When Oil Peaks ...
Fertilizer, DVDs, rubber, cheap flights, plastics and metals. None of these things have anything in common, right? Think again. An ingredient in all of them, in one form or another, is oil.
Oil is the precious primer of the world economic engine, making it hum. Oil provides 40% of the world's energy needs, and nearly 90% of all transportation. It's also a building block for many products and goods. Cut supplies of this natural resource and life as we know it could change.
But while some experts say the world runs no risk of running out of oil, others disagree. Sounding the alarm is the Association for the Study of Peak Oil and Gas. Its president is Kjell Aleklett, a physics professor at Sweden's Upsalla University.
"[During] the next 30 years we will find more than 150, maybe 200, but probably not, but 150 billion barrels of oil is roughly what you're going to find," Aleklett said. "And during the same period, we will consume 1,000 [billion barrels of oil]. So that means we are now digging deep into the reserves we have at the moment."
Aleklett is among a group of international experts - ex-oil executives and geologists - who believe there is less oil percolating under the ground than the oil industry acknowledges. They say the world has burned up nearly half of all its oil - an estimated 900 billion barrels of crude.
In industry jargon, that halfway point is the "peak", after which reserves no longer rise but drop. No one denies this will happen eventually. After all, oil is a finite resource. But these oil skeptics - so-called "peak" oil analysts - say the "peak" is coming sooner rather than later, maybe even in 2008. They paint a gloomy picture: falling oil supplies plus rising demand will equal shortages - and perhaps a rising risk of war.
Mainstream experts, however, dismiss such talk as scaremongering. They say predictions about the end of petroleum have been made since shortly after the first commercial oil rig went up in western Pennsylvania back in 1859. The reality, they say, is that supplies are growing, with more oil coming out of Iraq, Russia, the Caspian Sea and elsewhere.
And if supplies dip and prices rise, these experts say that will spur the industry to explore for more. Plus, breakthroughs in technology will make it easier to extract oil hard to get at now, such as the petroleum locked in sands in Canada.
Michael Lynch, a critic of the peak oil movement, said the movement's guru, geologist Colin Campbell, has a long record of making inaccurate predictions. "The people who predict peak oil have been predicting it any day now for 15 years," Lynch said. "Like Colin Campbell said in '89 that this is the peak right now, in '91 he said the peak is next year, and in '95 he said it's in '97 and so forth. I've generally been predicting continued rise [in oil supplies] since I started working on this; really making forecasts in the late '80s. I think over the next 30 years you won't see a peak unless it's from the demand side."
But with oil breaking the US$50-a-barrel barrier in October, and amid other concerns, the peak oil crowd is grabbing more attention. One of their most startling claims is the following: six barrels of oil are now used for every new barrel discovered. Major oil finds - that is, more than 500 million barrels - peaked in 1964. In 2000, there were 13 such discoveries; in 2001, six; in 2002, two; and in 2003, zero - the first time that had ever happened.
The "peak" oil analysts also say oil-industry investment patterns seem to indicate that there isn't much oil left to discover.