[p2p-research] Peak Oil confirmed by IEA

Michel Bauwens michelsub2004 at gmail.com
Sun Aug 16 12:26:07 CEST 2009


The world is heading for a catastrophic energy crunch that could cripple a
global economic recovery because most of the major oil fields in the world
have passed their peak production, a leading energy economist has warned.

Higher oil prices brought on by a rapid increase in demand and a stagnation,
or even decline, in supply could blow any recovery off course, said Dr Fatih
Birol, the chief economist at the respected International Energy Agency
(IEA) in Paris, which is charged with the task of assessing future energy
supplies by OECD countries.
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In an interview with The Independent, Dr Birol said that the public and many
governments appeared to be oblivious to the fact that the oil on which
modern civilisation depends is running out far faster than previously
predicted and that global production is likely to peak in about 10 years –
at least a decade earlier than most governments had estimated.

But the first detailed assessment of more than 800 oil fields in the world,
covering three quarters of global reserves, has found that most of the
biggest fields have already peaked and that the rate of decline in oil
production is now running at nearly twice the pace as calculated just two
years ago. On top of this, there is a problem of chronic under-investment by
oil-producing countries, a feature that is set to result in an "oil crunch"
within the next five years which will jeopardise any hope of a recovery from
the present global economic recession, he said.

In a stark warning to Britain and the other Western powers, Dr Birol said
that the market power of the very few oil-producing countries that hold
substantial reserves of oil – mostly in the Middle East – would increase
rapidly as the oil crisis begins to grip after 2010.

"One day we will run out of oil, it is not today or tomorrow, but one day we
will run out of oil and we have to leave oil before oil leaves us, and we
have to prepare ourselves for that day," Dr Birol said. "The earlier we
start, the better, because all of our economic and social system is based on
oil, so to change from that will take a lot of time and a lot of money and
we should take this issue very seriously," he said.

"The market power of the very few oil-producing countries, mainly in the
Middle East, will increase very quickly. They already have about 40 per cent
share of the oil market and this will increase much more strongly in the
future," he said.

There is now a real risk of a crunch in the oil supply after next year when
demand picks up because not enough is being done to build up new supplies of
oil to compensate for the rapid decline in existing fields.

The IEA estimates that the decline in oil production in existing fields is
now running at 6.7 per cent a year compared to the 3.7 per cent decline it
had estimated in 2007, which it now acknowledges to be wrong.

"If we see a tightness of the markets, people in the street will see it in
terms of higher prices, much higher than we see now. It will have an impact
on the economy, definitely, especially if we see this tightness in the
markets in the next few years," Dr Birol said.

"It will be especially important because the global economy will still be
very fragile, very vulnerable. Many people think there will be a recovery in
a few years' time but it will be a slow recovery and a fragile recovery and
we will have the risk that the recovery will be strangled with higher oil
prices," he told The Independent.

In its first-ever assessment of the world's major oil fields, the IEA
concluded that the global energy system was at a crossroads and that
consumption of oil was "patently unsustainable", with expected demand far
outstripping supply.

Oil production has already peaked in non-Opec countries and the era of cheap
oil has come to an end, it warned.

In most fields, oil production has now peaked, which means that other
sources of supply have to be found to meet existing demand.

Even if demand remained steady, the world would have to find the equivalent
of four Saudi Arabias to maintain production, and six Saudi Arabias if it is
to keep up with the expected increase in demand between now and 2030, Dr
Birol said.

"It's a big challenge in terms of the geology, in terms of the investment
and in terms of the geopolitics. So this is a big risk and it's mainly
because of the rates of the declining oil fields," he said.

"Many governments now are more and more aware that at least the day of cheap
and easy oil is over... [however] I'm not very optimistic about governments
being aware of the difficulties we may face in the oil supply," he said.

Environmentalists fear that as supplies of conventional oil run out,
governments will be forced to exploit even dirtier alternatives, such as the
massive reserves of tar sands in Alberta, Canada, which would be immensely
damaging to the environment because of the amount of energy needed to
recover a barrel of tar-sand oil compared to the energy needed to collect
the same amount of crude oil.

"Just because oil is running out faster than we have collectively assumed,
does not mean the pressure is off on climate change," said Jeremy Leggett, a
former oil-industry consultant and now a green entrepreneur with Solar

"Shell and others want to turn to tar, and extract oil from coal. But these
are very carbon-intensive processes, and will deepen the climate problem,"
Dr Leggett said.

"What we need to do is accelerate the mobilisation of renewables, energy
efficiency and alternative transport.

"We have to do this for global warming reasons anyway, but the imminent
energy crisis redoubles the imperative," he said.

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