Opinion
- Editorial- Commentary
Mary
King: Energy
security
I
had a very interesting response to my article "No
business as usual in energy" (Express,
June 25) from Rod Campbell-Ross of Australia. Listen:
"You
mention in one of your articles that Peak Oil
could occur as early as 2015. It may have
already happened. There is increasing evidence
that supply is declining off the various Peaks,
depending on what liquids one is looking at. A
continued rapid decline in Saudi (it has declined
11 per cent from its highs already) production,
whether for geological, economic or political reasons,
will not be masked for much longer.
Also it doesn't matter why the Saudis are producing
less. Whether they cannot, or will not still means
there is less oil in the market. If they do have
control, my guess is that having seen prices rise
to $70 without causing economic hardship (except
for poorer people and countries) that they may
be trying to get to $100 (or some other higher
number), but not precipitously, they will continue
trending down production so that prices trend up.
At
first glance you would think that is terrible.
I beg to differ, I think it is good. Western governments
(including no doubt yours in T&T) have been
lax and mendacious as far as the security of energy
supply is concerned. They should have forced the
price up by levying taxes (my favourite is to replace
income taxes with energy taxes), but if they won't
do it I suppose the Saudis have decided to do it
themselves. Now they get the benefit of the 'tax'.
Anyway, higher prices will hopefully dampen demand
and encourage conservation.''
Another reader commented that limiting our gas
extraction rates and maintaining reserves is better
policy than monetising since money disappears in
no time.
Listen
also to "In defence of the Hubbert
Linearisation Model'' by Jeffrey Brown at http://www.theoildrum.com/node/2689#more
"While
responsible people can disagree on what the annual
production data are telling us
about our proximity to Peak Oil, in my opinion
it is a virtual certainty that Peak Oil from the
point of view of importers is here. This virtual
certainty is due to the lethal combination of flat
to declining oil production and the (sometimes
rapidly) rising domestic consumption in exporting
countries, resulting in sometimes catastrophic
decline in exports. In effect in my opinion the
very lifeblood of the world economy is draining
away in front of our very eyes.''
Last week's article also referenced the increasing
control that governments are exerting on petroleum
resources: Saudi Arabia, Venezuela, Bolivia,
Peru. Government-owned oil companies now control
some 93 per cent of the world's proven reserves.
The 13 largest oil companies are national oil
companies which are initiating new domestic and
political behaviour. Russia is moving in the
same direction to regain state control of its
petroleum assets by, for example, in its forced
buyout by Gazprom of bp's joint venture in Kovykta,
one of the largest natural gas fields in the
world. Schlumberger estimates that the world
will lose some eight per cent of its present
production capacity between 2006 and 2010 (24mmb/d)
which will be impossible to replace by new finds.
The result of all of this is a dramatic search
in the world today for secure energy assets such
as Canada's oil sands and the deep-water Gulf
of Mexico (ref Tom Petrie). Yet we see that this
capital is hesitant to take up such deep water
offers in T&T. What does this tell us of
our prospects of increasing our reserves via
FDI?
First, governments are reclaiming their petroleum
assets which will change the world energy markets.
Secondly, the prospect of cheap energy is gone
and with the decline of the world's massive producing
fields finding petroleum will be more and more
expensive. Hence it is not business as usual either
for importers or exporters. It is even of more
concern to energy-based plantation economies like
ours especially with limited reserves.
Surely then our policy for the use of our reserves
must be conservation and optimum use of these
resources in which energy security, for local
consumption and export so as to live as we restructure
the on-shore economy, becomes pre-eminent. Our
Government policy of rapid drawdown of our reserves
to fuel smelters and LNG where the interests
of FDI are predominant becomes immediately questionable.
We are monetising our natural gas, saving very
little in our Heritage and Stabilisation Fund,
spending very inefficiently on certain social
services and the artefacts of economic development
while we incorrectly subsidise local energy sales
(gasoline, electricity). None of these encourages
conservation and does not contribute to long
term energy security. Our Government has indeed
been lax as far this security is concerned.
Mary
King is
an article writer in one of the leading newsdaily
in Trinidad & Tobago ( maryking@tstt.net.tt
). Petroleumworld not necessarily share these
views.
Editor's
Note: This article was first publish in Trinidad
Express, Monday, July 2nd 2007. Petroleumworld
reprint this article in the interest of our readers.
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Petroleumworld
07/08/07
Copyright ©2006
Mary King . All Rights Reserved.
