We've written twice about "Peak Oil", the notion that world oil production has peaked with no possibliltiy of exceeding the brieflly achieved record in 2008. (http://markostake.blogspot.com/2010/01/what-exactly-is-peak-oil-part-1.html) and (http://markostake.blogspot.com/2010/01/what-exactly-is-peak-oil-part-2.html).
The notion of Peak Oil has been controversial, especially given the claims from larger Middle Eastern producers that their reserves keep growing. Most Middle-Eastern producers, including giant Saudi Arabia, have not let Western scientists access to geological data necessary to verify their reserves. However, now the conventional wisdom is shifting dramatically.
Kuwait has now admitted that global production will peak in 2014. Their work represents an updated version of the famous Hubbert Model, which correctly predicted in 1956 that U.S. oil reserves would peak within 20 years. Many researchers have since tried using the model to predict when worldwide oil production might peak.
Thier prediction is flawed. Even their own scientists acknowledge that the world continues to consume its oil reserves at a rate of about 2.1% each year. According to the Hubbert Model, that rate of decline will accelerate. They plan to continue including new data that can refine the model as time goes by.
Some, like Marko's Take, have said production has ALREADY peaked, barring the fluke discovery of some unknown humungous, readily accessible oil field. FAT CHANCE! One earlier model by Swedish researchers suggested that oil would peak sometime between 2008 and 2018. Other researchers have argued there are decades to go before oil production goes into irreversible decline. The only thing they all agree on: OIL IS FINITE!
The issue's profile was raised recently with a new report projecting increased demand. After peaking above $140 a barrel in mid-2008, crude oil prices dipped to below $40 in early 2009, as global demand tanked amid the recession. Prices have been rising ever since and are above $80 now. Recently, the International Energy Agency (IEA) said it expects demand to resume the sort of growth that was common in recent years. Much of that growth has involved the modernizing economies of China and India.
Production cycles reflect the influence of new technological innovations in the oil industry, government regulations, economic conditions and political events. The factors include the discovery of new oil deposits, the recent economic recession (aka DEPRESSION) and the rise of renewable energy. As we've pointed out, renewable energy, AT THIS TIME, is insufficient to materially dampen the supply for oil FOR YEARS!
A perfect example is Mexico. The nation, which has been a top oil exporter, has experienced cacscading production and might even begin IMPORTING oil within the decade, the New York Times reports! Its troubles have arisen from a lack of technology to explore more inaccessible oil deposits and a misguided, nationalistic policy stemming from a 1938 law that banned foreign oil companies.
More complications may still change the ultimate end date for peak oil. OPEC's latest projection suggests that world oil demand will grow by 900,000 barrels per day in 2010, according to an Associated Press story this week. That follows a period of low oil demand during the height of the worldwide recession in 2009.
There is now little doubt that Peak Oil is more than just a lunatic "doomsday" notion. As oil does peak, if even by some fluke, it occurs this year or next year instead of 2008 as we have contended, the result will be the same: MUCH HIGHER OIL PRICES!
We have two video blogs on "Peak Oil" if you wish to familiarize yourself with some of the statistics backing up our assertion. They can be found here http://youtube.com/markostaketv.