When oil production declines and oil becomes too expensive and scarce, nuclear power will fail also. Here is why:
According to energy investment banker Matthew Simmons and most independent analysts, global oil production is now declining, from 74 million barrels per day to 60 million barrels per day by 2015. During the same time demand will increase 14%.
This is equivalent to a 33% drop in 7 years. No one can reverse this trend, nor can we conserve our way out of this catastrophe. Because the demand for oil is so high, it will always be higher than production; thus the depletion rate will continue until all recoverable oil is extracted.
Alternatives will not even begin to fill the gap. And most alternatives yield electric power, but we need liquid fuels for tractors/combines, 18 wheel trucks, trains, ships, and mining equipment.
We are facing the collapse of the highways that depend on diesel trucks for maintenance of bridges, cleaning culverts to avoid road washouts, snow plowing, roadbed and surface repair. When the highways fail, so will the power grid, as highways carry the parts, transformers, steel for pylons, and high tension cables, all from far away. With the highways out, there will be no food coming in from "outside," and without the power grid virtually nothing works, including home heating, pumping of gasoline and diesel, airports, communications, and automated systems.
This is documented in a free 48 page report that can be downloaded, website posted, distributed, and emailed: http://www.peakoilassociates.com/POAnalysis.html
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Big Oil, No Mojo
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What happens if none of this is enough for Big Oil to keep growing? In June, France's Total gave its answer, announcing it had signed a deal with nuclear-power company Areva and French utility Suez to build nuclear reactors in the Middle East. Shell has been investing heavily in liquefied-natural-gas technology. But Big Oil has been talking about diversification for years (remember BP's Beyond Petroleum campaign?). The obvious question is what value an oil company like Total can add in the nuclear industry. Mature oil companies aren't going to turn into nimble nuke, wind or solar specialists, just as the railroads in the 1950s didn't suddenly grow into airlines. Then there's a problem of scale. Alternative power can't rival Exxon's $40.6 billion in profit for 2007.
Despite their dwindling access to production and reserves, the majors still have valuable distribution networks and refining capacity, which the national oil companies need to sell their goods. Already, companies like Russia's Gazprom and Rosneft are striking deals to exchange production sharing for downstream assets. Sooner or later, some of the rising players (three of the top five oil companies by market cap are already national oil companies) will likely want to buy them outright. Given the assets, politics and emotions involved—remember when Cnooc tried to by Unocal?—that will be a battle that will make BP's Russian adventures seem like a minor skirmish.
© 2008
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