oil market are about to prove them incorrect.

Perhaps part of the matter with the state of denial is that the peak oil explanation is not well understood or not understood the least bit by the masses. There are those who accept as true that peak oil means that oil will soon not be available at any price. And since crude oil is still available and oil fields are still being developed worldwide there is no danger of running out of oil so peak oil is only a theory that can be disregarded for the following 50 to 100 years.

Those individuals fail to understand that peak oil means the all of the low hanging fruit of new oil fields has already been discovered. In the future oil will be much more challenging and costly to produce from deep water fields and oil fields located in remote regions around the globe with no or inadequate infrastructure in place.

Future oil fields will need another shrinking resource, large amounts of funds, to develop the fields and to bring the oil to market. They are going to also require extensive use of high tech extraction and complicated transport systems to bring the oil out of the earth and to transport it to refineries. Despite the fact that oil will likely be available fo quite a long time to come it is going to be very costly to create new sources and the oil is going to be enormously high priced.

It’s difficult personally to comprehend why people can’t or refuse to recognize the fact that in a finite world resources, even crude oil resources, will eventually be exhausted. The same people have no difficulty comprehending that with a sugar bowl if you continue to take scoops out without replacing the contents from time to time eventually the bowl becomes empty. Yet, the same people are in denial about the finite aspect of oil. They seem to think that a resource that took millions of years to form in infinite amounts will always be in abundant supply despite the fact that we are drawing down at a high rate an impossible to replace resource.

One time bomb that is speedily ticking away that will forcefully get the peak oil idea across is the sharp decline in the rate of production of Mexico’s Cantarell oil field. Mexico is the third largest supplier of oil to the United States. Within two years it is highly likely that Mexico will not be able to export ANY oil to the US market. Whatever oil they produce will be needed for the Mexican domestic market. That event may well be the trigger for a panic in the oil market.

Even those who deny peak oil will have to change their position as the price skyrockets to $200 a barrel and beyond. That day is probably not so far away.

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