The term “Peak Oil” refers to a global situation where the extraction of oil becomes more difficult and expensive due to dwindling oil reserves. Should the warnings of peak oil be true, the cost of everything from travel to plastic-based household items would increase dramatically. According to peak oil experts, the apex of available oil reserves has already been passed and the ramifications of peak oil will start being felt by consumers across the globe. While some of that pain has been delayed due to recessions and slower growth in the world’s large economies, these experts expect that economic recovery will spur greater demand from an increasing number of people. This, combined with decreasing supplies of the resource in demand will result in a spiral of increasing prices.
Peak oil is not a new concept, with the peak in U.S. production in 1970 predicted by M. King Hubbard in 1956. At the time, the U.S. was the world’s largest oil producer and the declining production ignited oil exploration and production across the globe, particularly the Middle East and Mexico. The two largest oil fields in the world, Ghawar in Saudi Arabia and Cantarell in Mexico were brought on line in relatively quick order.
Peak oil has largely been dismissed by global governments and OPEC but there is persuasive evidence that that these two fields and others ranked in top ten of the world’s largest oil reserves are producing ever decreasing amounts of petroleum. The decreased production at these fields is also important due to the fact that they produced the cleanest and highest quality oil. Cantarell peaked in 2004 with production dropping drastically ever since. Saudi Arabia does not share data on field production but computer models and overall production levels indicate that the Ghawar Field, which is the world’s largest, peaked in early 2006.
Peak oil continues to be hotly debated but if production levels at these two fields are any indication, the issue cannot be ignored and concentrated efforts must be made to conserve the oil that is left and develop alternatives to fossil fuel.
Increasing miles per gallon and other conservation efforts are gaining traction and are finding their way into mainstream thinking. Alternative energy production, particularly wind and solar, are making inroads as well but their production as a percentage of whole remains in the 1% to 2% area. On a level playing field these two alternatives are still not competitive with power generated by fossil fuel, which is still relatively cheap. These alternatives will become more competitive as technological advances decrease costs but the biggest trigger will probably arrive in the form of skyrocketing energy prices as demand increases.
News by Anthony Ricigliano