Conference Warns: Peak Oil Imminent with Severe Economic Consequences

A Peak Oil Conference, Entering the Age of Oil Depletion, organized by Depletion Scotland and the Oil Depletion Analysis Center (ODAC), held in Edinburgh Scotland is generating a lot of publicity. Most of the speakers are familiar to peak oil aficionados.  A complete summary of the proceedings is too lengthy for me to enumerate, but I will give a few and references to all of the articles I have found.

Nothing really new, but for neophytes, in alphabetical order, the dates when peak oil will occur as reported at the meeting.

• Kyjell Aleklett of ASPO, "Association for the Study of Peak Oil & Gas", in a presentation called "The oil supply tsunami alert" said the peak was 2008 in 2004.  Now it might be that the peak will come even earlier. ... we will not know when have peaked until we have passed the threshold.
• Colin Campbell was quoted by John Vidal of the Guardian as saying "The real  issue is not the actual date of peak production - which I believe is next year (2006) - but what happens during the decline of production.
• Also in the Guardian, Vidal referred to the International Energy Agency (IEA) ... as saying that peak oil will arrive "sometime between 2013 and 2037", with production thereafter expected to decline by about 3% a year.  Reuters reported that IEA says that world oil oil output should not peak before 2030.
• Dr Jeremy Leggett, a member of the UK government's Renewables Advisory Board and a former oil geologist was quoted by the BBC as saying "Most of us who are worried about this issue would say definitely it will happen some time this decade. ... 2008 might be the best guess, plus or minus two years. It's certainly a lot earlier than almost all the world is assuming at the moment. ... We need to take this issue as seriously as we take the war on terrorism - more so.  In a very good article "The twilight zone" that appeared in The Independent, he previewed his presentation saying "But no one can agree when we'll reach the point at which half our oil reserves are used up."
• Matthew Simmons, chairman of a Wall Street energy investment company, was reported by Vidal as saying that peak Oil was rapidly approaching even as demand was increasing.
• Chris Skrebowski, of the the Energy Institute in London told Vidal, I estimate that we have, at best, 32 months before (the crisis) hits."
• According to Vidal "Analysts increasingly say that official US Geological Survey (USGS)estimates that it (peak oil) will not happen for 35 years are over-optimistic."
• Brian Wilson, former UK energy minister  "my working assumption is both global oil and gas reserves continue to be significantly underestimated."

Several comments were made on the economic implications of peak oil.

• Aleklett said that "The fact that the price of crude oil is approaching $60 per barrel and the production costs for the barrel fluctuates between $1 and $10 shows that common economical theories are not valid any longer, something new is in the air and the question how to interpret today's vibrations."
• Hirsch in his recent report to DOE was quoted by Aleklett as claiming that "World oil peaking represents a problem like none other.  The political, economic, and social stakes are enormous.  Prudent risk management demands urgent attention and early action. If you start a serious program today it will take 20 years before completion.
• Campbell said "Oil companies are moving from denial to confession ... I think we are in for an extended period of restricted economic activity.  I do not think we will adjust very smoothly."
• Jim Meyer of ODAC was reported by Reuters as saying said "There's definitely a role for government intervention -- I don't think the markets can take care of it. ... Oil is not running out, but growth in oil is, and we need to talk about it"
• Chris Skrebowskie, of the Energy Institute in London said that a major financial crises could occur as soon as 2008.
• Simmons in the Reuters article said "Prices are going way higher -- $100 isn't very expensive. ... It could be catastrophic if we do not anticipate when peak comes."

Other noteworthy comments were:

• The world's top exporter Saudi Arabia said last week it is ready to increase its output capacity to 15 Million barrels per day, from around 11 million now, and sustain that level for 50 years. Earlier reports said they plan to have a capacity of 12.5 mbd by 2009 and 15 mbd at a later date.
• Leggett lists six shocking reasons that define "why we have to act now."  He is very concerned that no alternatives reduce greenhouse emissions to an acceptable level.  "For environmentalists this will be the final battleground."
• Wilson said "the biggest global challenge in energy terms was persuading the United States to reduce its own oil consumption"  ... He attacked America's "ever-increasing and ever-more profligate application"

My position on when peak oil will occur has not been firmly established, I am a "early topper", my current guess being between 1 and 5 years.  The conference had very little to say about what to do about peak oil. This seems more important, at this time, then trying to figure out who is the best forecaster and procrastinating on the economic implications, which I think are fairly obvious.  The conferences most useful purpose, hopefully was to help make people aware of the problem and the urgency to do something about it.  My post "Proven Technologies for the Next 20 Years" sums up what I think we have to do.  Unconventional oil may play an increasing role, but energy usage in production may limit the ability to sustain production.  Biofuels will have to take Brazil's model of becoming totally independent of imported oils through the use of biofuels, ethanol and biodiesel.  New breakthroughs in enzyme technology should allow widespread production of ethanol, at more economical prices, within a few years.  Huge investments will have to be made in coal liquefaction and Fischer-Tropsch diesel to fill the gap that biofuels cannot meet.  Higher fuel efficiency standards, more light vehicle diesels, hybrid cars and plug in hybrid cars will conserve substantial quantities of petroleum fuel.  Fuel cells and the hydrogen economy will not play a significant role in the next 20-30 years, if ever.