Sliding Down the Flagpole

Last week the US Department of Energy released the preliminary version of its Annual Energy Outlook 2006. This document, which projects supply, consumption, and prices for all forms of energy; is the official US government position on what energy resources will be available and at what cost, five, 10, 20, and even 25 years in the future.

For many years, making these annual projections was a rather straightforward exercise. There was plenty of coal, oil, and gas available, so all the forecasters had to do was project a sensible rate for GDP growth, mix in some energy efficiency gains, add a bit of inflation and out came a reasonable set of projections of what the future US energy consumption and prices might look like.
In recent years however, the traditional approach has started to come apart. Can anybody who follows the issue really imagine a product as valuable and as much in demand as oil dropping from its current $60 per barrel to $33 per barrel 20 years from now? Can anyone remotely familiar with the current oil situation really expect world production to increase smoothly from the current 84 million barrels a day (b/d) to 121 million b/d in 2025?

A few seconds with a calculator shows that, until last week, the US government was projecting world oil production will rise from the current 31 billion barrels per year to 44 billion barrels per year in 2025. This says the world would consume some 760 billion barrels during the next 20 years. This is not a serious projection. It will never happen. Most believe there are only about a trillion barrels of conventional oil left and know it is becoming increasingly difficult and expensive to produce.

Falls Church News-Press