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Peak Oil: Good News and Bad News

Written by Gary North on December 22, 2011

Is peak oil real? Yes. Is it an imminent threat? No.

Take a look at this graph. It reveals that peak oil usage per person peaked in 1973. Then it dropped. It has been flat for decades.

What are some of the implications: These.

The global population data are from the US census bureau, and the oil supply data are from ASPO through 1979 and EIA total liquids after that (the two sources agree to within a percent or so in the overlap).

If you were wondering why things have never been the same after the 1970s energy crises – now you know.  On the other hand, if you’ve been panicking that peak oil means the imminent end of civilization – settle down.  In a per-person sense it happened decades ago and we’ve been living in the aftermath ever since.  Peak oil is a slow squeeze.

On the other hand, output per day has been flat for five years at about 74 million barrels a day. (The 2008-9 recession pushed it down.)

Yet this chart is deceptive, as its creator says. It includes more than oil. He says that the peak was 2004.

Conventional crude ended its 150-year-long growth trajectory in 2004 and flattened out around 74 million barrels per day. Crude supply did not budge when oil prices tripled from 2004 to 2008, but global demand remained firm, shrugging off a recessionary dip in 2009. All the growth in supply since then was not crude but unconventional liquids, including natural gas liquids, biofuels, refinery gains, synthetic oil from tar sands, and other marginal resources. These liquids are by no means equivalent to crude. . . .

As Shell, Chevron, Total, the IEA, and a host of other serious observers have openly declared since 2005, the age of cheap and easy oil has ended. The “oil” that’s left is progressively expensive, difficult, risky, marginal, and fraught with secondary effects like increasing carbon emissions, demand for water, and competition with food.

So, the critical question is this: Who will supply demand from Chinese and Indians? Their demand is likely to push up prices: more demand, fixed supply.

Also, the supply is not fixed. There is no new oil being produced.

Unless we find a cost-effective substitute for oil, the squeeze will become intense. Most people will have to cut their use of oil. Those who don’t will have to cut their use of something else: re-budgeting.

We have time to prepare individually. We should not waste it.

Continue Reading on earlywarn.blogspot.com

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One thought on “Peak Oil: Good News and Bad News

  1. The price of gasoline has not risen [adjusted for inflation] since 1980; $1.30 then, $3.43 now. Why doesn't the market reflect peak oil concerns? Will gas prices just suddenly quadruple or more overnight? I think people would prepare if they were tired of getting squeezed along the way; instead we see bigger and bigger trucks and even motorcycles now with motors twice the size of my first car: a1974 Honda Civic [1200cc]!