The Global Oil Crisis
The international struggle over the
diminishing supply of petroleum
Nico, Ji, Trish
What's the Problem?
The Global Oil Crisis is
the international struggle over
an unevenly distributed
nonrenewable resource:
petroleum, a fossil fuel.
• Nonrenewable: It is not being generated again by any
reasonable time scale
• Fossil fuels are formed by a process requiring millions of
years
• Fancy phrase: Anaerobic digestion is this process
• Some countries possess far more oil reserves than
others, leading to political tensions.
Oil Dependency
A large part of the problem
is that many countries
are dependent on oil.
In other words, our current
use of power and
technology requires more
and more oil to be drilled.
Why this is a problem at the state level:
• States that import a lot of oil from foreign countries are at a
security risk
• States that export a lot of oil to other countries are often
highly contested
Example of "foreign security risk": US importing oil from countries
it views as "unstable" for ~$150 billion per year
Oil Reserves
...
Goal
Reducing global conflict over oil
Methods of accomplishing this goal:
• Reducing tension based on distribution of oil (short term)
• Reducing usage of oil (long term)
Past Initiative: IEA
"The International Energy Agency is the energy
forum for 28 industrialized countries. IEA
member country governments are committed to
taking joint measures to meet oil supply
emergencies."
Other agreements: Sharing energy information,
co-ordinating their energy policies, co-operating
in the development of rational energy
programs.
Set up under the 1974 Agreement on an
International Energy Program.
Actions taken by the IEA
• Monitoring the market
The IEA collects data on current supply & demand across
OECD and non-OECD countries.
• Emergency Response reviews
Peer reviews of preparedness for oil emergencies.
• Emergency Response Exercises
Every two years, the IEA carries out training exercises for
emergency response.
• IEA Emergency Stock levels
Checking the supply of minimum oil stock.
IEA Emergency Response
An attempt to prepare for oil disruptions.
Requires countries to hold oil stocks equivalent to at least 90
days of net oil imports to be used in the event of a major oil
supply disruption.
In the event of a crisis, the IEA assesses the potential need for
co-ordinated response, then all members make oil available to
the market if necessary.
Total stocks are around 4.2 billion barrels.
Past oil supply disruptions
2005 Hurricanes Katrina/Rita
2003 War in Iraq
2003 Venezuelan strike
2001 Iraqi oil export suspension
1991 Iraqi invasion of Kuwait
1981 Outbreak of Iran-Iraq war
1979 Iranian revolution
1974 Arab-Israeli war and Arab oil embargo
1967 Six day war
1956 Suez crisis
Response to Hurricane Katrina
disruption
"On 2 September 2005, all 26 IEA member countries agreed to
make available to the market the equivalent of 60 million
barrels through a combination of emergency response
measures, including the use of emergency stocks, increased
indigenous production and demand restraint.
Nearly 29 million barrels were drawn from public stocks." 23
million barrels were also made available through other means.
Past Initiative: Fuel Tax
• Excise tax imposed on sale of fuel (intended for
transportation)
o Most commonly gasoline
o Exception: agricultural vehicles
• Exercised in several European countries
o France
o Germany
o Netherlands
o Norway
o U.K.
Fuel Tax
• A way to conserve energy and reduce pollution
• Due to inelastic nature of demand for oil, tax effective in
short-run
• In long-run, should become more elastic as consumers
adjust consumption of gas
• Fuel Tax differences resulted in cross-border purchasing for
cheaper gas
o Limited effect to reduce traffic and dependency
Fuel Tax in the U.K.
Nationalization of Oil
• Process of deprivatization of oil production: self-imposed cap
• Met the goal of reducing the usage of oil.
• Although it was the pupose of obtatining more revenue,
o Actually brought the demand down due to rising price and slow
production resulting from kicking out private western industries.
o Limited capacity expansion
o Oil exploration became harder, ExxonMobile reduces investment
for new oil exploration since 1980.
Nationalization of Oil
• Countries
o Venezuela: 2007, Government stops Orinoco Belt
crude projects
o Russia: Pressured Royal Dutch Shell Company
hand over Sakhalin Island Project to State owned
Rosneft Co.
o Mexico: 1938, Nationalized and never privatized
Nationalization of Oil
• Iranian government announces
o starts investing and planning to develop much more fuel
efficient cars such as hybrid, alternative energy.
o Due to Nationalization and Slow development, Demand
decreses as much as 20%.
• Venezuela Government
o Exxon Mobile and ConocoPhillip walks away from the
Oricono Belt Project, decreasing another oil drilling and
extraction.
Current Initiative: Development of Fuel
Efficient Cars & Electric Cars
• N-Electric Cars
• Hybrid Cars
• Hydrogen Cars
o High Gas Mileage
Internal combustion engine requires
Gasoline.
Current Initiative: Alternative Energy
• Any source of usable energy intended to
replace fuel sources without negative
externalities
o Solar power
o Wind power
o Geothermal power
o Hydroelectric power
• Help to structure technology around
renewable resources
• Replace environmentally hazardous oil
consumption
• Lower energy emissions
Alternative Energy
• World economy’s energy consumption primarily oil
o Single most important source of energy
o Creates a significant dependence on oil
• Necessarily to act
immediately to save
energy and invest in
alternative energy
Percentage of Energy Consumption by U.S.
Current Initiative: Alternative
Transportation
By far, we use most of
our oil for transportation.
It is therefore critical to
reduce our consumption
of oil in transportation if
we are to become less
dependent on oil.
Public Transportation
Data from US:
At the state level: Public transportation directly saves 1.4 billion
gallons of gasoline every year. (Context: We use a total of ~330
billion, so this needs improvement.)
At the individual level: Public transit riders save, thousands of
dollars (studies disagree on exact numbers) in gas costs per
year, by consuming an average of one half the amount of oil as
non-transit users.
Bicycles and pedestrians
Bicycles are highly effective
and efficient for short-range
transport.
If cities are designed for
bicycles and pedestrians more
than for cars, oil use is
decreased and the city
becomes much more efficient
in many other ways.
Alternative forms of
transportation also save
space.
Our Proposals
• Stricter Laws on fuel efficiency
• Emissions & gas mileage
• 35.5 miles per gallon
o Nearly 10 MPG over current standards by National
Highway Traffic Safety Administration
• Emissions standards of 250 grams of carbon dioxide per
mile for vehicles
• Will save billions of barrels of oil
• Also encourage new and emerging technologies
• Research and Development of Hi-tech Eco-friendly Vehicles
o Vehicles that run completely free from Gasoline
o Ex. Tribrid Cars & Solar Cars
Tribrid & Solar Cars
• Tribrid Vehicles:
• Hybrid Cars with modification to obtain energy
• from environment.
• Ex. 2010 Toyota Prius hybrids equipped with solar panels
• Solar Cars:
• Electric vehicles
o powered by Solar electricity.
o Covered with solar panels
Conclusion
Long-term solution to end
conflicts over the declining
supply of oil:
Stop relying on it.
"In June of 2007 the U.S. was
consuming 20.7 million barrels
of oil per day, followed only by
China with 6.4 million.
Conserve your gas. Help end
the addiction."
Questions?
Sources
http://news.bbc.co.uk/2/hi/business/8092884.stm
http://lugar.senate.gov/energy/graphs/sector.html
http://www.publictransportation.org/contact/earthday/
IEA. 2010. “IEA Response System for Oil Supply
Emergencies.” [online] Available from
http://www.iea.org/publications/free_new_Desc.asp?PUBS_ID=
1912. November 1, 2010.
http://www.petrolprices.com/fuel-tax.html
http://www.youtube.com/watch?v=3tGGUtWZh0s&feature=cha
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