CAMPBELL COMMENTS ABOUT THE NEED FOR

THE GULF STREAM TURBINES

Comments On the Energy Crisis

A few years ago, Dr. Colin J. Campbell wrote the following for the Hubbert Center Newsletter #2001/2-1, M. King Hubbert Center for Petroleum Supply Studies, Colorado School of Mines:

“The reality is that there is no real reprieve. Gradually the market – and not just the oil market – will come to realize that OPEC can no longer single-handedly manage depletion. It will be a dreadful realization because it means that there is no ceiling to oil price other than from falling demand. That in turns spells economic recession and a crumbling stock market¼

“The United States is perhaps the most vulnerable to the coming crisis having farther to fall after the boom years, which themselves were largely driven by foreign debt and inward investment. The growing shortfall in oil supply since its own peak of production was made good by soaring imports, now contributing more than half its needs, and a move to gas. The rate of import cannot, however, be maintained as other countries pass their own production peaks, putting ever more pressure on the Middle East. The North Sea is now at peak, with the UK being off 7% in 2000 and 16% off October to October, meaning that production is set to fall by one-half in ten years. For every barrel imported into the United States, there will be one less left for anyone else, a situation inevitably leading to international tensions.

“The move to gas proved to be only a short-lived palliative. Gas depletes differently than oil. An uncontrolled gas well will blow it all away in one big puff. Production is, accordingly, capped by infrastructure and market, leaving a large, unseen balloon of readily available spare capacity. In a privatized market, trading on a daily basis, production becomes cheaper and cheaper as the original costs are written off and as this almost free spare capacity is drawn down. There are no market signals of the approach of the cliff at the end of the plateau. It accordingly came without warning, causing prices to surge through the roof, and bringing power blackouts to California. Canada is trying to make good the shortfall, but its stocks are falling fast too.

“The U.S. has to somehow find a way to cut its demand by at least five percent a year. It won’t be easy, but as the octogenarian said of old age ‘the alternative is even worse.’ Europe faces the same predicament as North Sea production plummets. Although it may draw on gas from Russia, North Africa and the Middle East to see it over the transition, assuming that new pipelines can be built in time, that creates a new and unwelcome geopolitical dependency.

“All of this is so incredibly obvious, being clearly revealed by even the simplest analysis of discovery and production trends. The inexplicable part is our great reluctance to look reality in the face and at least make some plans for what promises to be one of the greatest economic and political discontinuities of all time. Time is of the essence. It is later than you think.”

Dr. Campbell’s Comments on the Gulf Stream Turbine

Because I had quoted Dr. Campbell in an earlier paper, I sent him a copy. In his response, he said that the need for the Gulf Stream Turbines was so urgent that it justified more being spent on its development than had been spent on the entire space program. He wrote, “Perhaps you should round up old Al Gore and have him do a repeat of Kennedy putting a Man on the Moon (a singularly useless activity) but offering instead the voters a secure energy supply in perpetuity. If the US had that it could leave the rest of the world in peace and concentrate on making its own country some kind of new sustainable show piece for H. Sapiens¼”

In my paper I had stated, “Because the skyrocketing gas prices will curb discretionary spending and cause cost-push inflation, the potential damage to the US economy cannot be exaggerated. Our political leaders, who will have caused the energy crisis by their failure to establish a sound long-range energy policy to curb our extravagant consumption of petroleum and natural gas, will then try to win votes by re-instituting price controls, further worsening the long-term problem.”

Dr. Campbell wrote, “I am sure you are right. The US and probably the world faces a Depression of greater severity than that of 1929 because the famous flat-earth economists think it is a business cycle to be managed by financial mechanism – low interest rates, etc – when it is the fundamental energy supply, without which nothing happens, that has reached its limit. This has its dangers too because recession will reduce demand, which will lower price(s) in a sort of vicious circle. We need the dumb politicians to plan with your rotors, etc, before, not after the crisis hits. They may already be too late.”

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