August 8th, 2012

There is from time-to-time a new headline points again at the dangers of an oil spill from the proposed Keystone XL pipeline, whether it is the First Nations people of Western Canada voicing their concern, or the farmers of the mid-western plains, both in Canada and the United States. The concern is for the groundwater found beneath the surface, whereas in Canada the fresh water underground is equal to more than what is on the surface, and south of the Canadian border is the Ogallala Aquifer the largest aquifer in Western North American, an aquifer that encompasses over 174,000 square miles.

Riding alongside this obvious potential of harming the vast water supply sitting beneath the ground is the looming fact that it just might be that despite our technical advances increasing our access to the stuff the world needs to propel its developing motorized humanity, we seem to be running a bit short of the black gold. It has been over a decade that the doom & gloom experts have been warning us that the oil supply has been or soon will be dipping below the point of supplying our never ending thirst. The hype behind the obvious lack of concern over the North American environment is the push to reduce its dependence of the black gold from the Middle East, yet when you try and balance the numbers it is strongly noticed that even with the supposedly large glut of oil from the Tar Sands. It will simply be not enough to wean ourselves off the Middle Eastern oil fields. As for reducing the price at the pump, dont hold your breath! Analysis in and outside of the industry tell us that sooner than we believe that the increasing demand from China (1,336,718,015-Pop) and India (1,205,073,612-Pop) will boost the cost of a barrel of oil far above the $100. In this it is predicted that even a small disruption in the supply will more than

likely create a panic, along with gasoline hoarding once again leading to sky high costs at the pump much like in the 1970s. As the world populations now sits over 7 billion and our mobile population well over 1 billion or combustible energy resources are reaching the point of threatening our modern civilization and when you couple this observation with the various governments across the world lying about their oil supplies and the ramification linked with these tall tales a sensible person would predict disaster on the horizon. Now how far that horizon is away from our condition is still a bit cloudy but it isnt getting any further away despite the promises of the industry, whether it be Tar Sands or any other form of combustion source. Yes we can shift to alternative fuels, such as natural gas, hydrogen, corn, sugar and whatever else but our infrastructure here on the North American continent is not in-place to make a complete adaptation to lets say hydrogen or even natural gasand with the increasing manufacturer and dependence on cars wed soon run these alternatives to the edge. GWBs administration along with Presidents Obamas are accused of keeping the news about our diminishing supply under wraps, whereas there are some experts predicting more than just a few barrel shortfall during the next few years that could lead to gasoline rationing. Causing some to point their fingers at governments not implementing intensive conservation programs to stretch their supply, which whether you believe this or not really makes nonever-mind in that you might brace yourself for higher prices at your neighborhood gas pump. Regardless of what you believe, the idea of an unlimited oil supply can only be looked at as a dream, albeit one pushed on our population by the industry who has convinced us that by drilling and tapping such regions as the Arctic and processing the Tar Sands well have supplies that stretch off into our future, or at least until we discover oil on Mars. The International Monetary Fund predicts that the increasing world wide demand will drive the cost of a barrel of oil to over $200 a barrel soon after 2012 US Election, regardless of who wins. This prediction supported by computer simulations has opened the floodgates of commodity speculation which by their actions today have kept the price of a gallon of gasoline higher although the cost of a barrel of oil has decreased.

The state owned Saudi Arabias ARAMCO published a warning as of late, the reality that the era of abundant cheap oil is over, this supported by a statement published by the US EIA, careful consideration of a wide range of factors, there is a significant uncertainty (of a stable cost of a barrel), a fact that is supported by our lack of transparency when it comes to the actual amount of oil reserves beneath the ground in such nations as Saudi Arabia most estimates a huge rectal reach depending the financial greed of the nation and their oil production. Peak Oil Advocates predict that our top 500 existing giant oilfields will experience a 17-million-barrrel daily deficit by 2035 one that when you extract the numbers of the increasing demand means that to offset this decrease, alternative fuels will have to fill a 38.6 million-barrel daily void to keep pace, or in round figures about 40% of our current global output. Naturally inside the industry itself, we encounter the experts who tell us that the Peak Oil Advocates are under-estimating our new technology advances, whereas to implement these advances the cost may be high, adequate supplies do exist covering their butt by saying if they can be developed in a reasonable time frame. Absent discoveries of numerous near surface and easily accessible giant oilfields or a huge push to develop and increased infrastructure to distribute alternative fuels, even with an absent of a world wide disruption of existing oil supplies the fact remains that it will impossible to a continued economical growth with out a growing energy supply. We are using more and more everyday and not increasing our production, where over the last few years the USA has shown a decrease in the demand for the end product gasoline, yet its refineries are having little problems in marketing their product on the International market place thereby keeping the cost of a gallon high in the US, albeit they are using less. As the long-term availability of oil decreases sooner than most realize the global demand will drive the cost of a full-tank will reach unaffordable levels for a great majority of the worlds population. You remark that there has been an increase of almost 25% increase in US oil production since 2008, along with major new discoveries in the North Sea and off the coasts of Brazil and Ghana along with this the constantly rising

revenue in the industry has prompted the industry to develop resources not previously accessible. Dream on! Today it is estimated the world consumes 8,270,500 barrels per day on average which if usage did not increase using the latest technology (fracking) in the Western US and Canada and the successful recovery of the estimated trillions of embedded oil should last us until the latter part of this century of course this value does not account for any increased demand. As for cheap oil, forget it even if they discovered a massive field not too deep below the surface in the Arctic the cost of its transportation and its extraction will be horrific count on it. The Oil and Gas Journal in 2011 published an estimate of 1.47 trillion barrels of global conventional oil reserves, or around 47-years, if our consumption remained status quo, which it wont, it has been calculated to increase on average by some 2.2% per year. In case youre wondering that is 3.02 trillion barrels in 2011 and 3.097 trillion barrels in 2012 and 3.156 trillion barrels in 2013election year or not, we are swilling down our oil resource. If youre of the mind to know, consider that taking our most important four energy sources oil, natural gas, coal and uranium we have approximately 56years left of all of them at a conservative 1.6% increase per year in usage. A little beyond my life time, but my grandchildren might be up against a wall when it comes to heating their home in other words we have less than 50years to develop a new way to keep this globe operating without the four. As for oil, if its consumption increased at another 1% higher (as predicted with an exploded growth in developing societies) our supplies will last another 35-36 years, maybe! As this scenario develops nation such as Russia, Canada and Iraq will more than likely curb their exports, making the burden of other non-producing nations that much worse, with what little is released costing up in the thousands for a barrel why not, they will hold the barrel hostage. The USGS has estimated globally that there is around 681 billion barrels of undiscovered oil, which by present calculations would last about a decade, this from a report dated last spring it has not finished a world-wide report on the globes undiscovered un-conventional oil, which could be a significant amount even it was it is unclear on how quickly or at what cost it could be extracted.

It is no secret that the West (the US especially) should have began a crash program at least 15 years ago to replace its gas-guzzling SUVs, the US has over 250,000,000 cars and trucks that fit this description replacing them with smaller personal cars, and improving the infrastructure of rail to remove those tractor-trailer rings with a diesel thirst that is hard to imagine. But as most everything else in our society the bottom-line in both private and government seeks max return on the dollar in other words nothing is going to really change until it is an absolute necessity and guess what it then might be too late and the give-me-now economy will come crashing down pity the person leading the country then. A little history, when GWB was in office a critical report was published that showed the ramifications on the effects of our peaking oil production the Department of Energy was ordered to stop research on the subject. Go figure! As it reads today, the Congressional Budget Office tells us that the United States has very few options on the table to effectively address an oil shortage, mainly because our limited active fuel reserve, additional production capacity, and our very, very slow start for alternative modes of transportation and when you look at the inaction of our leaders to address (and create jobs) plans to update or repair our existing transportation infrastructure. Now couple this situation with the slow crawl towards alternative private vehicles, although it is predicted there will be at least 79 million alternative vehicles on the road in 2035, keep in mind that there will be an additional 8 to- 9 million gasoline powered cars. It is not news to you that oil prices have jumped some 400% since 2003, it is too bad that the withdrawal of conventional oil from our planet has only jumped 4% since 2003, and the trillion jump in oil reserves over the last decade is due to technology improvements that are increasing recoveries from known reservoirs, naturally the oil companies blame government obstacles across the world for no new discoveries why not? Fracking the latest controversial process, has in some regions ignited a drilling frenzy that has driven down somewhat the price of coal and natural gas, whereas some maintain that fracking along with additional Canadian imports (Tar Sands) could cut the US dependence on daily oil imports from 9

to 3 million barrels within a decade, I guess the in crowd doesnt consider Canadian Oil as an import. At the end of they day by 2035 the world population will have increased by 1.7 billion souls, and 850 million more cars will be taking their owners on Sunday drives, and the demand from China and India will be running an additional 25 million barrels per dayyour pump price is going to go down if a new President sits in the US Oval Office get a grip. And then we come back to the Ogallala Aquifer the largest one in Western North America, a reservoir of fresh water that is planned to have a large pipeline laid over it having a caustic mixture of oil and its thinner (to permit the thick oil to move), a mixture that is known to corrode the interior of the pipe. An aquifer that will NOT or replace contaminated water in a few years keep in mind that ground water is not like a river that is constantly flowing, it is a collection of water, mostly from ancient melting glaciers, water that has seeped down over many, many years it we deplete it or contaminate it, it will take (if ever) millions of years to refill but why the worry the immediate gain will make a few here and there wealthy, so pump that oil and worry about tomorrow tomorrow! In Canada alone 26% of its population depends on ground water, with over 5 million living in rural areas watering their livestock, their crops, operating fish farms, and now its worst enemy hydrocarbon extraction the driving entity that is sucking up that water like a young calf and a cows utter.