Energy experts continue to debate whether the world has already reached a peak in global oil output or if the moment of maximum yield still lies years ahead. But if we could look back to today from 50 years hence, the difference between a peak in 2008 or, say, 2015 is largely immaterial: for all practical purposes we are now perched on the summit of the depletion curve of world petroleum, and will remain in this territory – a rounded crest when seen from afar, not a sharp apex – for some years to come. There is nothing further to be gained by arguing about the precise moment of peak oil, or from seeking to delay its arrival. From now on, our overarching challenge is to adjust to life on the petroleum summit.
One might naturally assume that life on the summit would be especially comfortable. After all, there is more oil being pumped today than ever before. It is likely, moreover, that we can count on continued high levels of output for another decade or so, probably augmented by additional liquids derived from Canadian tar sands, Rocky Mountain shale, biofuels and other “unconventional” fuel sources. But the price of oil has shattered all previous records and there appear to be no barriers to its continued rise. Other vital products derived from petroleum or reliant on its ready availability – petrochemicals, plastics, pesticides and food – have also risen in cost, adding to our economic woes.
What, then, distinguishes this new era from that which preceded it? In the past, global petroleum output largely kept pace with the growth in international demand. This meant that major petroleum consumers – states, corporations, public utilities or individuals – could procure new oil-devouring systems with full confidence that adequate and affordable supplies would be available to fuel them in the years ahead. Car buyers could acquire a giant SUV assuming that gasoline would remain relatively affordable; farmers and truckers could buy powerful, fuel-guzzling vehicles believing that diesel would remain at an equivalent rate.
The pre-peak period of growth and abundance also provided considerable elasticity in the face of crisis and turmoil. When Iraq invaded Kuwait in 1990 and an international embargo was placed on both Iraqi and Kuwaiti crude, Saudi Arabia and other pro-western suppliers were able ramp up production, averting a global energy shortage and the resulting economic meltdown. The Saudis played this critical role on several other occasions, keeping the world well supplied with oil even in the most demanding of times.
But life on the summit will be very different. Although the global energy industry is pumping out more crude than ever, it is no longer capable of increasing output in tandem with ever-rising international demand. According to the latest projections from the US Department of Energy, world petroleum demand will rise from about 86 million barrels per day in 2007 to an estimated 106 million barrels in 2025. Some of these added barrels – perhaps 8 or 9 million per day – will be provided by unconventional sources, but a large share will have to come from conventional petroleum. But a growing number of analysts believe that the industry is now at, or close to, its maximum rate of output. This means that ever-increasing demand will constantly be chasing stagnant supply, thus driving up prices – precisely the situation we see today.
The National Newspaper (UAE)
