3 Cats Stalking

Life in an Exporting Nation

Comments on my previous post, Could things be worse than what we doomers thought?, expressed the opinion that exporting countries probably would not dry up within the decade, and that they would find a way to continue to import the luxury goods they could not produce themselves. Tom R pointed out that it might be riskier being a producer, what with the threats to their markets. Kevin wonders if there will be a "peak oil income" in those producer nations.

I had addressed the problem from a USA-centric point of view, for as one, two, or four of our major suppliers begin to fail in their "duty" to provide us with what we need, we may "suddenly" find ourselves coming up short on meeting our energy demand. The key element is the "suddenly," for so many of the authorities like CERA and NPC and EIA and IEA and EM have been espousing the opinion that we have lots of time before any of this becomes a problem. My son says technology and the market will lead us out of this tight spot, but I worry it may not happen soon enough, especially if the time remaining is even less than I had supposed before reading Jeffrey Brown's hypothesis. And the numbers I see indicate this shortage could happen as soon as five years from now, when the exporters reach the 50% level. I follow Murphy's laws, including "if it is going to happen, it will happen at the worst possible time."

But let's talk about the exporter-centric point of view.  Most of the exporting nations have little other resources than petroleum. Russia and Venezuela have some water, farmland, and other resources, but the Middle East producers have desert lands and exploding populations. Iran has been subsidizing their citizens with fuel to keep them happy, but they must import almost all their gasoline and food. I see the time when they cannot find enough energy to keep their populace happy, and then it will turn very ugly. Kevin is right to offer his sympathies. Only if the regime suppresses the population  will they be able to squeeze "more blood out of the turnip," aka oil out of the production grid, and send it to the USA.

One more thing. What do we have that the producers will want? Dollars? I don't think so, in fact, some are already saying no more dollars. We have food grains, and maybe some manufactured goods and technology, but we should be looking for some better product mix to trade for our energy supplies from abroad.

Whatever happens, it is going to be an interesting world, and I now expect it will start to happen during my lifetime, rather than after I have died and gone away. That is a sobering thought for a great-grandfather.

Sam Penny
the Prudent RVer

Could things be worse than what we doomers thought?

I started counting myself among the "doomers" about nine months ago as I read more and more about peak oil. I judged the chances of a peak oil economic crash to be 100%, maybe in my lifetime. I am 70 and retired, so to be in my lifetime means major problems might develop within about ten years.

Then my latest readings exposed a situation that could make things worse.

Jeffrey J. Brown's post entitled Net Oil Exports and the "Iron Triangle" on The Oil Drum makes reference to ELM, the Export Land Model. This concept, introduced a year and a half ago, is that the populace of the oil and gas producing countries will use more and more of their country's production, even as production peaks and then falls. The effect is that the production available for export to other countries can go to zero after a few years, even though the country is still producing oil.

Jeff made an interesting point in a recent email. The US reached the point where it ceased to be an oil exporter in 1950, twenty years before its production peaked in 1970. So this effect has happened before.

Then there was the news report last fall that Iran, location of the second largest reserves of oil in the world, would cease to be an exporter of oil within 10 years. The Iranian government has been subsidizing the price of fuel for its citizens for years, and as a result, the internal usage has grown exponentially over time. In 10 years they are expected to be using everything they can pump out of the ground.

Mexico is nearing the point where their exports will fall to zero as the Cantarell field is depleted and lesser fields cannot make up the difference. The US will feel that point as a major supplier goes away.

Argentina is nearing a state of collapse as its energy crisis deepens after years of 8% growth fed by subsidized fuels. They are begging fuel from Brazil and have cut off gas exports to Chili. Russia is on a splurge of buying new, big cars. The sheikdoms of the Middle East are using more and more of the oil they pump for extravagant lifestyles.

National oil companies control 90% of the world's reserves. Each country has citizens who want a growing share of the production pie, and each is faced with an export rate falling faster than their production rate is falling.

The US is among the group of countries who must import oil. But too many of us doomers have looked at the world oil production curve and assumed there would be a peak soon, but oil would flow for decades. Yes, there would be less, but there would be some.

But consider what happens if the countries with the oil use all they produce? Then there is nothing to export. Then the US does not have less over time; it has nothing to import. In that case, we must live entirely on what we can produce ourselves, whether it be homeland oil and gas, coal, biofuels, wind, solar, fission, or whatever. And how soon might this happen? Early indications (like Mexico) are we could be seeing the effects in less than five years.

When you add up what we can produce here in the US, it comes to much less than what we are using now. Something has to give, and give sooner than later. Yes, things are worse than some of us doomers had assumed.

Sam Penny
the Prudent RVer