Peak Oil Dead? Not Yet
In the past five years, warnings about peak oil have gained a lot of traction. U.S. oil production, after all, has fallen sharply since 1970. Global oil output has plateaued of late, even as China and India are demanding ever more crude. And that’s all caused prices to soar.
Yet the recent shale-oil boom in North Dakota has some analysts brushing off this gloomy perspective. A new research note (pdf) from Citigroup argues that the recent surge in North American production has “buried” the peak-oil hypothesis. New drilling technology has allowed companies to extract oil from once-inaccessible shale rock, which has, in turn, allowed the U.S. to slash its oil imports dramatically. What’s more, there are tantalizing shale deposits all around the world — in Argentina, Australia, and even France. So does that mean that, as the Citigroup analysts say, the peak-oil hypothesis is “dead”? Well, not so fast.
For one, the recent discoveries in North Dakota, while promising, need to be put in context. As a less-buoyant research note from Barclays Capital emphasizes, North Dakota’s shale plays still only produce 0.5 million barrels of oil per day. In an average year, tiny swings in China’s appetite for crude can easily gobble all of that up. What’s more, the United States still remains the largest importer of crude oil and other refined products in the world, at about 9 million barrels of oil per day. We’re still very far from erasing that dependency.
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