The world is not running out of oil - but Europe is

Petroleum geologist Wallace Pratt said, "Oil is found in the minds of men". He was referring to the theory of making discoveries. In the case of Eurocrats, however, it’s more of a practical observation

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Oil still rules in the energy game
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Peter C. Glover
On 8 May 2013 10:11

The thinking in limo-travelling EU circles was that wood equals low carbon; except it hasn’t turned out that way. Cutting down trees in ‘managed’ woodland in theory would be offset by the carbon sequestered from factory chimneys and stored in planted trees. That piece of euro-think prompted a huge surge in wood burning. That, in turn, led to a new alliance of users demanding public subsidies for ‘renewable’ biomass (read mostly wood).

Europe’s largest coal-fired power station immediately got in on the act. The Drax power station in the UK began converting half of its boilers to burn wood. Drax now expects to receive over half a million pounds in subsidies to burn biomass after the boilers come online in 2016. At current prices, that’s just short of a cool £300 million more than its pre-tax profit of £190 million in 2012.

But the fact is that Europe cannot sustain this kind of wood usage and it is scouring the globe to seek new sources. As a consequence, wood prices are soaring, with the index of wood-pellet prices published by Argus Biomass Markets spiking at a new high last year.

Unfortunately, it’s all to no avail CO2-wise as wood-burning doubles up in its carbon footprint anyway: first, through the process by which wood is made into pellets for industry use and second, through its actual burning.

France could help Europe avoid increasing coal use, but it has banned the fracking process that would offer it the option of significant domestic (shale) gas production. Germany’s knee-jerk idiocy in announcing the closure of its nuclear plants after Fukishima and investing heavily in solar energy has also massively back-fired. But then Angela Merkel’s green-lighting of over 25 new coal-fired power stations aims to pick up the energy – though not the carbon cutting – tab.

As the Washington Post, hardly a bastion of the pro-hydrocarbon right, recently observed: "Europe is becoming a green-energy basket case" and "a model of what not to do" when it comes to fighting climate change (if you believe it needs to be or can be ‘fought’). All of which has contributed significantly to the EU carbon trading scheme recently ending up on life-support when even the EU Parliament voted down an ill-thought through rescue plan.

The fact is, while the ideological carbon jihadists in Brussels were out fighting mythological eco-wars, the highly pragmatic Chinese were out buying up much of the world’s remaining conventional oil and gas resources. And while the Russians were annexing over half of the Arctic’s subsea hydrocarbon wealth, the Americans were busy devising cutting edge technology to open up the world’s surface ‘hiding’ massive unconventional (shale) gas and oil deposits. Over in Japan they were working on a process that could well enable extraction of gas from methane hydrates which could mean gas resources, for all practical purposes, to be infinite.

Meanwhile Europe has been desperately casting about to divest itself of a high dependency on Russian gas supplies. And when Israel discovered massive gas and oil reserves in the eastern Mediterranean it looked like it could. That was until Russia’s state-owned Gazprom bought a slice of the Israeli global distribution deal action for gas. And with Russian feet now firmly under the eastern Mediterranean table, even greater collaboration, possibly with Israel’s shale oil operation, is highly likely.

It’s almost as if the world is turning while the Eurocracy, somehow, manages to stand still. While the rest of the world recognises the on-going inherent reality that oil is still an indispensable player, ideological Brussels politicians prefer playing with windmills and funny plastic sheets.

The great petroleum geologist Wallace Pratt said, "Oil is found in the minds of men". He was referring to the theory of making new discoveries. In the case of Eurocrats, however, it’s more of a practical observation.

Peter C Glover is co-author of the bestselling Energy and Climate Wars and is a contributing editor at The Commentator. For more: www.petercglover.com

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