Friday, September 23, 2005

Peak Oil

I know, I know. Warnings of impending doom when the oil runs out are ten-a-penny. However, the following site is a very compelling breakdown of the problem and what options remain for our society.

For those who don't know what peak oil (or Hubberts Peak) is all about, it is the point in which global production of oil hits its highest point before declining due to lessening resources. In other words, the problem is not when oil runs out, but when it can no longer be produced in enough quantity to meet demand. Demand for oil has increased every year and will continue to do so, but if production reaches a point were it can go no further, then we really are in trouble.

Few can realistically argue that peak oil doesn't exist, as it has already happened in a number of places around the World. The US hit its peak oil production levels in 1970 and since then has seen a decline in production to about 50%. Russia hit its oil peak in 1987, North Sea oil in 1999. In fact 24 of the Worlds 44 oil producing nations are now producing less oil despite a constant increase in demand.

In the past, I've alway shook off the peak oil argument by saying that it won't happen in my lifetime because there is still oil out there waiting to be discovered. Plus there are untapped resources in places like the Falklands and Alaska. However, as Mattthew Savinar explains in his article, oil production now far outstrips the amount of new oil being discovered, with 6 barrels of oil being consumed for every barrel we find.

While I don't agree with everything in the article it is compelling and well researched. I'm not convinced that the peak of oil production will happen in 2007, although you never know. Indeed, OPEC admitted in June 2005 that it would struggle to pump enough oil to meet demand at the end of the year. Add to this fact the increased pressure on other nations following the loss of Gulf Oil due to Hurricanes Katrina and Rita and it all leads to one thing; an end to cheap oil.

Whether our oil dependent society can handle oil prices in the $100-$200 per barrel price range is dubious.