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Energy Risk - Oil Supplies To
Decline After 2010
by Tim Jones, RiskCenter.com
HOUSTON, Texas - May 31, 2002
Global supplies of
crude oil will peak as early as 2010 and
then start to decline, ushering in an era
of soaring energy prices and economic
upheaval, according to an international
group of petroleum specialists.
They hope to persuade oil-dependent
countries like the United States to stop
what they view as a squandering the
planet's finite bounty of fossil fuels.
Americans, as the biggest consumers
of energy, could suffer a particularly
harsh impact on their lifestyle, warned
participants in the two-day conference
on oil depletion that began Thursday at
Uppsala University in Uppsala,
Sweden.
"There is no factual data to support the
general sense that the world will be
awash in cheap oil forever," said
Matthew Simmons, an investment
banker who helped advise President
Bush's campaign on energy policy. "We
desperately need to find a new form of
energy."
Colin Campbell, a retired geologist who
helped organize the conference, argued
that governments are too caught up in
short-term issues to focus on the
long-term threat of depleted oil
reserves. Oil companies prefer not to
talk about it for fear of upsetting their
investors, he said. Their warning defies
the more commonly held view that
global crude reserves will remain
plentiful for decades. Critics say similar
predictions of scarcity at the time of the 1973-74 Arab oil embargo
didn't come true.
"There's a lot of phony baloney in there," said economist Michael
Lynch of the U.S. business forecasting firm DRI-WEFA. "A lot of
prominent geologists just laugh at this. There are wolves out there,
but if you keep crying wolf and no wolves show up, you start to lose
credibility," Lynch said.
The dispute centers on the precise timing of what is variously
described as "peak oil" or "the big rollover" — the predicted date
when existing oil production, together with new discoveries of crude,
can no longer replenish the world's reserves as quickly as
consuming countries are depleting them.
Roger Bentley, head of The Oil Depletion Analysis Center in London,
insisted that the predictions made in the 1970s were basically
correct. About 50 countries, including the United States, have already
passed their point of peak oil output, he said.
The world's total reserves of crude, excluding oil found in shale and
tar sands, are estimated to exceed 3 trillion barrels, according to the
U.S. Geological Survey and other conventional sources of data.
Campbell insisted the true figure for reserves is closer to 2 trillion
barrels, due partly to what he described as overstated reserves
reported by Saudi Arabia and other OPEC nations.
He played down the significance of new oil discoveries in the
Caspian Sea region of central Asia and in deep waters off the coasts
of Brazil and West Africa and in the Gulf of Mexico. Now that
geologists have effectively surveyed the globe for crude, Campbell
and others at the conference said they doubted that any giant new oil
fields still await discovery.
Also, unlike Lynch, Campbell believes that improvements in the
technologies used to explore and drill for oil will increase production
by only modest amounts.
As a result, Campbell forecast that oil output would peak by 2010 —
at least 26 years sooner than the rollover point predicted in a U.S.
government study prepared in 2000.
"It's not a cataclysmic event," he said. "But oil will become scarcer
and more expensive. That's undeniable." Campbell estimates
peak-year production at about 87 million barrels a day, compared to
daily output last month of 74.5 million barrels, as calculated by the
International
Energy Agency, a watchdog agency for the world's wealthiest
nations.
Simmons, the banker, predicted that the United States would suffer
an energy scare even sooner, due to a 10 percent decrease he
foresees in U.S. production of natural gas this year.
"If it's only 10 percent, we've dodged a bullet," he said. "And 10
percent is a disaster. It could be 20 percent." Simmons said
Americans will have to embrace coal and even nuclear power once
fossil fuels pass their global peak in production. Higher and more
volatile prices are sure to accompany the transition period, he said.
"You couldn't get serious people focusing on this issue, and we're
going to pay dearly for it."
© RiskCenter.com 2002 Used with Permission.
© Copyright energysavingnow.com 2000.
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"Disturbed children"
and
"Grumpy old men".
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