Peak Oil: World Running on Empty and USA Ill Prepared
The oil price will go through $100 a barrel at some stage in the next few months, maybe in the next few days. One consequence, petrol at £1 a litre, is already with us. The climb is surprising, at least to the oil companies, who a couple of years ago were still expecting an oil price of below $50 a barrel, and doing all their planning on that basis. But, in a way, it is more surprising that the world economy has managed to carry on growing strongly despite this rise. For the oil price affects not only energy prices; oil also is the feedstock for plastics and other products we use every day.
This has been a continuing story, really, ever since the oil price started to climb at the end of 2004, but this year has brought three further twists to it. The first is a growing appreciation of the finite limits to global oil production. Not only is production running pretty much at full bore, but there are also doubts about the ability to increase production in the medium-term. The second is the surge in demand from the emerging economies, principally China. And the third is the growing evidence of an economic slowdown in the US and the relationship between the higher oil price and that slowdown. A word about each.
The fundamental availability of mineral oil in the world has not changed much in recent years. No big new discoveries have been made, though a steady stream of smaller ones has been seen and interest in non-conventional sources of oil, including tar-sands, is rising. What has changed is the awareness of the pressure. The principal organisation warning of a lack of supply, the Association for the Study of Peak Oil, was seen by the main oil producers as maverick and wrong four years ago; now its views are seriously debated, even if most geologists feel they are too pessimistic. ASPO is talking of peak production being reached within the next five years.
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