United States invented the fracking to gain time and postpone the collapse of the world economy

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.

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.

(1)    http://pablorafaelgonzalez.blogspot.com/2008/10/uk-oil-will-last-4-years-more.html

(2)   http://www.eia.gov/countries/cab.cfm?fips=UK&scr=email

(3)   http://pablorafaelgonzalez.blogspot.com/2009/05/oil-price-might-surpass-500-for-year.html

(4)   Running Out: How Global Shortages Change the Economic Paradigm, Algora Publishing, New York, 2008.

http://searchworks.stanford.edu/view/6665607 

The fracking is what has prevented an explosion of oil prices so far

The EIA, Energy Information Administration of the United States has confirmed that the United Kingdom became a net oil importer in 2012. This means two things: a) That North Sea oil is running out and b) that the oil reserves of the United Kingdom are also in its final stage.

This fact alone would have been enough to cause an explosion of oil prices worldwide, because of an important source of production is virtually disappearing.

The key question is why this reality in the North Sea has not affected oil prices?

The answer is very simple: because the United States has announced that it has found a new production method, fracking, which offers unlimited quantities of oil and gas. For that reason, until now, the fall in North Sea production has not caused the chaos in price that in other circumstances this fact would generate.

The other key question that arises in a scenario as described is until where are true the figures on reserves and oil production by fracking?

The answer is: oil is the blood that moves the world economy and, therefore, the figures on production and reserves have a unique strategic nature which justifies the whole truth is not said or tells only part of the truth in this matter.

In the following links I present two papers published in this blog in 2008 and 2009 in which was announced the depletion of oil reserves in the UK, prediction now confirmed by the EIA.

http://pablorafaelgonzalez.blogspot.com/2008/10/uk-oil-will-last-4-years-more.html

http://pablorafaelgonzalez.blogspot.com/2009/05/oil-price-might-surpass-500-for-year.html

 This is the EIA Report on the UK oil depletion

http://www.eia.gov/countries/cab.cfm?fips=UK&scr=email

EIA report confirms the forecast of the book Running Out: how global shortages change the economic paradigm on the UK oil depletion

The U.S. Energy Information Administration, EIA, in a Report of June 3 2014 confirmed “The UK became a net importer of petroleum products in 2013, making it a net importer of all fossil fuels for the first time.”

The report says that “Although a number of new fields are expected to come online in 2013, UK production will continue to decline as new production will not be sufficient to offset the declines.” In other paragraph the report assures “EIA's Short-Term Energy Outlook expects UK oil production to continue to decline through 2015. The main reason for this decline is the overall maturity of the country's oil fields and diminishing prospects for new substantial discoveries in the future.”

The book Running Out: how global shortages change the economic paradigm of the autor Pablo Rafael Gonzalez, in their editions of the years 2005 and 2008, published by Algora Publishing, New York,  predicted the depletion of the United Kingdom reserves of oil for the year 2012. A similar forecast was made regarding the United States and Mexico oil for the year 2017. All this explains the desperate efforts to advance fracking, despite the environmental hazard it represents.

The book is a dense analysis of the behavior of natural resources, especially water and oil as a result of the overexploitation of the resources and the high population growth; these facts create the conditions for food shortages and further deterioration of the environment due to the pollution.

This is the EIA link

http://www.eia.gov/countries/cab.cfm?fips=UK&scr=email

This is the link of the book Running Out

http://www.amazon.com/Running-Out-Shortages-Economic-Paradigm/dp/0875865127/ref=la_B001JOAE2U_1_1?s=books&ie=UTF8&qid=1402011010&sr=1-1