Oil: When will we open our eyes?
In 2005 an event occurred which should have sent shock waves throughout the world. The Kuwaiti Government admitted that the Burgan oil field had reached peak production at 1.7 million barrels a day. The world’s second biggest oil field was in decline. The main stream media did not take notice. In fact, it seems that no one did. A google search will find just one article reporting the story.
The third largest field in the world, Mexico’s Cantarell, peaked in 2006 and production has fallen at an alarming rate. The chief executive of the state oil company Pemex expects production to fall by 14% per anum until 2015. Oil production peaked in the United States in 1971 and has been declining consistently ever since, despite the many billions spent on new technologies and advanced exploration techniques. Production in the North Sea peaked at the turn of the millennium, despite the discovery of the 500 million Buzzard field in 1999. At present consumption, this field would supply the world for a little over five weeks. Oil production is also falling in Venezuela and Russia.
The oil price is now at an astonishing $135 per barrel. It hovered at or below 25 dollars a barrels for much of the ’80s and 90’s. During the Iran-Iraq war and the first Gulf war Saudi Arabia, at the behest of their American paymasters, opened the taps on their giant fields flooding the market with oil. Prices soon began to fall. Saudi Arabia’s famed spare capacity ensured a relatively stable oil price for much of the last twenty years. Why then have they not flooded the market to ease the present crisis?
Why have none of the major oil producers increased their production? The price, after all, has never been better. The answer may be that the Saudis too are close to their peak. Saudi Arabian production appears to have fallen in recent years and it seems likely that the biggest oil field in the world, Ghawar, is at or near peak production.
If the biggest fields in the world are running out, where are we going to find more oil? Production is declining at a steady pace in the US, China and Europe, so demand for Middle Eastern and Caspian oil is only going to increase.
Peak oil, rather like the theory of evolution, is much maligned today. I humbly suggest that we should not necessarily believe everything that the preachers and oil executives tell us about their particular areas of interest. When Marion King Hubbert predicted that US oil production would peak in the early 1970s, he was laughed at by the ‘experts’. He was, of course, vindicated. I hear that the church too has recently apologised to Galileo. He was, it appears, right all along. The world is not actually at the centre of the universe. The loudest and most respected voices are not always correct. Oil is not a magical substance dropped into our volcanoes by Lord Xenu. It is a finite resource, created millions of years ago. We have got to face the uncomfortable reality that we have used about half of the oil on the planet, and that the remaining oil will be more difficult to find and cost a fortune to produce. Forget about global warming and the global credit crunch, this is the problem that will define the next century. What do we do after peak oil? Someone better find the answer quick or we are in for rather unpleasant future.