Tuesday, November 02, 2004

Is this peak oil thing for real?

Some readers have contacted me wondering why they hadn't heard about the debate surrounding peak oil production before. After all, if it's that critical an issue, why haven't the news networks picked it up? Why haven't I read about in the newspaper?

I would agree that the issue has not been covered well although the Wall Street Journal and The Christian Science Monitor have run articles on it. (Sorry, both links are only available to paid subscribers.) Paul Krugman mentioned it in a recent article and The Guardian, the respected British daily, has been covering it. National Geographic also ran a June 2004 cover story on it, and CNN ran a story last year.

Scientific American saw fit to publish a special section in its March 1998 edition entitled The End of Cheap Oil, the main article of which is available online here.

Yes, but these are just stories about the same Cassandras you've been talking to, you may say. Well, not exactly. They are talking to or referring to some different Cassandras. But, I get your point. So, you may wonder, are the any official sources that say a peak may be near? The answer is yes and no. Neither the U. S. Energy Information Agency nor the International Energy Agency (IEA), Europe's counterpart, will admit there's a near-term problem. (By 'near-term,' I mean the next 10 to 15 years.) What the IEA does say is that huge investments will have to be made in the Middle East especially, to meet oil demand. For why this appears unlikely, see the last section of my story on peak oil.

Finally, read what the vice president of the National Iranian Oil Company, A . M . Samsam Bakhtiari, told to a conference on peak oil this year:

The crisis is very, very near. World War III has started. It has already affected every single citizen of the Middle East. Soon it will spill over to affect every single citizen of the world. Syria’s oil production is in terminal decline. Yemen is following. Major Middle East producers, including Saudi Arabia, will peak soon or have already peaked.
Bakhtiari predicts a "bumpy" plateau in oil production from 2005 to 2008 after which production would decline worldwide.

Can anyone know if this is right? No, not until after the fact. My own view is that we may have a short-term top in oil production which will look like Bakhtiari's plateau, followed by an upswing in production that will get us to maybe 2015 or 2020. But, like everyone else, I'm just giving you my best guess about the exact timing.

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