As gasoline prices near $3 per gallon in parts of the country spurring inflationary concerns, a debate rages amongst informed geologists on whether this is a temporary crisis or an omen of times to come. The AP’s Matt Crenson takes a look at this discussion and emerges with a lot of interesting information.
Could the petroleum joyride — cheap, abundant oil that has sent the global economy whizzing along with the pedal to the metal and the AC blasting for decades — be coming to an end? Some observers of the oil industry think so. They predict that this year, maybe next — almost certainly by the end of the decade — the world’s oil production, having grown exuberantly for more than a century, will peak and begin to decline.
And then it really will be all downhill. The price of oil will increase drastically. Major oil-consuming countries will experience crippling inflation, unemployment and economic instability. Princeton University geologist Kenneth S. Deffeyes predicts “a permanent state of oil shortage.”
[…]
Deffeyes thinks the peak [in world oil production] will be in late 2005 or early 2006. Houston investment banker Matthew Simmons puts it at 2007 to 2009. California Institute of Technology physicist David Goodstein, whose book “The End of Oil” was published last year, predicts it will arrive before 2010.
The exact date doesn’t really matter, said Hirsch, because he believes it’s already too late. In an analysis he did for the U.S. Department of Energy in February, Hirsch concluded that it will take more than a decade for the U.S. economy to adapt to declining oil production.
As The New Yorker‘s John Cassidy noted in a must-read July 2003 article,
Some oil experts accuse Deffeyes and his colleagues of exaggerating. Daniel Yergin recently pointed out, in an article in the Financial Times, that improvements in drilling technology and further exploration could greatly boost current estimates of how much oil is left. “The point here is that world oil supplies are not some finite constant sum,� Yergin wrote. “Rather, the picture is dynamic and changing.�
Nevertheless, the methods used by Deffeyes in his 2001 treatise Hubbert’s Peak (another must-read for those interested in the [possibly] impending oil crunch) have been proven correct in the past. In 1956, Shell Oil geologist M. King Hubbert used the rate of new oil discoveries to predict that American production would peak in the year 1970. At the time, fellow geologists scoffed at the claim, but come 1970, Hubbert was proved correct. So although the annointed petroleum guru Daniel Yergin might not believe Deffeyes’ claims that worldwide oil production will peak at the end of this year or the beginning of next year, history is on Deffeyes’ side in this battle of minds.
So, what does this all mean?
First of all, President Bush’s energy bill — which actually raises gas prices by three cents per gallon — is not the answer. Drilling in the Arctic National Wildlife Reserve while still allowing Americans to buy Hummers is just not good policy. Luckily, as we noted last week, fewer and fewer Americans are buying SUVs, but even this is not enough.
Tougher gas-mileage standards must be implemented, and rules can no longer exempt SUVs and light trucks. Significant amounts of money must be invested in new technologies. While this is already occurring — Honda, for instance, is a leader with its new natural gas-powered Civic GX sedan that can be refueled from home — the American government needs to appropriate billions more for research.
America can overcome this oil crunch. The President’s pessimistic energy proposal, which is based on the belief that the US can never extricate itself from the petroleum market, undermines this country. (John Kerry did little beyond bash the Saudis in the 2004 race, so the Democrats are not off the hook on this issue either).
America needs a progressive thinker to lead us down the path to virtual energy independence. And whichever party can embrace such a forward looking and optimistic platform will be greatly rewarded in the years to come.
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