[Congressional Record (Bound Edition), Volume 158 (2012), Part 1]
[House]
[Pages 1116-1119]
[From the U.S. Government Publishing Office, www.gpo.gov]




                       THE WORLD ACCORDING TO OIL

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 5, 2011, the gentleman from Maryland (Mr. Bartlett) is 
recognized for 30 minutes.
  Mr. BARTLETT. Thank you, Mr. Speaker.
  Oil is about $100 a barrel. We're in a recession. The United States, 
just a couple of years ago, used 22 million barrels of oil a day. Now 
we're using less than 19 million barrels of oil a day, and still oil is 
$100 a barrel in the middle of a recession. We are also producing more 
oil in our country than we did last year for the first time since 1970. 
The production of oil has increased this last year. Every year before 
that, the production of oil was lower than it was the preceding year. 
Now, with Bakken oil, we're producing a bit more than we did last year.
  So why, with increased oil production and decreased oil use in the 
middle of a recession, should oil still be $100 a barrel?
  This is really hurting our economy. It increases the cost of just 
about everything we use because, if you've got it, a truck probably 
brought it, and the increased fuel cost increases the cost of just 
about everything, therefore, that we have.

                              {time}  1920

  I believe the most important speech given in the last century was 
given in 1956 on the 8th day of March in San Antonio, Texas, by an oil 
geologist known as M. King Hubbard. We need to put his speech in 
context. At that time, the United States was king of oil. We produced 
more oil. We used more oil. We exported more oil than any other country 
in the world.
  On this 8th day of March in 1956, M. King Hubbard made an astounding 
prediction. He said that in just 14 years, the United States would 
reach its maximum oil production. He wasn't sure what that number would 
be. But he made the prediction that we would reach our maximum 
production in 1970, just 14 years later, and no matter what we did, it 
would continue to go down after that. And from 1970 until about a year 
or so ago, that was true.
  Here I have a chart that shows what has happened to oil production in 
our country. A whole lot of it comes from Texas, as you can see from 
the lower dark blue below, and the rest of the United States is the 
lighter blue above. The kind of orange here is natural gas liquids. 
That's not in your gas tanks. That's propane and butane and chemicals 
like that.
  M. King Hubbard made his predictions using only the contiguous 48. He 
didn't include Alaska, and he didn't include the Gulf of Mexico in his 
predictions. He made that prediction in 1956, about here. In 1970, as 
you can see here, we reached our maximum production in the lower 48, 
and it went down pretty consistently after that. Then we found oil in 
Alaska, a lot of it. And there was a little blip on the way down when 
you add that to the oil to the rest of the United States and Texas. And 
then a little later were the fabled discoveries of oil in the Gulf of 
Mexico. And you can see what that did--you can hardly see the blip 
there. A lot of oil, but we use a lot of oil.
  The world uses 1 billion barrels of oil every 12 days. It's pretty 
simple arithmetic: 84 million barrels a day by about 12; that's 1,000 
million, which is 1 billion barrels of oil every 12 days.
  Oh, by the way, the M. King Hubbard that predicted that the United 
States was going to peak in 1970--of course he became a legend in his 
own time because he lived well beyond that, and he was exactly right. 
Relegated to the lunatic fringe for maybe 15 years or so, he became a 
celebrity after his predictions came true.
  And he predicted that what happened to the United States had to 
happen to the world. Oil is finite. One day, it will run out. One day, 
we will reach our maximum production, after which it will tail off in 
the world, just as it did in the United States.
  Now if you think that, collectively, the world is brighter and 
cleverer, and so forth, than the United States, then you might think 
that that won't happen. I think that we are the most creative, 
innovative society in the world. And if we couldn't turn it around, I 
think it's unlikely the world is going to turn it around.
  Well, here is a chart from just a few years ago: Peak oil, this is a 
plateau. The maximum production is called peak oil. And the question 
was asked, Are we there yet? Because you see, these curves have 
flattened out. These are from the two entities that do the best job of 
cataloging the production and use of oil, the EIA and the IEA. It's the 
same three letters of the alphabet turned a bit. One is a creature of 
the OECD, and the other is a part of our Department of Energy.
  They both, as you see, had a plateau here. And look what happened to 
the

[[Page 1117]]

price of oil. Now this was a little bit before it peaked at $147 a 
barrel and the economy collapsed, along with the housing market. That 
was kind of a double whammy, with both the housing market and the price 
of oil at $147 a barrel. When the economy came tumbling down, oil 
dropped to something under $40 a barrel, and it has steadily climbed 
since then up to now around $100 a barrel, where it has been for 
several months now.
  Are we there yet? Well, just recently we've had two charts produced 
by one of those entities, the IEA, the International Energy Agency. 
This is called the World Energy Outlook. The chart on top here is from 
2008, and the one on the bottom is from 2010. Now if you look at their 
Web site, you're going to have trouble finding the chart from 2008. 
They have purged their Web site of that chart. And in a few moments, 
you will understand why they purged it.
  Let's look at that chart. This dark blue is conventional oil. That's 
what we looked at before in the production of the United States. And 
it's been going up now for a very long time. If you started back here 
150 years ago at zero, and then we pumped more and more and more. And 
now the total liquids--not all of it oil; some of it is natural gas 
liquids--are up to about 84 million barrels of oil a day.
  Now they are predicting just exactly what M. King Hubbard predicted, 
and that is that there would be a peak, and after that peak, it would 
fall off. And you see, they are predicting a fairly dramatic falloff in 
the production of oil from the fields that we are now exploiting.
  But predicting out to 2030, they believe that by then, we will have a 
total liquid fuels production of about 106 million barrels of oil a day 
that will be made up of increasing amounts of natural gas liquids. And 
that will happen. We have found a lot of natural gas, so those will 
increase.
  The green here is nonconventional oil. That's going to also increase. 
That's oil like the tar sands of Alberta, Canada, that won't flow. You 
have to lift it with a 100-ton shovel and put it in a truck that hauls 
400 tons. And then you cook it into what we call stranded natural gas. 
That is natural gas where there aren't very many people to use it. So 
it's kind of stranded, so its price is less. So you can afford to cook 
this oil with it. And that's going to grow too some.
  And then they make two predictions here. That this light blue is 
production from fields that we've found but are too difficult to 
develop, like a field found in the Gulf of Mexico under 7,000 feet of 
water and 30,000 feetof rock. I heard a number. I have no idea how you 
get this precise. But it was said that when oil was $111 a barrel, they 
could afford to develop this field. So this is projected production 
from fields that we have found but are, with the current price of oil, 
too difficult to develop, uneconomically feasible to develop.
  And then the bright red here are fields yet to be discovered. The 
dark red here really belongs as a part of the oil down here. It's a 
little bit of additional conventional oil we've gotten by what we have 
called enhanced oil recovery. That's pumping some live steam down there 
or pumping some CO2 down there or, in Saudi Arabia, pushing 
some seawater down there. And some of their wells now are producing 
seven times as much seawater as oil, but it's okay because they can 
separate the seawater from the oil.
  Okay, two things about this chart: Note the falloff in production 
from conventional fields, and note that by 2030, 106 million barrels of 
oil a day projected--that's what the world is going to be producing. 
Just 2 years later, in 2010, reality is setting in--that's the lower 
chart down here--reality is setting in. Now they are up by 35, 5 years 
later, now they're up to only 96 million barrels of oil a day, not 106 
million barrels of oil a day. This is 5 years later, when it really 
should have been higher.

                              {time}  1930

  These top two curves here have been reversed and the colors 
different, but they are exactly the same thing. This is unconventional 
oil and this is natural gas liquids. Notice the precipitous decline in 
production from our current fields. And this includes, by the way, the 
enhanced oil recovery. You see it is in this chart, but it doesn't 
exist in this one because they have now incorporated and included where 
it belongs, and it is part of the conventional fields where we are now 
pumping from.
  Here they show two huge wedges. To keep this production going up 
slightly, they show two huge wedges here. Notice how considerably 
bigger they are than the ones they projected just 2 years earlier.
  I don't think that these two wedges are going to occur. They did not 
occur in the United States. Now today we have technologies that we 
didn't have there, like horizontal drilling and fracking. So we can get 
more out of a field than we could then, and we are going to go down and 
get some more oil out of fields that we thought were exhausted with 
this new technology.
  When you find a field that produces 10 billion barrels of oil, that 
is a big field. We have not found very many fields that produce 10 
billion barrels of oil. That will last the world 120 days. Every 12 
days, we use a billion barrels of oil.
  Now, I think you can see why you can no longer find this projection 
they made in 2008 in their Web site, because it is just not consistent 
with the reality that they are forced to use in projecting here just 
last year, in 2010.
  I will be enormously surprised if these two wedges occur. There is 
little evidence that they should occur. They did not occur in our 
country. Unless you think the world is incredibly more capable than the 
United States, then you will have some doubts whether those two wedges 
will occur or not.
  If they don't, this top curve is going to tip over for the world just 
exactly the way it did for the United States. We're not running out of 
oil. Many people who are disparaging, people who talk about peak oil 
will say that the peak oil people say we're running out of oil. We're 
not running out of oil. There is a lot of oil out there. There is more 
oil out there to be pumped than all of the oil that we have pumped in 
the last 150 years. What we're running out of is our ability to pump 
that oil as fast as we would like to use it.
  This next chart is an interesting one. It kind of puts what we're 
talking about in perspective--the world according to oil. This is what 
the world would look like if the size of the country was relative to 
how much oil reserves it had.
  You see here that Saudi Arabia kind of dominates the planet. They do 
for oil reserves. They have, we believe, maybe about 22 percent of all 
the reserves in all the world. Now, we aren't quite sure of that 
because a Wikipedia leak a few months ago indicated that they may have 
40 percent less oil than they've said.
  Let me explain what happened back when OPEC could produce more oil 
than the world needed and increased production would drive down prices. 
And so they had an agreement in the OPEC nations that you could pump a 
certain percentage of your reserves. So if you were a country that 
needed some more revenue, you simply had more reserves. And without 
finding any new oil, you can look back through history and see that 
some of them magically had maybe twice the reserves that they had. They 
didn't find any new fields; they just said they had twice the reserves 
in the fields they already had. Then you see, they could pump more oil. 
None of these OPEC nations will let our technical people in to look at 
their records so we really don't know how much oil they have, but we 
believe that it is relatively like this.
  You see little Kuwait looms huge on the world scene in terms of how 
much oil they have. Iraq, Iran, huge amounts of oil. Venezuela really 
dominates our hemisphere, doesn't it. It's bigger than all of the rest 
of the countries put together in terms of oil reserves.
  And here we are, the United States. We have 2 percent of the reserves 
of oil in the world, and we use 25 percent of the world's oil, a little 
less now because our cars get a little better mileage and our economy 
is down a little so

[[Page 1118]]

we're using a little less, but roughly 25 percent of the world's oil.
  Our number one importer is Canada. They have less oil than we, but 
they don't have very many people up there to use it, so they can export 
it to us.
  Until a couple of years ago, our number two importer of oil was 
Mexico. They also have less than us. Now, they have a lot of people, 
but their people are too poor to use the oil so they can export it. 
Just a few years ago, the second largest oil field in the world, the 
Cantarell oil field in Mexico, started in rapid decline, declining as 
much as 20 percent a year in production. So now Mexico is our number 
three importer and Saudi Arabia is now our number two. Mexico has been 
displaced by Saudi Arabia.
  Look at China and India over there. Tiny. China with a 1.3 billion 
people, India with well over a billion people, with an economy in China 
that's growing--well, in a recession; they've slumped. They were 16 
percent growth, and now I think they are something like 8 percent 
growth, and India is not far behind them. With a static oil production 
of 84 million barrels a day, and China last year used 6 percent more 
oil than they did the year before, where is it coming from? We used 
less. We used to be 22 million barrels a day; now we're less than 19 
million barrels a day. And some of the poorer countries of the world 
just can't afford the oil so they are doing without.
  This disparity between the people who are using the oil and the 
people who have the oil is going to set up some huge geopolitical 
tensions in the world. China last year sold more cars than we sold, and 
that curve is accelerating. China is now the number one polluter in the 
world. They just passed us. China is buying up oil all over the world. 
I wonder why.
  We have only 2 percent of the oil in the world, and we use 25 percent 
of the oil in the world, and we're notbuying oil anywhere. We don't 
need to because all you need to do is go to the global oil auction and 
have enough money and be the high bidder or participate at the bid 
price, and you get all the oil that you need if there's enough to meet 
everybody's needs. So why is China buying oil? They aren't just buying 
oil; they're buying goodwill: you need a hospital, soccer field, roads.
  Simultaneous with buying oil reserves all over the world, China is 
also aggressively building a blue-water navy. They soon will have more 
ships than we. They aren't our ships yet by a long shot, but this year 
they will graduate seven times as many engineers as we graduate, and 
about half of our engineering students are Chinese mostly and some 
India students.
  We can't for long have that disparity between the graduates of 
engineers and our two countries and we continue to be the world's 
premier economic and military power. We have got to do something to 
capture the imagination of our people and encourage our young people to 
go into careers of science, math, and engineering.
  Let me tell you what I think may happen; I hope it doesn't. Why would 
China buy oil while they're simultaneously very aggressively building a 
blue-water navy and building capabilities for denial. There is now--
look it up--a Chinese anti-ship missile that we essentially have no 
defense against. It travels 1,200 miles. There's no reason they can't 
put it on a ship, which means you couldn't get within 1,200 miles of a 
Chinese ship that had this missile on it unless we developed some 
defense against that missile.

                              {time}  1940

  Let's hope the time does not come when China says, hey, guys, I'm 
sorry, but we have 1.3 billion people. We have 900 million people in 
rural areas that, through the miracle of communications, know the 
benefits of an industrialized society, and they're saying, hey, guys, 
what about us? And our empire may unravel if we don't meet the needs of 
those people, so we can't share our oil. It's ours, we bought it, we 
can't share it, and we've got to have it. That would plunge the rest of 
the world into a recession, and China then would have to look to their 
population as consumers for the goods that they produce. And 1.3 
billion people could be a pretty big consuming population.
  The tragedy is that your government has paid for four different 
studies, two of them issuing in '05 and two of them in '07, that said 
the same thing, the peaking of oil is either present or imminent with 
potentially devastating consequences. Your government chose to ignore 
those four studies because it was not politically expedient to admit 
that we had a problem of those proportions.
  Now, we should have known that those predictions were coming because 
a very wise man in what, I think, was the most insightful speech of the 
last century, M. King Hubbert, gave the most important speech. I think 
that Hyman Rickover, the father of our nuclear submarine, gave the most 
insightful speech just about a year later. I don't know if these two 
men knew each other, but on the 15th day of May in 1957 to a group of 
physicians in St. Paul, Minnesota, Hyman Rickover gave a speech that 
was lost until a few years ago, and now you can find it on the 
Internet. Just Google for ``Rickover'' and ``energy speech'' and it 
will come up.
  He said some things there that should have been self-evident, and 
everyone should have been saying it; but it took Hyman Rickover to say 
the obvious. There is nothing man can do to rebuild exhausted fuel 
reserves. They are finite. The Moon is not made out of green cheese; 
the Earth is not made out of oil. One day, it will be gone. They were 
created by solar energy 500 million years ago and took eons to grow to 
their present volume.
  In the face of the basic fact that fossil fuel reserves are finite, 
the exact length of time these reserves will last is important in only 
one respect: the longer they last, the more time do we have to invent 
ways to live off renewable energy--you've heard of renewable energy--or 
substitute energy sources and to adjust our economy to the vast changes 
that we can expect from such a shift.
  Have you noticed we've been doing that? I haven't. I love this last 
quote here because I think it pretty well describes where we are and 
what we're doing.
  Fossil fuels resemble capital in the bank. A prudent and responsible 
parent will use his capital sparingly in order to pass on to his 
children as much as possible of his inheritance. A selfish and 
irresponsible parent will squander it in riotous living and care not 
one whit how his offspring will fare.
  Drill, baby, drill. And the unspoken part of that mantra is the hell 
with our kids and our grandkids, let them shift for themselves.
  I remember when the Vice President came and asked me if I would vote 
to drill in ANWR, and I said I would be happy to do that when you 
commit--this was Dick Cheney--that you're going to use all the revenues 
you get from ANWR to invest in alternatives, because we're way late in 
doing what Hyman Rickover said we needed to do in 1957.
  I noted that we were going to leave our kids a huge debt. It's bigger 
now than I thought it would be then. I said, wouldn't it be nice to 
leave them a little oil?
  Here is a quote from one of those studies. This was the first and the 
biggest of those studies, the so-called Hirsch, SAIC, big study: world 
oil peaking is going to happen, world production of conventional oil 
will reach a maximum and decline thereafter. That maximum was called 
the peak. A number of competent forecasters project peaking within a 
decade. It has happened. Others contend it will occur later. Prediction 
of the peaking is extremely difficult. He says that oil peaking 
presents a unique challenge. The world has never faced a problem like 
this. It is an unprecedented problem that the world faces.
  I have a last chart here that I think kind of helps us to put this in 
perspective. And this shows the production of oil, and this chart is a 
few years old. We need to have it updated. But this is when oil was 
discovered, way back in the 40s, the 50s, the 60s, the 70s. This is the 
use of oil.
  By the way, tonight when you do your prayers, thank the Islamic world

[[Page 1119]]

for the oil price spike hikes in the 70s. Look what it did. It woke us 
up. If they hadn't awakened us and this curve continued, we would be 
through the top of the chart by now. Up until the Carter years, it was 
a stunning statistic. Every 10 years we used as much oil as had been 
used in all of previous history. Now look at the slope of that curve. 
It is much lower than that.
  Our time is running out, and I must yield back; but I will come to 
the floor again soon, and we'll spend quite some time looking at this 
chart. Because if you had only one chart to look at where you were 
going to predict what you thought might happen in the future, I think 
this would be the chart, because you look back through history and see 
what has happened, and then you'll make a judgment. Wow, are we going 
to find that much more oil in the future that we found back here even 
with our increased capability to find oil? Yeah, we're going to find 
more, and we're going to pump more, but I think there is little or no 
chance that we'll be able to produce that oil fast enough to meet the 
growing demands of the world.
  I love challenges. This is a huge challenge. And I think that facing 
this challenge we can produce more jobs; we can be an exporter of the 
technologies for green energy. I just feel challenged by this, Mr. 
Speaker, and I hope Americans feel the same way.
  Thank you, Mr. Speaker. I yield back the balance of my time.

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