Is the World Running Out of Oil?

Every few years or so, the question is raised about whether the world is approaching peak oil. Reports are written and apocalyptic visions are cast about the consequences of such an event. It’s one of the reasons given for diversifying to new energy sources like wind and solar power. The price of oil is also key to planning almost all aspects of future transportation policy – from trains to highways to air travel. Now Daniel Yergin, an energy expert who chairs IHS Cambridge Energy Research Associates, says in a new cover story for the Wall Street Journal (and book released this week) that people can basically take a chill pill on the whole issue. He says the worries about peak oil routinely come up short.

This is actually the fifth time in modern history that we’ve seen widespread fear that the world was running out of oil. The first was in the 1880s, when production was concentrated in Pennsylvania and it was said that no oil would be found west of the Mississippi. Then oil was found in Texas and Oklahoma. Similar fears emerged after the two world wars. And in the 1970s, it was said that the world was going to fall off the “oil mountain.” But since 1978, world oil output has increased by 30%.

The core of Yergin’s argument is that the peak-oil doomsayers underestimate the amount of oil that can ultimately be recovered from the ground and discount the importance of how the economics of supply and demand shape the new technologies that are key to extracting oil from hard-to-reach places.

His article is based on a book he’s just written called The Quest: Energy, Security, and the Remaking of the Modern World. Back in October 1990, Yergin published a classic book called The Prize: The Epic Quest for Oil, Money and Power about how oil explains much of what goes on in international politics.

His new book comes on the heels of a forecast by the Energy Information Administration today that the world will consume 112.2 million barrels of oil per day in 2035, up 1.4 percent from the EIA’s earlier estimate. The agency said that global energy use could rise 53 percent by 2035 with China and India leading the charge as their economies continue to develop and require more energy.

USA Today says in its review of Yergin’s new book that it is “a tour de force, really — that evaluates the alternatives to oil so broadly and deeply that the physical tome could double as a doorstop.”

In his own positive review of the book, the Financial Times‘ energy correspondent Ed Crooks writes:

Yergin rewinds the tape, going back into the past several times to tell the stories of other aspects of energy: electricity generation, the debate over climate change, renewable power and the chequered history of the electric car. The effect is to make The Quest feel like four or five books in one, without the linear narrative thrust of The Prize. If the earlier book was novelistic, The Quest is more like a handbook or primer.

Infrastructurist