- Why Peak Oil is a Lie
It's NOT Peak Oil, It's NOT even the end of "Cheap Oil."
The nasty little truth is, there is plenty of Oil in the world...it's just that the "Cheap stuff " was becoming more difficult to find.
First, to talk about Oil, realise that there is oil that is easy to refine into gasoline, propane etc. and we call that "Light Sweet Crude" (think of that as that as that squeeze bottle of honey in the shape of a bear, after being in hot water for twenty minutes) and on the other end of the spectrum, "Sour Crude" (think molasses, on a cold day)
The oil that was taken out of the ground in far West Texas (Midland/Odessa area) was, and is the standard for "Light Sweet" but there is very little of that anymore because it's been drilled out over the last 20-30 years. That isn't to say that there isn't more there at deeper levels. (An aside here, when an investor looks at oil/gas leases, here in Texas, one of the most interesting things is, that many of the holders of the original leases are only selling drilling rights down to about 7500ft and keeping those mineral (oil/gas) rights below 7500ft. and if that doesn't point toward reserves at lower levels, I don't know what does)
At the other end of our Oil spectrum is "Sour Crude", main problem, it's harder to refine, because it's thicker, and more likely to contain trace minerals that we don't want like Sulfur,the good news is it's plentiful and cheap. For years the oil companies avoided "Sour Crude" like the plague, because "the return per barrel was less than other Crude".. and at this point I need to explain how Crude is refined.
The main "Tool" used in refineries is what is refered to as a "Cracking Tower"..(an extreme over simpliflication, for any Chemical Engineers that may read this, I'm a layman explaining to other laymen OK) heated Crude is introduced into the tower, as the Crude is heated it breakes down into its lighter and heavier hydrocarbons, lighter hydrocarbons like those used to formulate gasoline "float" higher and are seperated, other hydrocarbons that are used to make Diesel and kerosine are lower and at the bottom of the tower, think Road Tar. Since the "thicker the crude, the fewer light hydrocarbons" the lower the return of gallons of gasoline relative to gallons of Diesel.
For every problem, there is a solution..and it's not to "Circle the Toyotas,Pilgrims..
The methods being used to "Re-Refine" Crude, to increase its lighter hydrocarbon makeup are to increase the heat and pressure used, and to add other" pre-refined" hydrocarbons (like kerosine) to thin the crude (and even Steam)
If you have purchased unleaded or Diesel that was refined by Valero USA, (Valero is baised in France) it started out as"Sour Crude".
Another "kicker" Oil refineries in Japan and South Korea are having to STOP REFINING crude oil, they have such an OVERSUPPLY of fuel oil (Diesel) that prices for it have dropped to under $20 per barrel (36 cents per gallon, wholesale) compare that with "Light Sweet" Crude (unrefined) selling for $60 That's the LARGEST percentage "spread" between refined/unrefined in history!
The ONLY thing holding up crude oil prices, are those who have purchased Crude Oil Futures, they all are DESPORATLY trying to find someone , ANYONE to sell their contracts to. In the next 12 months those who are "long" (buying) crude oil futures...will lose BILLIONS.
The problem is that "The Seven Sisters of Oil" want you buy the lie that we are running out of Oil, but so do those who want to "help" us. The FEAR industry is one of fastest growing movements today.
There have been overt price manunipulations in the last two years, but there is now an oversupply of Crude now coming onto the market...Just in time..for the Election..
- Originaly published October 2006 Yahoo360 GRGeorge