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CAPITAL REGION
Forum sees oil peak as world crisis
American way of life may change
BY JASON SUBIK Gazette Reporter

    Paul Swartz, a former scientist for General Electric and local business leader, says he believes worldwide oil production either has, or soon will, reach peak production, which he thinks will probably mean the end of modern western civilization generally and the collapse of the American way of life specifi - cally.
    He doesn’t think it will take long for this to happen.
    “There is a growing insufficiency [of oil] and it’s going to undermine
    civilization as we know it. Not tomorrow, not in the next year or two, but in the next five to 10 years,” Swartz said.
    And he’s not thoughts on alone. Swartz this story at is the chairman www.daily  of the steergazette.com  ing committee
    of the Capital Region Energy Forum, known as CREF, a group he says is made up of scientists, business leaders and concerned citizens who meet regularly to listen to speakers and discuss energy issues.
    “When the group [was] founded it wasn’t with the intention of founding a group,” Swartz said.
    He said the initial membership of CREF was inspired by Saratoga-based author James Howard Kunstler and his book “The Long Emergency: Surviving the Converging Catastrophes of the Twenty-First Century,” much of which is available free online using a Google book search.
    Kunstler predicts worldwide cataclysmic results during the 21st century stemming from peaked oil production as well as global warming and other phenomenon. Kunstler, a former journalist for Rolling Stone magazine with no formal scientific training, has long been a critic of suburban sprawl and has predicted its demise before. His record as a Cassandra was tarred after the “Y2K” crisis, in which older computers unable to adjust to the year 2000 were predicted by him, and others, to cause widespread havoc starting Jan. 1, 2000. Those predictions were wrong. He later predicted for several years that the Dow Jones Industrial Average would plummet to 4,000 points. So far it has not.
    Swartz’s group, which he said has grown in size to about 183 on its mailing list, with 50 to 75 members who routinely come to meetings, does not believe in peak oil only on Kunstler’s say-so. Swartz said they routinely bring in experts and analyze data to educate themselves on what they foresee as an impending disaster. He said the group’s steering committee is considering becoming more of an advocacy group. “This is the first time that we’re really beginning to promote an issue because so many of us are concerned that we’re going to have a deficiency of oil starting rather soon, the next year or two, and you can see it in the increase in price. It’s not coincidental, it’s not political, it’s not anything except the first winds of a hurricane that says we don’t have a sufficient supply of oil,” Swartz said.
PEAK OIL
    The concept of peak oil was fi rst expressed by Marion King Hubbert in 1956. He was a geologist for Shell Oil who theorized that when world oil production peaks it will begin to gradually decline because of declining pressures under the ground. In the past, an oil well was considered dry when 50 percent of its estimated oil reserves were drained because of the same dynamics inherent in Hubbert’s theory. He correctly guessed when U.S. oil production peaked in the 1970s but predictions using Hubbert’s theory for worldwide production peaks have continually been pushed farther into the future as more oil has been discovered and more unconventional oil, like oil sands and oil shale, have become economically viable.
    According to the latest statistics compiled by British Petroleum, one of the world’s largest energy companies, the world recorded the highest-ever daily crude oil production in 2006 at 81.7 million barrels. Some CREF members say that may be the peak of oil production and the only questions that remain are whether production will plateau for a period or immediately begin to decline, and then how steep that decline will be.
    Saudi Arabia is often pointed to as the key to whether the world’s production of oil has truly peaked. According to the U.S. Energy Information Administration, Saudi Arabia produced 8.7 million barrels of crude oil, including lease condensate, in 2007, down from the country’s production peak of 9.5 million barrels per day in 2005. The country ramped up its oil production during the U.S. invasion of Iraq and its subsequent disruption of oil production there, averaging over 9 million barrels per day from 2003 to 2006 . It has now returned to levels closer, but still higher, than the period from 1991 to 2001.
    The question is, did the Saudis drop production on purpose to raise the price of oil, or because they can’t physically pump any more?
    “I don’t think we know the answer to that and I don’t think Saudi Arabia is going to tell us the answer to that even if they know,” said Roland Schmitt, a CREF member and former General Electric Co. senior vice president of corporate research and development.
    Schmitt departs from what Swartz calls the majority of CREF members in that he thinks the United States should consider more oil drilling in places like the Arctic National Wildlife Reserve and the continental shelf off the coast of Florida to stave off peak oil, while developing more alternative energy to preserve economic prosperity.
    “We have to reopen the question of drilling in places where we currently tell U.S. firms they can’t drill. Technology has come a long way and it permits you to drill in more environmentally friendly ways,” Schmitt said.
    According to the 1998 U.S. Geological Survey, the total quantity of technically recoverable oil within the entire ANWR area is between 5.7 billion and 16 billion barrels, with a mean value of 10.4 billion barrels. Assuming half of that could be recovered before a production peak, the supply would be enough to displace roughly 25 percent of daily U.S. crude oil consumption, about 15 million barrels a day, for about five years, and then a diminishing amount thereafter.
    Peak oil skeptics point to new oil discoveries off the coast of Brazil, undiscovered oil reserves in wartorn Iraq as well as new technologies to recover more oil from existing wells and oil from oil sands as reasons that true peak oil is far off.
CONTRASTING SPEAKERS
    Monday at 7 p.m. in the St. Joseph Hall of the College of Saint Rose CREF will sponsor an event titled “The Emerging Oil Crisis: What Lies Ahead and How Are We to Respond?”
    The event will begin with a lecture by Rensselaer Polytechnic Institute professor Richard Alben explaining the concept of peak oil and then two different views of what New York state and the United States should do to combat the potential effects of it.
    One speaker, Bill Reinhardt, a senior project manager for the New York State Energy Research and Development Authority, will argue that if society moves aggressively toward alternative renewable energy sources and energy conservation, disaster can be averted.
    “[Peak oil is] a very serious problem but if we really confront it, instead of denying its existence and avoiding taking action, and actually starting to do something about it now we can minimize the problems associated with it,” Reinhardt said.
    The other speaker, Clifford Wirth, a retired political science professor at the University of New Hampshire, says American society as its existed over the last 100 years is doomed no matter what is done. He said his study of the potential for renewable energy sources such as wind and solar indicates even massive government efforts to commercialize those energy sources will fail miserably because not enough energy can be drawn from them to compensate for the loss of oil. He says the power transmission grid, nuclear energy and even wind and solar will require too much oil to function without an abundant supply of it.
    “The real solution is to put the breaks on the entire consumer economy that we have and use the little bit of fossil fuel energy that we have to focus on necessities,” Wirth said. “One of the things I’m a proponent of is having the National Academy of Sciences study the whole energy policy area to come up with what the best scientists in the country think we should do.”
    Wirth will be making the trip to Albany from his home near Mexico City, which he said he moved to in order to better facilitate his wife’s family’s escape from that city when oil production collapses and Mexico falls into chaos. He also said he could no longer live in New Hampshire or the Northeast in general because society there will not be sustainable when oil is no longer available.
    Schmitt said he is aware of the great dangers inherent in the possibility of imminent peak oil but he, like Reinhardt, hopes that greater efficiencies in electrical technology and conservation will enable modern society to continue.
    “There have been people who have forecast doomsday scenarios frequently in the past and none of them has turned out to be right so far, so I’m a little skeptical of doomsday scenarios,” he said. “Man has found solutions to the problems people have foreseen. I’m hopeful and I think it’s quite possible that we will do that once again.”

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Wall Street traders to blame for higher prices

    I appreciated Anthony Frank’s May 25 article, “Taking over,” as he made several very valid points. However, Mr. Frank is under the same misconceptions that most people who are upset about the runaway costs of energy are, and that is who really is to blame.
    I have been involved with the purchase of energy for a major institution in the area for the past 12 years, and I know all too well that the major component of any energy source is based on the futures price for that commodity. The price is determined on Wall Street and on the virtual trading “floors” of online trading firms. I have been preaching this for almost the last 12 years to anyone who would listen, but just recently, one of the larger commodity traders, Michael W. Masters, portfolio manager for Masters Capital Management, actually testified to the Senate on this very subject. So without further display of my lack of eloquence I would refer you to the actual transcript of this testimony at: http://hsgac.senate.gov/  public/_files/052008Masters.pdf
    I will leave you with this quote from that testimony: “You have asked the question: ‘Are institutional investors contributing to food and energy price inflation?’ ... My unequivocal answer is yes ... institutional investors are one of, if not the primary, factors affecting commodities prices today.”
    FREDERICK F. PULIAFICO
    Glenville

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and I know all too well that the major component of any energy source is based on the futures price for that commodity. The price is determined on Wall Street and on the virtual trading “floors” of online trading firms.

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I could be a bit concerned that we might head to a depression

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Carl Strock THE VIEW FROM HERE
Carl Strock can be reached at 395-3085 or by e-mail at carlstrock@dailygazette.com.

GAS PRICES
    Now that I have settled that problem, I turn my attention to the price of gas, in response to a reader who wonders what it is elsewhere in the world. Having recently made a trip to Turkey, I can report that the price there is slightly above $11 per gallon. That’s right — $11 a gallon.
    Nevertheless, I noticed that people there still drive, though for the most part they drive small cars rather than monster pickups and SUVs. I don’t know how their egos survive, but I guess they do.
    At the other end of the scale we have Venezuela, a major oil producer, where the price is a laughable 12 cents per gallon.
    I cannot find an up-to-date listing for all the countries of the world, but from the scattershot sampling I have viewed, I gather that our $4 a gallon is still pretty cheap relative to other places.

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Raising alarm over oil supply
Retired professor is in Capital Region to spread word about "looming catastrophe"

By LARRY RULISON, Business writer
First published: Tuesday, June 10, 2008

COLONIE -- Clifford Wirth's view of the future in the United States is pretty grim.
     
The retired University of New Hampshire political science professor is in the Capital Region this week talking about the impending "peak oil" crisis.
For those unfamiliar with it, peak oil is the point at which world oil production hits its peak and then starts declining.
Because of the world's ever-increasing demand for oil, the declining supply will cause major shortages, political unrest and economic instability, observers say.
"This is a looming catastrophe," Wirth said Monday morning during a meeting with reporters at the Route 7 Diner in Latham.
Some peak oil researchers say we've already reached the top of the production curve, while others say it may still be decades away. And there are some who discount the problem altogether, although Wirth says it's not debatable.
"Peak oil is not a theory," he said. "It is a geophysical fact."
Wirth was scheduled to speak Monday night at The College of Saint Rose in a program sponsored by the Capital Region Energy Forum, a local group focused on energy education and policy.
He has done a lot of research on the subject and has his own consulting firm, Peak Oil Associates International.
Wirth is so worried about the problem that he is moving his family from New Hampshire to the Mexican state of Veracruz. His wife is originally from Mexico City, he said, and Veracruz has a rich soil, perfect for agriculture. And there is no need for home heating.
"New Hampshire is not a sustainable place to be," Wirth said.
Even though $4-a-gallon gas is already changing the way people and businesses act, Wirth said skyrocketing gas prices under a peak oil scenario will have a devastating effect. The transportation system will come to a halt, cutting off the food supply to most Americans.
He also is skeptical of alternative-energy sources such as hydrogen, saying the economic benefits are largely unproven. He wants the National Academy of Sciences -- scholars who advise the U.S. government -- to come up with solutions.
"It should not be coming from the energy community," he said, referring to businesses.
Wirth said states like New York should have a plan to deal with peak oil, much like they have plans for natural disasters and terrorist attacks.
"The media needs to be pounding on the door, asking questions," Wirth said. "What is the state of New York, and what is the governor going to do about it?" A phone call to Gov. David Paterson's office was not immediately returned.
Bill Reinhardt, a senior program manager with the New York State Energy Research and Development Authority, who was also scheduled to speak at Monday night's program, said state policymakers are aware of what's going on with the oil supply. "Yes, the oil crisis is real," Reinhardt said. "The era of cheap oil is over."
Paul Swartz, chairman of the Capital Region Energy Forum, said the public needs to hear what Wirth has to say because it presents a wake-up call, despite what they think of his opinions.
"It's a frightening issue," Swartz said. "It's going to have an impact on Western civilization. People are just oblivious, unaware."
Larry Rulison can be reached at 454-5504 or by e-mail at lrulison@timesunion.com.

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Carl Strock THE VIEW FROM HERE
Carl Strock can be reached at 395-3085 or by e-mail at carlstrock@dailygazette.com.

GAS PRICES
    Now that I have settled that problem, I turn my attention to the price of gas, in response to a reader who wonders what it is elsewhere in the world. Having recently made a trip to Turkey, I can report that the price there is slightly above $11 per gallon. That’s right — $11 a gallon.
    Nevertheless, I noticed that people there still drive, though for the most part they drive small cars rather than monster pickups and SUVs. I don’t know how their egos survive, but I guess they do.
    At the other end of the scale we have Venezuela, a major oil producer, where the price is a laughable 12 cents per gallon.
    I cannot find an up-to-date listing for all the countries of the world, but from the scattershot sampling I have viewed, I gather that our $4 a gallon is still pretty cheap relative to other places.