Apr 08 2009
∞
“ I really do understand the desire to move away from oil. A portion of my career has been devoted to developing replacements for petroleum. But as I said today, I am also a realist. Let’s suppose for a second that the following happens. Policies are put into place that hasten the downfall of our domestic oil and gas industry. Marginal wells become uneconomic and are shut in. According to Morgan Downey in Oil 101 there are 500,000 producing oil wells in the U.S., 80% of which produce 10 bpd or less. Yet those 10 bpd wells account for 20% of U.S. production. What happens if we put these marginal producers out of business? Some of you will say “That would be great. That’s what we need to combat climate change.” OK, I respect that opinion. However, there is now a shortfall in production to deal with. We either reduce demand or we have to find something renewable to fill the void. Right now, I don’t see anything that can fill even a 10% shortfall in U.S. production in the next few years. So that means either higher prices or some incentives (paid for by higher taxes) will be needed to reduce demand (and I don’t think that’s a bad thing) or we will become even more dependent upon OPEC - the outcome that I think is most likely in this scenario.
—
R-Squared Energy Blog: Anything But Oil
Sawickipedia: Great post on the near term reality for our dependence on oil production. I have no love for oil, but ain’t nothing going to replace it in 4 years at any scale.
