http://www.motherjones.com/news/feature/2004/11/10_401.htmlExperts say we're about to run out of oil. But we're nowhere near having another technology ready to take its place.
Over a Barrel
By Paul Roberts
November/December 2004 Issue
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The evidence is certainly piling up. Pollution levels from cars and power plants are on the rise. Climate change, another energy-related disaster, has begun impacting crop yields and water supplies and may soon provoke political strife. In fact, according to a Pentagon report last October, global warming could make key resources so scarce, and nations so desperate, that "disruption and conflict will be endemic" and "warfare would define human life."
Yet the most alarming symptoms of an energy system on the verge of collapse are found in the oil markets. Today, even as global demand for oil, led by the economic boom in Asia, is rising far faster than anticipated, our ability to pump more oil is falling. Despite assurances from oil's two biggest players -- the House of Bush and the House of Saud -- that supplies are plentiful (and, as George W. Bush famously put it, that getting the oil is just a matter of "jawboning" "our friends in OPEC to open the spigots"), it's now clear that even the Saudis lack the physical capacity to bring enough oil to desperate consumers. As a result, oil markets are now so tight that even a minor disturbance -- accelerated fighting in Iraq, another bomb in Riyadh, more unrest in Venezuela or Nigeria -- could send prices soaring and crash the global economy into a recession. "The world really has run out of production capacity," a veteran oil analyst warned me in late August. "Iraq is producing less than a third of the oil that had been forecast, the Saudis are maxed out, and there is no place else to go. And America is still relying on an energy policy that hasn't changed significantly in 20 years."
Nor is it any longer a matter of simply drilling new wells or laying new pipe. Oil is finite, and eventually, global production must peak, much as happened to domestic supplies in the early 1970s. When it does, oil prices will leap, perhaps as high as $100 per barrel -- a disaster if we don't have a cost-effective alternative fuel or technology in place. When the peak is coming is impossible to predict with precision. Estimates range from the ultra-optimistic, which foresee a peak no sooner than 2035, to the pessimistic, which hold that the peak may have already occurred. In any case, the signs are clear that the easy oil is harder to find and what remains is increasingly difficult and expensive to extract. Already, Western oil companies are struggling to discover new supplies fast enough to replace the oil they are selling. (Royal/Dutch Shell was so concerned about how declining discovery rates would devastate its stock price that it inflated its reserves figures by 20 percent.)
Worse, according to a new study in the respected Petroleum Review, in the United Kingdom, Indonesia, Gabon, and 15 other oil-rich nations that now supply 30 percent of the world's daily crude, oil production -- that is, the number of barrels that are pumped each day -- is declining by 5 percent a year. That's double the rate of decline of even a year ago, and it has forced other oil producers to pump extra simply to keep global supplies steady. "Those producers still with expansion potential are having to work harder and harder just to make up for the accelerating losses of the large number that have clearly peaked and are now in continuous decline," writes Chris Skrebowski, editor of Petroleum Review and a former analyst with BP and the Saudi national oil company. "Though largely unrecognized,
may be contributing to the rise in oil prices."
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