Is an Energy Armageddon Coming by 2015?
Tuesday, June 3, 2008 - Vol. 10, No. 133
Is an Energy Armageddon Coming by 2015?
Mike Burnick, Senior Editor, Global Markets Analyst and editor of Market Shock Trader.
Political unrest in the oil-rich Middle East boils over into open conflict...
A line of cars stretched for blocks winding into a gas station. The price is US$7 a gallon...but the price is partially covered by another hand-painted sign that reads: "Authorized Vehicles Only."
On the floor of a stock exchange frantic traders cry: Sell...Sell...SELL! But there are very few buyers. Anxious families gather around the television as a politician addresses the nation...a state of emergency is declared...but then the screen is filled with static. A moment later, lights in the neighborhood flicker and go dark...in fact whole cities go dark...with nothing left to power the generators.
These could be scenes from America's last energy crisis in the 1970's - but in fact they are scenes conjured up by Hollywood... specifically in the 1981 film The Road Warrior.
Inspired by true events of the ‘70's, the film paints a dark picture of a world in the very near future. In the film, the world has been thrown into chaos by an apocalyptic energy crisis. Perhaps these images are just a glimpse of things to come...
Now Showing: Global Energy Crisis Part II.
The world is now enduring its second major energy crisis, with crude oil setting a new record high of US$135 a barrel a week and a half ago. Other fossil fuels that Americans count on to be cheap and plentiful are sky-rocketing too. Coal prices in the U.S. doubled between January 2007 and this past February - in just one year. Coal soared 143% in Asia during the same period. In fact, over the past five years, the price has gone from about US$20/ton to more than US$120/ton - an increase of 600%. Coal fired power plants produce 40% of the world's electricity needs today, and rising demand has propelled this once cheap fuel into the stratosphere. Like oil, it looks as if coal prices have shifted to a permanently higher plateau.
The One Lagging Fossil Fuel Is About to Take Off
Natural gas prices had been lagging the rise in crude oil, but not anymore. Like its other fossil-fuel cousins, natural gas prices are playing catch-up with a vengeance - soaring 45% so far this year alone! Recently, the world's top energy market watchdog, the International Energy Agency (IEA) forecast a major crude oil supply crunch. In other words, they're predicting a potential energy Armageddon within the next 7 years! According to the Wall Street Journal, the revised forecast from the IEA "reflects deepening pessimism over whether oil companies can keep abreast of booming demand." Can anybody say, "Peak Oil?"
Just a bit further along, the IEA projects world oil demand to jump by one-third in just over 20, reaching 116 million barrels a day in global consumption by 2030. The trouble is the IEA and other experts are just now realizing that aging fields mean big-oil producers will "struggle to surpass 100 million barrels a day over the next two decades."
In fact, "the world could face a shortfall by 2015 of as much as 12.5 million barrels a day."
Brazil Closes In On Energy Independence Thanks to Alternative Fuel
In the film, Mad Max and his band of road warriors must constantly fend off attacks by rival gangs. They're fighting over a tanker truck full of gasoline - in a world where all the filling stations have run dry.
So will life inevitably imitate art in this instance? It doesn't have to end this way. Greater commitment to, and investment in, other alternative fuel sources could save the world from an apocalyptic energy crisis. There's little time to waste however, with fossil fuel prices on the rise already, and supplies now in doubt.
The Modern Cure to the Mad Max World
Brazil is one model to study a bit closer. In the last energy crisis during the 1970's the Brazilian government embarked on an ambitious program to free the country from oil imports. Brazil mandated every gasoline station must carry ethanol and that all new cars must be flex-fuel capable. At the time, some said this was nothing more than misguided government meddling with private enterprise...a boondoggle. Today there are 29,000 ethanol pumps all across Brazil. There's practically one on every street corner. In the U.S., we only have 700 ethanol pumps in the entire country. An impressive 85% of new cars sold in Brazil are flex-fuel capable today, compared to just 5% of cars on the road in the United States. Brazil has successfully replaced 40% of its gasoline needs with ethanol, resulting in US$59 billion in oil import savings since 1975. Brazil's booming ethanol industry is the leading global exporter today, and they've created one million new jobs along the way.
Today, gasoline prices in the U.S. are above US$4 a gallon and climbing - as consumers and businesses suffer. Meanwhile Brazil is expected to become a net crude oil exporter sometime in the next two years.
Is an Energy Armageddon Coming by 2015?
Mike Burnick, Senior Editor, Global Markets Analyst and editor of Market Shock Trader.
Political unrest in the oil-rich Middle East boils over into open conflict...
A line of cars stretched for blocks winding into a gas station. The price is US$7 a gallon...but the price is partially covered by another hand-painted sign that reads: "Authorized Vehicles Only."
On the floor of a stock exchange frantic traders cry: Sell...Sell...SELL! But there are very few buyers. Anxious families gather around the television as a politician addresses the nation...a state of emergency is declared...but then the screen is filled with static. A moment later, lights in the neighborhood flicker and go dark...in fact whole cities go dark...with nothing left to power the generators.
These could be scenes from America's last energy crisis in the 1970's - but in fact they are scenes conjured up by Hollywood... specifically in the 1981 film The Road Warrior.
Inspired by true events of the ‘70's, the film paints a dark picture of a world in the very near future. In the film, the world has been thrown into chaos by an apocalyptic energy crisis. Perhaps these images are just a glimpse of things to come...
Now Showing: Global Energy Crisis Part II.
The world is now enduring its second major energy crisis, with crude oil setting a new record high of US$135 a barrel a week and a half ago. Other fossil fuels that Americans count on to be cheap and plentiful are sky-rocketing too. Coal prices in the U.S. doubled between January 2007 and this past February - in just one year. Coal soared 143% in Asia during the same period. In fact, over the past five years, the price has gone from about US$20/ton to more than US$120/ton - an increase of 600%. Coal fired power plants produce 40% of the world's electricity needs today, and rising demand has propelled this once cheap fuel into the stratosphere. Like oil, it looks as if coal prices have shifted to a permanently higher plateau.
The One Lagging Fossil Fuel Is About to Take Off
Natural gas prices had been lagging the rise in crude oil, but not anymore. Like its other fossil-fuel cousins, natural gas prices are playing catch-up with a vengeance - soaring 45% so far this year alone! Recently, the world's top energy market watchdog, the International Energy Agency (IEA) forecast a major crude oil supply crunch. In other words, they're predicting a potential energy Armageddon within the next 7 years! According to the Wall Street Journal, the revised forecast from the IEA "reflects deepening pessimism over whether oil companies can keep abreast of booming demand." Can anybody say, "Peak Oil?"
Just a bit further along, the IEA projects world oil demand to jump by one-third in just over 20, reaching 116 million barrels a day in global consumption by 2030. The trouble is the IEA and other experts are just now realizing that aging fields mean big-oil producers will "struggle to surpass 100 million barrels a day over the next two decades."
In fact, "the world could face a shortfall by 2015 of as much as 12.5 million barrels a day."
Brazil Closes In On Energy Independence Thanks to Alternative Fuel
In the film, Mad Max and his band of road warriors must constantly fend off attacks by rival gangs. They're fighting over a tanker truck full of gasoline - in a world where all the filling stations have run dry.
So will life inevitably imitate art in this instance? It doesn't have to end this way. Greater commitment to, and investment in, other alternative fuel sources could save the world from an apocalyptic energy crisis. There's little time to waste however, with fossil fuel prices on the rise already, and supplies now in doubt.
The Modern Cure to the Mad Max World
Brazil is one model to study a bit closer. In the last energy crisis during the 1970's the Brazilian government embarked on an ambitious program to free the country from oil imports. Brazil mandated every gasoline station must carry ethanol and that all new cars must be flex-fuel capable. At the time, some said this was nothing more than misguided government meddling with private enterprise...a boondoggle. Today there are 29,000 ethanol pumps all across Brazil. There's practically one on every street corner. In the U.S., we only have 700 ethanol pumps in the entire country. An impressive 85% of new cars sold in Brazil are flex-fuel capable today, compared to just 5% of cars on the road in the United States. Brazil has successfully replaced 40% of its gasoline needs with ethanol, resulting in US$59 billion in oil import savings since 1975. Brazil's booming ethanol industry is the leading global exporter today, and they've created one million new jobs along the way.
Today, gasoline prices in the U.S. are above US$4 a gallon and climbing - as consumers and businesses suffer. Meanwhile Brazil is expected to become a net crude oil exporter sometime in the next two years.
posted by Anonymous | 12:02 AM
0 Comments:
Post a Comment
<< Home