Petrobras CEO: Peak Oil Production is Now

On Thursday, the energy blog TheOilDrum.com reported on a December 2009 presentation by Petrobras CEO Jose Sergio Gabrielli in which he estimated that world oil production would peak this year. Gabrielli, head of Brazil’s national oil company, joined the ranks of other international oil honchos, including former Aramco executive Sadad al-Husseini and Total’s CEO Christophe de Margerie, in stating that the level of global oil production cannot keep pace with growing demand. The logical result of this trend is oil scarcity that will lead to quickly rising crude prices in the next few years.
Should we take Gabrielli’s assessment seriously? The fact that he is the head of one of the largest and fastest-growing national oil companies in the world certainly lends him some personal credibility. His data is drawn from well known and respected sources like consultancy Wood Mackenzie, investment firm Merrill Lynch, and the International Energy Agency. His analysis takes into account supply contributions from unconventional sources such as Canada’s tar sands and even includes biofuel supplies. Though Gabrielli’s predictions, at this point, amount to not much more than elaborate guesses, it appears likely that they will be at least somewhat accurate.

Barring earth-shattering breakthroughs in oil extraction technology or massive increases in biofuel supply volumes, Gabrielli’s scenario portrays a world where there is simply not enough fuel to go around. This would unfortunately mean higher crude prices that could reverberate through the global economy, raising prices of gasoline, heating oil, and nearly all consumer goods. Though they do not amount to a cause for panic, Gabrielli’s predictions rightly possess the power to at least make one wonder: what happens next?

Heating Oil