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Here comes the night
David McKay
Posted: Thu, 07 Aug 2008

[miningmx.com] -- OIL WAS FIRST discovered in the Middle East 100 years ago in May by British explorer, George Reynolds. Now there’s talk the world’s oil will be exhausted in only 40 years’ time. That’s why, say some analysts, the days of cheap oil are gone forever.

At the time of writing, the price of Brent crude was a staggering $132/barrel. It was a popular conspiracy theory at the time of the US invasion of Iraq in 2003 that the world’s largest economy couldn’t survive on an oil price of $40/barrel, hence that country’s need to head off Middle Eastern threats to stability.

That’s just one gauge of how oil is spinning out of control; and each week brings a new high. For the record, a barrel is equal to about 158 litres.
how exactly are we supposed to get enough of the black stuff
“Iran has 25m barrels of excess crude floating around in storage ships,” comments one blogger ‘Ralph’ in response to a Sunday Telegraph report on 23 May. “Gosh, that’s approximately one day’s supply for the US,” he continued.

“If the Iranians can’t keep a day’s supply of oil on their ships, how exactly are we supposed to get enough of the black stuff when the refineries need it?”

The oil Reynolds discovered, described by the Sunday Telegraph as “gushing out of the sands of Persia”, is now more difficult to find. Reynolds’s legacy, the behemoth known as BP, is now drilling three miles of rock and salt in the Gulf of Mexico from its Thunder Horse rig, to find the next major reserve.

According to the Peak Oil Association, the world can’t produce enough oil with supply topping out at 85m barrels/day against demand of 87m barrels/day. And the German organisation The Energy Watch Group believes global coal resources will start to deplete by 2025, while uranium, one of the most commonly found minerals in the world, will reach peak production in 2013.

“South Africa has vast uranium reserves, so on a national level that may become part of a solution – but it’s not a global solution,” says Simon Ratcliffe, who heads the Association of Peak Oil South Africa (Aspo).

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The recommended response from Aspo ranges from controversially suggesting South Africa should adopt a population control policy through to localised agricultural methods and better urban planning that integrates work and living spaces.

“Over the next few years, the Chinese economy will start consuming more than it’s ever consumed. That’s the power of exponentials,” says Ratcliffe. In South Africa alone, a growth rate of 6% (now not likely) will mean the country will consume more energy that it’s ever consumed in 11 years’ time. “It’s scary – but where’s the oil going to come from?” he asks.

But it’s not just oil. The world’s search for sources of energy is sending all similar commodities into orbit, such as thermal uranium and coal.

Uranium, which is used in the production of nuclear energy and is touted as the answer to the world’s energy crisis, has recorded a well-documented surge in market-traded prices.

It’s price, however, has cooled lately.

According to Resource Capital Research, a long-term industry average price for uranium is now set at $90 per pound, down from $95/lb where it had held for about 12 months to March 2008.

It suggested speculative elements, believed to be pushing the oil price upwards, were influential factors in the price. “Uranium fund sentiment and activity remain important factors in the outlook for the spot uranium price,” RCR said.

Uranium holdings currently stand at an estimated 20m pounds. From a supply point of view, planned and proposed reactors increased 40% to 311 reactors from January 2007 to March this year.

Coal prices continue to rack up record prices amid fears that the ravenous Asian countries, which have become net importers, will continue to force the price upwards. Thermal or steam coal, as it’s also known, was at $122/t at the time of writing and is encouraging fresh supply from South Africa, one of the world’s major coal exporters.