The world has an energy problem. Oil! It’s dirty, dangerous and expensive. We have all seen enough hateful oil wars with misery and death to know that we need to get away from oil and its advocates from the top down. You will notice in the picture above that the American population that has been addicted to oil is not in the photo alongside the young Mark Hexum.

“Just a fraction of Iraq’s known fields are in development, and Iraq may be one of the few places left where much of its known hydrocarbon resources has not been fully exploited.” – US Energy Information Administration, Iraq Analysis

Back home, the American patriot is the person riding through your town in an all-electric vehicle, putting solar panels on his/her roof and telling everyone else to do the same. Paul Revere is back riding a Tesla Model S, warning about climate change and peak oil. The endgame is a sustainable clean electric society with all-electric transportation being powered by sun, wind, earth and water.

Let’s be clear that Washington is not where we should be looking for leadership. The Electric Energy Revolution is being led by the green business community and its growing base of advocates on Wall Street and Main Street. Green greed is good. Tesla stock’s (TSLA) rapid rise this year was due to the company’s exceptional products and long-term vision of sustainability. In contrast, shale oil is not sustainable. In the coming years, shale oil CEOs will see significant oil production declines and be knocked from their soap box. Saudi America, we are no such thing. The country needs to refocus on the true endgame. The Electric Energy Revolution is the big boom ahead.

The energy world has changed, peak oil signs.

The days of simply sticking a straw down and sucking the easy oil from an elephant sized oil pool are gone. The world’s elephant sized conventional oil fields are on life support, using every conceivable technology to keep the elephant alive. Regardless, these massive fields are in terminal decline, and numerous expensive unconventional oil fields are the oil industry’s solution to fill the tank. However, these unconventional fields are not good for the US long-term. Like a hamster on a wheel racing against the sands of time, nothing is going to stop the inevitable decline of oil.

So, the oil clock is ticking down as the ball is dropping in Times Square, 2014. The US is by far the largest oil consumer in the world, consuming over 20% of the world’s current demand of about 92 million barrels a day, according to the International Energy Agency (IEA). Putting this into perspective, China consumes about half as much oil as the US despite having a population about 4 times that of the US. To be blunt, the American addiction to oil is leading the world to another energy crisis. Nailing down the timing of such a crisis is difficult, because there are so many variables in the global economy, but two key indicators are coming into focus which may shake America’s energy complacency:

1. Higher world oil demand will weaken US hegemony, US Dollar.

US oil consumption recently jumped to around 20 million barrels a day, according to the Energy Information Administration (EIA), which negates a substantial amount of the increased oil production from shale oil in the US. A year ago, US oil consumption was running at about 19 million barrels a day (EIA). In China, 2013 oil demand through October averaged 9.8 million barrels a day, up 3.6 percent over 2012, according to Platts. Obviously, the oil market cannot accommodate everyone, so there will be big losers in the future. India looks to be one of the weakest links of the major oil dependent nations, which makes the Rupee a leading indicator for economic headwinds.

Moving forward, the world will increasingly question the dominance of the US Dollar as a reserve currency, especially during an oil price blowout considering the US reliance on oil imports. At the end of the day, the oil exporter will hold all the cards. The exporter could accept payment in Indian Rupee if it was deemed to be a better alternative to a reserve currency. The US mantra that it’s our US Dollar but your problem will not hold true. The world financial system has greatly matured technologically, and countries are looking to diversify their reserve holdings into varying currencies. In the coming years, China plans to position the Yuan as a dominant reserve currency alongside the US Dollar and Euro. Eventually, the dynamic US economy will fully adjust to peak oil, but oil will rule as the ultimate currency for many years to come. Oil will be the new gold.

2. West Texas Intermediate (WTI) oil will anticipate the peaking in shale oil.

In North Dakota, where the weather has dropped to minus 25 degrees recently, the shale oil business has slowed due to difficulties in heating the necessary water to frack the oil wells. Alison Ritter, spokeswoman for the North Dakota Department of Mineral Resources (NDDMR), said in a recent telephone interview that the weather was good in November, but December has been snowy and cold. She added: “You can throw boiling water and watch it freeze in the air.” North Dakota was producing about 940,000 barrels of oil a day in October, according to the latest data from the NDDMR, making the state a major energy player in the world today. Mr. Lynn Helms, the Director of the NDDMR, expects the state’s oil production to peak at about 1.6 million barrels a day by 2017. However, there are serious problems beneath these numbers, most specifically the decline rates, that should make the oil market very nervous. According to Ritter, the average shale oil well in the state produces 492 barrels a day in its first year, which is impressive, but this rate drops to an average of 172 barrels a day by year two, a 65% drop. At the end of 2012, North Dakota had 8,373 oil wells, producing 666,429 barrels of oil a day, so the average well produced about 80 barrels a day (source: NDDMR).

The price of WTI oil will likely rise in anticipation of the peaking of these shale oil fields across the country. Undoubtedly, most oil traders are not terribly impressed with an average well producing 80 barrels a day, so America should expect an oil spike when the sands of time outpace the hamster on the wheel. The NDDMR data will be closely watched but will most probably be a step behind oil traders. Hopefully, Congress will entertain us all with some hearings on oil market manipulation when the peak comes.

About EV News Report

EV News Report is a community blogging website for electric vehicle and greentech enthusiasts, as well as peak oil activists. Please help accelerate the electric vehicle and greentech movements by submitting an original article to EV News Report by following the video instructions on the About tab.

The world is transitioning from the fossil fuel age to the clean electric energy era. Two major world emergencies are driving this change:

1. There are over 7 billion people on the planet according to the United Nations. Today’s worldwide economic growth is placing tremendous demands on the energy sector. Unfortunately, according to the International Energy Agency, approximately 80% of the world’s energy is derived from fossil fuels. Absent an energy revolution, climate research tells us that the planet will be significantly warmer and altered for future generations.

2. The oil market is expensive and fragile. The door is open to green alternatives; however, high oil prices may destroy the currencies of oil dependent nations before the EV and greentech revolutions have a chance to reach mass adoption.

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