Peak Oil Facts: Where Do We Stand?

Peak Oil Facts: What Is Peak Oil?

Peak oil refers to the time when our ability to extract increasingly larger volumes of crude oil will plateau. After this time, production is forecast to drop leaving an ever widening gap between a nation's oil consumption and its ability to contribute to the fuel supply. While the occurance of Peak Oil in a country with small oil reserves is not a major cause for concern, the impact of OPEC countries which account for over 75% of the world's oil reserves reaching Peak Oil will be a significant turning point in human history.

Global energy demand is still growing steadily. This growth is not linear but is exponential in nature and so the energy needs of each nation are growing larger every year and the amount this demand increases by anually is also getting larger. Oil exploitation and coal mining has allowed this trend to develop and it is fair to say that the economies of the developed world are built upon fossil fuels.

For the majority of nations Peak Oil production has already passed. This is shown in the graph below which shows the data for non-OPEC and non-former USSR countries. This is to be expected; with the majority of oil reserves being located in a few countries, those with smaller deposits will run out more quickly.

The United States has a diminishing supply of proven reserves. The US currently produces around 25% of the oil consumes in that country with the rest being imported. According to the stated reserves, the US can only sustain this production for another 11 years, not accounting for increasing demand. Even with the maximum possible oil extraction from known sites and more recently exploited locations like the Bakken Oil Fields, the US will not be able to produce enough oil to match its consumption for any more than 40 years.

Peak Oil Facts: What Is The Real State Of The Reserves?

Statements of supply are made in terms of current production rates. For example, Canada has the world's second largest proven oil reserves and has enough to supply oil to the market for 120 years at current the production rate. Current production statements are also given for the other major oil reserves. OPEC countries have stated their reserves to be between 80 and 180 years woth of supply at current rates. However, these estimates do not account for energy use growth so the exact amount of time these resources will last is unclear.

This lack of clarity is compounded by the unavailability of well data from OPEC countries, so their claims cannot be substantiated. Additionally, OPEC countries agreed in 1985 to link their production to their proven reserve estimates. Very quickly this resulted in the majority of OPEC countries increasing their estimates of reserves by up to 300%. These estimates have either held steady or continued to rise since this time. These suspicious claims cannot be investigated because the data these claims are based on is not available. This sudden and unexplained jump in estimated reserves casts a shadow over the predicted lifespan of current production levels from OPEC countries.

Statements of supply availability have large political implications. It is clearly in the best interests of oil based economies, such as Saudi Arabia and the USA, to claim that they are not approaching or have passed Peak Oil production. This would cause loss of confidence in the market, panic buying and a whole raft of undesirable political and civil consequences. These are consequences that will be worldwide problems if our dependence on oil is not addressed very soon, without even considering environmental concerns.

The question of whether we have reached global Peak Oil or not cannot be definitively answered due to OPEC policies. Preparations for life after oil need to be made whether or not this has occured, and this needs to be the focus of Governments in this early part of the 21st century.