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Originally Posted by C150J  I'd love to get an educational discussion going on oil, seeing the critical role it plays in our vocation. I'd like to discuss the following:
- Are we running out?
- Are we relying too heavily on certain sources of crude?
- What needs to be done in the aviation community to conserve? APU usage, tugs, flex climbs?
- What do you see as the best alternative to Jet A?
I'll start by posting this paper - http://www.ncpa.org/pub/bg/bg159/. It seems a bit optimistic, and I'd be interested to hear JC's thoughts. |
I don't mean to sound arrogant but on this site I see a lot of people make interesting claims and predictions about oil. Some understand the fundamentals and some do not. I work in oil and have for the past five years. I work for a services company; we make the technology that finds the stuff and gets it out of the ground. I am a market analyst and it is my job to scope out these things you are talking about; I am also training to be a pro pilot so that is why I frequent this forum. I certainly have no crystal ball but I can make some educated guesses/predictions.
Your first question:
Are we running out?
The simple answer is NO. A lot of oil is yet to be discovered and new types of oil are known about but haven't been reached yet. The reason oil prices have gotten so high is because of a kind of shock to the system. Several years ago we were producing plenty of oil to meet the world's demands but the Indian and Chinese economies exploded with a growth in demand. This threw things out of whack and the supply side of the market struggled to keep up, which in turn drove prices up to uncharted territory. However, the supply side of the market is now catching up to demand. The complicated part in all of this is how long can supply keep up with demand or vice versa. Everyone says that we are running out of oil and they keep pushing the peak oil stuff on us constantly. The problem with peak oil theory is that Hubbert didn't have heavy oil, and deepwater oil in mind when he thought up his theory. Another thing some people dont' know is that inventory is finally starting to accumulate, which is a natural function of supply and demand to level out prices. I don't think that we are even close to "running out of oil." We may never see $30/bbl again but prices, right now, are artificially inflated due to speculation because until this point demand has been outpacing supply. On a side note, which is probably what you want to know. Oil companies such as Shell and Exxon Mobil are not worried about shortages of oil with in the next 20 years. I've read a few articles with the CEO of Shell where he says they have no supply worries for foreseeable future. He says that supply is very adequate for demand and that the fundamentals of supply and demand are not supporting $120/bbl oil. I'm not saying it can't get to $200/bbl but I am saying that it can't stay that high for long. Unfortunately I can't define what "long" means but I would not think it to be more than a few months. I think $60-70/bbl is the real market value for oil. There are many other historic fundamentals that point to a popping of oil and commodity prices bubble. i can share them with you in a pm if you like...it's too much for here.
Are we relying too heavily on certain sources of crude?
Yes. I am in total agreement with a couple of these guys on this forum. We rely too much on the middle east and if we would use our own reserves, develop Natural Gas-to-Liquid fuel capabilities, and use Coal to Liquid for US supply we would be much better off. However, I think that the US in addition to achieving these short term solutions should pursue long term solutions for ground transportation. I know many of these guys think that electric is going to be the long term permanent solution to cars but I completely disagree. I think the way going forward is going to be hydrogen fuel cells or liquid hydrogen. It will be able to deliver performance like we are used to all though infrastructure must be put in place. I think hydrogen will be the solution to this hook we have in our mouths called oil. Even planes could get the thrust capabilities they require from hydrogen. Technology will have to be developed but it is possible and I may see it before I die(I am 25).
What needs to be done in the aviation community to conserve? APU usage, tugs, flex climbs?
This question I don't really know. The guys on here probably know more than me about this.
What do you see as the best alternative to Jet A?
there is no alternative to Jet A at this time. Making blends of Bio-Diesel and Jet A may help conserve but someone else put it perfectly. Bio-Diesel starts to gel at about 20 degrees F. There are additives you can blend that will take it below 0 without a problem but they can't get to where they need it yet. however, Jet A can be made out of coal liquification and a Natural Gas to Liquid version of Jet A is possible as well. Byt the way the US has some of the largest reserves of coal and natural gas in the world.