More on Peak Oil

The latest issue of ISES' ReFocus magazine, in addition to the usual recycled press releases, carries an interesting article by energy economist Andrew McKillop: "Oil: No Supply Side Answer to the Coming Energy Crisis".  

McKillop echoes some of the comments we posted the other day from David Doty (who also forwarded several other interesting Peak Oil related links - see the Links/Resources section). World oil demand growth in 2004 was at its highest level in 27 years, even with (or perhaps the cause of) prices also at their highest since 1985; that means adding 2.5 million barrels/day to world oil supply every year to meet demand, or more than the combined output of Saudi Arabia and Russia within 7 years.

It's clear this can't continue; world oil output has never grown at such a rate in any past period. Will growth in demand shrink? The "culprit" here is most obviously China, with a car fleet grorwing 20%/year (as is India's). But demand has grown around the world, not just in the far east.

McKillop concludes there's a firm demand growth level of 2.3-2.7 Mbd/yr, reducible only through economic hardship. On the supply side this seems impossible to meet - there's also a quality problem, with the oil added most recently to supply being contaminated with sulphur and heavy metals, not the "light sweet crude" that refiners prefer.

McKillop sees the likely result in continued steady or dramatic rises in oil prices, followed by military invasion of producer countries (Iraq being the first example of this). Ironically, nuclear weapons become the ultimate source of the power needed to gain access to oil in the near-term world.

Barring a western-nations economic slump, the time period we have to effect a transition without major conflict is very short - the energy transition away from oil has perhaps 2 to 3 years, far shorter than the Kyoto time frame. The problem is critical, and the attention paid to it, so far at least, has been woefully insufficient.

Created: 2005-03-04 03:27:12 by Arthur Smith
Modified: 2005-03-04 03:28:53 by Arthur Smith