Thursday, March 18, 2010

Now is the time to Virtualize the American workforce to offset terminal decline we are facing after peak oil and keep our economy growing

With crude oil and gasoline prices increasing again we need to virtualize all in the workforce that can be and pay them for productivity. Baseline employee performance now so when we do switch to telecommuting their performance and productivity can be tracked. I know this can not be done for all jobs, manufacturing, medcal and others will have to be exempt.

The switch to smaller fuel effecient verhicles has to happen quickly. I will be doing this myself next year when my current lease is up. This is a win-win for everyone. We will get more miles per gallon which will save the consumer money plus keep demand for oil down which will keep the price low and help with the trade deficit. Maybe we will all be able to breath a little easier too.

If not already, we will soon be in the age of terminal decline of oil extraction. The big fields are starting to die or have gone into steep terminal decline. If you look up and read about Cantarell this is a great example of how enhanced production methods while will increase production or stabilize and plateau it. This will only lead to faster decline rates down the road. Cantarell peaked in 2004 at 2.12 million barrels with the help of nitrogen injection into the field. But this enhanced production is leading to a very steep decline curve and the field is now producing less than 400,000 barrels of oil a day. By 2012 Mexico will no longer be a net exporter. Ghawar the worlds largest field located in Saudia Arabia is also now rumored to be in decline or will peak very soon. We are not finding fields fast enough to offset the gian oil fileds decline rates. 5% of the worlds daily crude production comes from Ghawar alone.

Another very big issue is OPEC's amount of remaining declared reserves. Their daily quota is tied to their remaining reserve. If you look at this chart in the 80's notice that most of OPEC had a jump in declared reserves. You will also notice that most of the reserves are flat and not declining.

What bothers me most was the oil shock of 2008 that should of served as the wake up call we needed and for a while it was. But the high prices killed demand and caused the price of crude to crash and now the price is starting to recover. The price of crude oil is now approaching the levels we saw in 08.

When the recession ends and economic activity starts to pick up again so will the demand for crude. If we put the incentives in place to cut our demand we can grow our economy without having to pay ever increasing costs for our energy. The problem we face today and tomorrow is when the production curve hits the demand curve it sets off a bidding war for crude oil. This biggest challenge is going to be the transition to alternatives and keeping the demand curve below the terminal decline of the production curve. We can then divert the excess out of the transportation sector into areas that will need crude oil to help our economy to keep growing while we are still in the process of transitioning to alternative and renewable energy sources. There is so much we can be doing now that could help but we just don't. If we do act we are only helping ourselves and helping to secure an easier transition into our future.

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