PEAK OIL -- (House of
Representatives - March 06, 2007)
[Page: H2227]
The SPEAKER pro tempore
(Mr. Arcuri). Under the Speaker's announced policy of January
18, 2007, the gentleman from
Mr. BARTLETT of
I had the privilege of
leading a codel to
I was both surprised,
shocked, and really pleasantly surprised that they began their conversation
about energy by talking about post oil. This just wasn't the energy people in
The first point of this
program was conservation, a recognition that the world has no surplus energy to
invest in developing alternatives. If there was any surplus energy, we wouldn't
be paying $60 a barrel for oil.
Conservation not only
frees up oil, but it buys some time because if we in
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fact are producing oil at
the rate at which it is consumed and we cannot easily increase that production,
then we have not only run out of surplus energy, we have also run out of time.
So an aggressive conservation program will buy some time and free up some
energy that we can invest in alternatives.
So the first part of their
five-point plan was conservation. The second and third points was diversify,
get energy from as many other nonfossil fuel sources as you can, and get as
much of it as you can from your own country. From a national security
perspective, that makes good sense.
The fourth point in their
five-point program, and again, it wasn't just the energy people in China
talking about this, it was leaders in government in several other parts of the
government, the fourth part of their five-point plan was be kind to the
environment. You think, gee, that is strange they would say that since they are
the world's biggest polluter. They are the world's biggest country. Their
economy grew at 11.4 percent for the last quarter. And they know they are a big
polluter. They are apologetic. They have 1.3 billion people, and they don't
know how to use energy wisely, and they are asking for cooperation so they
might use their energy as efficiently as we use ours.
The fifth point was that
we need international cooperation because this planet is a little spaceship,
not all that big. It once seemed absolutely enormous when we sailed the ocean
in sailing ships, but now with airplanes it seems much smaller. We are here
together, so we have a global responsibility.
I thought of this attitude
on the part of the Chinese when I read an article that appeared in the New York
Times on page 1 on March 5. It says, ``Oil innovations pump new life into old
fields.''
I might pause to interject
here that this is a very appropriate use of carbon dioxide. It is a greenhouse
gas. Its concentration in the atmosphere has about doubled in the last couple
hundred years, and most of the world's scientists who study weather believe
that the Earth's temperature is increasing and that the greenhouse gases, chief
among them carbon dioxide, are responsible. So sequestering the carbon dioxide
and pumping it down into these wells to force the oil out is a doubly good
thing. It keeps it from going into the atmosphere, and it gets some additional
oil.
This article continues,
within the last decade, technology advances have made it possible to unlock
more oil from old fields, and at the same time higher oil prices have made it
economical for companies to go after reserves that are harder to reach. With
plenty of oil still left in familiar locations, forecasts that the world's
reserves are drying out have given way to predictions that more oil will be
found than ever before.
Well, I have a chart here
which looks at the oil discoveries back through the last number of years, last
70 years, and we see here in the bar graph the discoveries of oil and we see
there were some big discoveries in the 1940s and 1950s and 1970s and down in
the 1980s. And ever since that time, it has been down, down, down. That is in
spite of ever-better technology for discovering oil.
They mention the 3-D
seismic computer modeling they are using. We now have a pretty good idea of the
Earth's geology, and so we know where we might find gas and oil. Some very
unique geological conditions are necessary in order to have gas and oil. We
don't really know how the oil and gas got there, but there are some reasonable
conjectures, and if you understand these conjectures and if they are correct,
it gives you some clue as to how much more gas and oil we are likely to find.
The most popular theory
goes that a long time ago when the Earth was more uniformly warm than today,
there did not appear to be the torrid equator or the frigid poles, and because
there were subtropical seas at the North Slope and in ANWR and in Prudhoe Bay,
and those subtropical seas had a seasonal growth and then death of algae-like
organisms and maybe some small, animal organisms with them like the algae that
grows on your pond today. I don't know that they had winters, but they had
seasonal growth, and each season it would mature and die and then sink to the
bottom, and Earth runoff would mix in and overlay it, and then the next year
another layer of the organic material was deposited. This continued until there
was big buildup, a lot like at the bottom of a lake.
Then the theory says that
the tectonic plates of the Earth moved and surface seas with all of the organic
material mixed with the inorganic, rock and sand, were now submerged down under
considerable pressure and near enough to the molten core of the Earth there was
just the right combination of pressure and temperature. And with time, this
organic material was converted into what we know as gas and oil.
Now the products were some
very short-chain products such as gases, methane, the shortest of the chains;
and then very long chain ones which end up as Vasoline or waxes or something
like that. If there was not a rock dome over this, kind of an umbrella of rock,
then the gases would have escaped through the years and what would be left was
some tarry stuff that you couldn't pump because you would have to heat it up.
That is known as heavy oil where it exists today. You have to heat it up or mix
it with volatiles to get it moving.
This dome keeps the gas
from escaping. This was the explanation why for many oil wells when you finally
pump down into the oil, it is not a pocket of oil that you are sucking out like
a soda through a straw. It is all mixed with sand and rock, fractured rock and
so forth, but it will flow. For wells that were gushers, this gas pressure that
accumulated under the rock dome was now pushing down on this oil, and it pushed
it up the well pipe. So we had these gushers.
[Time: 20:00]
Well, this may not have
been the way that oil and gas was produced, but it certainly sounds logical
because that is where we find it, where we have these rock domes and so forth.
What that means is, of course, that with these current techniques that we have
of mapping the world, we can find those areas which have rock domes, which were
likely to and with the location relative to the edges of the tectonic place, we
can now identify where it is probable that you might find gas and oil
production. And with ever-increased capabilities, computer modeling and 3-D
seismic, we have found less and less oil through the years.
Now, this chart has
another curve on it, and that is the consumption curve. Interesting curve. You
will notice for a long time we were finding enormously more oil than we were
using, because we were using this much, but we had found that much. But from
about 1980 on, increasingly we have found less and less oil and used more and
more oil.
I would like you to note
the interesting change in the curve here in the 1970s. There was a stunning
statistic up until the seventies, the Carter years, with this rate of increase
and use. Every decade the world was using as much oil as it had used in all of
previous history. Now that is a stunning statistic. What that means is that
when you have used half the world's oil, there would then be 10 years left at
current use rates. Well, we had a big shock in the 1970s at the Arab oil
embargo, and we learned how to be much more efficient. For, what, 10 years or
so here, there was essentially no increase in oil, and now it is slowly going
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up again as the world's
economies grow. In
Now, this chart looks at
what the future may hold. This article that I just read, ``Oil Innovations Pump
New Life Into Old Wells'' says that we are going to have more oil than we have
ever found. Now, we are not really finding new oil, most of this is oil that is
in some of these fields, and these bars will go up higher here because now,
with enhanced recovery, we are able to get more oil out. And they are making
the projection that we are going to find as much more oil as we have remaining.
And one projection is, and I will come to that in a few moments, that we are
going to find as much more oil as we have ever found.
The next chart shows an
interesting picture. This is the same consumption curve that you saw there with
the same perturbations between the seventies and the eighties as a result of
the Arab oil embargo.
Now, this chart, which is
from our Energy Information Agency, is assuming something that I think is not
rational to assume, and that is that we are going to find as much more oil as
all of the reserves which we now know to exist.
A couple of congresses
ago, I chaired the Energy Subcommittee on Science, and one of the first things
I wanted to do was to determine the dimensions of the problem, and so we had
oil experts from all over the world come in. How much oil did we find? How much
of what we found is still there? And there was surprising unanimity from just
under 2,000 giga barrels to just over 2,000 giga barrels. That is their figure
here of 2.248,000 billion barrels.
Now, we use giga barrels.
They said billion barrels here, that is because it is for an American audience.
But if you were in
The next chart shows an
interesting prediction, and the data that was collected following the
prediction. This shows the discovery curves. What this does here is to kind of
round out those big bars that you saw in the previous one. And here they have
done a very interesting thing. They have taken the F-5, F-50 and F-95, which
was fractional, and I don't have the chart to how they got there, but I can
tell you how they got there. What they did is run a lot of simulations. And
they had the number of simulations on the ordinate, and they had the amount of
oil that the simulation indicated would be found on the abscissa. So, they put
these numbers into their computer simulation, and they got numbers out, and
they graft all those numbers. And then they found the mean of those numbers,
and they found that 95 percent, which meant that 95 percent of the predictions
indicate you would find more oil than that and so forth. And so they assumed
that the most likely thing would be the mean. Now, it was a mean of their
projections. But somehow that F got translated when it went from USGS to the
Energy Information Agency, it got translated to P, which is the probability.
Now, if this is really probability, this is a bizarre use of statistics.
So they show here three
probabilities. They show the P-95 probability, the P-50 probability and the P-5
probability. Now, if these really are probabilities, there should be another
green line coming down this way; because if you are only 50 percent certain,
obviously that is a pretty broad funnel you create out there. If you are only 5
percent certain, it is really broad. It is like the path of the hurricane. For
the next 24 hours, they know pretty well where it will be, so that is pretty
narrow. But as you go out in time, 2, 3 and 4 days, why it gets wider and wider
because you are less and less certain of where it is going. So there should
have been another green line down here and another blue line down here because
you have a broad uncertainty if
you are only 5 percent
certain.
But notice what the actual
data points have been doing. They have been following, as you might suspect,
the 95 percent probability, if in fact it is probability. Obviously 95 percent
probable is a lot more probable than 50 percent probable.
In a wide-ranging study
published in 2000, a U.S. Geological Survey estimated that ultimately
recoverable sources of conventional oil total about 3.3 trillion barrels, that
was this little mean number in the previous chart right here, of which a third
has already been produced. What has been produced is a half of what we have
discovered. They are predicting that we will discover for that mean, as they
call it, as much more oil as all of the reserves that we now know to exist.
More recently, Cambridge
Energy Research Associates, an energy consultant, estimates the total base of
recoverable oil, and here they have 4.8 trillion. The little chart I showed you
before had that at just under 4 trillion, you will remember. But notice from
the peaking chart that even if that is true, that will push peaking out to only
a bit before 2030. That is not all that far into the future.
Then they say there is a
minority view held largely by a small band of retired petroleum geologists and
some Members of Congress, that would be me, that oil production has peaked, but
the theory they say has been fading. Well, they should have told that to T.
Boone Pickens, because an Associated Press article, March 1 of this year, just
a few days ago, this is from Doha, Qatar, he is over there talking about oil.
And by the way, I didn't know until I read this article that he started his
professional life as a petroleum geologist. We know him as a very wise investor
on Wall Street. Legendary
If demand for crude rises
beyond the current global output of roughly 85 million barrels a day, Pickens
told the Associated Press, prices will rise to compensate, and alternative
sources of energy will begin to replace petroleum. If I am right, T. Boone
Pickens says, we are already at the peak. If that is true, the price will have
to go up.
And then he makes this
statement: ``I think there are less reserves around the world than are being
reported.'' Well, the two sources I mention are reporting greatly increased
reserves. T. Boone Pickens says that he believes that they are over-reporting,
said the 78-year-old former--by the way, young people can be very bright, but
wisdom comes with age, and so T. Boone Pickens has 78 years of wisdom--who now
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heads the Dallas-based Hedge
Fund BP Capital. There are no audited reserves in the Mid East. It makes me
suspicious, he says. We really don't know how much oil is in the
Forbes publisher, Steve
Forbes, challenged Pickens' assumptions during an exchange during the
conference saying political, not technological or geological, road blocks stood
in the way of increasing the world's oil production. Now, I know Steve Forbes,
and I admire him very much, but I think that he gives far too much credit to
the marketplace. Many people believe that the market is both omniscient, that
is, all knowledgeable, and omnipotent, all powerful.
If we had unlimited
resources, the market might do what Steve Forbes has confidence that it will
do. With the right incentives in places, such as
[Time: 20:15]
Pickens responded by
saying that Mexico is a declining producer of oil, as are most other countries,
naming the United States, Norway, Britain and soon Russia. By the way,
``The world has been
looked at,'' Pickens told Forbes. ``There is still oil to be found, but not in
the quantities we have seen in the past. The big fields have been found and the
smaller fields, well, there is just not enough of them to replenish the base.
Global consumers, led by the United States, have already pumped 1.1 trillion barrels
of oil, roughly half of the 2.2 trillion barrels that have been discovered,''
or what Pickens describes as nearly half of the world's estimate. He thinks we
will find a little more, 2.5 trillion barrels of oil. Other experts put
reserves at 3 trillion, Energy Information Agency; or 4 trillion barrels of
oil, Cambridge Energy Research Associates.
``From now on,'' Pickens
said, ``rising demand will be met by higher prices, rather than ever larger
crude oil production. Alternative energy sources will begin to take a share of
the energy market until the world evolves from a hydrocarbon-based economy to
something that is a mix of hydrocarbons and something else. Everything from
nuclear, coal, wind, solar, hydrogen and biofuels stands a chance to assuage
growing demand for energy.''
I would just like to make
a comment about hydrogen. All the others are truly energy sources. Nuclear,
coal, wind, solar, biofuels are energy sources. Hydrogen is not an energy
source. So why do we list it there? You can't mine hydrogen; you can't pump
hydrogen. The only way you can get hydrogen is to make it from something else.
Unless you are going to violate the second law of thermodynamics, it will
always take more energy to make hydrogen than you will get out of hydrogen.
It is made today largely
from natural gas. It can also be made by electromagnetizing water, splitting
water into hydrogen and oxygen. Well, if you will always use more energy to
make the hydrogen than you get out of the hydrogen, why would we be interested
in hydrogen?
Well, for two reasons. One
is that when you finally burn it, you get water. Water is the oxide of
hydrogen. When you burn hydrogen, you get hydrogen oxide. We commonly call it
water. That is pretty nonpolluting.
The second reason we are
interested is that it is a great candidate for fuel cells if we ever get
economically supportable fuel cells. We have been working on them for a long
time, experts tell us, maybe 20 years. We will have economically supportable
fuel cells, but that's the reason we talk about hydrogen.
A lot of people believe
hydrogen is an energy source. Hydrogen, think of it as a battery, is something
that carries energy from one place to another place. You can't put the falling
water in your car and run it, nor can you put the electricity, unless you have
a lot of batteries in your car to run the car, but you can take the electricity
you get from the hydroelectric plant, split water, compress the hydrogen, put
the hydrogen in your car. So you are really running your car on the energy from
the waterfall.
But secondhand you produce
hydrogen with it, and if you have a fuel cell in your car, now you will not
only be running your car, polluting, just with water, which is pretty
nonpolluting, but you will also get at least twice the efficiency out of that
as you get out of the reciprocating engine.
The next chart is a very
interesting one that shows us the sources to which one might turn to get energy
other than the energy we get from fossil fuels. This chart reminds me very much
of a young couple whose grandmother has died and left them a big inheritance,
and they now have established a pretty lavish lifestyle. Eighty-five percent of
all the money they spent came from their grandmother's inheritance and only 15
percent of the money they spend comes from what they earn.
They look at their
grandmother's inheritance and how old they are, and, gee, this money is not
going to last until we retire, so obviously we have got to do something, and
that something is going to be either make more money or spend less money. That
is pretty much exactly where we are relative to energy.
Eighty-five percent, some
people will tell you 86 percent, but 85 percent of all the energy that we are
expending today comes from natural gas, from petroleum, and from coal; and that
leaves only 15 percent of the gas to come from other sources, of energy to come
from other sources.
A bit more than half of
that 15 is nuclear energy. That is 20 percent of our electricity, and in France,
by the way, about 80 or 85 percent of their electricity comes from nuclear; and
in our country, about 20 percent, but it is 8 percent of our total energy.
So when you look at the
true renewables, only 7 percent now, it is a little different that this today,
because this is a 2000 chart, and we have been really ramping up with solar
cells, for instance, producing solar electricity. That market has been growing
at about 30 percent a year. That is incredible growth.
But this started out as 1
percent of 7 percent, that is .07 percent. Suppose it is four times bigger
today, that is .28 percent, less than a third of a percent, big deal. We have
got a long way to go.
Thirty-eight percent of
this renewable energy comes from wood, but that is not the person heating their
house with wood so much as it is the timber industry and the paper industry
wisely using what would otherwise be a waste product to produce energy. Waste
to energy, 8 percent of this 7 percent.
There is a really
state-of-the-art plant up here in Dickerson. They will be happy to have you
come visit. It is really a showcase, and they are burning waste to produce
electricity.
Now, one word of caution
about waste: that huge stream of waste represents a big investment of fossil
fuels, and don't count on having that big stream of waste in an
energy-deficient world. We will live comfortably, we can live comfortably, but
we will be producing far less waste in the future because all of that waste
represents the use of fossil fuels.
If T. Boone Pickens is
correct, and, by the way, he is not the only one, there are a number of experts
out there who believe that we have peaked or are about to peak, there will be
less and less of this waste. But at least for a moment it is a great use of this
waste material, much better, I think, than putting it in a landfill. Recycle
what you can; what you can't recycle, why, burn it to produce energy.
Wind. That is growing; it
is really efficient. Our big wind machines today are producing electricity at
about 2.5 cents a kilowatt hour. By the way, none of those big ones are made in
our country. I hope we can change that, but Norway makes them, for instance.
These are huge machines
with blades that turn very slowly. You have to be a really sick bird or bat
that flew into those. These aren't the little ones they had first where the
blades twirled around quickly and did kill some birds and bats. You may have
seen them. They are really quite large, and, I think, quite handsome.
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That could and should
grow. It is really growing in California. It is a totally renewable resource.
By the way, the wind is simply secondhand sun. The wind blows
because the sun heats the
Earth unequally and so it is differential temperatures on the surface that
cause the winds to blow.
Then the big chunk of
these renewables are conventional hydroelectric. Now, in our country we have
pretty much tapped out on the conventional hydroelectric. We probably dammed
every river that should have been dammed and maybe a few that shouldn't have
been dammed. They are now building fish ladders, and we are blowing up some of
those dams because we think that the environmental pressures are greater than
the relatively small amount of electricity we get from some of those.
That probably can't grow
much in our country, conventional, but microhydro produces far less
environmental impact and some believe might be as big as conventional hydro.
This is a little dam and small amounts of electricity, maybe only watts, but
100 watts, 24/7, that will produce a fair amount of light for your reading, for
instance.
At this 2000 chart,
alcohol fuel represented 1 percent of 7 percent, that is .07 percent. Today it
represents more than that. We have a number of ethanol plants; it is growing
very rapidly. There is a very interesting speech given by Hyman Rickover to an
audience of physicians. The 50th anniversary of that will be in just a few
days, few weeks, the 14th day of May. In that article he noted, that speech,
really, we used to have a transcript of it, he noted that one day there would
be competition between energy and food for our biological crops.
I thought of that when I
spent some time on a couple of occasions recently with our dairymen; and what
has happened is that with the relatively small amount of ethanol we have made
from corn, the supply demand has been so changed that in September of last year
corn was $2.11 a bushel, and in December it was $4.08 a bushel, nearly double.
The price of tortillas in Mexico has gone up, which is hurting poor people
there, and our dairymen are going bankrupt because of the high cost of feed.
Now, this is a boon to the corn producer, but it is anything but that to the
animal feeder, because with the relatively small amount of ethanol that we have
made, we have doubled the price of corn.
Well, this pretty much is
where we are going to have to find alternative energy sources, and it is quite
obvious, if you stop and think about it. You may want to put this off into the
future, but at some point we will reach peak oil. I think we are there or
nearly there for conventional oil.
Then at some point in the
future, oil and gas will be so hard to find, and so expensive, that other
sources of energy will be more attractive. We will look back in the future at
the age of oil, and what an incredible age it was.
If you do a Google search
for Hyman Rickover and energy, you will pull up the transcript of this
fascinating talk that he gave almost 50 years ago. He, in that talk, goes
through a very interesting history of the development of civilization and the
role that energy played in the development of that civilization.
All one has to do is kind
of reverse the tape, as you may see, when somebody jumps into a swimming pool,
and you reverse the tape and they jump back out of the swimming pool. So we can
see the contributions energy made to the development of civilization, and you
reverse that tape, you can get some idea as to what would happen to our
civilization if we are not able to derive energy from other sources equivalent
to that, which we are getting from fossil fuels.
The next chart is a very
interesting one from CERA, Cambridge Energy Research Associates, and this has
several projections of peaking on it.
Now, the title of this
article is ``Undulating Plateau Versus Peaking,'' and what they are contending
in the article is that those who believe in peaking probably also believe in
the tooth fairy, that they are about as probable. But in that article they have
this graph which shows a peak. I agree with them that it will not be a smooth
plateau, that it will be undulating.
I disagree that it will be
that far in the future and it will be that broad. But let's look at this chart.
They agree that if we find no additional large quantities of oil, that's the
roughly 2 trillion barrels that will have been found, that's the current
discovered oil in the previous charts, the peaking will be occurring fairly
soon.
If we find another,
roughly another trillion barrels by enhanced recovery and going under 7,000
feet of water and 30,000 feet of rock, as that last oil find in the Gulf of
Mexico was, that we can get that much more conventional oil. So peaking will be
pushed out to about this point.
[Time: 20:30]
And then they are looking
at unconventional oil. And just a word about some of that unconventional oil.
There are incredibly large potential reserves of unconventional oil. For
instance, the tar sands of Alberta, Canada, contain more potential oil than all
the oil that has been discovered so far. The same thing is true of our oil
shales out in Utah and Colorado.
So why aren't we resting
easy then that there is no problem for the immediate future because there is
this incredible reserve of oil? Now, they believe that we are going to tap a
pretty large amount of that.
In Alberta, Canada, they
are exploiting this field. They have a shovel which lifts 100 tons at a time.
It dumps into a truck which hauls 400 tons, and they carry this 400 tons to a
cooker. They have what is called stranded natural gas in Alberta, a lot of gas
and not many people. And since gas is hard to transport, it is not worth much
because there is not many people there to use it, so we call it stranded. So
its value is low. And from a dollar and cents perspective, they are making a
lot of money in Alberta. It is costing between $18 and $25 a barrel; that is
bringing $60 a barrel. That is a very handsome profit, so they are aggressively
exploiting this field. They are using natural gas to cook the oil. The natural
gas will not last forever. They know that, so now they are looking at the
possibility of building a nuclear power plant there.
I have asked: How long do
you have to operate a nuclear power plant before you get back to the fossil
fuel energy it took to build the nuclear power plant? I get wildly divergent
estimates of how long that is, which makes the point that we really need for
this dialogue, which we really need to have, we really need an honest broker to
help us agree on the facts, because it is very difficult to have an enlightened
discussion when you can't agree on the facts. That honest broker might very
well be the National Academy of Sciences. They are very knowledgeable. They are
highly respected, and I think that they would assume this responsibility and I
hope that we can find the resources so that they can do that.
Now, the Canadians know
that this is not sustainable. The gas will run out. And, in addition to that,
this vein, if you think of it as a vein which has now pretty much surfaced, it
will shortly duck under a heavy underlay so there will be a lot of material to
remove above it, so much so that they could not economically continue to mine
it and carry it to the cooker. So then they will have to develop it in situ, in
place. They really don't know yet how they would do that.
Now, the real profit that
you need to look at in any of these things is what is called energy-profit
ratio, how much energy you put in and how much energy you get out. In the big
oil fields, and we have no giant oil fields in our country. We have never had
one. The Ghawar War Field, perhaps the grand daddy of all oil fields in Saudi
Arabia, has been producing oil for a very long time, and for much of its life,
it was producing $100 worth of oil for $1 worth of investment, energy-profit
ratio of 100.
Our oil was never that
good. It started out maybe 10 or 20, and now it is down to 1 or 2 energy-profit
ratio, how much energy you have to put in compared to how much energy you get
out. And so although there are very large potential reserves in these
unconventional oil fields, the net that you get out will be very much less.
Even if it is feasible to get it out, the net will be very much less than the
amount of oil which is there.
Now, they are working very
hard in Canada. It is a huge enterprise. They are producing about 1 million
barrels a
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day. That is a lot. But that
is less than 5 percent of what we use in this country, and just a bit more than
1 percent of the 85 million barrels a day that the world uses. So even though
this is a tremendous effort and a lot of oil produced, it still is making a
fairly small contribution to the total amount of oil in the world.
Now, I would ask the
listener, Mr. Speaker, to draw their own conclusions: How much additional oil
do you think we will get from current fields with enhanced oil recovery? Even
if we get as much more as all of the present projected reserves, that will only
push the peak by their own chart, which we saw a bit ago, out to 2016. And if
we find double the amount of oil that we have ever found, it pushes it out only
to about 2027 or 2028. That is not the distant future.
The next chart is really
an interesting one, and I think graphically this kind of presents the dilemma that
the world is in, and this is what the geography of world would look like if the
size of a country was relative to the amount of oil reserves that it has. It is
a really interesting map; isn't it? Saudi Arabia dwarfs everything else. And
notice little Kuwait, a tiny corner of Iraq. You can see now why Saddam Hussein
was interested in Kuwait, a tiny province down there at the southeastern corner
of Iraq, just a fraction of the geography of Iraq, but nearly as big as Iraq.
It dwarfs the United States. Here we are; we would fit five times into Kuwait.
They have five times the reserves that we have.
Notice the two largest
countries in the world, China and India; 1,300,000,000 people in China; 1
billion in India and growing. They don't have the birth control, the population
control they have in China, and it won't be very long until India's population
is equal to that of China. I mentioned a bit ago that it won't be too long
before the middle class in India is the size of our total population, 300
million people. They all want cars. They all want heated and air conditioned
homes. All of this takes energy.
So the traditional roughly
2 percent increase per year in energy demand is going to pick up with the
development of countries like China and like India. Russia, which is now a huge
exporter of oil, notice, they are only four times the size of the United
States, a fraction of the size of Saudi Arabia, probably a bit smaller than
Kuwait.
Notice where most of the
world's oil is. There is some in this hemisphere, in Venezuela, but the rest of
it
is all northern Africa and
the Middle East. Someone had noted that it is very strange that the world of
Islam has most of the oil and the Christian world has most of the arable land.
It seems to me there ought to be some opportunity for partnering. We can
produce the food; they can produce the energy. But those kind of relationships
in this confrontational world are hard to achieve.
The next chart is one that
further develops this picture. And what this shows is the world, not as that
would be proportioned by oil but as it is, and it shows what the symbols here,
who is buying oil where. And these symbols for China, you notice one here, they
almost bought Unocal in our country, and China is now buying up oil around the
world very aggressively, not just buying oil, but in the process making
friends. ``Would you like a hospital? How about a soccer field?'' And the
Chinese are doing this all over the world. You can see their symbols where they
are all over the world, and notice many of them in that oil rich crest of
Africa and the Middle East.
Why are they doing this?
The Chinese economy is growing at over 10 percent. The last quarter for which I
saw data was 11.4 percent. They have to have observed that oil is fungible;
that it really doesn't matter who owns the oil, which is why I didn't have any
big problem with them buying Unocal. It doesn't really matter who owns the oil.
The country, the company that gets the oil is the high bidder because oil moves
in a global marketplace. Today, it was roughly $61 a barrel. So it doesn't make
one bit of difference who owns the oil. The person who has the money, who bids
the highest, gets the oil.
So, if this is how oil
moves on the world market, why would China be buying up all of this oil? We
happen to have one of the largest reserves of coal. We have 250 years of coal
at current use rates. But if you increase the use of coal only 2 percent; by
the way, this exponential growth is poorly understood by most people. After the
discovery of nuclear energy, Dr. Einstein was asked what the next great energy
source in the world would be, and he kind of jokingly responded that there was
nothing quite like the power of compound interest.
Let me tell you just a
little story to help understand this. The story is told that chess was
developed in an ancient small kingdom. And the king was very appreciative, and
he told the inventor of chess that, ``You have made such a contribution to our
culture that I will give you anything reasonable that you ask.''
And so the inventor said,
``Oh, king. I am a very simple man. I have simple needs. If you would just take
my chess board with, what, 64 squares on it, and if you put a grain of wheat on
the first square and two grains of wheat on the second square and four grains
of wheat on the third square and eight on the fourth and so forth until you
filled all of the squares of the chess board, that will be an adequate
compensation.''
The king said to himself,
``Foolish fellow. I would have given him anything reasonable. All he is asked
for is a little wheat on his chess board.''
The king of course could
not do that, because the amount of wheat that would have been on that chess
board I understand represents a decade of world harvest of wheat. That is what
exponential increase does.
Well, the world has been
increasing at about 2 percent a year. That rate of growth will increase. There
is an easy formula that you can use. If you divide the percentage growth into
70, it will give you doubling time. So 2 percent growth doubles in 35 years; 10
percent growth doubles in 7 years. So you can now get doubling time if you
divide the percent into 70.
This coal that would last
us 250 years, if you have only 2 percent increase in growth, that exponential
function decreases the duration of its use to just 85 years. And since coal
will not be useful for many of the uses of energy that we have, we are going to
have to convert it into a gas or a liquid. And the energy to do that if you
take it from coal will now reduce the amount of time that that 250 years of
coal will last to 50 years.
But since energy sources
move on a world market, we might be expected to share that liquid from coal or
gas from coal with the rest of the world. And since we use 1/4 of the world's
energy, that 50 years divided by 4 comes down to 12 1/2 years. So this amazing
250 years of coal suddenly shrinks to just 12 1/2 years at only 2 percent
growth if we are sharing it with the rest of the world.
Well, we may decide that,
since the coal is ours, that we won't need to share it with the rest of the
world if there is an acute energy shortage here.
[Time: 20:45]
That would be a logical
decision that a country would make.
Now, if we, if there is a
possibility we would not want to share our coal with the rest of the world, is
there a possibility that China might not want to share their oil, which they
have now bought in all of these countries around the world; that they would not
want to share their oil with the rest of the world?
Mr. Speaker, with that
thought in your mind, you might reflect on the fact that China today is
aggressively building a blue water navy. Some I think 60 percent of their oil
goes through the Straits of Moloch. We now could cut off that oil.
From a national security
perspective, I can understand why they would have a meaningful interest in a
blue water navy large enough to protect their supply lines for oil.
By the way, talking about
choke points for oil, I think 40 percent of the world's oil moves through the
Straits of Hormuz. And if that were mined, or if super tankers were sunk there
to block that, 40 percent decrease in the amount of oil would bring all of the
world's economies to their knees, essentially overnight. I hope that we are
guarding well the Straits of Hormuz because that would, indeed, be the ultimate
in asymmetric attack.
I have here a little
article called, ``Corn Based Plastic Coming Soon.''
[Page: H2233]
Now, of course, we live in a
plastic world. And all of these plastics are made from oil. If you will look at
your car, if you look at your home, you look at your television set, you look
at almost anything in your environment, and I suspect this rug was made out of
oil. Our pesticides, our herbicides, our pharmaceuticals, our make up, this is
all made out of oil or a great part of it is made out of oil. So there is an
interest in getting the things we make out of oil, much of our clothing is made
out of oil, interested in being able to get these fibers, this material from
something else, and so this is an article, ``Corn Based Plastic Coming Soon.''
Every bushel of corn that
we produce requires a lot of fossil fuel energy. And almost half that energy
comes from natural gas, which currently is used to make nitrogen fertilizer.
Corn, as a plant, is a pig. It requires and uses incredible amounts of
nutrients. And we have now engineered hybrid corn so that it can be planted
close together. It grows rapidly. It uses the sunlight efficiently, and it uses
enormous amounts of energy. And so, this corn based plastic that they are
talking about, I don't know what the efficiency there is. But if it is no
better than the efficiency of making ethanol, and ethanol, remember, every
gallon of ethanol represents at least three-fourths of a gallon of fossil fuel
to make it. Some, Dr. Pimenthal, for instance, believes that if you really
cost-account all the energy that goes into producing corn, that you use more
fossil fuel energy to produce the corn than you get out of the corn. I hope he
is wrong. I believe he is wrong. Anyway, after you have produced the ethanol
from the corn, you still have a pretty good feed left, and I don't think his
calculation took that into effect.
So this corn based plastic
really is, in large measure, just recycling fossil fuels. It may make you feel
good to say that my shirt is made from corn. But when you recognize the
incredible amounts of fossil fuel energy, if it is the same efficiency as using
ethanol, at least three-fourths of the fiber of your shirt might just as well
have been made from oil because that oil or some fossil fuel source was used in
growing the corn from which the plastic was made.
Mr. Speaker, we will
continue next week.
END