The macro situation on the energy industry is complicated. It is especially more complex in today’s world where commerce overlaps national borders instantaneously, supply chains are interlocked across a dozen countries, and commodities are now interdependent. This new world, born in 1995 with global systems and the Internet, began to walk in 2000 and before we knew it was alive, was sprinting by 2005. Since then crude oil has tripled in price, gold and corn futures have almost doubled, and the world fuel tank is running on empty. The primary reason for the explosive growth is because multinational companies modernized the east when technology and telecommunications created global access. This opened the world for three billion new people and now we are running out of fuel and electrical power - in cities across every country, on every continent. The future of energy is looking like a perfect storm, created by a ten year old global economy, swirling so fast that it is sucking us into a dark abyss where a convergence of industries and countries compete for the last available crane, rig, platform, pipeline, skilled welder, offshore crewman, steam turbine, or tanker filled with crude.
Given that energy is the life-blood of economic development, the battle for energy and power is a matter of national security for every nation. But many do not understand the complete picture. In order to fully appreciate the situation, pretend that one apple represents a million barrels a day of equivalent crude oil, a basis for measuring energy demand.
Back in 1995, the world consumed about 70 apples a day and had enough trees, trucks and people to harvest perhaps a dozen extra apples a day. But today, the world is making 86 crude apples a day and eating 86 crude apples a day. This has people worried because it’s not as if we have a year’s supply of apples in the pantry if something goes wrong. The United States, the largest consumer, eats 22 apples every day, and has perhaps l5 days of edible apples in their pantry (usable inventory) and another 30 days in the freezer (Strategic Petroleum Reserve). Since the world is eating the apples as fast as we can harvest them, some people are worried about receiving their daily ration of apples. This has never happened before and some people are in denial, especially the apple farmers.
Since we have so little spare capacity between apple supply and demand, the price of apples has quadrupled since 1995 and the average American family has used up their entire disposable income from their last two pay raises just to keep buying apples. They have been demanding that the nation make more apples, but there are many problems. First, it takes ten years for the seedling to bear fruit. Second, although were not out of apple trees (oil reserves), the economy has been growing so well that the world is flat out of experienced farmers, not enough people are graduating from apple farming school, the apple harvesters (refiners) are running at maximum capacity, and there are not enough trucks, drivers, and experienced apple pickers to make any more. The apple farmers (petroleum industry) tell us not to worry, we have enough apple trees to last a hundred years. What the farmers fail to acknowledge is that we are not beavers and we don’t eat the tree. We eat the apple.
Why don’t we grow other fruits to replace the apples? We do and apples only represent 80 percent of the total fruit (energy) we consume. The world actually eats another 22 pieces of fruit a day to survive; 12 organic oranges (wind, hydro and solar), 5 prickly pears (nuclear) and one more increasing rare fruit only available in emerging nations, 5 kiwi’s (wood). What people don’t realize is that the kiwis are only going to last just so long, and the assumed expansion plans for organic oranges and prickly pears are running into problems of their own. First, most people have become hooked on apples and they have built entire businesses all around apples, so the farmers who are trying to grow organic oranges and prickly pears are running into resistance from the apple addicts. Secondly, all of the farmers for organic oranges and prickly pears are facing the same problem as the apple farmers – the seedlings take ten years to grow, there are not enough trained farmers, and all the equipment to harvest, transport, and sell the organic oranges and prickly pears are back ordered or non-existent. As a result, all the fruit farmers’ plans are slipping by three to five years. There is actually one more problem for the prickly pears (nuclear), although they are cheap, healthy and safe, three people died from a bad pear when they first started growing them and now the pears have a bad reputation in America. Everyone in the industrialized nations has forgotten about the kiwis (wood) since those are only used in exotic places like Asia but the people eating kiwis are actually quite worried because there is only so many left and when they are gone, they too must start eating apples or oranges but they cannot afford them.
To read my presidential position paper, visit
What do we do about it? Click here to read my position paper for the next president.
Click here to listen to my radio program on the looming global energy crisis. This is part one, there are four parts listed in the Energy category on my website.
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