[Congressional Record Volume 154, Number 71 (Thursday, May 1, 2008)]
[House]
[Pages H3006-H3012]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
PEAK OIL
The SPEAKER pro tempore. Under the Speaker's announced policy of
January 18, 2007, the gentleman from Maryland (Mr. Bartlett) is
recognized for 60 minutes as the designee of the minority leader.
Mr. BARTLETT of Maryland. Mr. Speaker, I came early to our office
yesterday morning, and I opened the door and took the newspapers inside
and put them out on the reading table. And as I took them out, seven of
them, four newspapers and three of the kind of inside-the-beltway
papers, I noted the lead story above the fold. In the Sun there were
two stories: ``Demand Eats Supply, swiftly rising food prices are
undoing progress in fighting hunger globally''; and another above the
fold headline: ``Energy Bill Aid Payouts on Rise.'' Then I picked up
the Washington Times and noticed an above the
[[Page H3007]]
fold headline, ``Bush Lays Gas Blame on Congress.'' And then I picked
up the Washington Post, a major headline above the fold: ``Syphoning
Off Corn to Fuel Our Cars.'' And then the Wall Street Journal, the
biggest headline above the fold, with a graphic and picture above it:
``Grain Companies' Profit Soar As Global Food Crisis Mounts.''
And then I took the three inside-the-beltway newspapers to put them
on the reading table, and I looked at the headlines there, on the front
page: ``Gas Prices Fuel Effort to Jam GOP.'' ``Alexander Eyes Energy
Agenda.'' The first of those was Politico; the second was Roll Call.
And the third, The Hill: ``Politics at the Pump.''
So, Mr. Speaker, the seven papers that our office gets, every one of
them yesterday had as their leading story above the fold something
about energy prices and food prices, which, of course, are related.
Also appearing today, and I wanted to make sure that we didn't miss
this New York Times column by Thomas Friedman, a very well-known author
and commentator, which describes America's energy problems as the
``predictable consequences of an energy strategy that would be
exacerbated by the most popular proposed changes to maximize demand,
minimize supply, and buy the rest from the people who hate us most.''
In a little bit, I will read some other excerpts from this very
interesting op ed piece by Thomas Friedman.
I have here a little book which came across my desk, signed by one of
the authors to Representative Roscoe Bartlett: ``You are a political
voice in the dark. Please continue trying to shed light on this
critical issue.'' And the critical issue he's talking about is
explained in the title of his book, ``A Very Unpleasant Truth . . .
Peak Oil Production and Its Global Consequences.'' And I turned to the
little page that talked about who the authors are, about the authors:
W.D. Lyle, Jr. holds a Ph.D. in engineering from Purdue University. L.
Scott Allen holds a Ph.D. in physics from SMU. Both are retired
scientists from the Exploration and Producing Technical Center of a
large international oil company. They have been awarded over 40 patents
and coauthored or authored more than 50 technical papers with
contributions appearing in a variety of journals such as Science,
Geophysics, Nuclear Science and Engineering, and the Journal of
Petroleum Technology. Both authors, it says, live in the Dallas area.
So those are obviously well-respected authorities in their fields.
And I turned to chapter 6: ``What About Alternative Energy Sources
and What Should We Do Now?'' And it begins by saying, ``What must we do
now to prepare for and respond to the inevitable and impending energy
crisis?''
And, Mr. Speaker, the seven papers that I just referred to and the
headlines on all of them about energy and food would indicate that
maybe, just maybe, we're on the cusp of this crisis.
And then he says, ``The first and most important thing that needs to
be done is to educate and convince the public that a problem even
exists.''
Long before I got this book, more than 3 years before I got this
book, I thought also that that was the most important thing that needed
to be done. And so, Mr. Speaker, I think this is the 43rd time I have
come to the floor to spend an hour talking about the challenge. Really
it was to explain to the American people the challenge that we face, to
educate and convince the public that a problem even exists. Well, I
think these seven headlines indicate that at least the editors of those
papers thought that a problem existed because they were all talking
about the high price of energy and its consequences on food prices.
But education is not the only thing that I have been doing. I have
been personally involved in at least four activities, which I think
will help to advance America on the path that we need to be treading.
I'm sponsoring, in conjunction with the SMART Organization, a Smart
Green Showcase on July 18 of this year in Frederick, Maryland, that
will offer smart energy solutions for homeowners and small business
owners. There is a lot of information out there. There's a lot of new
technology that just isn't widely known. Practical ways you can use
less energy, save money, and help our country transition to domestic,
cleaner, and renewable energy sources. The conference will provide
educational and networking opportunities for homeowners and
representatives of large and small businesses, academic and nonprofit
organizations.
This Smart Green Showcase has its own Web site, and I would encourage
you to go to that Web site, www.smartgreenconference.com, for a fuller
explanation of what will be shown at this Smart Green Showcase.
In the next few days, I will submit a bill that is a companion bill
to a Senate bill, S. 2821, that was introduced in the Senate on the 3rd
day of last month by Senator Maria Cantwell and Senator John Ensign,
and almost half of the Senators have already signed onto this bill.
{time} 1700
I have a brief summary of the bill, and because what it does is so
important to where I think we need to be going, I am going to take just
a moment to read this brief summary. This Clean Energy Tax Stimulus Act
of 2008 amends the Internal Revenue Code to extend certain tax
incentives for energy production and conservation. It extends through
2009 the tax credit for production of electricity from renewable
sources. For example, biomass, geothermal energy, landfill gas, and
trash combustion.
It includes marine and hydrokinetic renewable energy as a resource
eligible for such credit. It allows sales of electricity produced from
renewable resources to regulated public utilities. This one is really
very important to encourage everybody, even every homeowner, to produce
electricity. If they are not using it, sell it back to the power
company.
It extends the Energy Investment Tax Credit for solar energy through
2016 for fuel cell and microturbine property through 2017. It repeals
the dollar per kilowatt limitation for fuel cell property under the
Energy Investment Tax Credit. It allows public electric utilities to
qualify for such credit.
It extends through 2009 the tax credit for residential energy-
efficient property expenditures. It repeals the 2000 limitation on the
tax credit for solar electric property. It allows an offset against the
alternative minimum tax of tax credit amounts. It extends through 2009
the tax credit for investment in clean, renewable energy bonds,
increases the national limitation amount for such bonds.
It extends through 2009 deferral provisions relating to the
recognition of gain by certain electric utilities, and extends to 2009
the tax credit for nonbusiness energy property. It includes residential
biomass fuel stoves, that is pellet stoves, as eligible energy property
for purposes of such credit.
It extends through 2010 the tax credit for energy-efficient new
homes. It extends through 2009 the tax deduction for energy-efficient
commercial buildings, and increases the allowable amount of such
deductions. Finally, it extends the tax credit for energy-efficient
appliances, to include appliances produced in 2008, 2009, and 2010, and
it revises and updates energy efficiency standards for such appliances
in accordance with the Energy Independence and Security Act of 2007.
As shown on the first chart here, I also have a Self-Powered Farm
Energy Bill, H.R. 80. This is really a very significant approach to
addressing our energy problems because we are going to have to turn
more and more to our farmers for energy and products that are produced
by energy, that in the future will have to be produced with less
energy. This bill would support Federal research, development,
demonstration, and commercial application activities to enable the
development of self-powered farms that are net producers of both food
and energy. They should be capable of independence from offsite sources
of energy. A farm standing all alone.
Mr. Speaker, if our farms can't be energy independent, we really,
really have a huge challenge for the future. I think this is very
doable, and this bill will offer awards, rewards to those who do that.
Offsite sources of energy, fuel and raw materials for fuel. A community
resource for food and energy or raw materials for fuel would minimize
or eliminate ongoing operating expenditures to offsite entities for
fossil fuel-derived energy, employ sustainable farming practices for
long-term soil fertility. We mustn't forget that what
[[Page H3008]]
we do to make our farms energy independent and to get energy from our
farms, that we must be really concerned about sustainability. It would
be easy for a few years to mine the soil, that is take out of the soil
more than you're putting back. But if it is not sustainable, it will
not be useful for the long term.
Employ sustainable farming practices for long-term soil fertility and
produces at least two times as much energy, including fuel or raw
materials, or fuel, as it consumes both onsite and in the transfer of
farm products to market.
The next chart shows an additional bill, H.R. 670, that I have
introduced, American Energy for America's Future, the bipartisan DRIVE
Act, Dependence Reduction through Innovation in Vehicles and Energy
Act. What this does is to encourage transition from depending so much
on liquid fuels from oil for transportation and move to electricity for
transportation.
And the reason for this, Mr. Speaker, is pretty obvious, if you stop
to think about it. We use two kinds of energy largely in our lives
today; electricity for many, many things, but not much for
transportation. Most of our transportation comes from fossil fuels,
from oil, and some gas. You see city buses advertising that they are
running on clean natural gas.
We have lots of opportunities to produce more electricity. We can do
more solar. France produces 75, 80 percent of their electricity from
solar. We have enormous opportunities to grow wind and solar. They are
now growing at something like 30 percent a year. That is incredible
growth rate. But they started very small. So even with that big growth
rate, they are still producing a very minimal amount of energy to the
grand mix of energy.
We can get a lot more energy in those parts of our country where
you're close enough to the molten core of the Earth to get true
geothermal energy. You go to Iceland, I have been there, and I did not
see a single chimney in Iceland. They may have one. I didn't see it.
They get essentially all of their energy there from geothermal energy.
That is tapping the molten core of the Earth, which will heat water,
and you can do lots and lots of things with it, and hot water.
Then, of course we have lots of opportunities for microhydro, without
the kind of impact on the environment that our macro hydro has had with
these huge dams and we try to compensate with fish ladders and so
forth, compensate for the damage we have done to the environment with
fish ladders and so forth so the fish who are spawning can get around
to them. So we have lots of opportunities for producing electricity.
Our options for producing more liquid fuels are far more limited. So
this is a very important bill. We are going to be talking for the rest
of our few moments together today about these opportunities for
producing more liquid fuels. You will see that they really are limited.
We really do have a challenge there.
So to the extent that we can move transportation dependency from oil
to electricity, we will have done a great deal to minimize our
dependence on oil and free ourselves from dependence on oil, as the
President appropriately said in his State of the Union Message, from
people who don't even like us.
I wanted to just spend a couple of moments reading some additional
comments from Thomas Friedman's article. I don't read this because I
necessarily agree with everything he says, but I read it because I
think that it's very important, as this little book said, that the
American people understand the seriousness of the challenge that faces
us.
So let me read a few more excerpts from his article that appeared
today in the New York Times. The title of his little op-ed piece is
called: Dumb as We Wanna Be. ``Here's what's scary: Our problem is so
much worse than you think. We have no energy strategy. If you are going
to use tax policy to shape energy strategy, then you want to raise
taxes on the things that you want to discourage, gasoline consumption
and gas-guzzling cars, and you want to lower taxes on the things you
want to encourage, new renewable energy technologies. We are doing, he
says, ``just the opposite.''
``The McCain-Clinton gas holiday proposal is a perfect example of
what energy expert Peter Schwartz of Global Business Network describes
as the true American energy policy today.'' Then I quote again,
``Maximize demand, minimize supply, and buy the rest from the people
who hate us the most.''
Then additional excerpts from the article go on to say, ``This is not
an energy policy. This is money laundering. We borrow money from China
and ship it to Saudi Arabia and take a little cut for ourselves as it
goes through our gas tanks. No, no, no. We'll just get the money by
taxing Big Oil. Even if you could do that,'' he says, ``what a terrible
way to spend precious tax dollars.
``For almost a year now, Congress has been bickering over whether and
how to renew the investment tax credit to stimulate investment in solar
energy and the production of tax credit to encourage investment in wind
energy. The Democrats wanted the wind and solar credits to be paid for
by taking away tax credits from the oil industry. President Bush said
he would veto that. Neither side would back down. Stalemate.''
You know, as I said, I read this not because I necessarily agree with
everything he says, but I read it because it is a very important voice
that is saying what I have been trying to say for more than 3 years
now, Hey, we face a problem. We have really got to do something about
that problem.
The next chart, this is a little cartoon which I think tells the
story that many people don't believe. Just why is gas so expensive,
over $3.50 a gallon now? Just why is gas so expensive? The cartoon says
it with just two words, a tiny little supply and a huge big demand.
Now there are many people who believe that gas is very expensive at
the pump because the major oil companies are gouging us. Many people
think that gas is high at the pump because the oil from which we refine
it is very expensive because the Arab world is holding back and not
producing as much oil as they could produce, or somehow gouging us.
The reality is that neither one of these commonly believed reasons
for our high gas prices are probably true. There may be a little
gouging here and there by stations and so forth. The price of oil is
not determined by our big oil companies, ExxonMobil and Shell and Royal
Dutch. The price of oil is determined, as this cartoon indicates, by
how much there is and how much we would like to use.
The Arabs don't determine the price of oil. They can affect the price
of oil. If they could produce more oil, they could drive down the price
of oil by increasing the supply so it would be more consistent with the
demand, and that would reduce the price of oil. There is increasing
evidence that they could not do this. That is they could not increase
their supply.
Russia, a couple of weeks ago, announced that they had peaked in oil
production. That they could no longer increase their production. Just
last week, Saudi Arabia indicated that they had reached a maximum oil
production. They have the granddaddy of all oil fields, the Ghawar, a
huge field, producing 5 million barrels a day. They want to bring
online a new field. I read a lot about the technicality of that field.
It's very interesting, what they have done. This is the field that has
a lot of potential oil in it. Khurais, I think. It's hard for me to
pronounce words with k-h.
{time} 1715
They have hired Halliburton to drill a large number of wells, and
what they plan to do, what they hope to do, is to flood that field
where the oil will not flow. If you drill down in that field, you will
not get any oil, although there is a great deal there, and they hope to
make this oil flow by pumping water in at the periphery of the field
under considerable pressure.
But this is a very delicate operation, because if they pump at too
high a pressure and too large a volume and the water overflows the oil,
it could seal off the little interstices through which the oil would
flow and it might kill the field, so there would be no oil from the
field. But hopefully they won't do this. They are very good at this
technology. And if they are able to develop this field, they will get,
they hope, 1.2 million barrels a day. This, they hope, will make up for
the oil that
[[Page H3009]]
they are not getting as the present fields they are pumping tail off.
They have reached a maximum production of oil.
The next chart is a chart whose history begins in 1956 with a talk
which I think will go down as the most famous speech given in the last
century by M. King Hubbert to a group of oil engineers and business
people at San Antonio, Texas, in 1956, 52 years ago, on the 8th day of
March. This was 1956. Here we are, 1956 right here.
He told them that in 1970, this point here. This part of this chart
was not available. All they had was this, rapidly increasing oil
production. We were the largest producer of oil in the world, the
largest consumer of oil in the world, and I think the largest exporter
of oil in the world. He said in 14 years, in 1970, the United States
will reach its maximum oil production. Shell Oil Company asked him,
please don't give that talk. You will make us look silly and make you
look silly. He gave the talk, and for a long while was an object of
derision. Then, right on schedule, in 1970 we reached our maximum oil
production.
Now, they didn't know that in 1970. You only know you have reached a
maximum when you look back and see, gee, we were pumping more oil then
than we are now. But this was clearly, clearly known by 1980, because
you can see by 1980 here we are well down the other side of Hubbert's
Peak.
There are a couple of things in this chart that he did not include in
his analysis. He couldn't have known that we were going to get so much
natural gas liquids, and he looked at only the lower 48. He didn't look
at Alaska, and he didn't look at the Gulf of Mexico, where we have
found huge amounts of oil.
I have been to Alaska, to Dead Horse, to Prudhoe Bay, and I have seen
the very beginning of that 4-foot pipeline through which for a number
of years now about one-fourth, about one-fourth of our total domestic
production has been flowing.
Well, you can see that even when you add the oil which he did not
include in his analysis, the oil that we got from the find in Alaska
and from the Gulf of Mexico, that that was just a blip on the slide
down the other side of Hubbert's Peak.
Now, we have done a number of things to try and reverse this, because
we are not at all comfortable in this country having only 2 percent of
the world's oil and using 25 percent of the world's oil. We have very
good scientists and engineers, and we have used a lot of enhanced oil
recovery. We have used discovery techniques, 3-D, seismic and computer
modeling to go out and find more oil, and we have drilled more oil
wells than all the rest of the world put together.
In spite of better discovery, of aggressive pumping of these fields
with this enhanced oil recovery, in spite of drilling more oil wells
than all the rest of the world put together, and in spite of finding
oil in Alaska and the Gulf of Mexico, we today are producing about half
as much oil as we produced in 1970.
I spent a few moments looking at this chart. I think it is very
important to understand what M. King Hubbert predicted and what
happened and the reality that no matter what we have done, we have not
been able to reverse what he said would happen, and that was in 1970 we
would reach our maximum oil production, and that after that, no matter
what we did, oil production would fall off.
The next chart, if I can have the next chart, the next chart is a
quote from one of four different reports that our government has paid
for and not totally ignored, but largely ignored. They all say the same
thing, by the way. This is from the first of those four reports done by
SAIC, a very large, prestigious international engineering science
organization. Dr. Robert Hirsch was the principal author of that, so it
is frequently called the Hirsch Report. He says here on page 64,
``World oil peaking is going to happen.''
Now, the same person that predicted that we would peak in 1970, in
1979 predicted that the world would be peaking about now. I have asked
myself a question so many times and asked the question to others, if M.
King Hubbert was so right about the United States and if he predicted
that the world would be peaking about now, wouldn't it have been
appropriate to have a plan B, a plan B which recognized that that might
happen, and, gee, you better have some contingency plans preparing for
it? When I say ``we,'' I mean the world. That is not what we have done.
There is no indication, as evidenced by the behavior of any company
or any country, that any of these entities have been doing anything to
address the huge challenge that we would have if in fact the world
followed the course that the United States so predictably followed,
that the world would peak about now. ``World oil peaking is going to
happen,'' this report said. ``World production of conventional oil will
reach a maximum and decline thereafter. That maximum is called the
peak. Oil peaking presents a unique challenge,'' this report says.
``The world has never faced a problem like this. There is no precedent
in history to guide us,'' is what this report says. There is no lesson
from the past that you can use to guide you as to what you need to be
doing to get you through this challenge.
The next chart, this is a chart of data which is compiled by the two
leading entities in the world that track the production and consumption
of oil. Now, we store a little, very little, in our strategic reserves
in this country and some other countries, but, by and large, all the
oil we produce is consumed.
``Peak Oil: Are We There Yet?'' These two agencies are the IEA, the
International Energy Agency, a part of the UN, and the EIA, the Energy
Information Administration, a part of our own Department of Energy.
The IEA, the international one, says that for the last 18 months or
so we have reached a plateau in oil production. As a matter of fact,
just at the end of the line they have drawn through there up and down,
because it is not a constant thing, up today and down tomorrow and so
forth, it is actually tipping over just slightly. The EIA, the green
line, shows that from their data we have been constant and actually a
little lower now, but relatively constant in oil production for the
last 3 years.
Now, if in fact the world's production of oil has been flat in the
last 3 years, and these are the two best recognized entities in the
world for tracking this, if in fact it has been flat for the last 3
years and demand has continued to go up, what would naturally happen to
oil prices?
Well, oil prices were, what, when they started, $50-some dollars a
barrel. Now, they are off the chart now, about $110 today. It has
dropped off a little from the $120 of last week. I think that dropoff,
Mr. Speaker, is because $120 oil is just plain too costly for a lot of
the world and they haven't been able to use it. They just make do with
less. So we have some higher reserves than we thought, and the
speculators now are speculating that the price of oil will come down
for the moment because of these reserves. Of course, $110 oil, the
price is off the chart here.
M. King Hubbert predicted in 1979 that the world would be peaking
about now. All four of these studies, the first one I mentioned, the
SAIC study, the second one, the Corps of Engineers study, the third
one, the Government Accountability study, and the fourth one, one done
by the National Petroleum Council, and all four of those say
essentially the same thing: Peaking of oil is inevitable, absolutely
inevitable; that it is either present or imminent, with potentially
devastating consequences.
Now, I say again, if M. King Hubbert was right about the United
States, and we spent quite some little while looking at that chart, and
in spite of everything that we have done, better oil discovery,
aggressive pumping of the oil, enhanced oil recovery, and although we
drill more wells than the rest of the world put together, M. King
Hubbert 's prediction is still true. Today we are producing about half
the oil we produced in 1970. He predicted that the world would be
peaking in oil production about now. These four studies all said that
peaking of oil is inevitable. They didn't know when it would occur.
These data from the EIA and the IEA would lead you to believe, unless
this is just a little plateau and it will take off again, and the next
chart we will look at, if we can have the next chart now, the next
chart will tell us how likely it is that this is just a little plateau
and then it is going to take off again.
[[Page H3010]]
If you had only one chart to look at, only one chart to use for
informing yourself and talking about this subject, this would be the
chart. This chart shows in the bars here going back as far as 1930 the
discoveries of oil, and, boy, it was up and down. We found some big
fields in some of these years, so we got some huge spikes. But notice
the general trend of this. Since about 1970 it has been down, down,
down, down, and that is in spite of evermore aggressive and better
techniques for finding the oil.
Now, if this peak is just a plateau and is going to take off again,
then you need to believe that one of two things is going to happen:
Either we are going to find very quickly better ways of teasing out
from the reserves we are now pumping more oil, or we are going to find
more reserves of oil, more big reserves of oil.
{time} 1730
The solid black line here indicates the oil that we have used. And
the world was in a very happy position up until about 1980. Every year
until 1980, we found more oil, sometimes a lot more oil, than we used
that year. If you integrate under this curve, you will get the total
volume of oil that we have used. So this area represents the volume of
oil that we have used.
Now, ever since about 1980, of course, we have been finding less oil
than we use, so now this area here has been filled in by reserves back
here. They are still there. We know they are underground. We know we
can pump them.
Now, how much more will we find in the future? Most of the experts
believe that we have probably found, of conventional oil--we will talk
in a few minutes about unconventional oil. Most experts believe that
for conventional oil we have probably found 90 percent, 95 percent of
all the oil we will find in the future. Those who made this chart
suggest that future discoveries will follow a descending curve, ever
less and less, as we go further and further into the future, because
once you found some oil, then additional oil is more and more difficult
to find. Now, this clearly won't be that smooth, it will be up and
down, but they are suggesting it will follow a curve much like that.
Now, what will the future look like? What the future will look like
will depend upon your perception of several things: How much more oil
you think we will find; it will depend upon how aggressive you think we
can be in pumping oil. But one thing is certain: You cannot pump oil
you have not found.
Now, the way this chart is drawn, it doesn't go clear out until the
end, of course; it goes out another 150 years. Every year, and this has
been the experience in the United States, less and less oil, harder and
harder to get. And now, with the world situation, not true in our
country because nobody else made up the deficit for the oil we didn't
pump; and so for a long while, even when our oil production was
dropping off, oil was still $10 a barrel because other countries could
produce it quickly and easily, and they did, so that made up for our
shortfall. But that is not going to happen in the future because, as
indicated by a prior chart, as indicated by all four of these studies,
paid for by your government, delivered to your government, oil is going
to peak.
And if the United States is a microcosm of the world, you would
reasonably judge that, no matter how aggressive we become, and we have
been really aggressive in our country, like drilling more oil wells
than all the rest of the world put together, you still are not going to
reverse that decline.
So what the future looks like, and you see the oil that you are using
here above the amount of oil that you found is going to have to be
filled in by reserves from here. You can use your eye and transfer
these reserves there and see reasonably what that curve will look like.
The next chart presents a little schematic. Now, I will point out
what is quite obvious: That this peak can be made very sharp if I
compress the abscissa and expand that ordinate, that will become a very
sharp curve. Here, I have spread it out so it is a very gradual curve.
This is a 2 percent growth curve. That is about the rate at which the
world has been increasing its use of oil. By the way, 2 percent growth
doubles in 35 years; it is four times bigger in 70 years; it is eight
times bigger in 105 years; it is 16 times bigger in 140 years.
This led Albert Einstein to answer a question asked by someone after
we had discovered nuclear energy: What will be the next big energy
force in the universe? And his response was: The most powerful force in
the universe is the power of compound interest. And, of course,
compound interest is compound growth.
This chart shows a 35-year growth period, the yellow. I think we are
about here, and peaking is either present or imminent. And most people
are looking at avoiding any problems in the future by filling the gap.
If this is what you have available and this is what you would like to
use, this yellow area represents the gap.
There are a lot of things out there that we can exploit to get some
liquid fuels from. In their totality, most of the experts that are
really seriously looking at this, in their totality, most people
believe that it will be extremely difficult to produce as much liquid
fuel as we now are using, let alone filling the gap. I will say that
that will not bring us to any calamitous end. We have enormous
opportunities for conservation and efficiency.
The other morning as I came into work, I noticed in one of the lanes
in front of me a big SUV with one person in it. In the lane right next
to them was a Prius with two people in it. Now, the Prius, I have one,
we get about 48 miles per gallon. That is at least three times that
SUV. Isn't it? So the Prius gets three times the miles per gallon of
the SUV; and there were two people in it; so that means that miles per
gallon per person was six times better in the Prius with two people in
it than it was in the SUV with one person in it. And the Prius is a
very comfortable vehicle, and riding with someone else makes the trip
to work more enjoyable. So, we have lots and lots of opportunities to
increase our efficiency.
The next chart is an interesting one, because there are a lot of
people who believe that somehow we are going to find a huge amount of
more oil out there. In a few moments we are going to talk about some of
these potentials. And there may be a lot out there. But what I am
saying is that we really need to have a plan B, because there is
nothing that we have done in our country which has avoided the
inevitable slide down the other side of Hubbert's Peak that M. King
Hubbert predicted in 1956.
This is a chart again from Robert Hirsch, and he gets this from EIA,
Energy Information Administration, and they are predicting here in this
chart that we will find as much more oil as all the reserves we now
know to be able to be pumped.
Most experts believe that the ultimate amount of oil, the total
amount that we will pump in the world from the beginning to the end of
the age of oil will be about 2 trillion barrels. Here it is 2.2. They
are suggesting here that we will find another nearly 1 trillion,
because this curve is based on what they call the main or expected
value of 3 trillion barrels. Now, that means that they think we are
going to find just about as much more oil as all the oil which we now
have in reserves which can be pumped.
Now, even if that curve occurs--and this is because of that
exponential growth. Even if this occurs, the peak is pushed out from
here to 2016. The dotted line, by the way, and I don't know if it is
even doable. The dotted line shows what would happen if you would have
an aggressive, enhanced recovery and pump it more quickly. It pushes
the peak out a little bit, and then you fall off a cliff after that.
This black curve, by the way, you will recognize from the big black
curve on the oil chart, remember, with all the bars going up. This is
the recession in the 1970s. If it weren't for that--the old saying, it
is an ill wind that brings no good. And that ill wind of those Arab oil
price spike hikes and the worldwide recession that followed that, that
is this dip here, we actually were using less energy for a while, we
really looked at our efficiency. And your air conditioner now is
probably three times as efficient as it was then. Your freezer, the
same thing. If we had not done that, look at this curve, look where it
would be, off the chart.
There was a stunning statistic during the Carter years, and that was
that
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every decade we used as much oil as had been used in all of previous
history. That is really different now. This slope you can see is very
much less than this slope. So this was kind of a blessing in disguise,
because it woke us up, and we now have a much lesser challenge than we
would have had if we not had those oil price spikes and that little
recession in the 1970s and this call to arms that resulted in a lot of
equipment that is now a whole lot more efficient.
The next chart is a fairly recent statement by Shell Oil Company CEO
van der Veer. By the year 2100, he says, the world's energy system will
be radically different from today's. The world's current predicament
limits our maneuvering room. We are experiencing a step change in the
growth rate of energy demand. And Shell estimates that, after 2015,
supplies of easy-to-access oil and gas will no longer keep up with
demand. It may be a little sooner than that, as indicated by these
curves from the IEA and the EIA. As a result, he says, society has no
choice but to add other energy sources.
The next chart is one that kind of puts this in perspective. This
looks at the industrial age.
By the way, there is a fascinating speech that was given. If M. King
Hubbert's speech was the most important speech of the last century, I
think the most insightful speech of the last century would be the
speech given by the father of our nuclear submarine, Hyman Rickover,
given 51 years ago the 14th day of this month to a group of physicians
in St. Paul, Minnesota. If you do a Google search for ``Rickover'' and
``energy speech,'' it will pop up.
He noted then that we were about 100 years into the age of oil,
which--and he uses just beautiful expressions, which he referred to as
the golden age. And truly it has been a golden age. And he had no idea
how long the age of oil will last; now we have a much better idea. But
he made a very important statement. He said that, how long the age of
oil lasted was important in only one regard: That the longer it lasted,
the more time that we have to plan for an orderly transition to
nonfossil fuels.
About 17 months ago, I was privileged to lead a codel of nine Members
of Congress to China to talk about energy. Interestingly, they began
their discussion of energy by talking about post-oil. Wow, I thought,
these people think in terms of generations and centuries.
We are a great country, and a part of our affluence and our greatness
is that we have a near-term focus, essential for our business, but I
think it would be nice if we had a little longer term view, too. It is
hard for our businesses to see beyond the next quarterly report; hard
for elected officials to see beyond the next election. But they were
talking about post-oil, and what they would be doing and what the world
should be doing now and would be doing in a post-oil world.
Well, Hyman Rickover talked about 8,000 years of recorded history,
and he said that the age of oil would be but a blip in the history of
man. I only have here about 400 years of that 8,000 years; but if you
went back to the rest of the 8,000 years, it would be flat because we
use very little energy. Here is the industrial revolution beginning
with wood; and then we have coal; and, boy, did it take off when we
found gas and oil.
This is the same curve that you have seen before, by the way. This is
the dip in the 1970s in the lesser slope now. Here, we have compressed
abscissa and expanded the ordinate, so now we have a very sharp curb
compared to the very gradual one we have been looking in the past.
If I superimposed on this a graph of population growth, it would
explode from roughly \1/2\ billion here, following this up almost
exactly to the nearly 7 billion people we have in the world today.
This reality, as the next chart shows us, introduces us to a very
challenging geopolitical reality. We have 2 percent of the world's
reserves; we use 25 percent of the world's oil; we import almost \2/3\
of what we use. We pump four times faster than the rest of the world.
We produce, from our 2 percent, 8 percent of the world's oil
production. So, we are pumping and our more wells than all the rest of
the world put together are working. We are pumping down our reserves
faster. We represent a bit less than 5 percent of the world's
population, one person in 22, and we use \1/4\ of the world's energy.
The next chart speaks a little more to this geopolitical challenge
that we face. If you look at the top ten owners of oil, that is the bar
on the right here, it is mostly countries that own it: Saudi Aramco,
National Iranian Oil, Iraqi National Oil, and so forth.
{time} 1745
And Luke Oil which is kind of private in Russia has only 2 percent.
These are the top ten.
If you now look at the top ten producers of oil, they are really big
guys: ExxonMobil, Royal Dutch, BP. They produce only 22 percent of the
oil. Most of the oil is produced by countries rather than companies.
The next chart speaks further to this geopolitical challenge that we
face. This shows what China is doing around the world. The dollar signs
indicate where we own some oil. You don't see very many of them here.
This symbol indicates where China owns oil, a lot of it in Russia.
Notice they have bought up oil all over the world.
The next chart speaks again to this geopolitical challenge that we
have. This is what the world would look like if the size of the country
was relative to the amount of oil they have. Very interesting. Saudi
Arabia dominates the landscape. They should, they have 22 percent, more
than a fifth of all of the oil in the world. Iraq, Kuwait, and you have
to get a magnifying glass to see the United Arab Emirates on a map.
Russia, not a giant compared to the others, but they are an aggressive
pumper of oil. I think they are now the number two producer of oil in
the world.
Venezuela, it dwarfs our part of the world. Bigger than everybody
else in this part of the world, but notice we get most of our oil from
Canada. Our third largest producer of oil is Mexico. Together they have
about as much oil as we have. Canada doesn't have very many people, and
they are too poor in Mexico to use the oil and so they can export the
oil. But this speaks again to the geopolitical challenge that we face.
The last chart, I just wanted to look at the sources from which we
are going to get liquid fuels. I have argued that because we face this
huge challenge in the future, and because it is going to be very
difficult to produce as rapidly as we would like to, the liquid fuels
to replace what won't be there as we slide down the other side of the
world, Hubbert's peak, that it would be nice to have in reserve a
little bit of the oil we know that is out there which is why I have not
been enthusiastic about drilling in ANWR or offshore or on our public
lands.
Maybe it is because I have 10 kids and 16 grandkids and two great-
grandkids. And I came to Congress because I was afraid that my kids and
grandkids weren't going to live in the same kind of country that I grew
up in. I thought we had too much government, it taxed too much, it
regulated too much, and it spent way too much. I would just like for my
kids and my grandkids and great-grandkids to have the same opportunity
I have had, and energy is so important in our world. So I have been
resistant to immediately drilling in ANWR and offshore and on our
public lands because it is like money in the bank that is yielding huge
interest rates. I don't think you ought to rush to the bank and pull it
out and spend it. It will be even more valuable later.
We will get a little of this and a little of that. There is no magic
bullet out there. I am sure everybody is familiar with what happened
with corn ethanol. We are using so much corn for ethanol, it has raised
the price of food around the world. Farmers have diverted land from
wheat and soybeans to corn. Rice harvests are down. Costco, I
understand, will sell you only one bag of rice now.
Mr. Speaker, let me close by saying I am kind of exhilarated by this.
There is no exhilaration like meeting and overcoming a big challenge,
and I think America is up to this. With leadership, I think we can once
again become an exporting country. We have the technology and the know-
how. We are the most innovative, creative society in the world. I think
when America understands this challenge, they will be up to the
challenge, and America will lead the world in moving from fossil fuels
to renewables.
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I think I will be here a week from today, and what I want to do at
that time is spend most of the time talking about realistic
expectations from all of these alternative sources of liquid fuels.
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