Energy-security?
In looking at the issue of energy-security, it became clear that the issue is very broad and has many aspect:
- in several regions of the world there is a shortage of rigs to do the necessary exploration and extractions to provide the “new” oil to balance the depletion and increase in demand,
- in other regions, especially Europe and North America, there is a shortage of skilled workers,
- an increasing ageing of the work-force is another issue, with many to retire in the coming decade, and not enough young workers or students to replace them,
- there is the depletion-factor hitting in at many of the ageing fields,
- an interesting new factor is the growing recognition that overstating of reserves may become a problem in the future, because paper reserves cannot be extracted,
- some regions may not have what they were expected to have, such as the Arctic, where a recent USGS-report has estimated “considerably less total resources” than only a few years ago,
- quite some projects that were profitable during conception, turn out not so profitable anymore, due to strong increase of costs of material, workforce and time needed to commissioning,
- other projects were conceived or executed with not enough attention for environmental impact, to be caught up with this later, either resulting in delay, and or increase of costs or abandonment, or loss of influence,
- several of the main producers of the world see their export-levels endangered due to a rapid rise of the economy and subsequent increase in internal demand,
- the war in Iraq is now recognized by most of the American people to actually having decreased energy security, and other wars will certainly worsen this situation.
So where does this all lead to? Well, we may start to see that more money, or a high oil price, may not necessarily
lead to more oil on the world-markets, as there are other factors determining the final outcome.
It is also said that the nationalisation-trend may be a danger for the energy-security. But is this really the case? The countries taking their resources back in their own hands may not be willing to maximize production according the expectations of “the Market”, but therefore their reserves may last longer and be part of the long-term energy-security, providing the oil that cannot be replaced by other energy-forms or –carriers.
And last-but-not-least, it could be “the Market” itself that is a danger to energy-security. Currently
the “crisis-premium”, or to put it straight “speculators-premium” is said to be 34 dollar to
the barrel, or a good 40(!)%, and prices are expected to reach the 100 or 200 dollar in the near future. This may
have an interesting effect on the global situation, because at a certain moment the pain-barrier may be reached for
the consumers as a result of the cumulative effects of this, and demand reduction may be the next danger of
energy-security. But then it may apply to the security of demand.
And we may then see the next bust-cycle coming, of which the cumulative effects may be very considerable, seeing the
current instability in the markets.
We may ask ourselves whether it is a good idea that the world-economy is so dependent on those few people squeezing the maximum out of “what the market gives”.
Enjoy the Update,
Alexander
Comments are always welcome at Alexander@gas-oil-power.com
