The 2012 oil crunch vs. Cash for Clunkers

Via the UAE comes a warning from Saudi Arabia: crude oil prices are likely to spike above last year’s record high. “If others do not begin to invest similarly in new capacity expansion projects, we could see within two to three years another price spike similar to, or worse than, what we witnessed in 2008.”

This is no surprise to anyone who’s been following the peak oil news, and it seems very unlikely that anything can be done on the supply side. If oil production is to keep pace with the historically rising consumption curve, we’ll need 20-30 million barrels per day of new production by 2030 just to keep pace with depletion elsewhere. That’s several new Saudi Arabias.
Where would this capacity come from? Not Mexico; its fields are sliding fast (Cantarell at 30%/year) and Pemex has neither the capability to develop difficult new resources nor the legal ability to partner with private oil companies. Not Venezuela; Chavez steals anything that comes into his country. Not Canada; the tar sands are terribly expensive to develop and are unlikely to hit 3 million bbl/day. Not Russia, which is past peak and following the same route as the USA’s lower 48. Not Brazil; even if the 8 billion barrels in Tupi can be pumped at an initial 10%/year, that is only about 2 million bbl/day. And certainly not ANWR or the Bakken shale, which are good for perhaps 2 mmbbl/day total.

There is NO solution to this problem on the supply side. The supply needed to continue BAU does not exist; oil prices high enough to expand supply will instead collapse the economy before that supply can be brought to market. The only way this challenge will be met is on the demand side, by shifting to other energy sources where it is feasible and aggressive economizing where it is not.

Daily Kos