Oil demand fuels pump fears
TASMANIAN business manager Craig Farrer feels a little nervous when he pumps fuel from the bowser.
Mr Farrer, 36, is one of thousands of Tasmanians who commute to work.
Many of us live in satellite centres like Port Sorell, Paper Beach, Boat Harbour and Blackmans Bay and travel to work in centres like Burnie, Devonport, Launceston and Hobart.
A restaurant manager, Mr Farrer bought a house at Clifton Beach, about 30km from Hobart where he works.
"I love living out here, it's like going to the shack each night, it's relaxing," Mr Farrer said.
Mr Farrer spends about $60 a week on fuel.
His weekly fuel bill could balloon to $180 in three years, says the theory of one oil expert.
Ali Samsam Bakhtiari, a 30-year veteran with the Iranian National Oil Company, said Aussie bowser prices could reach $3 a litre in three years -- a nightmare scenario for Mr Farrer.
"I'd have to think about selling and moving closer to the city," Mr Farrer said. "I'd stress the budget."
Mr Farrer said he would have to consider sharing travel with friends and neighbours to cut costs.
Dr Bakhtiari is one of many oil academics and experts predicting a global oil crisis.
These experts say world oil reserves are pumping near capacity.
With added demand from China, India and other fast growing Asian economies, demand will outstrip supply.
Some estimate demand will rise more than 50 per cent in the next 20 years.
The moment demand outstrips supply prices will start to rise -- and keep rising.
That is the theory, anyway.
Dr Bakhtiari predicts world production will peak by 2007, then decline.
Geophysicist Kenneth Deffeyes, of Princeton University in New Jersey, has warned about an impending oil crisis for years.
In Hubbert's Peak: The Impending World Oil Shortage, Professor Deffeyes says the threshold when demand outstrips supply will be crossed this year.
In 1956 another geophysicist, M. King Hubbert, predicted US oil production would peak in the 1970s. He was ridiculed but later proved right.
Professor Deffeyes' predictions are gaining credibility with oil prices this year already rising 30 per cent.
Concerned scientists and retired industry experts have formed ASPO, the Association for the Study of Peak Oil and Gas.
US energy sector investment banker Matthew Simmons shares ASPO's concerns and is worried at the world's lack of attention to the problem.
"I am still amazed at the limited knowledge that exists, even in the US or within our major oil and gas company's senior management, about this topic and its dire consequences," Mr Simmons said after an ASPO meeting.
ASPO, using data that is very different from that published by oil trade journals, predicts the oil threshold, when demand outstrips supply, will happen in 2010.
With a predicted 40 years of oil remaining at current production, ASPO scientists fear a decline in production will see a huge power shift to the Middle East, which controls two thirds of the world's oil.
Production is declining in the US, the North Sea and Australia.
Oil from the Middle East is expected to decline from about 2010.
A common theory is the rising demand and falling supply will spark further political instability and cause a global recession.
The recession will in turn reduce oil demand and extend the age of oil.
West Australian scientist Bruce Robinson reckons major oil companies are consciously ignoring the problems -- an "HIH or Enron factor" is at work with oil companies producing highly optimistic and unrealistic data about the impending crisis.
Predictions by GeoScience Australia and Woodside Petroleum show Australia's oil production will fall significantly this decade.
Australia has been virtually self-sufficient but GeoScience predictions in 2001 show Australia will import 60 per cent of its oil by 2010.
In the report World Oil Markets and the Challenges for Australia, Woodside predicts serious trade deficit issues.
Australia's trade in liquid hydrocarbons would go from a surplus of $1.2 billion in 2001-02 to a deficit of $7.6 billion by 2009-10.
Australian Bureau of Agricultural and Resource Economics (ABARE) projections released this month are more optimistic than GeoScience data.
ABARE suggests Australia will be importing half of its oil by 2020 unless significant new fields are discovered.
The US Department of Energy has put the oil threshold further out -- more like 20 years away.
Major oil companies Shell and Exxon are also more optimistic expecting the threshold to be decades away.
Greg Bourne, regional president BP Australasia, presented a paper at an energy conference in WA last year putting the threshold more than 20 years away.
"While oil and its derivatives was the fuel of the 20th century, it will start to run out this century, with Australia facing a downturn in domestic production and rising imports," Mr Bourne said.
"At BP our best estimate of when global shortages of oil will begin to bite deeply is between 20 and 40 years.
"Much depends on further exploration outcomes and geo-political uncertainties, including whether we have more war or achieve peace in the oil-rich Middle East."
Dependence on the Middle East for oil is a major US election issue.
Democrat presidential candidate John Kerry unveiled an ambitious $US30 billion plan this month to make the US less dependent on overseas oil.
More than 60 per cent of America's fuel is from the Middle East.
Just this month threats of sabotage brought Iraqi oil production to a halt and caused oil prices to race to record highs.
Crude oil went above $45 a barrel in New York -- with some predicting it could go over $100 in the current climate.
But while the oil prices are making many tremble, they are cause for celebration to others.
High oil prices are doing wonders for the international oil companies' bottom lines.
Exxon Mobil last month reported it earned almost $6 billion in the second quarter of the year, a record for any company in a three-month period.
Share prices in Saudi Arabia and Qatar rose about 40 per cent in the first seven months of the year.
The economies of Saudi Arabia, Kuwait and Qatar are expected to expand by between 8 per cent and 10 per cent this year.