The Beginning of the End of Oil

Will the oil supply soon reach its peak?

| June 9, 2005

It used to be that those who foretold of a day when oil wells would start running dry were scoffed at as 'cranks and conspiracy theorists.' But the idea of 'peak oil' isn't confined to the dark corners of the Internet's catastrophists anymore, Kevin Drum writes in Washington Monthly. Rather, the harbingers of peak oil have 'practically become rock stars.'

A new book by one-time Bush energy advisor Matthew Simmons lays out the case for a shattered faith in the idea that oil reserves -- namely Saudi Arabia's -- and ever-improving technologies will keep the black gold flowing at a rate that will meet increasing demand. It's a position gaining traction as a 'hot topic,' Drum writes.

But it's not just a couple of naysayers sounding the alarm. In a recent outlook report, petroleum giant ExxonMobil said it expected non-OPEC oil production to soon level off, after a peak in five years. As energy consultant Alfred J. Cavallo points out in the Bulletin of the Atomic Scientists, it's the first time an oil company has deigned to speak of peak oil.

ExxonMobil has two ideas for meeting increased demand. The first is to become more fuel efficient. 'That alone should convey the seriousness of this report: When have you ever heard a petroleum company make a plea for vehicles that use less gas?' Cavallo asks. The other is increased OPEC production, which he calls an 'ominous' assessment, given the countries' 'vested interest in obtaining the best possible price for their non-renewable resources.'

Cavallo appears to share the widely-held belief that the resources are there, the OPEC countries just won't want to tap them at the rates the world wants. That's a sketchy proposition, Simmons warns in Twilight in the Desert.

Using limited data -- a commodity in short supply -- Simmons argues that the country's oft-pointed-to savior supply is a sham. While Simmons acknowledges he's looking through a 'very small keyhole' of information, he's doing the best with what he and the rest of the world's got, Drum writes. What's needed is more transparency, Simmons and others argue -- a sentiment echoed by the International Energy Agency, the International Monetary Fund, and G7 members, which this year called on OPEC and other nations to 'open their fields to audit,' The Guardian reports.