Originally posted at http://www.markfloegel.org
If you’re a long time reader of these commentaries, you may have noticed the recurrence of a limited repertoire of subjects – the Iraq war, global warming, the evisceration of civil liberties in the U.S. and peak oil. As detrimental as I believe the administration of George W. Bush has been to life on Earth, I must admit he has made my writing life easy these past six years by keeping me supplied with plenty of idiocy to point at.
All the topics above are important; some are more urgent than others. Around this time last year, I wrote that Princeton geologist Ken Deffeyes predicted world crude oil production would peak on 24 November 2005 (he later amended that prediction to 16 December 2005).
The global oil peak, like the U.S. oil peak, which was reached in the early 1970s, will not be noticed immediately, Mr. Deffeyes and other peak oil adherents say. It will only be two or three years after the peak that what has transpired will become clear. Because oil is pumped in so many places and because so oil-producing nations and oil companies have so many reasons for being less than forthright, it can take two or three years before the undeniable fact of declining production becomes clear to all.
It’s not clear yet. Reuters news service reported at the end of October a speech by Matthew Simmons, another peak oil theory proponent. Mr. Simmons noted that according to data by the U.S. government’s Energy Information Administration (EIA), the world supply of crude oil was 84.35 million barrels of oil per day in the fourth quarter of 2005, but by the second quarter of 2006, production had fallen to 83.98 million bpd. Those numbers are in line with Mr. Deffeyes’s prediction.
I sat on those numbers for a bit, to see if the trend would continue in the third quarter of 2006. It didn’t. Third quarter 2006 oil production averaged 84.98 million bpd, according to EIA.
If you want to geek out and dive into the specifics, you’ll see that OPEC producers and the nations of the former USSR hiked their production in the third quarter of 2006, but elsewhere, there are declines across the board.
Production, of course, is only one half of the peak oil equation. The other half is demand. Even if oil production continues to creep upward (as well it might, since high oil prices justify the recovery of hard-to-get-at oil, like the oil trapped in Canadian tar sands), if the demand for oil rises above supply, we have an energy crisis on our hands.
The EIA site lists global demand in 2002 at 78.08 million bpd, 2003 – 79.74 million bpd, 2004 – 82.45 million bpd, 2005 – 84.02 million bpd. Demand in the first two quarters of 2006 (the latest data available) averaged 84.15 million bpd.
All those numbers boil down to this: right now, oil production is about 830,000 barrels ahead of demand each day. That’s not a huge margin for error and the differential is widened by three facts – 1) global economies have slowed considerably in the last six months, 2) a calm hurricane season knocked no Gulf of Mexico production off line and 3) the so-far unusually mild winter in the northern hemisphere has kept demand lower than normal.
I can imagine some readers, skeptical of peak oil, might be saying at this point. “Well, he was wrong, but at least he has the courage to write about it.” Ken Deffeyes was wrong, a year ago, to predict that world oil production would not rise any higher than the average for the fourth quarter of 2005.
I hope it doesn’t spoil any gloating, but I’m not ready to call this a decided question. A graph on the EIA site tracks the price of gas over the past two years; gas in December 2006 costs more than it did in December 2005, even though we were still reeling from Katrina then and we supposedly have a steady supply now. Looking ahead, we see oil exporter Nigeria exploding, literally, with unrest. Iraq’s oil production will not get out from beneath its civil war for the foreseeable future and Iran is facing more sanctions over its nuclear program. The dictator of Turkmenistan is dead and the future may be uncertain in that oil and gas rich nation and Vladimir Putin is acting more like his old KGB self every week.
Will peak oil be passed off as misguided worrying by alarmists or are those people the few bold enough to say what they see with clear eyes? We’ll be much closer to the answer in 2007.
Happy New Year.
© Mark Floegel, 2006