GOOD NEWS OR DISINFORMATION?
What’s this? The US Government is telling us not to worry; oil prices – although currently at record highs, will be slowly declining. However, in the long term there is likely to be tremendous stability in world oil prices all the way up to 2030, with prices ranging only between $42 to $180 per barrel.
The EIA is a government agency funded by US tax dollars to
“provide timely and comprehensive information” to Congress and the American people on critical energy issues. The EIA’s “Operating Principles” call on the agency to “Act with a sense of urgency,” to “Always tell the truth,” and to “Do the right thing.” (SOURCE)
The EIA’s latest statistics (March 2008 ) suggests that Peak Oil problems are “decades away … not years away.” Peak Oil theorists such as Matthew Simmons, Matt Savinar, Colin Campbell (who is quoted on the poster below) all disagree.
The EIA slides are from:
Why Are Oil Prices So High and Where are They Going?
Subject: Petroleum, Forecast, International
Presented by: Guy F. Caruso, EIA Administrator
Presented to: Global Finance Forum
Washington, DC – March 11, 2008
TRUTH OR DARE
The EIA has been heavily criticized by Peak Oil theorists, namely The Association for the Study of Peak Oil & Gas (ASPO-USA).
ASPO-USA is a nonpartisan, proactive effort to encourage prudent energy management, constructive community transformation, and cooperative initiatives during an era of depleting petroleum resources.
In fact, ASPO-USA is absolutely furious; accusing EIA of ignoring evidence, refusing to open a dialogue with Peak Oil Theorists, and conducting a dis-information campaign.
The most heavily cited evidence is this poster (pdf)
Take a look a the information provided on this EIA poster more closely:
The forecast accounts for ‘high’, ‘reference’, and ‘low’ economic growth; but nevertheless the EIA is telling us that production will continue to rise for many years to come. In contrast; the peak oil theorists are predicting poor and/or negative economic growth and a decline in production. So when will production eventually start to decrease?
Note that the ‘optimists’ (EIA, CERA [Cambridge Energy Research Associates], and Shell) represent US government interests and oil companies, while those estimating a closer date for decline in production are the ‘independent analysists’, many of whom are seasoned veterans in the oil industry without political ties. The gap in predicted dates is substantial, but the oil companies are starting to listen.
Note the last sentence:
“Opinions on the effect of passing Hubbert’s peak range from the faith that the market economy will produce a solution to predictions of doomsday scenarios of a global economy unable to meet its energy needs.”
One criticism of the market economy producing a solution is that ‘classic market economy’ assumes that supply balances demand.
So what happens when an increase in demand (coming from India and China’s huge thirst for energy) cannot keep up with (i) current oil production levels or (ii) artificial limits forced on the production of oil production by wars and/or OPEN controls?
Even if EIA is accurate in its forecast, the consequences could be disastrous if global demand (or any single country’s demand) exceeds the amount available. There won’t be enough oil to go around. At any price.
Most peak oil theorists argue that due to these unpredictable factors (war/terrorism, OPEC, strength of the US dollar, economic stability, recovery of the sub-prime situation) the chances of demand encountering a decreased supply is highly likely. In fact, this is what accounts for the present surge in oil prices (May 2008).
THE POINT IS NOT “WHEN IS THE PEAK”
There is no risk that we are running out of oil but chances of being able to match the projected growth in demand over the medium term with a rise in production is being seriously questioned (abstract of a paper entitled: Peak Oil, A Reality or Hype? by Mamdouh G. Salameh)
My hope is that all parties concerned maintain peak vigilance over the situation as events unfold and to remember one important maxim: it’s better to be over-prepared than under.
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2 Comments
May 5, 2008 at 2:08 pm
I don’t agree. To my calculation, it will either keep on growing or maintain at this level +/- the same rate.
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May 5, 2008 at 2:20 pm
That’s good news; it means we have more time – and possibly to be ‘pinched’ rather than ’squeezed’ if the supply cannot keep up with increasing demand.