The Causes of Rising Fuel Prices and their Effect on International Business Infrastructure
Andy Johnson
Center for the Advancement of Math and Science Education
Black Hills State University
Spearfish SD 57799
605-642-6508
andyjohnson@bhsu.edu
David Scarborough
College of Business
Black Hills State University
Spearfish SD 57799
605-642-6159
DavidScarborough@bhsu.edu
Abstract:
International businesses rely on an extensive transportation and shipping infrastructure which is
powered by liquid fuels. However, the rising price of petroleum and its products is raising
concerns and causing economic challenges worldwide. A transportation system that was taken
for granted a few years ago (and which had been expanding for generations) is now troubled. In
this paper we address the question of the long-term viability of petroleum and other liquid fuels
for powering transportation. We first consider petroleum as a nonrenewable resource that has a
fixed supply, and then we survey the considerable challenges to using renewable and
nonrenewable petroleum alternatives. The overall picture is one of serious changes driven by a
new high-cost price regime for liquid fuels.
Johnson, A., Scarborough, D.
Causes of Rising Fuel Prices
1
The relation between petroleum production and economic growth
This paper takes the position that constraints in the physical world strongly influence economic
activity. We consider that the wealth of the western world is due in no small part to the ready
availability of cheap fossil fuels over the last century. And if this is so, then an awareness of the
current and future status of the fuel supply is essential to prudent decision making.
It is difficult to overstate the importance of petroleum for sustaining economic growth in a
modern industrialized economy. In addition to being the primary fuel used to transport people
and products, petroleum derivatives provide essential inputs for many industries including
agriculture, pharmaceuticals, chemicals, plastics, electronics and energy. The relationship
between oil production and economic growth is well documented. For example, Zuccetto, et. al.
(1982) studied the relation between total energy use in countries and the national GDP. They
found a strong correlation between the two. Figure 1 shows Zuccetto, et. al.'s graph - the greater
the energy consumption, the higher the GDP per capita. The variation from a curve is small.
Figure 1: Energy use and GDP of 31 nations in 1974
Other studies have provided additional evidence that economic success is driven by energy use.
This is easily explained by considering that material productivity of workers expands when they
have more energy available to them. A single worker with an electrically powered lathe is able
Johnson, A., Scarborough, D.
Causes of Rising Fuel Prices
2
to do the work that would require a large team of laborers if the pieces had to be turned by
human or animal muscle power. Modern automated machinery has reduced the amount of labor
per unit produced even farther. All this machinery, however, requires energy to power it.
The relation between supply, demand, and price for petroleum has also been carefully studied.
Our thesis is that the recent rise in petroleum prices is related to a problem with the supply.
World GDP, oil prices and oil exports have increased systematically for decades until recently.
Beginning in early 2006 (the shaded area in Figure 2), world GDP continued to increase while
net oil exports declined and oil prices increased sharply. Perry, an economist interprets these
trends:
“With the significant increase in world output and the accompanying increase world
demand for oil and energy interacting with a flat and/or falling world supply of oil,
there was only one direction for oil prices to go. Up.”
Figure 2: Perry, M.J. (2008). “ Oil Prices, World GDP and Net Oil Exports”
We will devote the rest of this paper to investigating the decline in net oil exports and their
implications.
The petroleum supply is limited
Our culture is not given to contemplating the prospect of a petroleum shortage. For more than
ninety of the last hundred years, more petroleum was produced each year than the previous year
so the supply seemed effectively limitless for the times. However, petroleum forms only in
special geologic circumstances over spans of millions of years, and humans have been extracting
it at an impressive rate. We should think of the world's petroleum endowment as a one-time gift
that is fundamentally limited. Unfortunately, there has been little discussion of what those limits
might be. Only a few petroleum geologists have studied the overall picture of petroleum
availability, and what they find is troubling.
The first work on petroleum depletion was done by M. King Hubbert, a geologist working for
Shell Oil. In 1956 he published a paper detailing the future (for that time) of oil production in the
Johnson, A., Scarborough, D.
Causes of Rising Fuel Prices
3
lower 48 United States (Hubbert 1957). This was during the heyday of the Texas oil boom.
Petroleum production was rising every year and the common expectation was that this would
continue for a very long time. However, Hubbert knew that every oil field reaches a peak of
production and then gradually declines in production capacity. New fields had to continually be
found to replace the declining production from mature fields. Hubbert applied a mathematical
analysis to existing discovery and extraction data for all the fields in the US, and projected that
petroleum production in the lower 48 United States would peak in 1970 and subsequently
decline. This prediction was greeted with widespread disbelief, but Hubbert's calculations were
vindicated when US oil production peaked in 1970 and began to decline in 1971.
Figure 3a - Hubbert's 1956 graph showing US petroleum production peaking around 1970,
assuming a total extractable endowment of 200 billion barrels of oil.
Figure 3b - Actual lower 48 production data superimposed on Hubbert's prediction
Colin Campbell, a retired petroleum geologist, applied Hubbert's analysis to the world's
petroleum production using the most accurate data available (Campbell, 2008). The results are
shown in figure 4.
Figure 4: Analysis of petroleum discovery and production worldwide by Colin Campbell, retired
petroleum engineer.
Johnson, A., Scarborough, D.
Causes of Rising Fuel Prices
4
The gray bars in figure 4 represent petroleum discoveries. Note that discoveries peaked in the
1960s and have been more or less declining ever since. This was due primarily to the "lowhanging-fruit effect", that the larger and more easily found oil fields were discovered early on.
The graph shows that the present rate of petroleum discovery is much lower than before. New
fields that are found tend to be smaller or are located in remote areas. Meanwhile oil production
rose at an exponential rate until the oil embargoes of the 1970s. But rising production could not
continue indefinitely. In 1982, the world used as much oil as was discovered. Ever since that
year, oil consumption has exceeded oil discoveries. In 2007, five times as much oil was used as
was discovered worldwide. The thin line on the above graph represents Campbell's projected
petroleum production based on the same type of analysis used by Hubbert. Note that Campbell
projects the peak of oil production to be within a few years with a decline becoming evident by
2010. The decline after 2010 is inexorable. Other analyses that incorporate additional liquid
fuels such as those obtained from natural gas fields and from tar sands show a peak two or three
years in the future.
Campbell's analysis is one of many. Depending on assumptions put into the calculations, the
dates of the peak of petroleum production vary by up to ten years, but the overall conclusion
from all of these studies is that the production of liquid fossil fuels is set to begin declining soon.
The timing of the peak doesn't change much despite substantial differences in estimates of the
"ultimate recoverable resource" (oil available in the ground), because current petroleum
production is so high, and it takes years to bring a newly discovered field into full production.
Meanwhile, major petroleum-producing fields are approaching decline or are in decline.
For example, Mexico's supergiant Cantarell field has recently entered decline. Cantarell
produced over two million barrels per day in 2004 making it the second largest source of
petroleum in the world, after the Ghawar field in Saudi Arabia. At its peak, Cantarell was
responsible for 60% of Mexico's petroleum production. However, production at Cantarell started
declining in 2005, and the field is now able to produce only one million barrels per day, a rate
that is still decreasing. All efforts of regaining additional production are not altering the overall
picture for Cantarell. Because of a lack of timely discoveries of comparable oil fields and rising
domestic consumption in Mexico, we can expect Mexican petroleum exports to decline
precipitously in future years. The situation with other oil exporters is different only in terms of
their timing. As time goes on more and more petroleum producers will find their exports
declining as their major fields become depleted.
It takes increasing efforts to find new petroleum to replace the declining production from aging
fields. Even if a substantial and unanticipated supply of new petroleum is found, it will have to
make up for the loss of production from currently depleting fields. At some point, it will no
longer be possible to bring new fields online fast enough to replace failing production from older
fields. At that point, the world will enter the petroleum post-peak era, and petroleum prices will
rise, severely challenging the world's economies.
What about alternative fuels?
Much effort is currently going into petroleum alternatives. The US has mandated corn ethanol
production, enterprising individuals are turning used fryer oil into biodiesel, and massive tracts
Johnson, A., Scarborough, D.
Causes of Rising Fuel Prices
5
of the Canadian tar sands are being mined and converted to liquid fuel. The question is whether
these new sources of fuel will provide sufficient energy to maintain current consumption
patterns. The answer is "unfortunately not" because of numerous problems. None of the
petroleum alternatives can be scaled up to the massive rate of consumption we now enjoy, in fact
all will take many years to be scaled up to a useful degree. Also, all of these fuel sources require
substantial energy inputs for their production - a problem that is only now becoming understood.
The problem of scaling
The US is ramping up ethanol production. The common assumption is that this ethanol will be
available as a motor fuel, but very little of the ethanol produced in the US is available as E85
fuel. According to actuary Gail Tverberg (2007),
"In 2006, about 20% of the US corn crop was used to produce ethanol. Even with this
huge share of the corn crop, US corn-based ethanol amounted to only about 3.5% of the
US gasoline supply by volume, and 2.4% of the supply by energy contribution."
The problem is that our current consumption of gasoline is so large. In 2007, the US consumed
an average of 380 million gallons of gasoline per day. Meanwhile, the average US production of
ethanol in 2007 (after a year's harvest and production) was 17 million gallons per day. If the
entire US corn crop were turned into ethanol using the current processes, we could not expect
more than 85 million gallons per day of ethanol production, which is only 22% of the daily
gasoline consumption by volume, and only 15% of the total energy consumption (since the
energy content of ethanol is less than that of gasoline). In this extreme case, there would be no
corn in the food supply.
Interestingly, there is another reason why E85 is not commonly available at gas stations. The
vast majority of ethanol produced is needed as a fuel oxygenate additive to regular gasoline.
Ethanol is being used to replace MTBE which was made from natural gas but found to be
carcinogenic and nonbiodegradable, and thus MTBE is being phased out in most US states (US
DOE, 2002). Fuel manufacturers add oxygenates to gasoline to keep vehicle emissions under the
limits set by existing clean air standards. Currently there is not enough ethanol available in the
US to treat gasoline to the level that it was treated using MTBE. Thus we cannot expect to see
significant supplies of E85 available unless ethanol is abandoned as a fuel additive, or gasoline
consumption declines significantly. While it may be possible to produce significant amounts of
ethanol from cellulose, this process is not fully developed yet. This will be discussed briefly in a
later section.
There are similar scaling problems with biodiesel. The total world production of lipids
(biologically generated oils) in 2005 was 135 million metric tons, 80% of which went to human
consumption. Assuming a 1-to-1 by volume conversion of oils to biodiesel, this would give
approximately 113 million gallons per day. In another extreme example, if all of the food oil
produced worldwide was shipped to the US and converted to biodiesel, it would power less than
40% of the vehicles in the US. There are limits to the amount of biodiesel that can be produced.
There is a similar problem with the Canadian tar sands. After $14 billion in investments, tar
sand industries are producing approximately 1.1 million barrels of bitumen per day which yield
Johnson, A., Scarborough, D.
Causes of Rising Fuel Prices
6
roughly 30 million gallons of gasoline per day. The Albertan government projects that the tar
sands might triple their production by 2020 to approximately 80 million gallons per day of
gasoline, or about 20% of current US consumption. The tar sands process uses natural gas.
Scaling up to the 2020 level will require more natural gas than Canada currently exports.
The above numbers might be seen to support the view that a patchwork of fuel sources might be
able to provide sufficent fuels to support the economy as it is currently structured. However,
alternative fuels have additional problems of higher energy costs and the delays inherent in
ramping up production.
The problem of delays
All alternative fuels will require significant time to scale up production to significant levels. In a
study commissioned by the US Dept. of Energy, Hirsch, et. al. (2005) estimated the effects of
time delays on "crash mitigation programs" to produce more fuel once authorities recognize an
emergency. The findings of Hirsch et. al. are that decades will be required to transition the
existing petroleum-based infrastructure to other fuel sources. They estimated that if mitigation
programs are initiated ten years before petroleum production begins declining, an inevitable fuel
shortfall will hit about a decade after the petroleum peak. However, if mitigation programs are
not initiated until the peak of oil production occurs, a more serious supply shortfall will be
immediate and substantial. Hirsch et. al. estimate that mitigation strategies must be initiated two
decades before the peak in oil production for there to be no disruptions in the liquid fuel supply.
Based on the findings of many petroleum geologists we do not have twenty years, and we may
not have ten years before petroleum production begins declining. When the decline hits, we can
expect all countries to shift to the left and downwards on the GDP-energy use graph of figure 1.
Cellulosic ethanol is an example of the timing problem. While ethanol has been produced from
cellulose in very small quantities, there is as yet no functioning cellulosic ethanol plant in
production. This is because cellulose, while comparatively energy dense, is chemically very
stable. It is technically difficult to convert cellulose to smaller molecules such as sugars or
alcohols. The cost of making a cellulose-to-ethanol plant has been estimated to be two to five
times as great as the cost of a corn ethanol plant.
Presuming that a successful cellulosic ethanol plant can be built in the near future, wise investors
are likely to wait until the conversion process is perfected before investing in additional plants.
Once this is accomplished, new plants will take time to build and bring online. Meanwhile,
infrastructure for the transportation and storage of the biomass feedstock will have to be
developed. If switchgrass is used, farmers will have to be convinced to shift some of their
production to this new crop and learn how to grow it efficiently. Thus, one can expect that the
growth of cellulosic ethanol production will be initially slow before ethanol production can reach
the scale of present gasoline production. We should not count on cellulosic ethanol being
available when oil production begins declining.
The US possesses large deposits of coal. The Department of Energy has suggested that coal-toliquid fuel conversion (CTL) could supply substantial amounts of liquid fuels in the future.
However, the only CTL plants now in operation are in South Africa. Building a single CTL
plant in the US will take some time, and building enough plants to mitigate the decline in
Johnson, A., Scarborough, D.
Causes of Rising Fuel Prices
7
petroleum will take at least a decade. The permitting process maybe particularly time consuming
since these plants emit vast amounts of CO2. Third parties would likely attempt to require CTL
facilities to sequester the CO2 produced, and there are no CO2 sequestration technologies
currently available.
There are similar problems with converting natural gas to liquid fuels, or GTL. GTL plants will
not be built in the US as this country already is facing problems with the natural gas supply. A
few GTL plants have been built in the Middle East where natural gas is plentiful (Rahmim,
2008). But the total capacity is currently below four million gallons per day and is not expected
to rise beyond 16 million gallons per day by 2020 (National Petroleum Council, 2007). This
would be four percent of the current US petroleum consumption. The NPC itself concluded that
“GTL is unlikely to be a major component of global supply in the time frame of this study”.
The problem of energy costs for fuel production
The above discussion of alternative fuels has so far ignored the fact that every fuel requires
energy for its production. Until recent years, this "energy investment" required for an energy
output was sufficiently small that it could often be ignored. However, the production of biofuels
and other fuels require substantial energy inputs which cannot be ignored. To account for this,
"Energy Return On Energy Investment" or EROEI is used to evaluate the energy cost of
producing fuels.
The higher the EROEI, the more useful and profitable the fuel. (And it is quite possible that high
EROEIs lead to higher economic indicators in general). If the EROEI of a fuel is equal to or less
than 1, there is no energetic reason to make the fuel since as much energy goes into its
production as it provides.
The west Texas oil fields had EROEIs of around 100. For every 100 barrels of oil extracted
from the ground, about one barrel of oil energy equivalent was required. But as the easy oil
fields were depleted, the EROEI of oil production decreased. For example, producing oil from
deepwater sites requires a great deal of equipment and effort, and thus a much greater energy
input. The EROEI of modern deepwater sites such as those in the Gulf of Mexico is around 10,
and dropping.
EROEI is important in evaluating alternative fuels. For example, there has been considerable
debate about the EROEI of corn ethanol. Because of the large number of processes required to
produce corn ethanol (including planting, irrigation, fertilizing, harvesting, transportation,
fermentation, and distillation), much energy is required. This paper will not wade into the highly
contested question of accurate values for the EROEI of corn ethanol. We will only mention that
some researchers have found that more energy is required to produce ethanol than it yields, while
others have found EROEI values slightly greater than one. The value of 1.2 is accepted by some
observers, and others suggest that the EROEI may be as great as 2 or 3. But even for an
optimistic value of 2, this implies that every time an ethanol plant produces two gallons of
ethanol, one of those gallons must be returned to the production stream while the other gallon
Johnson, A., Scarborough, D.
Causes of Rising Fuel Prices
8
would be available as new energy. When the EROEI equals 2, only half of the energy produced
is "new" energy.
In a previous discussion, we estimated that the US could produce 85 million gallons of ethanol
per day if the total US corn production were devoted solely to ethanol. This unrealistic scenario
becomes even worse when we acknowledge that we had assumed that the energy inputs to the
ethanol production came from other fossil fuels. If one requires that ethanol production be
fueled by ethanol, using an optimistic EROEI of 2, then all of that corn would yield only 43
million gallons per day of ethanol usable as a fuel. Thus, going without corn in our food supply
would actually yield the US only about 8% of our current fuel consumption rather than the
previously estimated 15%.
The other alternative fuels are only slightly better. The EROEI of the Canadian tar sands is
around 5, meaning that the 2020 estimate of 20% of current US liquid fuel needs from tar sands
(which was simplified and probably optimistic) must be revised down to meeting only 16% of
the total current demand.
Fossil fuel conversion technologies have similar low EROEIs. The additional problem with
developing new coal to liquid (CTL) capacity in the US is that, despite large reserves, a recent
analysis of coal supplies has shown that the world is likely to encounter a peak in coal
production within twenty or thirty years (Zittel & Schindler, 2007). Thus developing a reliance
on liquid fuels from coal will only create another inevitable fossil fuel production crisis.
This section has shown that the energy cost of producing alternative fuels is high compared with
the relative ease with which petroleum based fuels were produced in the past. We currently have
no available energy sources that can replace petroleum when its production begins declining.
The problem appears to be that we have developed an economic system that relies on massive
and continual infusions of petroleum. Our way of life cannot be maintained when petroleum
production begins declining. Economies and businesses will change.
Which part of peak oil theory is a theory?
The idea of petroleum depletion is sometimes dubbed "peak oil theory", which allows doubters
to dismiss it as "just a theory". We need to consider which aspects of these ideas about
petroleum depletion are reliable information, and which are inferences.
The graph of petroleum discovery in figure 4 is a compilation of data currently available from
petroleum producers (see Longwell, 2002). World petroleum discoveries really did peak for the
last time around 1968, and discoveries have been declining since then. Petroleum production
records are also considered to be reliable facts. The idea that the petroleum supply is finite in
extent is fundamental to our understanding of the natural world. The EROEI for petroleum has
also generally declined since a hundred years ago, although data beyond financial records may
not be available to support this claim. Still, it is difficult to deny that the world will eventually
experience a downturn in petroleum production, and that efforts to extract the remaining
petroleum will encounter greater and greater energy expenses.
Johnson, A., Scarborough, D.
Causes of Rising Fuel Prices
9
Projections of the future of discovery, and of the approximate date of the peak of oil production,
however, are statements about the future. Some doubters point out that new oil fields are coming
on line every year, and that more exploration and more drilling will certainly yield new finds.
Certainly additional efforts and price incentives will spark new discoveries. So how much new
petroleum will this additional effort yield? If we refer to the history of petroleum in the US we
see that substantial additional exploration was not able to reverse the decline of production in
this country. Figure 5 shows the production of petroleum in the US (including Alaska) with the
total feet drilled in exploratory and production wells. Note that roughly doubling the amount of
wells drilled from 1978 to 1987 did not reverse the decline in production but was only able to
halt it briefly. (The production hump between 1978 and 1990 is due to Alaskan oil). A
substantial rise in petroleum prices that took place at the same time also failed to reverse the
decline. The overall trend of decline appears to be inexorable.
Figure 5: Total drilling and petroleum production in the US since 1949. Data from the US EIA,
http://www.eia.doe.gov/overview_hd.html
When it comes to replacing petroleum with biofuels or nontraditional petroleum from sources
such as the Athabasca tar sands, we have already provided simple calculations to demonstrate
that these fuels simply cannot be scaled up sufficiently. In this case, the faith that alternative
fuels will replace petroleum fills the role of the weakly supported theory. A few calculations are
all that is needed to demonstrate the stark limitations on alternative fuels. Thus the core of the
so-called "peak oil theory" (which we prefer to call petroleum depletion) consists mainly of
established data and easily-supported projections of current trends.
Johnson, A., Scarborough, D.
Causes of Rising Fuel Prices
10
The one area that is difficult to predict is how the world economy will respond to declines in the
petroleum supply. We address this briefly in the next section.
How does this affect international commerce?
Petroleum is the prime source of fuel for transportation. In the US, 96% of the transportation is
powered by petroleum. As the price of petroleum rises due to reduced supply, some petroleum
demand must be destroyed. Since 70% of US petroleum consumption is for transportation, it is
most likely that some transportation activities will be curtailed.
But the problem is not simply that everyone must drive their personal vehicles less. Our
economy is in a sense powered by petroleum. Iron ores are extracted by diesel powered
machines, refined in coal powered refineries, and the steel product is shipped to distant
manufacturing plants. Food produced by diesel powered machinery travels thousands of miles to
our tables. Polyester fibers made from petroleum are shipped from US chemical plants to
Chinese knitting mills and returned to the US as clothing. American consumers drive cars to
shopping malls to purchase clothing that has traveled many thousands of miles. The long supply
chains bringing raw materials to Asian manufacturers and manufactured goods to the West are
threatened by rising transportation costs. Shipping costs for long-distance traveling goods can no
longer be considered as minor portions of the overall cost of the goods. In May 2008, the World
Shipping Council released a statement about rising costs of bunker fuel for freighters:
"Shipping lines worldwide are struggling as crude oil prices topped an
unprecedented US$119 per barrel this week, in turn pushing marine bunker fuel
prices up past $552 per ton – a $26 per ton increase since the end of March alone.
Bunker prices have risen 87% since the beginning of 2007.
Fuel costs represent as much as 50-60% of total ship operating costs, depending on
the type of ship and service. Ocean carriers are required to recover these costs to
maintain levels of service, meaning the price of shipping goods will continue to
face upward pressures."
Airlines and the trucking industry are experiencing worse problems because of their higher fuel
costs per mile. The overall effect of rising shipping costs (and rising raw materials costs, and
rising production costs) must be an increase in prices for most goods - particularly those that
travel long distances - and an attendant decline in demand for goods (since most incomes will not
rise in response to prices). While we cannot predict the future, it appears that the world will have
great difficulty avoding a serious and extended economic downturn.
This scenario may be difficult to accept. But we must realize that we live in extraordinary times
that are unlike any other period in history. From the dawn of man until 1900, the world
population stayed under 1.5 billion. For millennia, until the advent of coal-powered machines,
travel to another country or across an ocean took months. The world has experienced three
generations of increasing population, increasing food production, and increasing wealth and
convenience, all which arguably were enabled by the increasing availability of fossil fuels, and
by petroleum in particular. While we have come to expect continued growth, the decline of
petroleum will seriously challenge this expectation. The major fuel that has powered the growth
Johnson, A., Scarborough, D.
Causes of Rising Fuel Prices
11
of modern economies will no longer be inexpensive or freely available. Any economy that relies
on growth and long distance transportation will have great difficulty in a fuel-constrained
environment. In their report to the US Department of Energy, Hirsch et. al. concluded:
"The problems associated with world oil production peaking will not be temporary, and past
“energy crisis” experience will provide relatively little guidance."
What can and should businesses be doing?
We are confident of the geological facts of oil production, and we expect that the projected
economic consequences are difficult to avoid. However, we do not claim to know the specifics
of the economic changes that lie ahead, and we don't have solutions to offer. We can, however,
suggest some guidelines that others have already described (Heinberg, 2006 and 2008).
Transportation companies are already working to increase their fuel efficiency. Airlines are
reducing the weight of planes, restricting baggage, and reducing routes flown. Shipping
companies are reducing speeds and trying to combine trips. Some enterprising companies have
developed giant traction kites that freight ships deploy in favorable winds. These "sky sails" are
expected to reduce fuel consumption by up to 30% (Jameson, 2008). There are ways to transport
goods without the use of fossil fuels. We should be working on these, particularly on developing
a wind-powered electric rail system in the US.
Increases in fuel efficiency will help companies in the short term, but bigger changes will need to
be made over the longer term. When transportation becomes a major cost, the solution is to
reduce the transportation needed to conduct business. This will require ingenuity and in many
cases may result in reduced expectations. It is also likely to result in relocalization of economies.
It may well be that just-in-time inventory management has a limited future, as do the
international supply chains of discount retail stores. Businesses that ship products long distances
or that rely on distant suppliers are already beginning to search for and utilize local suppliers,
and they are recognizing the importance of local markets.
Finally, if the economies of the world contract, they are likely to experience a series of economic
shocks and degradations in infrastructure. Communities and businesses that are better prepared,
more flexible, and willing to work together will be more resilient in these situations. To remain
successful, businesses might need to shift their goals from maximizing profits to maintaining the
stability of their home communities. Troubled companies might prefer to negotiate with
employees to keep skilled staff on short hours rather than simply laying off entire workforces.
While it presents a serious challenge, the upcoming energy crunch does not have to be seen in a
totally negative light. We believe that the quality of life could improve even when material
wealth is in decline. This depends on people choosing ways of living that emphasize
connectedness and mutual support rather than competing for increasingly scarce resources. This
choice is up to us.
Johnson, A., Scarborough, D.
Causes of Rising Fuel Prices
12
References:
Campbell, C. (2008) ASPO Newsletter #92, August 2008, Association for the Study of Peak Oil
and Gas, Uppsala Sweden http://www.peakoil.net/aspo-newsletter
Heinberg, R. (2006) The Oil Depletion Protocol - A Plan to Avert Oil Wars, Terrorism, and
Economic Collapse, Gabriola BC, New Society Publishers, 208 pp.
Heinberg, R. (2008) "Museletter #192 - Resilient Communities: A Guide to Disaster
Management" April 2008, http://www.richardheinberg.com/museletter/192
Hirsch, R., R. Bezdek, et al. (2005). Peaking of World Oil Production: Impacts, Mitigation, and
Risk Management, SAIC for the US Dept. of Energy: 91 pp.
http://www.netl.doe.gov/publications/others/pdf/Oil_Peaking_NETL.pdf
Hubbert, M. K. (1957). "Nuclear Energy and the Fossil Fuels". Drilling and Production Practice
1956. API. New York, American Petroleum Institute: pp. 7-25.
Jameson, N. (2008) "Skysails Ship Completes 12,000 Mile Round Trip", Sustainable Shipping
website, http://www.sustainableshipping.com/news/2008/03/71021
Longwell, (2002) "The Future of the Oil and Gas Industry: Past Approaches, New Challenges",
World Energy 5(3) pp. 100-104, available online at
http://www.worldenergysource.com/articles/pdf/longwell_WE_v5n3.pdf
National Petroleum Council, Topical Paper #9, Gas to Liquids (GTL) Working document,
released July 18, 2007, available at http://www.npc.org/Study_Topic_Papers/9-STG-Gas-toLiquids-GTL.pdf
Perry, M.J. (2008). “Oil Prices, Global GDP and Net Oil Exports,” Seeking Alpha Investment
Newletter, posted July 28, 2008. http://seekingalpha.com/article/87353-oil-prices-global-gdpand-net-oil-exports.
Province of Alberta (2008) "Alberta's Oil Sands", Canadian government report online at
http://www.energy.gov.ab.ca/OurBusiness/oilsands.asp
Rahmim, Iraj (2008) “GTL, CTL Finding Roles in Global Energy Supply”, Oil and Gas Journal,
March 2008
Tverberg, Gail (2007) "Corn-Based Ethanol: Is This a Solution?"
http://gailtheactuary.wordpress.com/2007/05/29/corn-based-ethanol-is-this-a-solution/
US DOE Energy Information Administration (2002) Analysis of Selected Transportation Fuel
Issues Associated with Proposed Energy Legislation online report,
http://www.eia.doe.gov/oiaf/servicerpt/fuel/mtbe.html
World Shipping Council (2008) "Record Fuel Prices Place Stress On Ocean Shipping" Public
statement, 3 pp. http://www.worldshipping.org/pdf/WSC_fuel_statement_final.pdf
Zittel, W; Schindler, J. (2007) "Coal: Resources and Future Production", report by the Energy
Watch Group; 47 pp.
http://www.energywatchgroup.org/fileadmin/global/pdf/EWG_Report_Coal_10-072007ms.pdf
Johnson, A., Scarborough, D.
Causes of Rising Fuel Prices
13