Peak Oil on the Horizon

that global supply has peaked and the likelihood oil prices could reach as much as $300 a barrel. (Source: Bloomberg)

In a recent public address to the Senate of Australia, Bakhtiari stated that “I can see a range of $100-150 [per barrel of oil] not very far into the future.” He amplified this statement as follows:

They do say oil production will never peak, it's just that they want you to believe that the peak won't come until 2030 and after that production will decline so gradually that there will be plenty of oil right on out through the rest of the 21st century.

The peak oil theory predicts that the world's oil production output, like any nonrenewable resource, will eventually reach an all-time high and afterward gradually decline. Although it will be impossible to tell precisely when the peak occurs until it has already occurred and the world is in a definite production decrease, many experts are already predicting that the moment will happen in a few short years.

However, all in all, most would appear to agree that peak oil output is not very far away for all of us. It could take place sometime within the next decade or so, which in fact means that there is not much time left for a world economy to be driven largely by oil.

High gasoline prices have returned oil to the forefront of the national debate. Matthew Simmons, an energy industry investment banker, is a leading voice warning of “peak oil”—the theory that world oil output will soon decline. Saudi officials and many economists say oil production will increase to meet growing demand, but Simmons doesn’t buy it.

As we start off 2007, it seemed helpful to list the oil producing countries that Oil Drum readers might keep an eye on, both in this and future years. Often, the global production curve is presented in an undifferentiated way or is divided between OPEC and non-OPEC countries (as with the EIA). Other standard data sources such as the IEA, BP, Oil & Gas Journal, etc. usually break out production by region.

If you think this is a bunch of crap about a few barefoot hippies with some solar panels and all the dope they can smoke somewhere in Northern California, friend, think again.

In contrast to a widely discussed theory that world oil production will soon reach a peak and go into sharp decline, a new analysis of the subject by Cambridge Energy Research Associates (CERA) finds that the remaining global oil resource base is actually 3.74 trillion barrels -- three times as large as the 1.2 trillion barrels estimated by the theory’s proponents -- and that the “peak oil” argument is based on faulty analysis which could, if accepted, distort critical policy and investment decisions and cloud the debate over the energy future.

The phrase “the end of the world as we know it” has been uttered so often in the last decade that some Peak Oil advocates simply use its acronym, TEOTWAWKI.

Discussions of Peak Oil really began to enter the mainstream in 2005. Congressman Roscoe Bartlett gave a speech about Peak Oil on the floor of the U.S. House of Representatives.2 After Hurricane Katrina caused oil and gasoline prices to spike3 people began to ask serious questions about our oil supplies. The issue began to receive more attention from the mainstream media.4 This essay will discuss the history of Peak Oil discussions, the potential ramifications from a peak in oil production, the influences of the supply/demand imbalance, and finally what you need to do to prepare for Peak Oil.

With the demand for energy around the world ever increasing, are we edging closer to "peak oil" - and what can be done about it?

There's a very good chance claimed OPEC reserves are exaggerated. Here's the history of how much OPEC nations have claimed to have in their proved reserves (oil that they should almost certainly be able to produce with existing technology and prices).