How then, do we move backwards? How does a society, with most of the people having no clue of future events, move from being dependent on a vast and intertwined network of goods and services produced by the indigenous people of whereever, to a local resource and renewable energy based society, and do so in the timeframe available (20-30 years using the most liberal extimates, 10-20 with resonable estimates, 5-10 with worst case scenarios), all the while prices on everything increasing, world politics getting more militaristic, governments continuously reducing civil liberties, shortages of goods on the market and weather patterns resembling bad Hollywood movies?
Posted: Tue Sep 27, 2005 3:01 pm Post subject: Re: Congressman Bartlett's PO Conf.
We will be _________________ "When you understand why you dismiss all the other possible gods, you will understand why I dismiss yours." - Stephen F Roberts.
This is a call-in program. _________________ "When you understand why you dismiss all the other possible gods, you will understand why I dismiss yours." - Stephen F Roberts.
Joined: Mar 29, 2005 Posts: 266 Location: Maryland
Posted: Tue Sep 27, 2005 5:05 pm Post subject: Re: Congressman Bartlett's PO Conf.
Some people were protesting outside his office today:
Quote:
Groups to Gather to Urge Congressman Bartlett to Vote Against Budget
FREDERICK– A collection of groups opposed to the federal budget bill gathered in front of Congressman Roscoe Bartlett’s district office in Frederick to urge the Congressman to vote no on the budget. The budget bill is being opposed by a wide variety of groups for its cuts to social programs, higher education funding, Medicaid, and a provision to allow for drilling in the Arctic National Wildlife Refuge.
...
In the wake of already high gas prices exacerbated by hurricanes Katrina and Rita, drilling proponents have increasingly called on Congress to allow oil drilling in the Arctic National Wildlife Refuge, claiming that drilling can be done with little impact on the environment. But a new report by MaryPIRG demonstrates that oil spills on Alaska’s North Slope have increased sharply since 2000.
“Our report, ‘Saving America's Arctic: Dispelling Myths about Drilling in the Arctic National Wildlife Refuge,’ shows that oil and gas drilling is incompatible with an area as pristine and wild as the Arctic Refuge,” said Clinton. “An industry that averages one oil spill every 16 hours should not be allowed to get its hands on one of America’s last wild places.”
According to the Alaska Department of Environmental Conservation, the number of reported oil spills on Alaska’s North Slope reached a 10-year high in 2002. In 2004, 550 spills were reported on the North Slope—one spill every 16 hours. Alaska’s North Slope has experienced an average of 504 spills annually since 1996.
The coastal plain of the Arctic Refuge is one of America’s last wild places. The Area supports a wide array of wildlife, including caribou, polar bear, musk oxen, and more than 130 species of migratory birds.
There are 135 species of birds that use the Arctic National Wildlife Refuge for nesting or to feed up for migration,” said Bob Schaeffer, president of the Audubon Society of Central Maryland. “Many of these are very sensitive to disturbance, whether it be by helicopters or predators following roads across the tundra. Oil development in ANWR could be devastating to Snow Geese and other waterfowl.”
Following high gas prices exacerbated by Hurricane Katrina, drilling proponents have increasingly called on Congress to allow drilling in the coastal plain of the Arctic Refuge. But drilling in the Arctic Refuge is unlikely to solve America’s energy problems or reduce the price of gas. According to the Bush administration’s own Energy Information Administration, oil from the Arctic Refuge would reduce the price of gas by less than a penny and a half in 2025, the estimated peak year for Refuge oil production. The same EIA study points out that drilling in the Refuge would reduce imports of foreign oil by only two to four percent at best.
“Instead of drilling in the Arctic Refuge, America needs an energy policy that is good for the environment and consumers,” said Clinton. “The easiest way to do that is to make our cars, SUVs, and light trucks go farther on a gallon of gas.”
The message, those in attendance said, is that the budget does not reflect American values, and is a bill that Congressman Bartlett should vote against.
“This bill opens up our last pristine wilderness area, it cuts higher ed funding, Medicaid funding and social programs,” said Clinton. “This bill does more damage than good and Congressman Bartlett should do what’s right and vote against this bill.”
Posted: Tue Sep 27, 2005 7:18 pm Post subject: Re: Congressman Bartlett's PO Conf.
I don't know about the rest of you, but I was extremely disappointed with Donald R. Wulfinghoff. He seemed to know his stuff when it comes to making buildings more energy efficient. But when he discussed transportation efficiency, the guy was woefully ignorant. But that didn't stop him from opening his yap.
He described mass transit, telecommuting and the like as distractions to energy efficiency. Specifically, he referred to mass transit as only a social program (I own a car, but take transit, am I social program???). Yet Wulfinghoff spoke glowingly of Europe and its walkwable cities. Did he not venture aboard their spectacular transit and high-speed rail systems???
And, when he first spoke of how the transportation sector could become more efficient, he said "this is a situation that will take care of itself." Given the massive government involvement in owning and subsidizing oil-intensive highways and aviation infrastructure, how can free-enterprise "fix" this situation by competing with such huge subsidies?
When people don't know what they're talking about, they should ignore their egos, while doing themselves and the world a favor by keeping their mouths closed. But these folks figure that since they're an expert on one aspect of energy efficiency, they figure they're an expert on ALL aspects of it.
I fear some people actually took into consideration Wulfinghoff's views on energy efficiency in the transportation scene. This nation is already ignorant enough on the issue without needing to be misled, too.
Posted: Tue Sep 27, 2005 10:14 pm Post subject: Re: Congressman Bartlett's PO Conf.
Peepers wrote:
I don't know about the rest of you, but I was extremely disappointed with Donald R. Wulfinghoff. He seemed to know his stuff when it comes to making buildings more energy efficient. But when he discussed transportation efficiency, the guy was woefully ignorant. But that didn't stop him from opening his yap.
He described mass transit, telecommuting and the like as distractions to energy efficiency. Specifically, he referred to mass transit as only a social program (I own a car, but take transit, am I social program???). Yet Wulfinghoff spoke glowingly of Europe and its walkwable cities. Did he not venture aboard their spectacular transit and high-speed rail systems???
Totally agree. Public transportation (especially electrically-powered public transit systems) are extremely effecient as people-movers. I think he's really off-base here.
The ONLY thing I can think of where he could be right is that, due to North-Americas fixation with suburban life, it could be very expensive/difficult to "retrofit" suburbia for public transit. That's the only argument I could think of that would make his statement fit.
Even then, why couldn't there be a bus terminal at every suburban subdivision bringing people in town? Even a dirty diesel-driven bus is a way more effecient people-mover than your average car in terms of passenger/miles.
Posted: Wed Sep 28, 2005 12:25 am Post subject: Re: Congressman Bartlett's PO Conf.
An Oil Drum review of the conference stated that Wulfinghoff's views on mass transit were loudly booed by the audience. Of course, the audience knows what's going on. The casual story-reader sheeple doesn't.
Joined: Aug 18, 2004 Posts: 694 Location: SF Bay Area, Calif
Posted: Wed Sep 28, 2005 2:02 am Post subject: Re: Congressman Bartlett's PO Conf.
I wouldn't be too quick to write off Wulfinghoff on transportation.
He looked like one of those old-timers who have been in the business for decades, and who have developed a set of shock statements to get people's attention.
His talk was full of dogmatic assertions, which began to make sense once he started explaining them. (Reminds me of Bill Mollison, the co-originator of permaculture.)
I'd be interested to hear his full arguments about transportation. I looked at his website http://www.energybooks.com/ , but that's mostly about efficiency in housing and industrial plants.
My guess is that he is very strong on specific technical points, but neglects social factors.
Quote:
So let’s look at this most important technique, which is to minimize transportation. There are four basic - look at the odometer of your car and see where the miles go. The largest number of miles probably go to commuting. Commuting is entirely unproductive. It wastes vast amounts of fuel and energy for the manufacture of vehicles. Everyone hates it, so it isn’t something we want. The solution is to live near where you work or to work where near you live. The action is individual, it is entirely voluntary, and it is feasible immediately.
Posted: Wed Sep 28, 2005 2:47 am Post subject: Re: Congressman Bartlett's PO Conf.
bart wrote:
For what percentage of working people is it immediately feasible to quit their jobs and take ones close to home?
Not for me, I've been trying for months. Of course, I could move closer to my job... if I honestly thought that I want to work there forever. But I don't.
The suggestion is good if you are happy to hop around wherever your jobs may take you. This is often not very compatible with a family life. Or with having any kind of preference on certain places over others.
Joined: Aug 17, 2004 Posts: 3541 Location: 39° 39' N 77° 77' W or thereabouts
Posted: Wed Sep 28, 2005 6:00 am Post subject: Re: Congressman Bartlett's PO Conf.
Someone posted a transcript but it had a lot of errors and it was cut off. I spent some time last night cleaning up a copy. As usuall Bartlett uses so many visual aids a text-only copy is nearly worthless. The other speakers come across better as just text.
Quote:
REPRESENTATIVE ROSCOE G. BARTLETT
MARYLAND 6TH DISTRICT
2005 ENERGY CONFERENCE
MONDAY, SEPTEMBER 26, 2005
9:00 A.M. -- 12:00 NOON
FREDERICK COMMUNITY COLLEGE
FREDERICK, MARYLAND
PARTICIPANTS:
DR. KENNETH DEFFEYES
MATTHEW SIMMONS
RICHARD HEINBERG
DONALD WULFINGHOFF
JOHN SPEARS
JOHN HOWE
Transcript by:
Federal News Service
Washington, D.C.
REPRESENTATIVE ROSCOE G. BARTLETT (R-MD): Good morning and thank you all very much for coming. This is kind of like coming home to me. I worked here for 12 years at the community college, taught anatomy and physiology to the nursing students and also taught a biology course. And when the publishers saw that I taught a biology course, they all sent me their textbooks hoping that I would adopt it for the class of course and then they could sell some textbooks. And so over my desk went all of the textbooks in biology. And all of them had chapters on energy and environment and so forth. And I would read those. And so my concern about the subject that we're talking about today is more than 30 years old because I have been reading and thinking about this for at least 30 years now.
I really appreciate you all coming and especially appreciative of the members of the panels that have come. We have here today represented some of the experts from around the country and indeed around the world. I would just mention them briefly now -- who they are -- and then introduce them in more detail a little later.
Dr. Kenneth Deffeyes, professor. He worked with M. King Hubbert. Many of you may not know who M. King Hubbert is. I'm sure you will after today's session. You'll know who it is. And he will be talking to us about his concerns about the world's energy resources.
Matt Simmons is the president. I spoke with the president about energy and mentioned Matt. Oh, yes, I know Matt. Matt was his energy advisor during his first campaign and his second campaign. He is president and CEO. I guess you have relinquished one of those titles now so that he can spend more time to education of the largest energy investment banks in the world.
He has a new book out called "Twilight in the Desert" -- intriguing title. And it's about Saudi Arabia and his concerns that Saudi Arabia probably has peaked in oil production. You may have noticed that when OPEC gets together and when the oil sheikhs come here they don't promise that they are going to pump a lot more oil to bring the price of oil and gas down. I think they are not promising because they can't produce more oil.
Richard Heinberg -- and I'm really envious of him. He has taken the two best titles for books: "The Party is Over," is the title of one of his books. And the second title -- really great title is "Power Down," because as you'll see in today's conference, that is exactly what we're going to have to do.
Then our second panel is going to do deal with what do we do about it? How do we transition so that we have a relatively soft landing? Donald Wulfinghoff -- and he has written really a tall, an enormous book on energy conservation in buildings. He is perhaps the world's authority on energy conservation in buildings, which, by the way, is where we use our most energy. Most conspicuously we use energy in transportation, but we use most of it in our buildings and he'll talk about that.
John Spears -- what does sustainability look like? How do we get there? And John Howe. John is a retired engineer in New England, and he has been pioneering this. He has written two books. And he has been giving these books away because he just is so concerned that Americans need to know about the energy crisis and what is coming.
I have a couple of slides to kind of give us started here. Okay, we need to go back six decades to kind of put this in context. During the '40s and '50s, and a scientist by the name of M. King Hubbert worked for the Shell Oil Company, and he noticed the exploitation of individual oil fields, and they all seemed to following a bell curve.
Now, most people know what a bell curve is. If you are noting the size of people -- some of them are very short, some are very tall, but most of us is somewhere in the middle, and if you put all those down, you get a bell curve. And he noticed that the exploitation and exhaustion of these oil fields followed a bell curve. Then about halfway through it reached a peak and the second half of oil, logically, was more difficult to get than the first half.
The green there, the smooth green curve shows his prediction, and the more ragged curves shows the actual data points he predicted in 1956 that the United States would peak in 1970 and right on target the United States peaked in 1970, in spite of feverish drilling. I read the other day that maybe 80 percent of all of the oil wells drilled in the world have been drilled in this country. In spite of feverish drilling, it's been downhill ever since.
The red curve there is Russia -- a bit more oil than we. And they peaked a bit after us. And you see that they kind of fell off when the Soviet Union came apart. They are going to have a second much smaller peak because of the disarray that occurred there when the Soviet Union dissolved.
The next slide. The next slide is a schematic and this is a very interesting slide. The U-curve there or the parabolic curve there is the -- the exponential curve, is a 2 percent growth, just 2 percent growth. From the beginning of the yellow to the end of the yellow is 35 years because that is the amount of time it takes with 2 percent compounded growth to double.
And what this shows is that if peak oil occurs at the point where it is shown there, that you start to have problems when the two curves diverge, because China increased their use of oil last year by about 15 percent. They increased their imports by 25 percent. And so for those who believe that peak oil is in the future -- probably. But we're now seeing the effects of it.
You know, there are three things that are not controversial. M. King Hubbert predicted that the United States would peak in 1970. We did. He predicted the world would peak about now and oil this morning was over $64 a barrel. So those are inescapable facts.
The next curve -- the next chart. The next chart -- this depicts the challenge that we have. And this is a little depiction of the Apollo 13. And they had started on their way to the moon, you noticed, and things collapsed, and they had to really make some changes if they were going to get back alive. This is a pretty good analogy. It's not that we're all going to die if we don't do the right things, and they all would have died if they didn't do the right things. But, boy, they had to do the right things at the right time or they weren't going to have a smooth landing. And there was a great movie made of that. I'm sure many of you have seen that movie.
Well, let's move now into our first presenter, Dr. Deffeyes. He had the privilege of working with M. King Hubbert. I hope he tells us something about that. He is author and Princeton University professor emeritus. He joined the Shell research lab where M. King Hubbert had recently issued his controversial predictions that U.S. oil production would peak during the '70s. It peaked at 1970, some people say '71, but about then.
After reworking Hubbert's numbers, Dr. Deffeyes sought other employment. He is the author of "Hubbert's Peak: The Impending World Oil Shortage," and his new book, "Beyond Oil: The View from Hubbert's Peak." He makes the case that world oil production is no longer increasing. Dr. Deffeyes.
(Applause.)
KENNETH DEFFEYES: This is a historic occasion in that a conservative congressman, an independent banker, and Ivy League democrat, and a radical social critic are telling you that we have arrived at the same answer. And it's -- you better believe it -- time. (Laughter.)
Now, if you want to make an author feel bad, this is a logo off of the coffee cup, my 40,000-word book reduced to a coffee cup -- (laughter) -- but it pretty well -- it gives the message saying that it's wakeup time and we have to take this seriously. This is M. King Hubbert's original 1956 graph, except I have added the dots to show what happened. And the peak fit pretty well, and the 19 -- wrong one -- this shoulder is Prudhoe Bay kicking in -- biggest oil field ever in the United States wasn't big enough to give us new high bigger than the 1970 peak.
Now, this could have staggered on upwards. And Matt Simmons' expression is you only see it in the rearview mirror. But one of the clues that I got at least was that the Texas Railroad Commission in 1972 removed production rationing in Texas. Before that, they were the OPEC of its day and regulated -- excuse me -- he would talk in Portland late last week. It was a nice audience of 300 people, one of
whom had a bad cold. (Laughter.) I had brought it home.
But the bell-shaped curve worked out. And this is my most recent book. And the reason that I'm telling you about it is that I was able to -- excuse me -- to simplify Hubbert's mathematical derivation. And this is United States oil production. For the reason you just heard, it's the most explored area in the world. And after 1958, it settles down to a pretty good straight line. So with your permission, my computer and I draw the best-fitting straight line from 1958 on and once you let me draw that straight line, it's all over.
The three lines of high-school algebra up at the top are an alternative derivation of Hubbert's theory. And the only difference is he goes from A to B, in pages and pages of heavy deferential equations, and I go from B to A in three lines of high-school algebra. You get the same answer. The first equation is just the equation of a straight line. The second equation I plug in the things that are on the graph, P over Q is the vertical axis, and I go through and substitute what is on this actual graph. And on the third equation, I multiply both sides by Q. Now, that is the Hubbert theory.
And what it says is that the heavy magic is inside the parenthesis. What is inside the parenthesis is the fraction of oil that hasn't been produced yet. Or if you're doing exploration, it's the fraction of oil that hasn't been found yet. And the analogy is to fishing in a pond. If you notice after fishing several months in a pond, you're not catching as many fish, you can decide you'll go to the fishing tackle store and buy a fancy new fly rod -- you know, new technology -- or you can decide that you have caught most of the fish and you're going to go the grocery store and buy fish.
So the thing inside the parenthesis is the fraction of oil that hasn't been produced yet and what is not inside the parenthesis is the price of oil, which grips economists -- no end and new technology, which grips new technologists. And the answer is new technology and high oil prices help but they don't help very much. The big deal is how many fish are still left in the pond.
Now, this is Hubbert in 1968 predicting world oil production. And the 1968 curve, the more optimistic one peaks in the year 2000, and he has -- 2000 -- 100 billion barrels. Now, Hubert's critics say, well, 2000 came and went, you know. It didn't peak. Hubbert is wrong. But, look, for the standpoint of 1968, this is pretty good shooting to get to within five years of the year and to get to within about 3 percent of the total amount of oil.
Now, this is M. King Hubbert in the 1930s. He was no easier to get along with then than he was -- (chuckles) -- later in life. But it's interesting, I got a letter from a crystallographer long since retired who said I knew Hubbert at Columbia University in the 1930s. And he was interested in the problem even then. And looking back, I suspect that the first time -- 1956, that the story was mature enough that he could see the answer he pounced.
Now, for the world -- and we're getting to the core of the story here -- after 1983, the world production settles down to a pretty good straight line, and there is one more black dot -- because I had to release this to the publisher before the 2004 numbers came out -- so the 2004 numbers -- another black dot jammed between there and the plus mark. The plus mark is when half of the oil is being produced, and that third equation, a couple of slides back, had as one of its consequences that the peak of production occurs at the symmetry point when half of the oil has been produced.
And so I got an enlarged version of this and counted forward. And that is where I got to Thanksgiving Day this year, saying that that is my estimate of the peak. Now, I did that to make the economists nervous. It really is uncertain by about three weeks on either side. (Laughter.)
Now, this came across the Dow Jones newswire in 2003. And to me, it's almost an identical replica of the Texas Railroad Commission announcement that there would be no production rationing in Texas next month, and saying we don't have any surplus production capacity. And Matt Simmons' book confirms this view, but I took this as the first announcement that we knew -- that I knew the world oil peak was real.
Now, this is the gloomiest of the all of the diagrams, and it says that -- sorry, these are attributing the oil to the first well in the field. When you drill a discovery well and you don't get oil, what do you do? Well, you keep drilling horizontally and vertically until you drill up the oil field. But it's an irreversible event. You don't get to discover that oil field a second time and you're not going to forget where your discovery well was. So this says that 90 percent -- sorry, 96 percent of all of the oil we're ever going to find is in oil fields we have already discovered. And the -- I don't have to extrapolate very far. That is where my 2013 billion barrels comes from is where that line hits the axis.
Now, the U.S. Geological Survey has an enormously more optimistic estimate. They have to find another Middle East plus another North Sea to come out even to fill in that gap between my estimate and theirs. Now, for the United States, they have estimated that there is another Kuwait undiscovered beneath the United States. Of course I tell them, hey, whisper in my ear where that sucker is. (Laughter.) I'll go have these with you. Is it South Alabama? So -- because it doesn't exist.
But this is the gloom-and-doom picture. Now, when I put those same curves, the actual numbers and the best-fitting curves on a cumulative graph, the Bell-shape curve becomes and S-shaped curve. And the thing that is labeled exploration is the 6 percent that is not yet discovered. But the thing I have named after my friend Bob Snyder (sp?) is now that the buzz word, "redevelopment" -- going back and looking at old oil fields, existing oil fields -- not for secondary recovery or tertiary recovery, but for overlooked productive oil sands. And in West Texas and the Gulf of Mexico, Bob Snyder found or bought some 60 oil fields and found several hundred million barrels of additional oil. And had an after-tax cash flow rate of return of 17 percent. So just a stunning performance.
And there are some companies doing that. And when I talk to financial firms, I tell them, if you find any company that is doing a good job of redevelopment, you know, call me collect; I want to invest in those. With the best rumor, if you're into financing, is that XTO, Cross Timbers Oil out of Forth Worth, is doing a good job. I haven't bought XTO yet. I'm looking into it. So this is the picture saying there is a considerable amount of the oil can be developed from existing fields. And it's not that it's not in the estimates. It's something that is going to happen.
Now, everyone asks about price. And here are natural gas prices in the United States. This is first sale of natural gas down the stream from the producing well. And the Henry Hubb's stock spot market prices look a lot like this only wilder. And the thing -- it's very smooth up until about 1985. Then you start seeing little wintertime peaks, and then it just goes crazy. And the stock spot market price at Henry Hubb Louisiana -- I think it was $17 the day before yesterday, the last time I looked. We are going into the winter with already high-midwinter prices. The current price is way off the top of this screen here.
Come on, baby. All right, now there is some essential services. (Laughter.) This is an ambulance that we want to make sure that we have got oil for. And we don't -- you see the Red Cross on the side of the ambulance there. Here are industries that are going to get hit pretty hard. And the big ones are at the top of the alphabet. The zymurgy is just the industrial use of yeast to make wine and cheese and bread. (Laughter.)
But up at the top, agriculture is at great risk because the green revolution of 1970 that made starving to death no longer fashionable was based on new seed varieties, heavy use of mineral fertilizers, and pesticides. Now, the pesticides are mostly petrochemicals. And the mineral fertilizers, the nitrogen requires natural gas for the source of hydrogen to take nitrogen out of the atmosphere. And the phosphate is very energy intensive, converting rock phosphate to soluble superphosphate. So agriculture -- excuse me -- and particularly third-world agriculture is at risk.
Now, the automotive business -- it isn't a matter of simply CAFE standards, raising the required mileage. One opportunity that I think is being missed -- there are diesel automobiles. And if you look up on Google, common-rail diesels, you'll find that there are diesel automobiles in Europe that get more than 100 miles to the gallon. And we are not selling those things in the U.S. I wish we were and I don't know why not.
From the standpoint of aviation, everybody is going to get hit. And one of my predictions is those nice vegetables that get flown from the -- and fruits -- they come up from the southern hemisphere during our winter will get impossibly expensive, and we're going to have to learn to love rutabagas and parsnips and turnips -- (laughter) -- a bunch of things that I hate because they can be stored in root cellars in the region where they are grown.
So it is going to affect us. However, we have a family legend -- my brother and I. After my first book came out, my brother read it and said, uh-oh, aviation is really in trouble. And he says, I know a vice president at Boeing. I'm going to send him a copy of the book. Well, forgot about it. Four years later, Boeing introduces the 7E7, now, the 787 with the lowest fuel cost per seat mile of any commercial airliner. And they are racking out sales and beating out Airbus for the first time in several years.
And my brother and I quietly agree -- I went back to my brother and said, did you send the guy the book? He said, well, I'm not claiming credit, but I sent him the book and I said, you better read this, you better memorize this; this is your future. So my brother and I claim to have bailed out Boeing from this problem. (Laughter.)
Now, this is a reminder that there will be rationing. The economists all think it will be rationing by price and they'll raise the price until nobody can afford it any more and you do without. The next one -- the next administration -- fix the price of oil and thereby invent rationing by inconvenience. There were these long lines of cars waiting for what little gasoline there was in the filling station.
And the third one -- during World War II, President Roosevelt had us running around with little red and blue ration coupons. So there will be rationing where there is going to be pressure on the government to do something and doing something might involve something other that just letting the price rise.
I found this in Taiwan. I don't read Chinese but I claim it should say, tell the kids to turn out the lights. There a lot of small-scale things that we can do. And your speakers -- later you will hear about some of these, but changing our habits -- multiple uses every time you take the car out of the garage, turning out the lights, energy conservation is certainly going to be a major part of what has to happen.
Now, people ask, well, how about some new technology? Well, this is an old technology. This is a guy delivering in the city of Paris in 1870 a mixture of hydrogen and carbon monoxide. Now, a more dangerous toxic mixture is hard to imagine. (Scattered laughter.) But it was used for cooking and it was used for lighting. And you can see a gas street lamp across the street.
Well, the modern version of this -- Texaco engineers improved it with using pure oxygen, higher temperatures, better catalysts, and once you have got the hydrogen, you can do lots of things. The Chinese are making fertilizer, nitrogen fertilizers with the hydrogen. It's used in petroleum refining. The Canadian tar sands -- every time they break a carbon-carbon bond to lighten up that oil, they have to stick on two hydrogens. Where do they get the hydrogen? Natural gas.
So there are -- there is a long list. But one of my colleagues is very enthusiastic about this one: dimethyl ether, which I had never heard of -- and it's an almost perfect diesel fuel in that -- excuse me -- there are no carbon-carbon bonds in that molecule so it can't make soot. You can't get black smoke coming out of a dimethyl ether engine, is non-toxic. I didn't believe that. I had to go to the drug store. And the propellant in hairspray today is all dimethyl ether.
The old operating room anesthetic was diethyl ether. And it's made from coal. And there is a pilot plan in China turning out -- I think it's in the 100,000-gallon-a-day department. They are selling it as a heating fuel, a cooking fuel to compete with butane and propane, but their ambition is to get the cost down under $2 a gallon and sell it as diesel fuel.
Okay, the hard landing, soft landing -- of the soft landings, you need to get enough new nuclear capacity, energy-efficient automobiles, energy-efficient housing, wind energy in place by this coming Thanksgiving. (Laughter.) Well, you know, tough assignment. So what does a hard landing look like? What are we trying to avoid? And the simplest of hard landings is a global recession worse than 1930, worse than the Great Depression.
The extreme hard landing -- I borrowed the four horsemen of the apocalypse. The pesticides, as I said, are all petrochemicals, that fertilizer is going to be expensive and difficult to transport, so that things could get pretty bad, and the -- or story -- Amos Nure at Stanford is all but predicting a war between the United States and China over access to world oil supplies. Now, he says, I don't want to see a war between the U.S. and China, and I hope that by predicting it, we can avoid it.
But back to the soft landing, the announced purpose of this meeting is to arrange for a soft landing. And this is my reading of your chances. My granddaughter Emma colored this and signed it. It's a snowball in hell. (Laughter.) Good luck.
(Applause.)
REP. BARTLETT: Thank you very much. Let me use just one little analogy to try to put the challenge we have in perspective. We in our country are very much like the young couple that just got married and learned that they had a big inheritance from their grandparents. So they have established a lifestyle where 85 percent of all of the money they spend comes from their grandparents' inheritance, and only 15 percent from their income. And the grandparents' inheritance is not going to last until they retire. So obviously they are going to have to do something. Either they are going to have to spend less money or they are going to have to make more money.
I use that 85-15 because that is exactly where we are in this country. Eighty-five percent of the energy we use comes from fossil fuels. That will wind down and by and by, we're going to have to live on that 15 percent and hopefully we can grow it above the 15 percent that it is now. But that is the dimensions of the challenge that we face.
Our next speaker is really world-renowned. He has just published a new book, which I think is going to be a best seller, "Twilight in the Desert." He has now relinquished on of his positions in his company so that he has more time to do what he is doing today and to help educate the American people. Matt Simmons.
(Applause.)
MATTHEW SIMMONS: Well, thank you. It's a pleasure to be here. It's been interesting in the last six months to -- I've had some unbelievably interesting educational experiences as a result of coming out with this book and participating in -- I guess this summer -- 110 radio talk shows around North America. And I will tell you that people hearing bad news truthfully are willing to take bad news. It's been really remarkable. I've also had a really interesting experience getting acquainted with Congressman Bartlett and seeing how amazing it is that someone can pick so quickly up on these facts. I happen also to be slowly but surely co-authoring an ed-op piece with another congressman. He's been long retired -- Stewart Udall. Fifty years ago, Stewart Udall was sworn in as a congressman of the United States, and then during the '60s, he was secretary of the interior in the Kennedy and Johnson administration. And our co- authored piece -- if I can ever finish up my second draft and send it back to Stewart Udall -- is "50 Years of Energy Mistakes" because he can go back with the benefit of hindsight and actually discuss 50 years, 25 sessions of Congress, how we made one mistake after another. So this is basically a big problem.
It was also interesting -- last Tuesday morning, I was at the -- in London at the Oil & Money Conference, which is probably the most important global sort of conference held once a year where all of the sort of senior OPEC people are there and all of the -- a lot of the CEOs of major oil companies. And on the first panel of the morning, there were three of us -- a lawyer, and then I was the first speaker, and the third speaker was Dr. Sadad Al-Husseini, who is retired executive vice president of Saudi Aramco in charge of oil and gas. I think the audience thought that they were going to witness a literal verbal battle because my views on the worry about Saudi Arabia's oil are now very public and Dr. Al-Husseini, who is a Ph.D. from Brown, was known as the brains of Saudi Aramco until he retired a year and a half ago. I surprised the audience by not really getting at all into Middle East oil. I basically said, we're all consumed now with the fact that we've run out of refinery capacity. What's even more profound is we've run out of drilling capacity. We're out of drilling rigs. We're just totally out of drilling rigs, and it'll take longer to actually restore capacity in drilling rigs than refineries.
And then Dr. Al-Husseini got up, and he -- very politically correct because he wants to still live in Saudi Arabia -- gave a very possible message through a lot of different slides. He effectively said that the Middle East has a productive capacity today of 21 (million) to 23 million barrels a day, somewhere in that range. And best case is by 2025 it will be 25 million barrels a day. Best case. And he showed basically the decline of Iran, and he showed the Burgan field and what would happen if it increased and then collapsed. He stayed totally away from his own country, but he speaking for his countrymen. And so it was a pretty astonishing speech.
What I was asked to address today is the topic of today's energy reality, and in my opinion it's a pretty simple story. We are in a deep hole. One of the interesting comments that I heard from an energy economist about four years ago was that the -- he said, if you wake up one morning and you find out that you're in a deep hole, rule number one is stop digging. Well, our wakeup call is here because America and the world drifted into a benign energy war. How we drifted there was that demand was supposed to peak. It think it's so interesting. If you go back a decade ago and Google the word "peak," it was all demand is about to peak. It wasn't supply. Supply was supposed to grow and grow cheaply. Energy economist told other economists that didn't know anything about energy that told everyone else. And they said that one thing that's going to happen is technology is going to basically continually bring down the cost of extracting oil and gas -- make it cheaper and cheaper and cheaper.
That belief was so deeply embedded that by 1999 when oil prices had suffered their biggest collapse in 50 years on a perceived oil glut that never showed up -- it was just bad data -- the best minds in the oil industry said, no, $10 oil won't last. It's going to go to five (dollars) and stay there for almost a decade because Saudi Arabia is going to flood the world with oil. And that became so believe that it became the cover story of The Economist. And then nine months later in their millennium issue, they published one of the funniest stories I've ever heard -- "We Was Wrong" -- called it the biggest blooper of the 20th century.
Well, these were all great theses, but they were simply dreams. And now the alarm clock is ringing to wake up. These were just simply dreams. It turned out that everything went awry. Demand didn't peak; it grew too fast. 1995 -- 10 years ago, demand finally exceeded 70 million barrels a day, but it took almost the entire year before people said, my gosh, demand is surprisingly growing again. Then over the next 10 years every time it grew, it was deemed to be an aberration. And the best guesses for the fourth quarter or the first quarter of the period we're going into is that global energy demand -- oil demand -- is apparently going to be between 87 (million) and 88 million barrels a day. That will be somewhere between 2 (million) and 5 million barrels a day more than we can supply.
And then in this era that costs were going to come down through technology, turned out a funny thing happened there. The cost to drill and complete an average well doubled. And we did find a lot of new supply over this period of time. It's just that they were all little things. I mean, Shell Oil Company now is talking about their expiration goal of finding some big cats. It was only a decade ago that the lingo was, we're going after elephants. And it turns out that all this technology we were talking about -- it was sort of also illusory because we couldn't afford because of low prices to drill adequate appraisal wells and core the wells so we knew what was there. So we used the concept 3- D seismic, which has never ever shown anything about the -- anything about the possible structure, actually created reserves that weren't ever there. And so we systemically overstated our proven reserves. And then energy reserves that we had quite a bit of 10 or 15 years ago in this efficient free market were perceived to be glut. And so we used them up in the mantra of we're really getting efficient, and just in time supply has arrived with the energy patch.
And by August 2005, our spare capacity was disappearing. It was disappearing at the wellhead. It w
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