Criticism of a recent major review on the world’s remaining oil
supply is hot on the plate for many scientists who adamantly maintain the end
of (the world) oil availability is coming sooner than many are prepared to
acknowledge.
The Statistical Review of World Energy, published last June by BP, sites the
world has enough reserves to provide another 40 years of current consumption
before depleting. Great news, right? Wrong, says many “peak theory” scientists.
The argument
presides around the numbers. The Statistical Review of World Energy report is
based on “officially reported” production, capacity and reserves figures
provided by major oil companies and oil producing governments. London-based Oil Depletion
Analysis Center
scientists argue their reports indicate the world will peak within the next
four years before starting the dreaded steep decline that will leave much of
the world economy in tatters.
When our
consumption of oil reaches its peak and then exceeds the discovery of fresh
reserves we will start depleting our known reserves. This is the fundamentals
behind the “peak oil” theory.
The head of
the depletion center, Colin Campbell, a former chief geologist and vice-president
for a string of major oil companies that include Shell, Exxon, Fina, Chevron
Texaco and BP, said “It’s quite a simple theory and one that any beer drinker
understands. The glass starts full and ends empty and the faster you drink it
the quicker it’s gone.” He further explained that the peak of easy oil (the
stuff that’s very cost-efficient to extract) came during 2005. What we’re
extracting now is the oil that’s not so easy or cost-efficient to extract, but
heightened demand has made the higher cost of extraction warranted.
Campbell argues that even
with tertiary extraction methods the world oil peak will come as soon as 2011.
Peter Davies,
the chief economist for BP, point-blank denies such a scenario and discharges
any arguments made by “peak oil” theorists. “We don’t believe there is an
absolute resource constraint. When peak oil comes, it is just as likely to come
from consumption peaking, perhaps because of climate change policies as from
production peaking,” retorts Davies.
Recently, the
one-time-significant gap between demand and supply has narrowed and, in 2006,
that gap nearly disappeared resulting in seismic inflation still being
experienced across the U.S.
Once consumption exceeds production by even the smallest amount, the price of
oil will fly above $100 a barrel - numbers the U.S. came unhappily too close too
during 2007 – and a global recession is likely to begin.
Like Dr.
Campbell, Jeremy Leggett is a geologist who has turned conservationist.
Leggett’s book, Half Gone: Oil, Gas, Hot
Air and the Global Energy Crisis, has exposed the “peak oil” theory to a
much greater audience. Within his book, he compares government and industry
resistance to facing up to the looming oil era end to the denial received about
the dangers of global warming. “It reminds me of the way no one would listen
for years to scientists warning about global warming,” he states. “We were
predicting things pretty much exactly as they have played out. Then, as now, we
were wondering what it would take to get people to listen.”
Mr. Leggett
elaborated the scenario with an example from 1999 when Brittan’s North Sea reserves peaked. For about two years after that
peak became visible it was considered “an act of treason” to not meet demand.
There is,
however, one thing that most petroleum analysts agree upon and that is that the
actual depletion of an oil field does follow the predictable bell curve
discovered by Shell geologist M King Hubbert.
In 1956,
Hubbert made a mathematical model to predict what would happen to the US oil production.
This model, come to be known as the Hubbert Curve (or Hubbert’s Peak), showed
that initial production of any field rises sharply before reaching a plateau.
Once the plateau was reached (the peak) production would begin its terminal
decline. Hubbert predicted the U.S.
would reach its production peak in 1969 and he was ridiculed by many, until
1970 when the peak was reached and US production started its own
terminal decline. Hubbert’s US
peak was off by a year because of an unexpected oil find in
Alaska.
The one thing
no one is disagreeing upon is the exponential increase in demand. China and India have grown with much
intensity, and their demand for the scarce resource has placed incredible
strain upon more established industrialized countries economies. Their growth
means a lot more petroleum needs to come from somewhere. According to the most
conservative estimates form the IEA (International Energy Agency), today’s
average daily consumption of 85 million barrels will increase to over 110
million barrels a day within the next two decades.
With nearly
two-thirds of the world’s reserve lying under the sands of Middle Eastern
countries, massive increases will be necessary from this region to meet global
demand. But does the Middle East really have
as much oil as they say they have? “When I was the boss of an oil company I
would never tell the truth. It’s not part of the game,” says Dr. Campbell. He
points out that the Statistical Review released by BP is comprised mostly of
widely used estimates, but is still
only a summary of the political estimates supplied by governments and oil
companies.
A recent
survey on Saudi Arabia, Iran, Iraq
and Kuwait
indicates there is much to be concerned about. Last year a journalist in Kuwait
discovered documentation indicating the country’s reserves were actually half
of that reported. And 2007 saw the introduction of oil rationing in Iran which is a
major indication as to which way their reserves are progressing.
Sadad
al-Huseini, the retired chief executive the Saudi Arabia’s oil corporation
knows more about the kingdom’s oil situation than anyone. His view, to say the
least, is dreary, “The problem is that you go from 79 million barrels a day in
2002 to 84.5 million in 2004. You’re leaping by two to three million [barrels a
day]” a year, al-Huseini told The New York Times during an interview last year.
“That’s like a whole new Saudi
Arabia every couple of years. It can’t be
done indefinitely.”
The Importance of Oil
·
A simple reduction of 10-25% could cripple oil-dependent
industrial economies. (In the 1970s, a reduction of just 5% caused an inflation
response of over 400%.)
·
Most farming equipment is either build in oil-powered plants or
uses diesel as fuel. Nearly all pesticides and many fertilizers are made from
oil.
·
Most plastics, used in everything from computers and mobile phones
to pipelines, clothing and carpets, are made form oil-based substances.
·
Manufacturing requires huge amounts of fossil fuels. The
construction of a single car in the US requires, in average, at last 20
barrels of oil.
·
Most renewable energy equipment requires large amounts of oil to
produce.
·
Metal production – particularly aluminum – cosmetics, hair dye,
ink and many common painkillers all rely on oil for their existence.
Alternative Power
Source Options
·
Coal – There are still an
estimated 909 billion tones of proven coal reserves worldwide, enough to last
at least 155 years. But coal is a fossil fuel and a dirty energy source that
will only add to global warming.
·
Natural Gas – The natural gas fields
in Siberia, Alaska
and the Middle East should last 20 years
longer than the world’s oil reserves but, although cleaner than oil, natural
gas is still a fossil fuel that emits pollutants. It is also expensive to
extract and transport as it has to be liquefied.
·
Hydrogen Fuel Cells – Hydrogen fuel cells
would provide us with a permanent, renewable, clean energy source as they
combine hydrogen and oxygen chemically to produce electricity, water and heat.
The difficulty, however, is that there isn’t enough hydrogen to go round and
the few clean methods of producing it are discouragingly expensive.
·
Bio-fuels – Ethanol from corn and
maize has become a popular alternative to oil. However, studies suggest ethanol
production has a negative effect on the environment because of the space
required to grow that is demanded for both energy and livestock needs.
·
Renewable Energy – Oil-dependent
nations are turning to renewable energy sources such as hydroelectric, solar
and wind power to provide an alternative. This is a good offset to current
consumption levels, but the likelihood of renewable sources providing enough
energy is slim as technology simply isn’t good enough to capture enough energy
needed to sustain even most needs.
·
Nuclear – Fears of the world’s
uranium supply running out have been allayed by improved reactors and the
possibility of using thorium as a nuclear fuel. But an increase in the number
of reactors across the globe would increase the chance of a disaster and the
risk of dangerous substances getting into the hands of terrorists.
Sources: The
Independent, The New York Times, International Energy Agency, PB
