Posted on 06/07/2004 5:53:14 PM PDT by blam
Is the world's oil running out fast?
By Adam Porter at the Peak Oil conference in Berlin
How long will the oil keep flowing?
If you think oil prices are high at $40 a barrel then wait till they are four times that much.
How will you pay to run your car? How will you get the children to school? How will you heat your house? How much will transported food go up in price?
How will we pay for plastics, metals, rubber, cheap flights, Simpson's DVDs, 3G phones and everlasting economic growth?
The basic answer is, we won't.
This is the message from the Association for the Study of Peak Oil (ASPO).
The group of oil executives, geologists, investment bankers, academics and others has been warning the world of high oil prices, and the ensuing fallout, for some years now.
The end of cheap oil
It includes a diverse range of oil industry insiders.
People like Ali Bakhtiari, head of strategic planning at Iran's National Oil Company (NOIC), Dr Colin Campbell, a former executive vice president of Total-Fina, and Matthew Simmons, an energy investment banker and adviser to the controversial Bush-Cheney energy plan.
They are united by one idea, that global oil production is about to peak, which in turn will signal the permanent end of cheap oil.
And they warn that this is the foundation of the current rise in oil prices.
Who hurts when prices explode?
"Oil is far too cheap at the moment," says Mr Simmons.
"The figure I'd use is around $182 a barrel. We need to price oil realistically to control its demand. That is because global production is peaking."
Large new oil fields are ever more difficult to find
"If we price oil correctly," Mr Simmons says, "it could give us time to find bridge fuels, fuels to fill the gap between an oil economy and a renewable economy. But I don't see that happening."
The adherents of the peak oil theory warn the decline of world oil output will force oil prices higher for good, and that the knock on effects could be catastrophic.
"In my opinion, unfortunately, there will be no linear change," says Iran's Ali Bakhtiari. "There will only be sudden explosive change."
"The people who will be least affected will be the super poor, who already have no access to energy, and the super rich who do not care if oil is $100 a barrel."
"It is everyone who is in the middle who will be hurt the most," says Mr Bakhtiari. "When the crisis comes there will be enormous changes."
Oil rationing?
Dr Campbell says endless growth is not possible
Much of ASPO's predictions stem from the calculations of Dr Campbell.
His work on oil reserves has long suggested that many official oil data are either flawed estimates or at worst downright lies.
Scandals like the 23% of 'lost' reserves at Royal Dutch Shell have helped to boost interest in his work.
False reserves threaten the security of energy supply, just as do bombs under pipelines.
Dr Campbell's conclusion: oil production and consumption should be regulated by governments.
"Many reserve figures are highly questionable," says Dr Campbell.
"Many great oil fields are increasingly old and inefficient. But I don't think oil is easy to produce with a sniper behind every palm tree."
"The way to increase energy security is to reduce demand," he says.
'Difficult times'
At ASPO's recent conference in Berlin, companies such as BP and Exxon and men such as Fatih Birol, chief economist of the International Energy Agency, began to talk to the proponents of the peak oil theory.
Whilst they may not agree with Dr Campbell's theories, their attendance highlighted ASPO's emerging importance in the oil debate.
In public, Mr Birol denied that supply would not be able to meet rising demand, especially from the buoyant economies in the USA, China and India.
But after his speech he seemed to change his tune.
"For the time being there is no spare capacity. But we expect demand to increase by the fourth quarter (of the year) by three million barrels a day."
He pinned his hopes for an increase in production squarely on troubled Saudi Arabia.
"If Saudi does not increase supply by 3 million barrels a day by the end of the year we will face, how can I say this, it will be very difficult. We will have difficult times. They must invest."
Can Saudi deliver?
But even Mr Birol admitted that Saudi production was "about flat".
Three million extra barrels a day would mean a huge 30% leap in output in just a few months.
North Sea oil production is in decline
When BBC News Online followed up by asking if this giant increase in production was actually possible rather than simply a desire he refused to answer. "You are from the press? This is not for you. This is not for the press."
Asking other delegates - admittedly supporters of the peak oil theory - whether such a steep increase was feasible, the answers were unambiguous: "absolutely out of the question," "completely impossible," and "3 million barrels - never, not even 300,000."
One delegate laughed so hard he had to support himself on a table.
Some recent figures tend to back up ASPO's outlook.
North Sea production is declining at an increasing rate, having peaked in 1999.
Not at the predicted flat rate of decline of 7%, but gradually accelerating from 7% to 8.5% to 11%.
And the number of major new oil fields discovered around the world fell to zero for the first time in 2003, despite an obvious increase in technological expertise.
"We need transparency with the figures," says Dr Campbell.
"This avoids profiteering from shortages, the collapse of poor countries and it will stimulate alternatives."
"Consumer countries need to be able to audit fields, but at the same time 'flat earth' economists who believe in endless growth need to change their ideas."
And Dr Campbell has a dire warning: "If the real figures were to come out there would be panic on the stock markets, in the end that would suit no one."
Paging Paul Ehrlich and every other chicken little...
Oh no! We're going to run out of oil! The 1960s will be a decade of utter crisis!
Oh... wait...
I hear this every decade. In a few hundred or thousand they MAY be right.
... at least they didn't claim that Halliburton is developing an engine that runs on burnt caribou, dolphins and seal pups.
But seal pups are plentiful. Just go up to Canada, they have a fresh batch of clubbed ones. (Seriously, they authorized more clubbing this year)
Right now I wouldn't believe them if they said the sun rose in the east.
BS. My husband has worked for a major oil company for 30 years; the last 20 years installing automation. We are capable of much more efficient drilling and refinement but the greens are preventing progress.
From 1973
Track 1. Only So Much Oil in the Ground
Awesome song, not the most accurate assessment of total oil reserves
Uh - economics doesn't really work that way, you know, as every pinhead who ever tried to tax a particular social behavior out of existence has found out. What happens when you try this is that the demand creates alternate markets. If, for example, the government places a prohibitive tax on alcohol, we don't get abstinence, we get the Mafia.
The key is that the "we" who price oil need to have a monopolistic control over all possible sources in order for that approach to work. In short, we attempt to treat the tyranny of endless demand for oil by establishing a tyranny on supply. Dumb.
Uh, but gas went down 10 cents today at the local station.
It's all Bush's fault!!!
(hehe got here first)
My brother and law spouted this nonsense to me the other day. It is total nonsense. There is more oil on earth then we can possibly imagine...enough to last another 1000 years.
When Qatar first prospected for natural gas a few decades ago, the "experts" predicted modestly abundant resorces. As they began to drill and prospect further thy discovered that under that tiny nation lies the largest single source of natural gas even found on the planet. Qatar is now the world's leading exporter of LNG in the world, and astoundingly rich as a result.
ANWR is another great example. I personally believe the minority of experts who believe that ANWR may indeed have reserves rivalling that of Iraq under ground. That would be a good reason for the RATs to NOT want us to drill there.
I sure hope that the BBC runs out of oil. The sooner the better.
This article is emitting near-lethal doses of irony.
Hey, we dropped twelve cents since Friday! Very kewl.
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