Environmental Engineering Reference
In-Depth Information
oil boom will be history by the end of the current decade—though the official forecast shows pro-
duction levels gently drifting thereafter when in all likelihood they will plummet given the spectac-
ular per-well decline rates of the current top-producing plays, the Bakken and Eagle Ford forma-
tions.
3
Is there another Dutch boy waiting, finger ready? At one point the largest tight oil deposits in
the United States were said to be in California's Monterey formation; the EIA released a report in
2011 forecasting that the Monterey would ultimately yield 15.4 billion barrels of crude, about two-
thirds of the country's total tight oil reserves. However, subsequent analysis undertaken by my col-
league David Hughes at Post Carbon Institute significantly dampened such expectations; and sure
enough, in mid-2014 the EIA gutted the Monterey forecast by 96 percent to a measly 600 million
barrels.
4
Tight oil deposits in other countries will take longer to develop than those in the United
States and will present more technical and especially political challenges (fossil fuel extraction can
be very lucrative for property owners in the United States, but in most other countries it's the gov-
ernment that profits from extracting or selling access to underground resources). Other unconven-
tionals, like extra-heavy oil in Venezuela and kerogen (also known as “oil shale,” and not to be con-
fused with shale oil) in the American West, will be even slower and more expensive to produce—if
they're ever tapped to any significant extent (Shell abandoned its kerogen research operations in
2013 without any prospect of eventual profitability).
5
Bottom line: the recent, ongoing “new normal” of high but stable oil prices may last another few
years; after that, oil supplies will become much more problematic, and prices are anybody's guess.
The dam is weakening. Have your hip boots and waders ready.
2. Quantitative Easing
The financial crash of 2008, bad as it was, should really be thought of as merely a symptom of
a more pervasive, profound, and ongoing shift in the entire global economy. Our growth-based,
fossil-fueled economic system is colliding with foreseeable energy and debt limits.
6
We constructed
our existing financial system during a historic period of anomalous rapid growth; without further
growth in manufacturing, transport, and trade, the pyramid of credit and leverage built by investors
during recent decades is likely to implode. We got just a taste of what might be in store with the
Lehman and AIG failures.
Some who understood the system's vulnerability early on, and who warned that a crash was
imminent, forecast a rapid collapse of the entire economy. Each year from 2008 up to the present,
these commentators have insisted that in a matter of months we'll see bread lines, shuttered banks,
and riots in the streets. Riots and bank failures have indeed shown up in Greece, but here in the
United States (and Britain, Germany, China, Canada, Australia . . . the list continues) economic life
goes on. In the United States, pre-crash norms in employment, household income, and house values
have not fully returned, but neither has the sky fallen. Most economists say the nation is in the midst
of a “fragile recovery.”
Why no collapse? Governments and central banks have inserted fingers in financial levees.
Most notably, the Federal Reserve rushed to keep crisis at bay by purchasing tens of billions of dol-
lars in US Treasury bonds each month, year after year, using money created out of thin air at the
moment of purchase. This has enabled the federal government to borrow at low interest rates; it also
props up the American financial industry. Indeed, virtually all of the Fed's money has stayed within
