Barack's Peak Oil Confession

Brian Hicks

Written By Brian Hicks

Posted July 14, 2010

Shortly after being sworn in, the President of the United States is briefed on secrets of national security… secrets of our nation’s frailty… secrets that aren’t revealed to anyone except top government officials.

But what Obama let slip — and what commentators on NBC, Fox, and MSNBC completely missed — could send the price of oil skyrocketing… and a nation into panic mode:

Oil is a finite resource… We consume more than 20 percent of the world’s oil, but have less than 2 percent of the world’s oil reserves. And that’s part of the reason oil companies are drilling a mile beneath the surface of the ocean: because we’re running out of places to drill on land and in shallow water.

For decades, we have known the days of cheap and easily accessible oil were numbered. For decades, we’ve talked and talked about the need to end America’s century-long addiction to fossil fuels. And for decades, we have failed to act with the sense of urgency that this challenge requires.

Anyone with any doubt that cheap, easily-found oil is still out there is delusional.

If there’s still cheap, easy oil to be had…

Then why would BP be drilling in miles-deep water?

Think about it.

The United States alone consumes more than 20 million barrels a day more than China, Japan, Russia, Germany, and India combined.

And the Gulf spill, which could be accompanied by a disastrous ban on offshore drilling, will only make the oil shortfall worse.

What’s the president supposed to say? I can only imagine his address to the Union…

Our nation and the world are about to face one of the greatest challenges in history — the rapid depletion of oil supplies and other fossil fuels has begun…

You will no longer be able to afford to drive your cars.

Thank you for your attention. God bless America.

If words like these were delivered with the nightly news, accelerating panic attacks would be the least of our concerns.

What’s really infuriating Americans are the trails of deception, lies, and erroneous reports that the gullible masses believe. What Obama and BP won’t tell you is that the spill could also send us into a double dip recession, if only from the foreclosure rates the Gulf region is now seeing.

We’re talking about millions of people that could be displaced. The White House and BP have no idea what’s been unleashed in this area.

But let’s not get side-tracked with the economy right now…

The main focus today is peak oil

I don’t care what the anti-peak oil theorists tell you.

They’re wrong, and BP just made things worse.

Even British insurer Lloyd’s believes in peak oil. In a new report, the firm discusses how “soaring demand combined with environmental and technological constraints could bring the planet to peak oil-like circumstances long before the amount of recoverable oil actually peaks.”

Lloyd’s warns “a lack of investment in new oil wells exacerbated by environmental concerns raised by the Gulf oil spill, combined with accelerating demand from emerging economies China and India could shove the price of a barrel of oil over $200 by 2013.”

With the Gulf disaster, peak oil is either imminent or has already arrived.

Easy-to-obtain black gold is being exhausted, which is part of the reason BP was drilling so deep (about four miles down).

How BP just made matters worse

The very fact that BP and others are drilling in 5,000 feet of water confirms, to me at least, the peak oil issue.

Why any company would take on such high risk doesn’t make sense if it saw another option.

Every day, we’re reminded of how the oil crisis in the Black Sea — err, the Gulf of Mexico — is worsening. BP estimates the disaster at 100,000 barrels a day, even though it’s probably more.

But what we don’t hear about — perhaps in an attempt to protect the White House, BP, and other offshore stock holders — is the peak oil concern. In fact very little has been said about this.

Instead, we hear that Obama wants some one’s ass to kick over this.

Sure, the U.S. Geological Survey estimates we have 3,000 billion barrels of oil in our planet — a 46-year supply if no more oil is found.

But the problem exists in getting the oil out of the ground; most of it cannot be accessed at all, or is so expensive to drill that’s it not worth the cost.

And if we’re lucky, we’ll find six new fields the size of those in Saudi Arabia to maintain current world oil output through 2030, according to the International Energy Agency.

Maybe someday, the anti-peak oil theorists will wake up

Take a look at BP’s other platform, Thunder Horse, which began in May 2008.

It was supposed to pull up a billion barrels of oil at a rate of 250,000 bpd… It’s now pulling up maybe 60,000 bpd.

We hear about all the great oil finds off shore, but we never hear about the disasters. They just seem to find their way to Itneverhappenedville.

Neptune is another Gulf project. This one was supposed to bring up 50,000 bpd, but it peaked at 40,000 by August 2008.

A year and a half later, production was down to 16,000.

According to the Falls Church News Press:

If it turns out that 10 or 20 percent of initial estimates is all that can really be recovered, then the cost of this oil will be prohibitive. Deepwater wells were running $100 to in some cases $200 million per well drilled. Platforms that drill and support multiple wells can easily get into the billions of dollars before they are producing. If these wells unlimitedly yield only a fraction of what their planners were hoping for, there are going to be some very broke oil companies, or some very expensive gasoline in our future.

The other problem: fallout by BP

Any new drilling regulations — and any new blowout preventer (that actually works) — will send the price of oil found by offshore wells through the roof. And that will hurt many companies, leaving us with scant oil finds 15 years from now.

Unless something revolutionary comes along, the offshore oil we find may be too expensive to pull up.

Ignore the naysayers… They have no idea what’s really happening.

If you want to make some real money from this situation, you can always milk onshore gains from the Bakken and Cardium regions.

Oh, and Pure Asset Trader (now 63 for 66 in closed positions) has six new trades that’ll fly once oil begins to pop again. Stay tuned.

Stay Ahead of the Curve,

Ian L. Cooper
Editor, Energy and Capital

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