Peaking' out; If you think current oil prices are highjust wait
Geologists aren't finding major new oil fields anywhere in the world and most do not expect to do so. Existing fields will reach their maximum output within a few dec-ades.
Meanwhile, crude oil is being consumed at an ever-faster pace, not only in the United States and Europe but also in rapidly developing economies like China and India.
That combinationfalling reserves and rising demandcould produce a global economic crisis unlike any in history.
Over the past four years, experts have debated the concept of oil "peaking"that is the point the world's crude oil output will reach its maximum, after which supplies will inevitably dwindle. Oil is not a renewable resource. It takes nature millions of years to form an oil field, and when the oil is gone, it's really gone.
The issue should get far more attention than it has. Instead, the energy legislation recently passed by the U.S. House doesn't even hint at the problem.
Despite the Bush administration's efforts to promote additional drilling, the United States can't drill its way out of the mess. Accelerated domestic production just means we will have less oil left to cushion the blow when peaking occurs.
The real answer must be development of new fuels and engine technologies. America should invest in such projects and embrace policies that encourage consumers to switch their fuel use and vehicle purchases.
There's widespread consensus that peaking will occur globally in the foreseeable future, but disagreement about when it will happen, says a March 2005 report by U.S. Department of Energy consultants. The report cited six experts who say peaking could occur between 2006 and 2010, three who think it will happen between 2010 and 2020, two who say it will hit between 2020 and 2025, and only one who says there will be no peak.
Since creating new fuels and engines will take years, even optimistic scenarios leave little time to prepare for the inevitable economic transition.
If the world prepares 20 years before peak oil production, the transition likely will be smooth and economic disruptions minor, the report said. Since the most optimistic projections say peaking will happen just 20 years from now, time is running out even under the best scenario.
If the world waits until a decade before peaking occurs, the global economy will face significant energy shortages for a 10-year period, the report warned. So if mid-range scenarios are right about when peaking will occur, the global economy already is headed for trouble. But if the world waits until the crisis is imminent, in other words until the oil supply starts to decline in earnest, economic dislocations may last for decades.
Conservation will be part of the answer, because postponing the day of reckoning could buy time to develop alternatives. But President Bush and the Republican-dominated Congress steadfastly oppose mandating tougher fuel-economy standards.
It's possible to make gasoline and diesel substitutes from farm products such as corn and soy. But it's unclear if the world's farmers can grow enough materials to significantly offset the crude oil supply. (Daily oil consumption is now a staggering 84 million barrels per day.) Even so, it's obviously worthwhile to encourage a shift from crude oil to biomass fuels, and make alternative fuels more economical and environmentally friendly.
Other alternatives also present challenges. For example, oil from tar sands is filled with polluting impurities and requires extensive processing to be made into gasoline. If tar sands are widely developed, their proponents must solve the environmental concerns.
Renewable energy such as wind and solar could reduce the need to burn crude oil or even natural gas to generate electricity. But to date, solar-powered vehicles haven't gotten much beyond the experimental stage, and cars powered only by electricity still don't offer the zoom to attract many consumers.
Hybrid vehicles hold great promise because they are partly powered by electricity. Although they currently occupy just a market niche, they're becoming more popular as gas prices rise. But the Bush administration seems uninterested in policies that might encourage consumers and businesses to buy (and thus manufacturers to build) more hybrids.
The demand for liquid fuels is so massive that none of these alternatives by themselves can replace gasoline and diesel. Taken as a whole, though, they could reduce the demand for crude oil, giving vehicle manufacturers time to invent alternatives to the internal combustion engine before peak oil production occurs.
What's needed first, though, is courageous political leadership to focus attention on the problem. Bush and Congress must not squander the years that remain before peak oil production actually occurs. Solving the puzzle must become a national priority.