Opinion
- Editorial- Commentary
Gwynne
Dyer: After
peak oil
"Don't
Panic'' is excellent advice in most times of
crisis (an though not if you're an investor,
in which case the trick is to panic 48 hours before
everybody else does). If the peak oil crisis is
upon us, then not panicking is definitely the right
response. It can be a quite gentle crisis if it
is properly handled, but it will be a nightmare
if governments and markets panic.
The current surge in the price of oil is certainly
not driven by a conviction that oil supplies have
peaked and can only decline from now on.
The dealers in the London and New York exchanges
who make the market react to the daily flow of
news - a possible Turkish invasion of Iraqi Kurdistan,
two North Sea rigs closed for a week because of
bad weather - and don't bother much about longer
term issues like peak oil.
The market is a simple-minded beast: supply is
tight and disruptions are possible, so the price
goes up. But the market is so tight because demand
has been growing faster than supply for years,
mainly due to the economic boom in Asia - and now
the fear is that supplies may have stopped growing
altogether. The German-based Energy Watch Group
declaredlast month that global oil output peaked
in 2006 at 81 million barrels per day. It will
fall to 58 million b/d by 2020, they predict, and
to only 39 million b/d by 2030.
That would give us just over twenty years to cut
our use of oil by half - or rather by two-thirds,
really, since world demand for oil is set to increase
37 per cent by 2030, according to the annual report
of the US Energy Department's forecasting arm,
the Energy Information Administration.
In theory, two decades ought to be enough to come
up with more efficient engines and other conservation
measures for the half of all oil that is used
in transport, and to switch to alternative fuels
for much of the rest.
But there are many who doubt that we will succeed.
Once the realisation sinks in that the future
is one of steadily diminishing oil supplies and
steadily rising oil prices, they argue, there will
be a vicious scramble for control of the remaining
reserves, accompanied by wars that deplete those
reserves even faster. The markets will panic, a
deep and permanent global depression will impoverish
everyone, and there will not be the will or the
resources to build a new economy that is far less
dependent on oil.
There really is a finite amount of oil, and at
some point production will peak and begin to decline.
Is that time here? Perhaps.
World oil production, which grew annually by an
average of 1.2 million b/d over the past twenty
years, has been almost flat for the past 18 months
despite the absence of any major disruptions.
If peak oil is here, must we all now go into the
dark together? Of course not. The predicted rate
of decline in world oil production once we are
past the peak is only two percent a year. If demand
were still rising by about two per cent a year,
that would imply a four percent shortfall in supply
next year, an eight percent shortage the year after,
12 per cent the year after that....
However, that presumes that Asian economies continue
to grow at the present rate, but they won't go
on doing that if the oil price goes through the
roof. So let us assume that we have to cope with
an accumulating oil shortfall of around three per
cent a year. Could modern economies transform their
basic transport and energy structures at three
per cent per annum?
Certainly they can, provided they continue to co-operate
internationally and don't panic. Moreover, the
technologies they need to wean themselves from
their excessive dependence on oil are precisely
the ones they need to get their carbon emissions
down and ward off the threat of runaway global
warming.
If peak oil is here, we can deal with it. And
if it isn't here yet, we should still be acting
as if it were. The sooner we start adapting our
economies to a future in which oil is increasingly
scarce and expensive, the less pain and risk we
will face when it does arrive.
Gwynne Dyer is a London-based independent journalist
whose articles are published in 45 countries.
Petroleumworld not necessarily share these
views.
Editor's
Note: This article was first publish in Trinidad
Express, Monday, November 11th 2007. Petroleumworld
reprint this article in the interest
of our readers.
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Petroleumworld
11/ 11/07
Copyright ©2006
Gwynne
Dyer.
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