Australian Broadcasting Corporation



Broadcast: 23/11/2004
Running out of oil

Reporter: Stephen McDonell

TONY JONES: Now to our feature on oil and though it’s a finite resource, there is great debate about how much black gold remains.

Yet a growing number of industry experts now think we will very quickly reach the milestone ‘peak’ of oil supply.

This would mean the world is then eating into the second half of all available oil reserves.

Though there’d still be plenty of oil left, if the peak theory is right we are now on the road to running out.

Stephen McDonell reports.

STEPHEN McDONELL: 2005 could be a milestone in history.

Some think we could reach the peak in world oil supply and next year start using up the second half of all the world’s reserves.

COLIN CAMPBELL, OIL DEPLETION ANALYSIS CENTRE: Everybody has come to imagine that the flow of oil is like the rivers that flow from the mountains to the sea.

It’s just perceived to be a natural part of the world we live in.

STEPHEN McDONELL: Colin Campbell is a mineral geologist who worked in the oil industry for 31 years.

These days he researches oil depletion and is a world authority on the subject.

He studies exploration data and information about reserves of both oil companies and exporting nations.

Colin Campbell believes that over the next 12 months the world will probably reach its peak of supply.

COLIN CAMPBELL: It is the beginning of the decline and this really, from a mind set standpoint, is likely to have a huge impact on the way companies behave, the way governments behave and eventually the way people have to adjust to this new situation.

STEPHEN McDONELL: According to his theory, the peak of discovery was 1964.

Though new oil reserves are still being located they aren’t the big quality fields like those previously found in the Middle East, Texas or even Australia.

The challenge is either proving or disproving the theory.

For instance, oil countries have lied about the size of their reserves, giving them bigger quotas under OPEC rules.

But Colin Campbell remains confident of his oil peak estimate.

COLIN CAMPBELL: We can’t be exact about what I’m taking about if I say the best estimate is 2005.

It could come a year or two later by all means, because the data that we’re using to make these estimates is so unreliable.

But I think we have penetrated the confusion enough to have a fairly good idea.

STEPHEN McDONELL: None of the oil companies would be interviewed by Lateline about the question of the oil peak.

One company spokesperson laughed down the phone, saying it was impossible that we’re near the peak because of the sheer abundance of oil, yet he wouldn’t come on camera and say this.

But there are a growing number of industry experts who think the peak is near.

MATTHEW SIMMONS, CEO, SIMMONS & COMPANY INTERNATIONAL: I don’t think it is beyond the remote possibility that we will look back 10 years from now and say we actually had peaked, past tense, in 2004.

STEPHEN McDONELL: Matthew Simmons is the Texas-based chief executive officer of a merchant bank specialising in energy investments.

He’s also advised the Bush Administration on oil issues.

He says there are now just too many regions to ignore, which are now categorically beyond the peak.

MATTHEW SIMMONS: What it really basically means is that the continued growth in the energy-demand era is coming to an end unless we can quickly invent some other form of energy to take its place.

And we haven’t started.

I don’t think we have anything on the drawing board today that could even remotely be called an alternative to oil and gas can even remotely impact and offset the peaking of oil and gas.

STEPHEN McDONELL: Questions about the availability of oil have led to a renewed push for nuclear energy.

Then there are other options, wind and tidal power and, of course, solar energy can all be increasingly utilised as well as electric cars and better building design.

Of course, the good news is we’re not about to run out of oil straight away.

The tank’s at least half full.

Stephen McDonell, Lateline.