Study: Peak oil has come and gone
Oil prices have retreated from their $90 highs of last week, but the long-term outlook is grim indeed according to a new study from Germany:
World oil production has already peaked and will fall by half as soon as 2030, according to a report which also warns that extreme shortages of fossil fuels will lead to wars and social breakdown.
The German-based Energy Watch Group will release its study in London today saying that global oil production peaked in 2006 – much earlier than most experts had expected. The report… predicts that production will now fall by 7% a year.
The declaration of a peak last year squares with that of a renowned authority who maintains a regular correspondence with Outstanding Investments editor Byron King. He's a now-retired official from the National Iranian Oil Company who shared the following last year in one of Byron's Whiskey and Gunpowder articles:
"After some 147 years of almost uninterrupted supply growth to a record output of some 81-82 million barrels/day [mb/d] in the summer of 2006, crude oil production has since entered its irreversible decline. This exceptional reversal alters the energy supply equation upon which life on our planet is based. It will come to place pressure upon the use of all other sources of energy — be it natural gas, coal, nuclear power, and all types of sundry renewables, especially biofuels. It will eventually come to affect everything else under the sun."
The German study agrees:
The report presents a bleak view of the future unless a radically different approach is adopted. It quotes the British energy economist David Fleming as saying: "Anticipated supply shortages could lead easily to disturbing scenes of mass unrest as witnessed in Burma this month. For government, industry and the wider public, just muddling through is not an option any more as this situation could spin out of control and turn into a complete meltdown of society."
[The report's author, Joerg] Schindler comes to a similar conclusion. "The world is at the beginning of a structural change of its economic system. This change will be triggered by declining fossil fuel supplies and will influence almost all aspects of our daily life."
Key to the study's conclusions is its methodology. Unlike the International Energy Agency's forecast earlier this year (which was no walk in the park)…
the EWG study relies more on actual oil production data which, it says, are more reliable than estimates of reserves still in the ground. The group says official industry estimates put global reserves at about 1.255 gigabarrels – equivalent to 42 years' supply at current consumption rates. But it thinks the figure is only about two thirds of that.
Global oil production is currently about 81m barrels a day – EWG expects that to fall to 39m by 2030. It also predicts significant falls in gas, coal and uranium production as those energy sources are used up.
39 million barrels a day by 2030? That too squares with the forecast of Byron's Iranian contact… who projects 55 million barrels a day by 2020.
The consequences will indeed be far reaching. Byron has some thoughts on how it'll all play out… and how to protect yourself… in this special report.
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