Back to school - on foot?

I had intended to follow my piece on the decline of the Cantarell oilfield with a piece on how to reduce energy consumption, but history, as is its wont, has marched on.

In the Cantarell piece I referred to a study by an organization called Securing America’s Future Energy. That study estimated that a 4% reduction in world oil supply would lead to an oil price spike into the range of $160 a barrel. This would result in ~$6 a gallon gasoline and heating oil and, according to their unsurprising projections, a worldwide recession. To quote one of the participants, former Director of Central Intelligence Robert M. Gates, “The real lesson here [is that] it only requires a relatively small amount of oil to be taken out of the system to have huge economic and security implications.”

British Petroleum has just shut down their Prudhoe Bay operation in Alaska due to corroded pipes. They will be replacing most of the piping and can’t give an estimate of when it will come back on line. That means that 400,000 barrels per day (b/d), about half a percent of world production, is shut in for an indefinite period.

Meanwhile, the U.N. Security Council has issued an ultimatum to Iran – stop enriching uranium by August 31st or else suffer sanctions. Iran has responded with defiance, including a reference to the “oil weapon.” Iran exported 2.7 million b/d in 2005, or about 3.2% of world production.

Iraq is either in the midst of a civil war (according to Iraqis and most world observers), or on the edge of one, if you work for the Bush Administration. Iran has great influence over the Shiite sections of Iraq, and could make the situation much worse if it was in their interest. Iraq ekes out roughly 2 million b/d, or roughly 2.4% of world production.

The rebels in the oil rich sections of Nigeria are kidnapping oil workers on a regular basis and disrupting production there. Rebel attacks temporarily shut in about 675,000 b/d earlier this year. Nigeria exports 2.25 million b/d, about 2.7% of world output.

Let us not forget the 4-6 major hurricanes that the NOAA is predicting for the Gulf of Mexico this season. The U.S. portion of the Gulf produces 1.5 million b/d, about 1.7% of world production. 100% of it was shut in after Katrina, with 50% of capacity still down weeks later. The production shut in was temporary, but major.

Anything could happen, and nothing might happen. BP might be magicians and get that 400,000 b/d back in a few weeks, but I doubt it. I will leave my crystal ball in its velvet-lined box, but I will do some simple arithmetic.

Half a percent of world production is indefinitely shut in, and 10% is at risk in the next few months. The mullahs that rule Iran will be making a decision before Labor Day weekend about the cost/benefit ratio of crippling the world economy. Do they continue to delay and play the diplomatic game, or do they screw the valves shut and say the Persian equivalent of “How do you like me now, infidel?” (0.5% + 3.2%= 3.7%)Would they also give the signal to their allies within Iraq to step up attacks on oil infrastructure there? ( 3.7% + 2.4% = 6.1%) Nigeria is an unknown, as is Mother Nature.

The cosmic dice may roll and give us sevens, or they may give us snake eyes, or something in between. Even a slightly bad scenario would push oil prices over $100 a barrel. My main point is that we are living very, very close to the edge of a bad situation. My second point is that we have very little control over the supply side of the equation. If we begged the Saudis they might be able to squeeze out another 2 million b/d, but that is not guaranteed, either.

Which brings me back to the people at SAFE. They point out that we can’t wait around for the oil dice to roll if we want to avoid a long bout of economic, social, and political pain. We need an accelerated program of demand reduction. We, the people, can’t expect any such rational action from the federal government right now, so it is up to us on a personal, local, and state level.

Now is the time to do the home weatherization you have been meaning to do. Get that carpool going, even one day a week. Telecommute. Retire the beater SUV and get the hybrid you’ve always wanted, or at least something with an extra 10 mpg. Eat more locally grown food. Just drive less. Forward this post to your friends and ask them to do the same. Even if you can’t save the country, you can put yourself and your community in a better position for when the probabilities play out.

Ok, next time, the energy reduction piece.