Running out of oil

Running out of oil

Yesterday, I did a blog entry looking at how the world was heading into a new crisis, this one with oil, and how it would be worse than the credit crunch.

Now The Independent runs an interview with the world's top energy economist Dr Fatih Birol from the International Energy Agency (IEA) in Paris who warns that the world's supply of oil is running out fast.

The agency has done an assessment of 800 oil fields in the world, covering three quarters of global reserves. It 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. According to the IEA, the decline in oil production in existing fields is now running at 6.7% a year compared to the 3.7% decline it had estimated in 2007. So nearly double the rate.

Birol told The Independent: "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. 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. 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."

Writing in Forbes, commentator Chris Nelder says we will never see cheap fuel again.

"Oil production is expected to go into terminal decline around 2012. The principal reason is that the largest and most productive fields are becoming depleted while new discoveries have been progressively smaller and of lesser quality. Discovery of new oil peaked over 40 years ago and has been declining ever since despite furious drilling and unprecedentedly high prices.

"When it begins to decline, rate of crude production is projected to fall at 5%, or over four mbpd, per year—roughly equivalent to losing the entire production of Latin America or Europe every year. The decline rate will likely accelerate to over 10% per year by 2030."

Still, as Nelder says, there might be a positive in this if we can learn how to harvest the Earth's wind, solar, geothermal and marine resources.

But that's some way off. Looking at how hard it will be to get agreement on climate change at Copenhagen at the end of the year, we are nowhere near that stage.


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