National Commentary

The Peak Oil Crisis: More Reports

A new report has been added to the growing list of studies dealing with the issue of when world oil production will peak.

Earlier this month the UK’s Energy Research Centre released a 300 page (plus seven detailed technical annexes) study entitled “Global Oil Depletion – An assessment of the evidence for near-term peak in global oil production.” (The report is available for downloading at the UKERC’s website.)

 

This is clearly the most sophisticated report of any that has been done so far, carefully weighing the evidence for and against an early peak of conventional oil production in 600 pages of detailed annexes. The report benefits from the International Energy Agency’s change of heart that occurred with its reevaluation of worldwide depletion rates that was released in November of 2008.

The IEA currently says that while conventional world oil production will peak around 2020, production of alternative fuels such as natural gas liquids and extracts from the Alberta tar sands will increase rapidly enough so that total liquid fuel production can keep growing through 2030. To its credit, the Agency continues to warn that lack of adequate investment and a reviving demand for oil could lead to a supply squeeze within the next two years which of course is a far more realistic position.

The new UKERC’s efforts also benefits from the events of 2008 when the current recession started and oil prices spiked to over $140 a barrel and then dove to $30.

A key message of the new study is that whenever the peak of world oil production does come it will likely be too soon for any meaningful mitigation efforts such as increased efficiency or the development of alternative energy sources. It also notes that peak oil will have a major impact on efforts to control global warming.

Unlike the previous reports, the group preparing this one was largely made up of independent academics. The group was sufficiently isolated from the British government which was the source of the funding to issue a report which contradicts government policy. Her Majesty’s government still remains tied to the notion that oil depletion will not happen for the next 20 years and there is simply no reason the government should be making preparations for the event. Fortunately, the U.S. government has remained silent on the matter and has not gotten itself into a denial trap.

The main conclusion of the British report is that there is a “significant risk” that conventional oil production will peak before 2020, and that forecasts which delay the event beyond 2030 are based on assumptions that are “at best optimistic and at worst implausible.” This is a nice balance between warning of trouble just ahead and not seeming overly alarmist. One suspects that a lot of effort went into crafting the phrase.

A fair question to ask is whether reports of this type have any impact or change government policy? In recent years, two other major reports were issued in the U.S., one by the Government Accountability Office, and one by the National Petroleum Council at the request of the U.S. Secretary of Energy. While these extensive reports did a workman like job in weighing the pros and cons of imminent peak oil, they failed to reach any particularly alarming conclusions and were largely ignored by the media and the U.S. government. The general sentiment these days seems to be that anything that will not happen in days, weeks, or at most a few months can safely be ignored as over the horizon of concern.

The new study had wide coverage in the British media by U.S. standards. The British government, which of course had paid for the study, acknowledged its existence, met with the authors to hear the conclusions, and said it would study the government’s policy on peak oil.

It is fair to say that most governments have enough on their plates these days with the global economy crashing, unemployment skyrocketing, and tax revenues disappearing to acknowledge and begin planning for the likelihood that extremely high oil prices and all that entails are just around the corner. It is looking more likely that we, as a global society, are going to be over the great cliff of oil depletion before we collectively acknowledge it exists.

Earlier this week in Denver, the U.S. branch of the Association for the Study of Peak Oil held their annual meeting to exchange thoughts and the results of research on just how close we are to feeling a significant impact from world oil depletion.

A torrent of bad news from the world’s leading specialists in peak oil thundered out from the podium and PowerPoints in an endless stream: a consensus has emerged that global convention oil production plateaued at the end of 2004 and is unlikely to ever grow very much again; we are in brief period of balance between depletion from existing fields and production starting from new fields; this balance is likely to last for another two to five years before world production starts to fall inexorably; depletion rates from fields that are past peak are worse than believed and are likely to get still worse; exporters are using more and more of their own oil so that the ability of the U.S. to import oil will fall faster than world production; whenever an economy spends more than four percent of its GDP on oil it goes into recession.

The beat went on and on with scarcely a break. Deep sea oil may cost so much to find and produce there is no way we can afford to use it in our cars — ditto for all that oil in the Canadian tar sands. When global oil depletion sets in global oil production is likely to fall faster and have more devastating consequences than anyone had believed.

The oil in some quantity certainly will be around for a while, but the oil age in the form we have known and loved for the last hundred years is fast coming to a close.