Does Peak Oil Signal The End?
World News Australia reporter Aarti Betigeri has been investigating the future of the world’s oil reserves. In this special report she talks to oil experts about ‘peak’ oil and what some believe is the beginning of the end for carbon based fuels.
Petrol prices may be steady for now, but there are fears they're set to reach even higher levels than we've seen in recent months.
The reason for this, experts say, is simply because we're soon going to start running out of oil.
The argument that oil supply is running out is one that is running hot in business and scientific circles but is only just starting to gain attention in the Australian media.
Peak oil is the name applied to the theory that after half the world's oil has been drilled, oil prices will spiral out of control, leading to mayhem for the global economy.
With demand for oil rising globally, particularly from China and India, the frenzied search for new oilfields has largely come up empty.
At the same time, many older fields have gone into decline, with more effort put into producing less oil.
"We've come to the end of the first half of the age of oil, not to the full end of the age of oil, just the first half of it," said Colin J Campbell, oil geologist and chair of the Association for the Study of Peak Oil.
Dr Campbell is considered one of the leading world authorities on the subject.
"But the significant point is, during the first half we've seen the rapid expansion of industry, transport, agriculture, and indeed financial capital, which has allowed the world's population to grow sixfold, exactly, in parallel with this growing oil supply," he told SBS.
It is not known when peak oil will occur, with estimates ranging from next month to 2025. But many experts say it is not the date that matters, but rather what we do as we enter the downslope of oil availability.
The main issue at stake is not so much concern over oil running out, but rather, that there will not be enough to keep oil-dependent economies — including Australia's — functioning properly.
"I think the recent volatility in the price of oil is the first indication of what's going to happen," said Professor John Mathews, who teaches business strategy at Sydney's Macquarie Graduate School of Management.
"The price of oil is not really dictated by recent events like Hurricane Katrina, but it hasn't really affected global oil supplies," he said.
It is what happens in the Middle East that is the key, he said, in regards to their oil reserves, however how much oil is left there is a closely-guarded secret.
"We can say that peak oil will be the prime determinant of oil price in the future. I am sure it will rise above at least $100 per barrel in the next 12 months."
Alternative fuels are already being investigated , with many major oil companies already moving towards diversifying.
Chevron in the US has put out a range of ads warning that "the end of easy oil is over", urging consumers to work with them to counter dwindling supplies.
And BP recently rebranded with a sun logo, to indicate its own move towards alternative energies such as solar power.
Those who support a ‘soft landing’ view of resource depletion believe that it will take careful management, greater use of of existing resources and a gradual shift to alternative energy sources to allow us to move relativelly smoothly away from the hydrocarbon economy when that transition is required.
"When oil is approaching its peak production, prices will rise — and they may have risen already, they have doubled or even trebled in recent years," said longtime oil consultant Ericks Velins.
"What the price rise means is that it slows down economic growth, or in other words, we'll use less oil. At the same time an increased price actually stimulates the search for alternative fuels as well as for more efficiencies in the use of these fuels," he said.
"Oil companies have been involved in producing the tar sands in Canada for many years, oil companies have been involved in producing heavy oils in Venezuela for some time.
"But oil companies are just now starting to look at plans for producing oil from natural gas, in Qatar, and of course oil was produced from natural gas in South Africa for many years as well. So these are the more immediate feasible alternatives."