| July 22, 2005 The Bramble Bush by Kevin Morford As Kenai Goes, So Goes the World
The owners of the Agrium fertilizer plant on the Kenai Peninsula have been talking about shutting it down due to lack of adequate supplies of natural gas. They had previously decided to close its doors this year. Just recently, though, it was announced that the plant would continue in production for one more year, based upon a plan to pump natural gas directly to it from the wells in Cook Inlet. That plan will delay the shutdown of the plant for a year, but will accelerate the depletion of natural gas from Cook Inlet. If the Agrium plant had shut down this year, it had been estimated that proven reserves of Cook Inlet natural gas would run out in 2012. Now the proven reserves are likely to run out sooner than that.  The chart that accompanies this column was produced by the State of Alaska Division of Oil and Gas, and shows the historical and anticipated future production of natural gas from Cook Inlet. It illustrates the ramp-up in production during the early development of the resource, a sustained high level of production for many years, and a rapid drop in production as the reserves are depleted. Even though we are currently at a relatively high level of production, Agrium’s owners already know that they will need to shut down in the next year or two. The rise and fall of natural gas production in Cook Inlet, and its attendant local economic consequences, is an example of a process that is likely to be repeated on a global scale within the next decade or two. The end of the Agrium plant will have a ripple effect throughout the local economy around Kenai, and more widely in Alaska. The lost payroll will no longer be available to support grocery stores, gas stations, clothing stores, and other secondary businesses. Some workers will drop into poverty, and others will move in search of better economic opportunities. We have seen similar local effects when companies move their operations overseas, and it is not pretty. The world’s economy, as presently structured, is completely dependant upon the availability of abundant fossil fuels. There is presently no alternative source of energy that will allow us to maintain our present scope of economic activities without a primary reliance on fossil fuels. In addition, the worldwide demand for fossil fuels is increasing at a geometric rate. This means that at regular intervals of time, the overall demand doubles in size, then doubles again, then doubles again. There is currently a raging debate among experts about when world oil production will peak, and irreversibly start to decline. Oil production in the U.S. already peaked and started to decline some years ago, and no amount of exploration and drilling will reverse that trend. So far, that drop in U.S. production has been taken up by production in other parts of the world. Some experts say that the drop in production for the world as a whole will not happen for a decade or so. Others say that world oil production has already peaked, and is starting to decline. Whenever that decline actually starts to take place, it will be followed by drastic impacts on the world economy as existing businesses either cannot get or cannot afford the energy they need to stay in business. The difference will be that when the worldwide decline starts, there will be limited opportunities to move somewhere else for a better economic opportunity. The fuel shortages and attendant high prices will be everywhere. But the United States is likely to be worse off than Europe and other more energy efficient economies. Why is Europe more efficient? Because it gets approximately twice as much economic output from a barrel of oil, compared with the United States. This means that it already has the economic infrastructure in place to better cope with a worldwide shortage of fossil fuels. A realistic energy policy for the United States would push us toward conservation, energy efficiency, and development of alternative, sustainable sources of energy. It would require some sacrifices and hardships now, but it would much better prepare us for the day when worldwide production of fossil fuels peaks and irreversibly starts to decline. Watch what happens on the Kenai Peninsula over the next few years. It is a harbinger of things to come in the rest of the world. Kevin Morford is a political activist and an attorney in private practice in the Anchorage area. He can be reached at kmorford@insurgent49.com. |
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2005
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Reserved. in-sur-gent (in sur'jent), n. 1. a member of a group which revolts against the policies of its leadership. |
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