The U.S. Energy
Information Administration, EIA, confirmed on 3 June 2014 the UK became a net
oil importer in 2012. This simply means that the oil reserves in the North Sea
are already coming to its end.
If fracking had not
arisen as an energetic alternative, official recognition of the North Sea depletion
had created a chaos of prices leading them to unthinkable levels.
In the history of the
last decades a similar fact occurred in 1974 as a result of the Arab oil
embargo against the West, which increased almost 6 times oil prices, leading
them to $ 10.70. The price for the year 1970 was $ 1.70. Then, in 1980, the
price rose as high as $ 40, i.e. more than three times the already high amount
of $ 10,70 from 1974. If a similar situation occurs today and oil prices were
multiplied by three, the final price would be located above $ 400. If this
occurs, a collapse of the global economy would be generated because oil affects
the price of most goods traded in the world.
No one can know the
future precisely, but the story is undeniably a source of knowledge. If it
happened in the past can happen again in the present or in the future.
At the rate of
production by 2005, conventional oil reserves of U.S. would last only until
2016. For that reason, the United States invented the fracking, in order to
prolong in time its production capacity and reduce dependence in foreign oil.
What is the actual
production capacity and reserves of fracking?
That's the key question;
however, there is no a clear-cut answer. Oil is the lifeblood of the world
economy, the most important strategic product and therefore there is no absolute
transparency regarding the behavior of production and reserves in reality. For
example, some time ago the company Shell was forced to acknowledge that it had
overstated its oil reserves for political reasons. Today, it could be happening
something similar regarding fracking.
On October 29, 2008, we
published an article in this blog with the title The UK oil will last 4 years more (1). That article stated:
Quote:
“The United Kingdom
will be the first Western country where the oil will finish. If that country
maintains the production and the level of reserves that had for the year 2005,
the collapse of the United Kingdom oil will occur in four years, it means, for
the year 2012.
A similar phenomenon already has happened. Indeed, on May 28 2008, an important member of the OPEC, Indonesia, announced their withdrawal of the Organization, because of already do not have enough oil and can not to continue being an exporter.
The Norway oil will last seven years more, until the year 2015; the United States and Mexico oil only eight years more, until the year 2016, and the China oil nine years more, it means, until the year 2017.” End of quote.
A similar phenomenon already has happened. Indeed, on May 28 2008, an important member of the OPEC, Indonesia, announced their withdrawal of the Organization, because of already do not have enough oil and can not to continue being an exporter.
The Norway oil will last seven years more, until the year 2015; the United States and Mexico oil only eight years more, until the year 2016, and the China oil nine years more, it means, until the year 2017.” End of quote.
Facts have proved that
the forecast made in this blog in 2008 regarding to the United Kingdom is
fulfilled as has been confirmed by the EIA (2).
The United States has
found a temporary solution by mean of fracking.
Is it enough?
What will happen in
Norway, Mexico and China in the near future?
How will compensate
those countries their declining conventional oil reserves?
Can Brazil successfully
develop its deepwater projects?
The prospects do not
look easy; conventional oil is running out in many regions of the world.
The stability of the
oil prices will be influenced by the veracity of the figures of fracking; if
fracking does not fulfill the expectations, the explosion of prices will appear
necessarily in the scenario.
Can technology replace
Mother Nature?
Something similar is
happening regarding water. Every day new shortages of water are emerging in
various regions of the world, including the United States.
(4)
Running Out: How Global Shortages Change the Economic Paradigm, Algora
Publishing, New York, 2008.
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