By Joan Lowy
SCRIPPS HOWARD NEWS SERVICE
It's called "the big rollover," the moment when worldwide demand for
oil outstrips the global capacity to produce it.
Most oil experts agree that when that day of reckoning comes, it will signal
the end of the oil age and the end of cheap energy. Petroleum geologists, energy-industry
analysts and others are now saying that moment is close at hand and may even
have already occurred.
"This is the monster in the closet," said Kenneth Deffeyes, a professor
emeritus of geosciences at Princeton University and author of a book about oil
depletion. "This is such bad news that … we're not going to hear
from either Republicans or Democrats about it until after the election. Everybody
wants to say we can have 2 percent or 3 percent economic growth."
Potential for havoc is great
While the public has generally grown complacent about oil dependence, believing
that the day the world runs out of oil is far in the future, that is not the
moment that counts, oil experts said.
Rather, under the scenario many experts lay out, the key moment will be when
oil production can no longer keep pace with demand. When that happens, prices
will rise - maybe sharply, maybe gradually - and they will keep rising until
demand eventually drops.
Since transportation in the United States is almost wholly dependent on oil,
and the United States uses more oil than any other nation, the potential for
economic havoc is great.
"Whether that peak happens in 2020 or 2050 is not important," said
David Goodstein, a physics professor at the California Institute of Technology
and author of "Out of Gas: The End of the Age of Oil." "It still
doesn't give us enough time to come up with an alternative if we don't make
an attempt to come up with an alternative" right away.
Forecasts vary as to when the peak will arrive, with some experts predicting
it will occur this decade - Deffeyes says Thanksgiving Day 2005, give or take
a month - and others point to about 2012. The International Energy Agency, which
was created by industrial countries after the 1973 oil crisis, places the peak
of oil production somewhere between 2010 and 2020.
U.S. agency puts it at 2037
The U.S. Energy Information Administration, the government's energy data and
analysis arm, places the peaking point at about 2037, considerably farther into
the future. But the energy administration's analysis is based on an estimate
of 3 trillion barrels of total recoverable oil since production began - a far
more optimistic assessment than many analysts believe is reasonable.
Other experts cite about 40 studies that place the total amount of oil that
can ever be technologically and economically recovered at between 1.8 trillion
and 2.4 trillion barrels.
A total of about 950 billion barrels - or nearly half - has already been produced.
That's key because most analysts - including experts with the energy administration
- believe that production will peak at about the halfway point in proven oil
reserves.
Their reasoning is based on the experience of the United States, which reached
its production peak in the lower 48 states in 1970 at almost exactly the halfway
point in proven reserves.
Oil discoveries decreasing
If the estimates of proven reserves grow based on the discovery of new fields
or the use of better technology to recover more oil, the day of reckoning moves
further into the future.
However, if world demand for oil grows faster than proven reserves, the day
of reckoning draws closer. And that's exactly what has been happening. The volume
of oil discovered every five years has been decreasing steadily since about
1980, while demand has been growing at about 3 percent a year.
Meanwhile, the oil being produced is increasingly coming from older fields that
are nearing at the point when their yield will start to decline.
"The average barrel of oil comes from a field that was discovered more
than 30 years ago, and some of it is coming from fields discovered more than
100 years ago," Deffeyes said.
Currently, the world consumes 28 billion barrels of oil a year, or 78 million
barrels a day.
Matthew Simmons - chairman of the Houston energy research and investment banking
firm Simmons & Company International, and an energy adviser to the Bush
campaign in 2000 - recently created a flurry of controversy in oil circles when
he suggested that Saudi Arabia and other OPEC (Organization of Petroleum Exporting
Countries) nations may be overstating their proven reserves.
If that's the case, then the moment of peak production is likely to be sooner,
rather than later.
In the mid-1980s, when OPEC was changing its quota system based on each member
country's proven reserves, Saudi Arabia and other countries suddenly and dramatically
increased their estimates of proven reserves, Simmons said.
Those estimates have essentially remained the same ever since, even though there
have been no large oil discoveries in the last 20 years, Simmons said.