I’d like to apologize up front for all the numbers that follow, for two reasons. One, because I try to keep these commentaries are more entertaining than a math problem and two, because the message they carry is so depressing.
The numbers are from an article in the 21 Aug edition of Oil and Gas Journal, an oil industry trade magazine. The piece was written by Kjell Alekett, a professor of physics at Uppsala University in Sweden. Ready? Here we go:
In 2005, oil-exporting nations shipped, on average, 48 million barrels of oil every day. The biggest single importer was the U.S., which claimed 29 percent of the oil; Japan claimed 11 percent and China, seven percent. (These countries represent five, two and 21 percent of the world’s population, respectively.)
As a nation’s economy grows, its oil consumption grows with it. Oil consumption in the U.S and Japan (like other industrialized countries) has been growing at about one and a half percent a year, but in China, for period 2000-2005, oil consumption grew by eight and a half percent per year. Those numbers look dull on the screen, but both economists and oil industry professionals are struck dumb by the rate of growth in China’s oil consumption.
By 2030 – just 24 years away – Mr. Alekett predicts the U.S. and Chinese markets will each be demanding seven millions gallons per day more than they are currently. If all that additional oil can be found (more on that below); China will have no trouble paying for it. The Chinese will use some of the billions of U.S. dollars it is sitting on, thanks to the huge imbalance of trade China has with the U.S. Corporations and government in the U.S., on the other hand, will probably have to borrow additional billions of dollars to pay for the extra seven million barrels of oil American consumers will demand each day.
There’s an “if” in the paragraph above. Mr. Alekett says that while U.S. and Chinese demand will soar by 2030, the rest of the world will also be steadily increasing its use of black gold. Meanwhile, production from known oil reserves will be diminishing and few substantial new reserves are being found. By 2030, he estimates that worldwide demand will exceed production by 30 million barrels per day. (Thirty millions barrels per day, by the way, is what the U.S. is expected to consume in 2030.)
Well, 2030 is a long way off, as far into the future as 1982 is in the past. (Hmmm, maybe it’s not that far after all.) Of course, life will not continue as it has until one morning in 2030 when we wake up and find ourselves short 30 million barrels of oil. In between, there will be more wars, around the Persian Gulf and central Asia, as China seeks overland routes for oil pipelines the U.S. Navy won’t be able to block.
There will be economic upsets and dislocation, like the situation last January when Russia cut off natural gas to Ukraine (and therefore, to Western Europe). Russia, after Saudi Arabia, is the leading oil exporter in the world. The deputy of Russia’s central bank, who had a reputation for fighting shady deals, was gunned down in the streets of Moscow yesterday. Expect more of that.
Again, I apologize for the all the numbers and for the gloomy outlook. I also apologize if I seem to frequently harp on this issue, but when I read articles like Mr. Alekett’s in the oil industry trade journals and I don’t see the same analysis reflected in the mainstream press – especially in the weeks leading to an election – I think it’s cause for concern.
The opportunities for individual citizens to make a difference come around every other year. In the next weeks, we need to have discussion about mass transit and carbon taxes and conversion to renewable energy resources. In one of the next few election cycles, the corner will be turned and it will be too late to avoid the worst consequences of our actions. Let’s hope it’s not too late already.
Sorry About the Numbers
I’d like to apologize up front for all the numbers that follow, for two reasons. One, because I try to keep these commentaries are more entertaining than a math problem and two, because the message they carry is so depressing.
The numbers are from an article in the 21 Aug edition of Oil and Gas Journal, an oil industry trade magazine. The piece was written by Kjell Alekett, a professor of physics at Uppsala University in Sweden. Ready? Here we go:
In 2005, oil-exporting nations shipped, on average, 48 million barrels of oil every day. The biggest single importer was the U.S., which claimed 29 percent of the oil; Japan claimed 11 percent and China, seven percent. (These countries represent five, two and 21 percent of the world’s population, respectively.)
As a nation’s economy grows, its oil consumption grows with it. Oil consumption in the U.S and Japan (like other industrialized countries) has been growing at about one and a half percent a year, but in China, for period 2000-2005, oil consumption grew by eight and a half percent per year. Those numbers look dull on the screen, but both economists and oil industry professionals are struck dumb by the rate of growth in China’s oil consumption.
By 2030 – just 24 years away – Mr. Alekett predicts the U.S. and Chinese markets will each be demanding seven millions gallons per day more than they are currently. If all that additional oil can be found (more on that below); China will have no trouble paying for it. The Chinese will use some of the billions of U.S. dollars it is sitting on, thanks to the huge imbalance of trade China has with the U.S. Corporations and government in the U.S., on the other hand, will probably have to borrow additional billions of dollars to pay for the extra seven million barrels of oil American consumers will demand each day.
There’s an “if” in the paragraph above. Mr. Alekett says that while U.S. and Chinese demand will soar by 2030, the rest of the world will also be steadily increasing its use of black gold. Meanwhile, production from known oil reserves will be diminishing and few substantial new reserves are being found. By 2030, he estimates that worldwide demand will exceed production by 30 million barrels per day. (Thirty millions barrels per day, by the way, is what the U.S. is expected to consume in 2030.)
Well, 2030 is a long way off, as far into the future as 1982 is in the past. (Hmmm, maybe it’s not that far after all.) Of course, life will not continue as it has until one morning in 2030 when we wake up and find ourselves short 30 million barrels of oil. In between, there will be more wars, around the Persian Gulf and central Asia, as China seeks overland routes for oil pipelines the U.S. Navy won’t be able to block.
There will be economic upsets and dislocation, like the situation last January when Russia cut off natural gas to Ukraine (and therefore, to Western Europe). Russia, after Saudi Arabia, is the leading oil exporter in the world. The deputy of Russia’s central bank, who had a reputation for fighting shady deals, was gunned down in the streets of Moscow yesterday. Expect more of that.
Again, I apologize for the all the numbers and for the gloomy outlook. I also apologize if I seem to frequently harp on this issue, but when I read articles like Mr. Alekett’s in the oil industry trade journals and I don’t see the same analysis reflected in the mainstream press – especially in the weeks leading to an election – I think it’s cause for concern.
The opportunities for individual citizens to make a difference come around every other year. In the next weeks, we need to have discussion about mass transit and carbon taxes and conversion to renewable energy resources. In one of the next few election cycles, the corner will be turned and it will be too late to avoid the worst consequences of our actions. Let’s hope it’s not too late already.
© Mark Floegel, 2006