World battle for energy crisis

World battle for energy crisis

Brian Ardiente

Rey O. Bongga

Abstract

Many countries are fighting for a portion of the world where there is a large of fuel reserves due to energy crisis .The reasons of war in Iraq and USA is not only because of political power but also for the oil reserves in the country. This research is conducted to determine how the world resolves this energy crisis. This paper presents how the world encountered this energy crisis, the ways on how they face this crisis, and how does it affect the daily lives of the people. After reading this paper, the reader is expected to know the better way to resolve the said crisis.

Chapter 1

Introduction

Energy is the basis of industrial civilization. Without it, modern life would be profoundly affected. During the 1970’s the world began a painful adjustment to the vulnerability of energy supplies. The industrialized nations used most of the world’s energy. Other energy sources including solar and wind power and vegetable wastes were relatively minor contributors to the world energy supplies, although of considerable importance of certain countries.

The new perfect storm may eclipse World War 2 in its fury. The new storm is not terrorism, as many in high places would like for you to believe. Rather, it is the Peak Oil Storm or to put in the simplest terms, the end of cheap oil. We have been warned again and again but the evidence is that the warnings often fallen on deaf ears.

Evidence of the ignored warning is the accelerating growth in size and inefficiency of our cars and trucks, the lack of oil and gas well drilling and the slowness of developing an effective research for alternative sources of energy.

The year 1973 brought an end to the era of secure, cheap oil. The very high oil prices again caused a worldwide recession and gave energy conservation a big push, as oil demand slackened and supplies increased the world oil market slumped. Of course, rapidly rising gasoline prices and oil prices are an important manifestation of the approaching perfect storm of Peak Oil. Oil prices are now about $115 per barrel and seem destined to go higher.

Statement of the problem

The concern of this study is to show how different countries resolve their energy crisis.

This study also sought to answer the following questions:

1.) Can we find and develop enough new energy resources to maintain the world’s increasing demand for fuel?

2.) Will existing oil and natural gas reserves become depleted before we have developed new energy supplies?

Objectives

1.) To know what is the most used energy resources by different countries.

2.) To investigate the alternatives used in facing Energy Crisis.

3.) To determine what countries are competing in exporting fuels.

Significance of the study

Since nowadays prices of fuel, gas, and oil increases day by day same goes for the financial problems of the people, and more people are concern about a drop of those energy sources this research believes that knowing the better way in consuming our energy resources will prevent crisis in energy. Through this study we will be aware that war is not the solution of the conflict in every nation. This study would be a great help not only in the country but also on us to be informed.

Theoretical review

Energy crisis certainly spread economic pain and hardship globally, especially to those who cannot afford higher transportation and heating fuel costs. It is like the tremors that before a major earthquake, they suggest the dangerous accumulation of powerful energy forces that will roil the planet for years to come.

Petroleum (crude oil) and natural gas are found in commercial quantities in sedimentary basins in more than 50 countries in all parts of the world. The largest deposits are in the Middle East, which contains more than half the known oil reserves and almost one-third of the known natural-gas reserves. The United States contains only about 2 percent of the known oil reserves and 3 percent of the known natural-gas reserves.

In the long run, conserving energy resources may provide the time needed to develop new sources of energy, such as hydrogen fuel cells, or to further develop alternative energy sources, such as solar energy and wind energy. While this development occurs, however, the world will continue to be vulnerable to disruptions in the supply of oil, which, after World War II (1939-1945), became the most favored energy source.

Chapter 2

Review of Related Literature

This chapter presents a review of related studies and researches, which are directly and indirectly related to the present problem. Wood was the first and, for most of human history, the major source of energy. It was readily available, because extensive forests grew in many parts of the world and the amount of wood needed for heating and cooking was relatively modest. Certain other energy sources, found only in localized areas, were also used in ancient times: asphalt, coal, and peat from surface deposits and oil from seepages of underground deposits.

This situation changed when wood began to be used during the Middle Ages to make charcoal. The charcoal was heated with metal ore to break up chemical compounds and free the metal. As forests were cut and wood supplies dwindled at the onset of the Industrial Revolution in the mid-18th century, charcoal was replaced by coke (produced from coal) in the reduction of ores. Coal, which also began to be used to drive steam engines, became the dominant energy source as the Industrial Revolution proceeded.

Although for centuries petroleum (also known as crude oil) had been used in small quantities for purposes as diverse as medicine and ship caulking, the modern petroleum era began when a commercial well was brought into production in Pennsylvania in 1859. The oil industry in the United States expanded rapidly as refineries sprang up to make oil products from crude oil. The oil companies soon began exporting their principal product, kerosene—used for lighting—to all areas of the world. The development of the internal-combustion engine and the automobile at the end of the 19th century created a vast new market for another major product, gasoline. A third major product, heavy oil, began to replace coal in some energy markets after World War II (yergin, stobaugh, and Weeks, 2003).

During World War I, the U.S. oil industry produced two-thirds of the world’s oil supply from domestic sources and imported another one-sixth from Mexico. At the end of the war and before the discovery of the productive East Texas fields in 1930, however, the United States, with its reserves strained by the war, became a net oil importer for a few years (Lee, 2003).

Formation of OPEC

Two series of events coincided to change this secure supply of cheap oil into an insecure supply of expensive oil. In 1960, enraged by unilateral cuts in oil prices by the seven big oil companies, the governments of the major oil-exporting countries formed the Organization of Petroleum Exporting Countries, or OPEC. OPEC’s goal was to try to prevent further cuts in the price that the member countries—Venezuela and four countries around the Persian Gulf—received for oil. They succeeded, but for a decade they were unable to raise prices. In the meantime, increasing oil consumption throughout the world, especially in Europe and Japan, where oil displaced coal as a primary source of energy, caused an enormous expansion in the demand for oil products (Yergin et.al, 2003).

The Energy Crisis

In October of the year 1973, as a result of the Arab-Israeli War, the Arab oil-producing countries cut back oil production and embargoed oil shipments to the United States and the Netherlands. Although the Arab cutbacks represented a loss of less than 7 percent in world supply, they created panic on the part of oil companies, consumers, oil traders, and some governments. Wild bidding for crude oil ensued when a few producing nations began to auction off some of their oil. This bidding encouraged the OPEC nations, which now numbered 13, to raise the price of all their crude oil to a level as high as eight times that of a few years earlier.

In 1978 a second oil crisis began, as a result of the revolution that eventually drove the Shah of Iran from his throne, Iranian oil production and exports dropped precipitously. Because Iran had been a major exporter, consumers again panicked. A replay of 1973 events, complete with wild bidding, again forced up oil prices during 1979. The outbreak of war between Iran and Iraq in 1980 gave a further boost to oil prices. By the end of 1980 the price of crude oil stood at 19 times what it had been just ten years earlier.

Significant increases in non-OPEC oil supplies, such as those in the North Sea, Mexico, Brazil, Egypt, China, and India, pushed oil prices even lower. Production in the Soviet Union reached 11.42 million barrels per day by 1989, accounting for 19.2 percent of world production in that year (Lee, 2003).

Chapter 3

Methodology

In this study, the researchers seek in the internet how this different countries solve this energy crisis. We found out that the major oil companies, which are based principally in the United States, initially found large oil supplies in the United States. As a result, oil companies from other countries—especially Britain, the Netherlands, and France—began to search for oil in many parts of the world, especially the Middle East. The British brought the first field there (in Iran) into production just before World War I (1914-1918). During World War I, the U.S. oil industry produced two-thirds of the world’s oil supply from domestic sources and imported another one-sixth from Mexico.

In industrialized countries, they have greater convenience in using oil and gas due to lower costs in the earlier 20th century that virtually forced coal out of the market for heating homes and offices and driving locomotives. But the dramatic jumps in oil prices after 1973, however, gave coal a major cost advantage for utilities and large industrial customers, and coal began to recapture some of its lost markets.

In contrast to the industrialized countries, developing countries that have large coal reserves (such as China and India) continue to use coal for industrial and heating purposes. The average price of coal has remained virtually unchanged since the early 1980s and is forecast to decline in the early part of the 21st century. However, in industrialized countries the need to comply with stricter environmental regulations has made burning coal more costly.

A major challenge in the move toward increased use of renewable forms of energy is that these resources are by nature intermittent and may not always be available when needed. As long as these energy sources are contributing less than 30 percent of the power in a given region, existing electricity grids will probably have enough reserve generating capacity to ensure reliability. But as these new energy sources become increasingly dominant, the system as a whole will need to be adapted. The simplest solution is to build backup generators that employ efficient gas turbines and a variety of sophisticated energy storage devices.

The World found better alternative to solve this energy crisis, this is through conservation. Energy supplies can be extended by the conservation of currently available resources. Three types of possible energy conservation practices may be described. The first type is curtailment, which is, doing without—for example, closing factories to reduce the amount of power consumed or cutting back on travel to reduce the amount of gasoline burned. The second type is overhaul, that is, changing the way people live and the way goods and services are produced—for example, slowing further suburbanization of society, using less energy-intensive materials in production processes, and decreasing the amount of energy consumed by certain products (such as automobiles). The third type involves the more efficient use of energy, that is, adjusting to higher energy costs—for example, investing in cars that go farther per unit of fuel, capturing waste heat in factories and reusing it, and insulating houses. This third option requires less drastic changes in lifestyle, so governments and societies most commonly adopt it over the other two options.

A number of obstacles stand in the way. One major roadblock to productive conservation is its highly fragmented and unglamorous character; it requires hundreds of millions of people to do mundane things such as turning off lights and keeping tires properly inflated. Another barrier has been the price of energy. When adjusted for inflation, the cost of gasoline in the United States was lower in 1998 than it was in 1972. Low energy prices make it difficult to convince people to invest in energy efficiency. From 1973 to the mid-1980s, when oil prices increased in the United States, energy consumption per person dropped about 14 percent, in large part due to conservation measures. However, because oil has become cheaper during the 1990s, the U.S. Energy Department predicts that by the year 2000 energy use in the United States will increase to within 2 percent of 1973 levels.

Chapter 4

Results

This part presents the result in resolving this energy crisis. By using oil and gas, they are producing considerable environmental pollution. One source of pollution connected with the oil industry is the sulfur in crude oil. Regulations of national and local governments restrict the amount of sulfur dioxide that can be discharged by factories and utilities burning fuel oil. Because removing sulfur is expensive, however, regulations still allow some sulfur dioxide to be discharged into the air.

Many scientists believe that another potential environmental problem from refining and burning large amounts of oil and other fossil fuels occurs when carbon dioxide, methane, and other by-product gases accumulate in the atmosphere.

During the Ky?to meeting, representatives of 160 nations signed an agreement known as the Ky?to Protocol, which would require 38 industrialized nations to limit emissions of greenhouse gases to levels that are an average of 5 percent below the emission levels of 1990. In order to reduce their fossil fuel emissions to achieve these levels, the industrialized nations would have to shift their energy mix toward energy sources that do not produce as much carbon dioxide, such as natural gas, or to alternative energy sources, such as hydroelectric energy, solar energy, wind energy, or nuclear energy.

Despite coal’s relative cheapness and huge reserves, the growth in the use of coal since 1973 has been much less than expected, because coal is associated with more environmental problems than oil. Underground mining can result in black lung disease for miners, the sinking of the land over mines and the drainage of acid into water tables. Surface mining requires careful reclamation, or the unrestored land will remain scarred and unproductive. In addition, the burning of coal causes emission of sulfur dioxide particles, nitrogen oxide, and other impurities.

Solving these problems is costly, and who should pay is a matter of controversy. As a result, coal consumption may continue to grow more slowly than would otherwise be expected. The vast coal reserves, the improved technologies to reduce pollution, and the further development of coal gasification still indicate, however, that the market for coal will increase in coming years.

During the next three decades, with occasional federal support, the U.S. oil companies were enormously successful in expanding in the rest of the world. By 1955 the five major U.S. oil companies produced two-thirds of the oil for the world oil market(not including North America and the Soviet bloc). Two British-based companies produced almost one-third of the world’s oil supply, and the French produced a mere one-fiftieth. The next 15 years were a period of serenity for energy supplies. The seven major U.S. and British oil companies provided the world with increasing quantities of cheap oil. The world price was about a dollar a barrel, and during this time the United States was largely self-sufficient, with its imports limited by a quota.

Observation

Many of the world’s leading petroleum geologists believe that the world oil supply will peak around 80 million barrels per day between 2010 and 2020. Since in1998 world consumption was approximately 70 million barrels per day. On the other hand, many economists believe that even modestly higher oil prices might lead to greater supply, since the oil companies would then have the economic incentive to exploit less accessible oil deposits.

Natural gas may be increasingly used in place of oil for applications such as power generation and transportation. One reason is that world reserves of natural gas have doubled since 1976, in part because of the discovery of major deposits of natural gas in Russia and in the Middle East. New facilities and pipelines are being constructed to help process and transport this natural gas from production wells to consumers.

Conserving energy has become increasingly important as energy rates and shortages have increased. Consumers can find a number of ways to cut back on their electrical use, especially with appliances commonly found in the home.

Conservation plays an important rule in solving world’s energy crisis. Many people had come to recognize that increased energy efficiency could help the world energy balance in the short and middle term, and that productive conservation should be considered as no less an energy alternative than the energy sources themselves.

Conclusions

In the light of the findings in this research we found out that Coal became the dominant energy source in the time of Industrial Revolution. This energy resource was also used by developing countries. But after World War II heavy oil, began to replace coal in some energy markets. Oil becomes the most used by industrialized countries since they need to comply with stricter environmental regulations that made burning coal more costly.

The researcher also found that the better alternative in facing energy crisis is through conservation rather than war. Since war can affect greatly to the production of energy resources.

We conclude also that due to its vast reserves, the Middle East countries will continue to be the major source of oil for the foreseeable future. However, new discoveries in the Caspian Sea region suggest that countries such as Kazakhstan may become major sources of petroleum in the 21st century.

The energy crisis of the 1970s was just a temporary blip in an otherwise agreeably oil-dependent lifestyle. Warnings that the world could run out of oil were countered by a flurry of more optimistic estimates. The world is not running out of oil—at least not yet. What our society does face, and soon, is the end of the abundant and cheap oil on which all industrial nations depend.

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