Chris Skrebowski

Unless and until adaptive responses are large and fast enough to constrain the upward trend of oil prices, the primary adaptive response will be periodic economic crashes of a magnitude that depresses oil consumption and oil prices. These have the effect of shifting consumption from incumbent consumers—the advanced economies—to the new consumers in the developing economies.

This week we are taking a break from the usual format to publish a new piece by ODAC trustee Chris Skrebowski. In the article Chris argues that the long running debate over peak oil between geologists and economists is a distraction. There is a price at which oil becomes unaffordble to consume and therefore to produce. The affects of this are already beginning to play out in the global economy.

A simple observation – or why peak will be earlier than most people expect: “Global production falls when loss of output from countries in decline exceeds gains in output from those that are expanding.” (Slide presentation by the editor of Petroleum Review.)

Analyst Chris Skrebowski is “surprised and somewhat saddened to read CERA’s curious attack on the concept of Peak Oil.” After analyzing CERA’s figures, however, he concludes that “far from dispelling concerns about Peak Oil you have effectively confirmed that they are real and imminent. “

I am naturally pleased that my periodic revisions to my megaprojects analysis attract interest and comment. However, it has become clear that a certain amount of misunderstanding and confusion has grown up, particularly about my treatment of depletion.

Gripping update on the invaluable Megaprojects listing by the Petroleum Review: “…The world has now reached the point where the volumes lost to depletion are much larger than the levels of likely new demand. This means total increments required (new demand plus depletion) are running at around 7%/y, while the largest supply increments in 2006 and 2007 are contributing 3.6% and 3.5%”.(pdf)