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Gas pains . . . again!

xBy John Cannell

The two previous articles relating to gasoline and oil supplies generated more phone calls, faxes and e-mails to me than any previous article. Many comments were in the form of questions rather than comments, so I thought I would try to answer these questions along with some illuminating facts.
Several people concluded that retailers were ‘gouging’ the general public at the behest of the oil companies.

The rationale for this assumption is that fuel in the retailer’s tanks has already been paid for, so why should the price increase until this stock is exhausted? Oil companies advise (?) retailers to adjust their prices. The retailer (theoretically) can refuse to do so, because we all know it is illegal to fix retail prices, but, generally they have no choice but to go along with it and make the adjustment.

This is happening even as I write. It is the day before the July 1 weekend, and local prices have elevated from approximately 1.08 to 1.15 cents per litre. Obviously, those retailers who have full bulk tanks will temporarily profit from the increase, but when they inevitably replenish their gasoline inventory, it will be at the increased wholesale price.

Guess what happens next? Of course, the price goes down after the long weekend perhaps, even lower than it was previously so that the retailer takes a loss on this new stock. Big Oil says it all averages out, but most retailers I have talked to express strong doubt about this. As a consumer, there is not much I can do about it either way.

Others have expressed the opinion that despite the naysayers there is an unlimited supply of oil, in one form or another, available, and that governments and Big Oil are lying about coming shortages. It is good business for the oil companies to understate availability and potential, simply because demand is, thereby, enhanced. Quite frankly, however, it is not necessary to cry ‘wolf’, as there are definitely clouds on the horizon.

Some facts:
• The pessimistic prediction is for oil production to peak in 2010, based on recoverable reserves of 1600-2200 billion barrels.

• The optimistic forecast is for oil production to peak in 2050 based on recoverable reserves of 2500-3800 billion barrels. Currently, approximately 73% of petroleum consumed is used by the transportation industry. Light duty vehicles (cars, pick-ups) and freight trucks use the most whereas aircraft take less, however, as a mode of transport aircraft are far less efficient, consuming the incredible volume of two million dollars per day. Whether you are in the pessimist camp , the optimist camp, or, somewhere between, it is clear that reserves of liquid petroleum are limited, whereas consumption will continue to increase, perhaps as much as 7 million barrels per day by 2032.

Wow! What do we do? Well, in Canada we are already doing it! We are rapidly developing our oil shale reserves to the extent we are world leaders in this field. Worldwide, the amount of oil shale available for production is estimated to be around 3 trillion barrels, much of it in the United States. To put this into perspective, this would be sufficient to meet demand at the current rate for 5-600 years! There are other methods which include, coal liquefaction and gasification (already being done in South Africa), tar sands and other syncrude methods.

Some practical solutions to stave off darkness:

  Synthetic crude from oil shale
  Gasoline and diesel from Coal
  Diesel from soybeans and/or other agri products
  Light crude from oil shale refined into jet fuel
  Home heating oil from oil shale and tar sands
  All electric cars/trucks for short range travel
  Production of electricity by nuclear power. Today’ nuclear power IS safe! Especially new generation “pebble bed reactors” now being built for China. (Google Pebble Bed Reactors on your PC for information)
  Electricity from wind and geothermal n Solar energy built into new homes or retrofitted
  Solar powered electrolysis plans, possibly located offshore to produce
  Hydrogen from seawater

The future is not dark or bleak, but we must all become involved in an effort to motivate governments at all levels to “get cracking” on alternate energy rather than waiting until we reach a crisis stage. Let’s not forget 2050 is only 44 years away!

You can contact John in Saint John, New Brunswick here