Oil production has peaked as demand soars

In 1998, oil cost $10 per barrel and experts said the price would return to $5 per barrel, but it never happened. Many people believed we had huge oil fields that would never run dry, and that new fields would meet our growing demands. Ten years later, the evidence is beginning to align to tell a much different story — one that we are just beginning to read.

I serve as a member of the Minnesota House of Representatives Energy Committee. This year our committee held hearings on “peak oil.”


Peak oil is the point where world oil companies produce a maximum output of oil, after which they will never be able to sustainably produce that same amount of oil again. Some people believe we have already reached that point, and many others believe we will reach that point in five to 10 years.

What does that mean for residents in district 30B? If China and India continue to purchase vehicles at the rate they are now, they will be consuming much greater amounts of oil at a time when world oil supply is either at its peak or beginning to decline. This is simple economics; a shortage in supply and increase in demand will lead to higher prices.

Consider these facts: According to Matthew R. Simmons, author of “Twilight in the Desert — The Risk of Peak Oil,” and one of the testifiers before our Energy Committee, oil accounts for 95 percent of our transportation energy and is increasingly being used to make consumer goods. In 1995, the world demanded 70 million barrels per day (mbd), and today we demand 88 mbd. World crude production was at about 69 mbd in 2003, 74 mbd in 2005, and is currently at about 73 mbd.

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