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Sunday, March 21, 2010

Peak Oil Could Signal Construction's Next Big Challenge

This is pretty depressing:

Source: http://constructioninformer.com/2010/02/24/constructions-next-biggest-challenge-may-be-just-around-the-corner

Rusting Oil Tank Signifies Peal Oil

Oil infrastructure rusts away as peak oil comes to pass.

Somewhere beneath all the surface clutter about construction’s job losses, dismal productivity, economic uncertainty, challenges in workforce development and the exciting new promises of BIM and IPD, there is a lurking reality that the industry is not paying attention to. And it very well may be its ultimate challenge.

That reality is – the end of the oil-fed economy.

This is extremely important for construction because it is this single, looming reality that could easily deliver the second great blow to the industry in a short span of just five to 10 years.

Construction and all its related industries are perhaps especially oil challenged. It’s not just about the gas and diesel that powers vehicles and equipment. It’s also about all the things made out of oil. Just think about a shortage of plastics and the picture becomes a little clearer. Hard hats, tools, batteries, truck and equipment parts, wire coatings, asphalt shingles, gas cans and packaging are just a few of the items we take for granted every day that come from oil. Almost all building components, including the proverbial kitchen sink, cement and lumber owe a portion of their existence to oil.

People in construction, and the larger population for that matter, get regular reassurances that there’s plenty of oil to meet the world’s daily demands for a long time to come. Meanwhile, there are reports and wake-up calls coming from many quarters that credibly question those assertions.

The contradiction in the information being released is so severe that you can’t look at the issue with reading glasses on. You have to get out the telescope. So while the CEO of British Petroleum is predicting the peak in world oil demand in 2020, the top boss of Britain’s international energy security efforts is calling for new actions to address the potential of a peak in the world’s oil supply in the next five years.

The people sounding the alarms that the world’s oil supply is reaching its peak are not dyed-in-the-wool environmentalists, or those on the fringe of society waiting for the heart-pounding collapse of civilization. They are petroleum officials and those whose livelihoods are wrapped up in knowing everything about oil.

Total SA is a French oil and gas concern that has its fingers in the upstream and downstream oil business. It not only explores for, develops and produces oil and gas, but it also refines the raw material into products, and markets those products. It deals in petrochemicals, fertilizers and petroleum materials used in the manufacture of many kinds of products. Potentially, the plastic in the circular saw you used today, or the battery in your truck were somehow made possible by this company.

In early 2009, Total SA’s CEO Christophe de Margerie said he expected world oil production to plateau at 90 million barrels a day. Remember that number, because you will be hearing a lot about it.

The CEO of Conoco Phillips, James Mulva, and Hess’ CEO John Hess reportedly alluded to a similar number in October of 2009 at the Oil and Money Conference in London.

Jeremy Gilbert, the person responsible for British Petroleum’s production at Prudhoe Bay, Alaska, tempered the enthusiasm of a geologist at the Association of Peak Oil Conference in Denver, Colorado in October of 2009. The geologist spoke glowingly of the estimated 450 billion gallons of oil available off Brazil’s coast, in the Amazonian jungle, in the Gulf of Mexico and off Africa’s western coast. British Petroleum’s Gilbert reminded him that at just the current rate of oil use the world would need 600 billion barrels to make it to 2030.

At the same conference Chris Skrebowski, editor of the UK Petroleum Review, and a former planner and market analyst in the oil industry, said his studies revealed a continued production plateau for some years, and perhaps even an increase over today’s production. Whether the production could be pushed above 87 million barrels a day though, was in question.

This is where the world oil supply gets confusing for most people. There’s still a lot of oil, so what’s the problem? It’s not about how much is available in total. It’s about how much is available every day. It’s no different from a business’ budget. If the business spends more each day than it takes in it is continually running in the red. It can do it for a time, but eventually, the losses mount up and the business can no longer sustain its expenses.

Unfortunately, as oil fields come and go, and the oil becomes harder and harder to find and extract, the production can’t keep up with demand. That’s when the manufacturer of the plastic coating for the electrical wire begins to run out of raw material. And for those in construction who depend upon electrical wire that has a covering, that’s when shortages start to happen, and costs start to skyrocket.

As recently as August of 2009 the International Energy Agency warned that the top oil production worldwide will be reached in 10 years and that the world’s big oilfields have already peaked. Its chief economist said oil shortages could easily cause worldwide economic and industrial collapse.

On February 10, leaders of companies that are on the U.K. Industry Taskforce on Peak Oil and Energy cited an oil crunch poised to happen within five years and called on governments and business to act now so it does not catch everyone off guard as the credit crunch did.

Of course blue-blooded Americans are probably wondering where their major oil production companies stand when it comes to the view of world oil supplies. Stay tuned and discover why “Drill Baby Drill,” is more like an erotic battle cry than one related in any way to efficiently securing America’s energy future.

Source: Peak Oil Could Signal Construction's Next Big Challenge


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