When I started working on oil depletion in 2003, there were a handful of lone voices in the wilderness sounding the alarm. Since then, the IEA, EIA, multiple government agencies in several nations, and several oil industry executives have determined oil shortages are possible. Multiple reports and books have been written. Congress has taken testimony. Key figures in Washington have made speeches. Although there are some differences in the details, they are trivial in comparison with the broader perspective.
At some point, perhaps very soon, oil demand could exceed oil supply.
A draft of the U. S. National Petroleum Council’s report Facing the Hard Truths about Energy, A comprehensive view to 2030 of global oil and natural gas was released July 18, 2007. The report was balanced, well written, and informative. World oil reserves are plentiful. But access to these reserves is limited. The average IOC estimate of production in 2030 is 107 Mbl/day versus an estimated demand of 138 Mbl/day, a 23% shortfall.
To quote from the Executive Summary: “Over the next 25 years, risks above ground—geopolitical, technical, and infrastructure—are more likely to affect oil and natural gas production rates than are limitations of the below-ground endowment. This range of outcomes emphasizes the need for proactive strategies to manage the accumulating risks to liquids delivery in 2030.” Assuming these risks do not disrupt production, supplies appear to be adequate through 2015. Production thereafter is less certain.
Precisely the points I make in “The Report on Oil Depletion”. The NPC has confirmed that by 2030, oil demand will only equal oil supply if there is substantial demand destruction. Furthermore, accumulating above ground risks could disrupt oil supplies at any time between now and 2030.
The NPC has acknowledged the importance of dealing with CO2 emissions and Global Warming. The report includes a long list of specific recommendations, including many which deal with energy efficiency and conservation. (Yes. The oil industry is actually telling us to use less oil.) The report conveys a sense of urgency. The NPC has effectively called on Congress to establish a comprehensive energy policy for America that includes the creation of a clearly defined regulatory and legal environment, and urges energy become an key factor in American foreign policy.
The outlook for natural gas is more encouraging. Assuming the unrestricted flow of LNG, supplies will be adequate through 2030. The outlook for coal is also encouraging. Assuming we agree on an ecologically responsible and energy efficient consumption plan, there is enough coal to satisfy America’s through the end of this century.
Like many of my “Peak Oil” associates, I am disappointed the NPC did not give us more specific information, and I am very disturbed that the world’s largest independent oil companies do not have better resource data. Nevertheless, the NPC has opened the door to having a positive, constructive, dialogue about the oil challenges that lie ahead.
Going forward, we need to focus on three things:
- We need to be sure we take an integrated approach to contemporary concerns about global warming and fossil fuel depletion. Global warming and fossil fuel depletion are in fact evil twins, and if we want to make intelligent choices, we need to deal with them as a package. Let’s start by drawing Al Gore into our discussion.
- We need to push our elected officials into the formation of an oil and natural gas consumer’s union. Start with the United States, Canada, and the European Union. Invite China and India. This will give our nations the leverage we need to deal with supplier cartels, and – hopefully – lead to resource sharing agreements. I firmly believe working together is a far better option than the existing perilous alternative.
- We need to find a way to deal with the Middle East. No. It will not be easy. The region overflows with insidious virile hatred. But the unpleasant fact is this: the future of the world’s oil and natural gas supplies depend on what happens in the Middle East. For the sake of world peace, we must control the outcome.
The NPC report confirms what we all knew. It is time to move on. We must work together to mitigate the impact of oil depletion.
As for our political leaders, there is absolutely no excuse to ignore the energy challenges that lie ahead. Time is running out. We need positive, constructive, legislative leadership. And we need it NOW.
To do otherwise would be an act of criminal neglect.
Ronald R. Cooke
The Cultural Economist
PS. I welcome thoughtful questions, comments and information. You can reach me – tce :: tce.name
