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Monday, November 15, 2004

Peak Oil hits Barrons

Jonathan at A Tiny Revolution has the text of an article from today's Barron's magazine, one of the most influential publications among the financial elite. The article is written by Charles T. Maxwell, called the "dean of energy analysts" in the subtitle.
Few people outside the oil industry understand that 6% to 7% more oil must be found and made available to the market each year in order to meet 2% growth in world consumption. It's a huge job; and it is getting harder to do, as the potential reserve size of prospects we are drilling today is smaller, and the large, prolific fields found in the past are advancing along their decline curves. Currently, some 70% of the oil that is consumed comes from fields discovered 25 or more years ago.

Most of the likely oil-bearing basins of the world have now been prospected, and the odds of vast new reserves suddenly making an appearance are low. Of course, relatively large individual discoveries will occasionally turn up in the years ahead, but not in size and number to suggest these finds can equal the substantially greater amount of supplies that are being burned up. Today, the world is consuming some 30 billion barrels a year, and we are finding less than one-third that amount.
Our country's leaders have three main choices: Taking over someone else's oil fields; carrying on until the lights go out and Americans are freezing in the dark; or changing our life style by deep conservation while heavily investing in alternative energy sources at higher costs.

The first two choices can be only temporary palliatives. Taking over foreign energy fields would be against this country's principles, and, like most violations of principle, it wouldn't work. This strategy wouldn't protect us from war, terrorism and the exhaustion of our military and moral resources. Carrying on as we are until we crash looks more like "surrender" than "adjustment."

By elimination, if not by wisdom, we will eventually turn to a massive national and international conservation effort.
Obviously, Maxwell undercuts his own credibility, in my eyes anyway, with the nonsense that I italicised (taking over someone else's oil fields IS our principle--see "Doctrine, Carter" and "Energy Plan, Cheney"). He also says a bunch of stuff after the section I quoted that I found highly distasteful, so I didn't quote it (it's my blog, after all!). Still, the article is clear evidence that the financial moguls in this country know about peak oil, or will after they read the article. I'm not sure which is scarier--that they didn't really know about it before now and are therefore ignorant and incompetent, or the more likely scenario that they've known about it all along and have consciously decided to plow ahead with their evil schemes KNOWING it means widespread war, famine, pestilence, and so on in the relatively near future. Actually, now that I've written them both out, I know which is scarier.

For a slightly different view of peak oil, "Oldman" at The Blogging of the President 2004 says that rapidly rising oil prices and new technology will likely keep oil from peaking for many years, but that production will increase at between 0% and 1% per year. for the next decade or two. Even so, rapidly rising demand will exacerbate the current crises. And, even if he's right, there's no reason to expect that the downslope won't be just as steep at the end of a plateau as it would be from the peak of a mountain. (Via Michael)