Peak Oil: A Thing of the Past?

No, I don't mean that the idea the world's oil production has peaked and is now declining has been discredited. Anything but. Rather a seemingly respectable group of parliamentarians and scientists has concluded that the peak has already happened. Last year, to be precise, according to the Energy Watch Group. (PDF here)

The major result from this analysis is that world oil production has peaked in 2006.
Production will start to decline at a rate of several percent per year. By 2020, and even more
by 2030, global oil supply will be dramatically lower. This will create a supply gap which can
hardly be closed by growing contributions from other fossil, nuclear or alternative energy
sources in this time frame.

Of course, there are those who have argued that peak oil is still decades off. Trying to sort out what is corporate propaganda (generated to counter a lack of market confidence that will almost certainly accompany widespread belief that oil supplies are in a rapid decline) and what is wishful thinking on the part of environmentalists and others who welcome any news that will encourage energy portfolio diversification and the resulting cleansing of the air is no easy task.

The thing I like about the EWG approach is its honesty about the task involved in figuring out just how much oil is available and how much we can suck out of the ground at a reasonable cost. Earlier this year the same group produced a similar report on coal reserves that anticipated "peak coal" by 2025:

The first and foremost conclusion from this investigation is that data quality of coal reserves and resources is poor, both on global and national levels. But there is no objective way to determine how reliable the available data actually are. The timeline analyses of data performed here suggest that on a global level the statistics overestimate the reserves and the resources. In the global sum both reserves and resources have been downgraded over the past two decades, in some cases drastically.

That report was perhaps more sobering than the conclusion that peak oil is a thing of the past, considering conventional wisdom would have us believe there are a couple of hundred years worth of coal on U.S. territory alone.

But as a group of scientists report in PNAS this week, "Economic growth has made carbon dioxide in the atmosphere increase much faster than expected." (As usual, it's hard to find a link to the PNAS paper, so here's the AFP press report.) And a lot of that growth is made possible by increased exploitation of coal reserves.

Ultimately, the report's validity will rest on the sources of the data on which its predictions are based, data that are notoriously difficult to verify:

The analysis in this paper does not primarily rely on reserve data which are difficult to assess and to verify and in the past frequently have turned out to be unreliable. The history of discoveries is a better indicator though the individual data are of varying quality. Rather the analysis is based primarily on production data which can be observed more easily and are also more reliable. Historical discovery and production patterns allow to project future discoveries and - where peak production has already been reached - future production patterns

The EWG also peppers its scientific survey with notable quotes, this like one from former US Defense Secretary and CIA Director, James Schlesinger, "The battle is over, the oil peakists have won. Current US energy policy and the administration's oil strategy in Iraq and Iran are deluded."

And this from King Abdullah of Saudi Arabia: "The oil boom is over and will not return. All of us must
get used to a different lifestyle."

Ultimately, given the challenges involved in producing reliable estimates and the vested interests of everyone involved, I have to say that I remain unconvinced that peak oil indeed is in the past. But considering the sources, I am more skeptical of the idea that it remains decades away. Either way, the only reasonable course of action is to prepare for the post-oil era now.

For those wanting the quick and dirty overview, here's the EWG press release. And here's another excerpt from the full report:

"Peak oil is now".

For quite some time, a hot debate is going on regarding peak oil. Institutions close to the energy industry, like CERA, are engaging in a campaign trying to "debunk" the "peak oil theory". This paper is one of many by authors inside and outside ASPO (the Organisation for the Study of Peak Oil) showing that peak oil is anything but a "theory", it is real and we are witnessing it already. According to the scenario projections in this study, the peak of world oil production was in 2006.

The timing of the peak in this study is by a few years earlier than seen by other authors (like e.g. Campbell, ASPO, and Skrebowski) who are also well aware of the imminent oil peak. One reason for the difference is a more pessimistic assessment of the potential of future additions to oil production, especially from offshore oil and from deep sea oil due to the observed delays in announced field developments. Another reason are earlier and greater declines projected for key producing regions, especially in the Middle East.