Peak Oil : Real Or Self-Imposed?

Peak Oil is defined as a point in time when the maximum rate of global oil production is reached, after which the rate of production will continue to decline. In other words all the large oil fields have been discovered and that any additional new oil discoveries and development will not be sufficient to increase world oil supply levels. Some experts are saying that we reached a peak oil rate of 85 million barrels per day in 2004. They say that the rising trend of global oil production ended in 2004 and has been flat since. This is supported by government statistics. The International Energy Agency (IEA) recently released its energy outlook report in which it dismissed fears about peak oil. They said “Global oil production is not expected to peak before 2030, conventional crude oil production is projected to level off toward the end.” The IEA also warned that there could be an oil supply crunch in the medium term from under-investment. They project that world oil supply is projected to rise from 84 million b/d in 2007 to 106 million b/d in 2030, with the bulk of the increase expected toward the end of the period.

Other opinions on peak oil say that we have a “practical” peak oil or perhaps a “self-imposed” peak oil as a result of “resource nationalism”. I reported on “resource nationalism” in a previous post. I said that Saudi Arabia will restrict output by not expanding oil field development or at least delaying development in order to save oil for future generations. This would result in lower exports. Some have referred to it as “resource nationalism”. If their cash coffers are filled as a result of the high prices, perhaps they can reduce exports to save some of their oil for future generations. It was reported in April that Saudi Arabia has put its plans to increase long-term production on hold. It will not expand oil field development beyond 12.5 million b/d. Current Saudi production capacity is about 11.3 million b/d and scheduled to rise to 12.5 next year. Similarly, the United States Government has restricted domestic oil production for years forcing the U.S. to import almost 70% of our oil needs. Drilling bans imposed by Presidents and Congress have prevented our oil and gas resources from being developed. The peak oil theory proponents need to take into account factors such as “resource nationalism” and the U.S. Government’s campaign against U.S. domestic oil exploration and development.