Running Out Fast?

There are two starkly different views on the state of the world’s oil reserves.

The rosy view is that there are enough “proven” oil reserves to ensure humanity with another 40 years of consumption at current rates.

The not-so-rosy view — actually, the catastrophic view — is that humanity is rapidly trundling toward disaster, which could be as close as 4 years away.

The rosy view was expressed again yesterday following publication of BP’s Statistical Review of World Energy.

The London-based Oil Depletion Analysis Center isn’t buying it. The center predicts that global production of oil will peak within the next four years, followed by increasingly steep declines and, ultimately, drastic changes in the global economy and the way we live our lives.

The concerns were reported today by Daniel Howden of the The Independent, a London-based newspaper. According to Howden, some experts, including Colin Campbell, a former chief geologist and executive for several major petroleum companies, maintain that we already have reached what is known among energy analysts as the peak oil point — the point at which the most accessible oil already has been pumped out of the earth. Even if less accessible oil from deep sea reserves, polar regions and other sources is extracted, the peak will come as soon as 2011, Campbell says.

Until now, it’s been like drinking from a magical glass that replenishes itself at the rate at which we drink from it. But if Campbell and other peak oil proponents are right, we soon will be drinking from a half empty glass.

What is certain is the dwindling margin between demand and supply — one that all but disappeared last year, Howden writes.

“If consumption begins to exceed production by even the smallest amount, the price of oil could soar above $100 a barrel,” he writes, adding that a global recession will follow.

While such a calamity could not be addressed by the energy strategies in place today, an Alabama Cooperative Extension System renewable energy specialist says that the theory at least should drive home how volatile the energy issue has become.

For his part, Hall has seen this volatility firsthand — from the complacency that follows when energy prices drop periodically, to the vague sense of dread people express when they read about catastrophic predictions such as those associated with peak oil theory.

Whatever the case, Hall says all of these factors should motivate all Americans to put themselves firmly on the road toward energy dependence, with a heavy emphasis on renewable energy.

Hall is an especially strong admirer of Brazil, which “created a blueprint for energy efficiency and stuck with it through thick and thin” until it had successfully weaned itself off oil.

Moreover, Brazil is now one of the world’s leaders in renewable energy resources, with roughly 60 percent of its sugar production invested in ethanol. While renewable energy supplies only 6 percent of the national energy demand in the United States, ethanol alone accounts for 13.5 percent of Brazil’s energy use. Ethanol fuels nearly half of Brazil’s automobiles — a share that is increasing steadily, thanks to the advent of flex-fuel vehicles, which run on gasoline, ethanol or a mixture of both.

What’s badly needed now, Hall says, are government incentives aimed at protecting the emerging alternative fuels industry while it is still in its infancy.

Part of this should include steps to ensure that renewable energy prices remain high enough to attract investors — something only governments can provide at this point, he says.

Posted by Jim Langcuster at June 14, 2007 02:52 PM | TrackBack