Peak Oil: Good Things Could Happen to Us

Peak oil is usually defined as the point at which the world’s consumption of this crucial fuel reaches the supply available on the market. When this occurs, oil becomes a scarce commodity and demand forces dramatic increases in price. A hint of this happened in August of 2008 when oil reached an unprecedented $147 per barrel, only to collapse to about $40 when demand was reduced by the global financial crisis.

Once deemed unthinkable, peak oil is now the subject of very serious consideration, partly because global consumption is rising faster than supply, and partly because the predicted rebound of our depressed economy is expected to increase demand and thus price. Furthermore, the worldwide recession and the subsequent fall in the price of oil has reduced exploration and development, further jeopardizing the immediate supply should the economy recover. The implications for the short term are worrying. If we are brave enough to think about the long-term, implications are staggering. A world of expensive and scarce oil would be radically different than the one in which we live today.

Total, the fourth largest oil company in the world, is betting that peak oil will occur in 2020 at a production level of 95 million barrels per day (bpd) — our present consumption is about 85 million bpd.

According to Total’s “95 theory”, falling output from old wells and scarce new ones mean we will not be able exceed this “plateau” of production regardless of effort. We are already having to find 4 million bpd just to compensate for depleted wells. By Total’s calculations, we have 33 years of oil left, with an additional 17 years of supply that might be available with advanced recovery methods. The ramifications are sobering. But even more sobering if we consider that conventional economic predictions expect us to be needing 130 million bpd by 2020.

Other oil companies are hinting at Total’s predictions. British Petroleum has changed its name to BP for “Beyond Petroleum”, an ominous sign for oil security. And the president of Chevron has frequently used full-page ads in numerous popular publications to warn us of upcoming oil shortages. Exxon remains silent on the subject.

Courier-Islander