source: U.S. Energy Information Administration
To some geologists, the world is heading toward an oil crisis of historic proportions. The crisis will come, they say, not when the wells go dry, but when world oil production reaches a peak and begins to decline. At that time, prices are likely to rise precipitously unless demand, which has been growing year by year, also declines.
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source: U.S. Energy Information Administration |
There is, however, little agreement on when the peak production will occur. For example, the Energy Information Administration (EIA) of the U.S. Department of Energy has made several projections, with the short-fall happening at the earliest in 2021 and at the latest in 2112. Others such as geologist Colin Campbell, chair of the Association for the Study of Peak Oil and Gas in Uppsala, Sweden—suggest the peak may occur as early as 2005; geophysicist Kenneth Deffeyes of Princeton University says the peak will definitely be next year. Economist Morris Adelman of the Massachusetts Institute of Technology insists that "for the next 25 to 50 years, the oil available to the market is for all intents and purposes infinite." The difference between oil optimists and oil pessimists is crucial, for if the pessimists are correct, there will be insufficient time for an orderly transition to alternative energy sources.
The variable estimates over the timing of the peak may exist in part because official agencies such as the EIA are under intense pressure not to throw the markets into a panic by coming out with pessimistic forecasts. But differences also arise from the lack of agreed-on data regarding oil reserves. The best known information on reserves comes from the U.S. Geological Survey, which estimates that before extraction began in the19th century a total of 3.3 trillion barrels lay in the ground. Only 0.7 trillion barrels have been extracted, implying that the peak oil production still lies many years away.
Campbell and others assert that these estimates are far too high because countries exaggerate the amount of petroleum still in the ground. Such a revision apparently happened in the late 1980s, when six OPEC countries increased their stated reserves by huge mar-gins, apparently to boost their export quotas, which are the basis for computing reserves. Companies also have a stake in exaggeration, as in the recent case of the Royal/Dutch Shell Group, which admitted that its "proven reserves" were 20 percent less than originally stated. Critics also point out that global discovery of new oil fields peaked in the 1960s and has been declining ever since. Oil optimists say that new techniques of discovery and retrieval will keep production high for many years to come, thus forestalling an early peak in production.
The coming decline of oil could lead to a world-wide depression and exacerbate existing tensions among oil importers. China, with its sharply rising demand, vigorously competes with Japan for Siberian oil, and the U.S., Russia and Iran are all in a diplomatic tussle to control oil in Kazakhstan and Azerbaijan. Instability in Saudi Arabia could draw the U.S. deeper into military involvement in the Persian Gulf. Despite these troublesome prospects, no U.S. administration of the past two decades has put much effort into planning for a change to a new energy economy.
Crude oil imports and exports in 2003, in millions of barrels per day:
Leading Importers U.S. 11.2 Japan 5.5 Germany 2.5 China 2.0 Leading Exporters Persian Gulf states 18.7 Russia 5.5 Norway 3.3 Venezuela 2.2
FURTHER READING
The End of Oil: On the Edge of a Perilous New World. Paul Roberts. Houghton Mifflin, 2004.
Association for the Study of Peak Oil and Gas: www.peakoil.net
Rodger Doyle can be reached at rdoyle2@adelphia.net
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