According to the chief economist at the International Energy Agency (IEA) in Paris, the world could be hurtling toward an energy crunch that could effectively kill any global economic recovery. Dr. Fatih Birol said in an interview that most major oil fields in the world have eclipsed their peak production. Birol noted that the public and many governments are oblivious to the fact that oil is running out faster than earlier predicted, with global production likely to peak in roughly 10 years.
Birol said, "One day we will run out of oil, it is not today or tomorrow, but one day we will run out of oil and we have to leave oil before oil leaves us, and we have to prepare ourselves for the day. The earlier we start, the better." It will not be cheap to convert from our dependence on oil, but the cost may be better than the possibility of having no oil whatsoever; or having $200-per-barrel oil.
My question is this: are we looking at a Chicken Little scenario here, or is Dr. Birol onto something? The IEA now estimates that the decline in oil production in existing fields is running at 6.7% a year compared to 3.7% estimated in 2007 (an estimate the IEA now says was "wrong"). With the group now classifying the consumption of oil as "patently unsustainable," we could be teetering on the precipice of rocketing oil prices. If oil production has indeed peaked in non-OPEC countries, it could get ugly. Unfortunately, it could get equally as ugly if investors buy into the notion of an impending oil crunch, and nothing happens. Could the frustration bubble over oil prices burst?
One thing is certain, this topic polarizes people and leads to passionate discourse on the need to lose our reliance on oil. If Dr. Birol is right, we may need to lose that reliance a lot quicker than some think.
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Reader Comments (Page 1 of 1)
8-04-2009 @ 6:41AM
Dan Barnett said...
The "peak oil production" argument has been run for at least the last 20 years. If the Pundits say it often enough, eventually they are going to be right.