The following is a summary of a response to a previous article.
In a recent commentary in UBC Reports (A Peek Past Peak Oil,
April 6, 2006 at www.publicaffairs.ubc.ca/ubcreports/2006/06apr06/peakoil.html),
Professor Dowlatabati stated that peaking of conventional
oil production (Peak Oil) will simply mark another energy crossroads that will
be characterized by a seamless transition to non-conventional oil sources. A
supply glut will develop and prices will fall back towards the marginal cost of
production from oil sands and coal, said to be in the range of $20 to $40 per
barrel. In my view, this prediction can be readily refuted by simple
back-of-the-envelope analyses, and that the future reality will be much
different. More likely, we will be facing a substantial shortfall in oil supply
within a decade.
The peaking of world oil production presents the
Unfortunately, no industrialized nation (except perhaps Sweden) has yet initiated a serious mitigation program, nor does it appear that we have anything like 20 years left to prepare for the peak of oil production. In March 1998, Colin Campbell and Jean Laherr貥 published their benchmark article The End of Cheap Oil2 and concluded that global production of conventional oil will begin to decline sooner than most people think, probably with 10 years. Their forecast seems right on the money. Today, benchmark crude oil prices are nudging $75 dollars per barrel, close to their historic, inflation-corrected high of about $80 in 1980. Global demand is outstripping supply.
As part of the effort to develop my own conclusions about the validity of Peak Oil, I have, like others, analyzed global oil production data using the logistic curve model developed by geologist, Dr. M. King Hubbert, of
Based on Hubberts model, current total oil supply of about 85 million barrels per day is projected to remain more-or-less flat out to about 2012, and then decline at a rate of about 2% per year thereafter. Meanwhile, globally demand for oil is growing annually at a rate of about 2%. And theres the rub. While conventional oil supply growth appears flat and may soon begin to decline, demand for liquid fuels continues to grow. This means that by 2015, we could be facing a global shortfall of some 22 million barrels per day, representing the gap between global demand and conventional oil supply. To put this in perspective, a deficit of 22 million barrels per day would be greater than the current
The question is: can production from non-conventional sources such as the
So where does that leave us? There is still widespread disbelief or downplaying of the real significance of Peak Oil. I am left with the unavoidable conclusion that should total global oil supply peak sometime between now and about 2010 or so, no combination of non-conventional sources will be sufficient to offset future decline let alone continue to grow supply. Obviously, the projected demand growth will not be realized, and demand will be brought back into balance with supply primarily through higher prices. How high will prices go? Because price is now determined by market forces and the dynamics of supply and demand, not marginal production costs, we no longer have the tools to forecast price. I am betting though that we will probably see $100 per barrel oil well before 2015, and could well see that price at anytime given even modest geopolitical disruption to supply.
Peak Oilers are typically characterized as a pessimistic bunch or prophets of doom. While there may be some truth to this, I believe that there is much opportunity and reason for optimism. Rather than focusing only on what I see as futile and costly attempts to continue to grow the supply of liquid fuels, efforts must be redirected to the demand side: efficiency (doing more with less); conservation (just doing less); designing compact, walkable urban communities; emphasizing public transit including electric light rail; switching to biofuels and other renewable energy sources; relocalising organic food production, and so on. These are all very desirable actions that will be necessary not only to mitigate the effects of Peak Oil, but also to reduce green-house gas emissions and to shrink our ecological footprint, while developing a more livable and sustainable society. It is heartening to see just such efforts being made here at UBC as outlined in the recent Sustainability Issue of UBC Reports. In fact, if Peak Oil helps us to accelerate these efforts, then it could turn out to be just about the best thing that ever happened to us.
Dr. Rob Millar
The Department of Civil Engineering
2 Scientific American, March 1998, p. 78-83
3 Canadian Crude Oil Production and Supply Forecast 2005-2015. Canadian Association of Petroleum Producers, July 2005. www.capp.ca/default.asp?V_DOC_ID=689
4 Energy Information Administration, International Energy Outlook, 2005. Report #:DOE/EIA-0484 (2005). www.eia.doe.gov/oiaf/ieo/coal.html
5 Pumping Coal; Scientific American, March 2006, p. 20-22