Random Acts of Chaos

theamericanbear:

“[The United States] has already identified at least eight massive potential reserves and has begun drilling in earnest and ramping up its domestic oil production. It is estimated that by the end of 2012 the U.S. will be producing 720,000 barrels of crude per day from [“tight oil”] sources, accounting for roughly 12% of domestic oil needs.”

There is another more insidious aspect to the development of these newly economically viable sources of crude oil; the undercutting of the hoped for “green revolution” in energy production. The economic imperative for developing cheap and renewable sources of energy largely evaporates once you are suddenly awash in a wealth of oil, but the environmental hazards remain and in many cases worsen. Shale belongs to the same family of “tight oil” products as the notoriously environmentally destructive Alberta tar sands, which are famously believed to contain within them more carbon dioxide than has until now been emitted in all of human history. Extraction on a large scale can be expected to exacerbate existing problems with CO2emissions and climate change with potentially disastrous effects. With a new abundance of shale-based crude oil, the fiscal urgency to develop “green” sources of power will be gone and investment capital will flow back into more business-as-usual forms of energy production. While this may be good in the short-term for the economic and political fortunes of countries with major shale reserves, it may be devastating for the planet itself in the long-term. The shale oil boom promises to fundamentally realign the global oil market and shift political power away from its present equilibrium; but while this promises to create new winners and losers geopolitically it may end up being looked back upon as lose-lose for the world at large if it ultimately aborts the movement towards clean and renewable power and makes crude oil the prime energy source of the foreseeable future.

As production of shale oil and other crude “alternatives” ramps up around the world and as greater deposits continue to be discovered in the territory of current net-importers, the global oil market stands at a something of a precipice. While OPEC has heretofore been dismissive towards the potential of shale oil to undercut its market power, statistics which show meteoric projected increases in both reserves and output in countries such as the U.S. suggest that current oil producers may be acting with dangerous complacence. As technology continues to develop and improve the economic viability of extracting shale and other “tight oil” products, OPEC countries need to make tough decisions about exercising their production muscle to reduce prices and thus postpone the immediate imperative to develop shale oil sources; or conversely risk rolling the dice and allowing their market dominance to be challenged. This will end up being a potentially momentous decision not just politically and economically but for the potential long-term health of the planet as well.