ASPO’s review of the NPC study identified the following serious shortcomings

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ASPO’s review of the NPC study identified the following serious shortcomings:

1)The study fails to directly answer the straightforward questions asked by Energy Secretary Bodman. In its multi-chapter report, the NPC buries the critical issue of peak oil in a rambling discussion of energy supply, energy demand, energy efficiency and climate change.

2)The NPC study hides the huge near-term problem of meeting global demand for liquid fuels. Mitigating the emerging worldwide shortage of oil will take decades under the best of conditions, according to ASPO. Ironically, the Department of Energy’s National Energy Technology Laboratory had already commissioned a much clearer discussion of this challenge. In their seminal 2005 paper “Peaking of World Oil Production: Impacts, Mitigation, & Risk Management,” Robert Hirsch and Roger Bezdek coherently outlined the dire risks of delayed action.

3)The NPC’s Executive Summary contains some profoundly misleading graphs, according to ASPO. One suggests that petroleum supplies will grow for another two decades, another that five nations in the Middle East are capable and willing to double oil exports. Experts have serious doubts about both assumptions. Today, 10 nations produce nearly 75 percent of oil exports. But as one senior Saudi puts it, “There has been a paradigm shift in the energy world whereby oil producers are no longer inclined to rapidly exhaust their resource for the sake of accelerating the misuse of a precious and finite commodity. This sentiment prevails inside and outside of OPEC countries but has yet to be appreciated among the major energy consuming countries of the world.

4)The report evades discussion of the economic trauma that is likely once world oil production flattens. According to Robert M. Gates, current Secretary of Defense, “It only requires a relatively small amount of oil to be taken out of the system to have huge economic and security implications…. If we wait until a crisis occurs to act, the nation will have access to few, if any, effective short-term remedies.” Gates reached this conclusion after participating in the Oil Shockwave, a planning exercise sponsored by the nonpartisan National Commission on Energy Policy. “We must transcend the narrow interests that have historically stood in the way of a coherent oil security strategy,” Gates concluded. The NPC study ignores these and similar warnings from many other sources.

5)Asking the National Petroleum Council, dominated by major oil companies, to diagnose energy fundamentals is a mistake, according to ASPO. In addition to conflicts of interest in reporting supplies, the major oil companies must now compete with independents and national oil companies for major reserves.

Today, resource nationalism, guerrilla insurgencies and soaring Asian demand hold sway. The insatiable appetite for oil in China and India, combined with insurgencies in Nigeria and Sudan, and falling production in the U.S., Mexico, Norway and Britain, has created a new dynamic, ASPO believes. It is the decisions made by national oil companies in Venezuela, Russia, Iran, Saudi Arabia and elsewhere—not those made by the major oil companies that control the future course of world oil production.

6)By calling for yet another study of world energy reserves, the NPC admits the inadequacy of existing reserves data. Yet the critical issue is not how much oil is below ground but how fast it can be produced. The concern is not barrels of reserves but rates of flow.

Although the NPC identifies "producibility" as a concern, it seems not to appreciate how depletion is ravaging the world's giant fields. Depletion is tireless, quick, inevitable, relentless and automatic. Investment is halting, slow, optional, costly and sporadic. The NPC calls for greater investment. But even if investment had the same characteristics as depletion, it would still not win the race.

7)Although the NPC forecasts no supply shortfall before 2020, other independent observers predict one sooner. Peak oil is a risk management challenge, and Secretary Bodman and the nation require immediate guidance. The United States has designed its industrial economy; transportation infrastructure; automobiles; and agriculture and land-use patterns around $20 to $30 oil.

Because oil provides 40 percent of the globe’s energy, and because the energy system is so large and slow to change, the costs of acting immediately to begin mitigating the inevitable supply crunch are dwarfed by the economic penalties of further delay. By failing to urge timely action, the NPC misleads the public and places the nation’s future at risk, according to ASPO.

8)The NPC study seems oblivious to geopolitical and economic reality. Nowhere in the executive summary are the countries of Iraq or Iran mentioned or leaders such as Putin or Chavez. The word “OPEC” appears only once, in a footnote.

“In the final analysis, the NPC Study is woefully inadequate, leaving the Secretary of Energy and the American public with inadequate warning of the huge economic and social risks that many experts believe are just around the corner,” says Udall.

http://www.aspo-usa.com/index.php?option=com_content&task=view&id=176&Itemid=91