10 aug The next oil revolution
Like many others, I was convinced that the world would run out of fossil energy very soon. A good reason to invest in wind mills, solar pannels and other alternative energy sources. But we were wrong: the surge in oil production around the world is a fact. Yes, more oil, not less, let alone not enough. While we were wondering how the energy hungry emerging markets would handle their strategies in a shrinking oil market, technicians from the giant companies like ExxonMobil, Shell and BP were inventing hydraulic fracking and horizontal drilling. According to the John F. Kennedy School of Government at Harvard University, ‘contrary to what most peoplke believe, oil supply capacity is growing worldwide at such an unprecedented level that it might outpace consumption…’
More oil than we need, including China and India? Wow. Is it also the end of commercially responsible development of alternative energy? Is it a knive in the back of the Green movement, that will have difficulty in defending expensive energy and less jobs while more jobs are available every day in the world of oil production? Big dilemma! The Harvard report says that ‘by 2020, the world’s oil capacity could be more than 110 million barrels per day, an increase of almost 20% compared to the actual production.’ Until 2015 the oil market will be ‘highly volatile’ and ‘prone to extreme movements in opposite directions. But after that we might witness a real collapse in oil prices. How will oil companies be able to react to these developments? By selling more for less, I guess. How will the geostrategic situation change if the US will be able to provide 65% of its own needs and will not be forced to import oil from other countries? It will be a political landslide, no doubt. I am curious how the Saudi’s and Gulf princes are preparing for these changes. If they don’t, their economies will get oput of balance and eventually die. Meanwhile those of Irak, Brazil, Canada and the US will start booming (again).
Much of this ‘new’ oil comes from Canada’s oil sands, Brazil’s presalt oil and American shale oil. The technologies are not all new, but those used to exploit shale and tight oil have evolved. The technology can also be used to reopen and recover more oil from existing oilfields. This will mean heavy pressure on the environment and extreme tensions between oil companies and the eco movement. But my guess is that money will beat ideology, once again.
What lesson can we learn from this unexpected revolution? That most developments are not easy to predict. We didn’t see the global crisis coming because we believed in the logic of efficient markets. And we didn’t see more oil coming, because we…maybe didn’t want to see it?