by Tom Whipple
12-03-06
Lurking just beyond public perception is the 800-pound gorilla of peak oil
issues... who gets to import how much after worldwide depletion sets in?
Currently, distribution of the world's oil production is relatively simple.
Whoever wants oil, and has the money to pay for it, can buy as much as they
want. No questions. No limits. Historically there have been a few exceptions,
such as during World War II or the Arab Oil embargo, but in general if you have
the money, importing oil has not been a problem.
In February, the gorilla began to stir in the form of a report prepared by
the folks up at the University of Alberta in Canada. It seems 68 % of the crude
oil and 55 % of the natural gas produced in Canada is being exported to the US.
Under the fine print of North American Free Trade Agreement (NAFTA), the
Canadians are obligated to continue shipping this portion of their oil and gas
production to us even after they go into depletion and can no longer produce
enough to satisfytheir own needs.
Not unexpectedly, a number of Canadian writers have started to ask why on earth
32 mm Canadians should be obligated to send over half of their oil and gas
production to help meet the energy appetite of 300 mm Americans.
As Canada 's production of oil and gas starts to dwindle, there will
obviously be pressure to reduce exports. Canada's Prime Minister recently noted
that unless the US is more forthcoming on Canadian complaints about US softwood
restrictions, Washington just might be facing Canadian reluctance to keep
exporting such prodigious amounts of oil and gas south of their border.
Although there does not seem to be any immediate danger of a reduction in the
flow of Canadian oil and gas to the US, the report and media reaction raise a
glimmer of what might happen to world energy movements after depletion sets in.
For some period after peak oil, the rich nations will simply outbid the poor
ones for dwindling supplies of gas and oil. Indeed, this seems to be already
happening after the recent price increases. What will become hardships for the
rich will become life and death issues in poorer countries as the underpinnings
of modern civilization simply melt away.
In the United States, however, it might be time to start making a distinction
between imports of oil and imports of natural gas. There are many sources of
imported oil, and stepping up oil imports can be rather easy as we have seen
from the marked increases in our imports to compensate for the hurricane damage
to production facilities in the Gulf of Mexico.
However, importing gas is another issue as most of it comes by pipeline from
Canada and Mexico. Only 2 % of current natural gas imports come as liquefied
natural gas (LNG) from distant suppliers. Although there are a lot of calls
these days to increase LNG imports to the United States by building more LNG
import faculties, importing increased supplies of LNG requires the construction
of large and expensive LNG production facilities in other countries and the
special tankers to move it.
For the US, the bulk of our natural gas imports -- some 18 % of our total
consumption -- come by pipelines from countries that have their own needs and
are starting to raise questions about the scale of their exports.
There is another issue with natural gas however; it is a very versatile fuel and
raw material. Currently in the US about 22 % of our annual consumption of
natural gas goes for residential needs where it supplies heating for about 55 %
of the homes in the country. About 38 % is used in industry to produce power and
as the raw material to make multiple products and 25 % goes to produce clean
electricity.
In February, the Canadian Chemical Producers Association released a statement
pointing out that by far the most valuable use of natural gas was to make other
materials such as vinyl and plastics. The Association contends that using
natural gas to make materials is far more valuable to our civilization than
burning it to keep warm or to make electricity that can be produced by other
fuels.
Until recently there was so much gas around nobody really looked very hard at
what it should be used for. Anything that made economic sense was fair game.
It's now starting to look as if natural gas may become scarce even before oil
does. This is especially true in Britain where North Sea gas is running out, and
in the US where hurricanes keep tearing up production facilities and at least
one neighbour is starting to wonder about how long they really want to keep
supplying us.
For the 55 % of us who are currently cooking, drying, bathing and generally
keeping comfortable courtesy of our natural gas supply, it just might be time to
start thinking about alternatives.
Source: www.vheadline.com