In recent weeks there has been an explosion of articles, groups, government agencies and energy companies all going public with their peak oil concerns. Maybe, finally, the real peak oil story is about to go mainstream.
In February the UK Industry Task Force on Peak Oil and Energy Security issued a new report saying the oil crunch would occur within five years. I reported on that publication several times in these pages. Their high profile signatories to the publication including Sir Richard Branson helped to lend credence to their efforts.
Their report was followed by a hurried energy briefing to the British Government after enough politicians expressed concern that maybe there was something to worry about. The British government was told that the global production plateau for crude likely began in 2004. This plateau could be the start of the "undulating plateau" I have described more than once in these pages. This is where production struggles to make gains and prices become more volatile as the peak appears. We may not know for several years that peak oil has arrived because of the supply and demand cycles plus the global inventories. This provides a cushion against a clear peak but once it is passed we will be able to look back and clearly see when it occurred.
In March of this year I reported on a publication by scientists from the University of Kuwait claiming that global production of oil will peak in 2014. They did an extensive study of major producing countries and projected the peak in each country and then combined those predictions to calculate the global peak.
Also in March researchers from Oxford University published their claims that oil reserves had been over estimated by up to one-third. I reported on this in March and their claims that demand will likely outstrip supply by 2014.
Also in March the French newspaper Le Monde published the results of an interview with Glen Sweetnam from the EIA and confirmed the agency was worried that production could peak as early as 2011. This came from a internal presentation Sweetnam gave a year ago that finally "escaped" to the light of day. The EIA presentation showed 50 mbpd of undiscovered production would be needed to meet demand after 2011 and that undiscovered production could not be brought online until 5-7 years after it was discovered. This suggests if it was suddenly found today it would likely be 2020 before any quantity could be brought online and that is well after the potential peak in 2011 according to Sweetnam.
In April the U.S. Joint Forces command published their Joint Operating Environment (JOE) report warning that the military should have contingency plans as surplus oil production capacity could disappear within two years with serious shortages by 2015. I reported on this publication in mid April and their warning that the shortfall in production by 2015 could equal 10 million barrels per day.
We have also been seeing many more analysts raise their targets on oil prices to $100 by the end of 2010 based on "market forces." This is confusing given the "claimed" 6 mbpd of excess production capacity in OPEC. It suggests energy analysts are becoming much more concerned that this excess capacity may not actually exist or be significantly less than stated.
In an article in Forbes in April titled "Oil Reality Check: It's Going Higher," the author suggests we will see oil over $100 in 2010 due to rising demand. Mark Mills states, "Whatever the debate about the ultimate total physical hydrocarbon resources on this planet, using technology we have, equipment and infrastructure that exists or could be built under any scenario in a few years, 2010 probably marks "the peak" production of oil as we know it today. You don't have to be an economist or pundit to know the implications of demand continuing to grow against an essentially fixed supply base."
I personally believe Mark is incorrect in his assumption about 2010 being the peak simply because of the number of new projects coming online in 2010 and early 2011. I have shown from the Oil Megaprojects Database that 2009/2010 were banner years for new projects being completed but after early 2011 the drop off in new production is significant.
Regardless of when peak oil actually arrives the fact that articles are suddenly appearing in the mainstream press suggests we are a lot closer than we were just a couple years ago. Peak oilers were routinely ridiculed and over the last year that ridicule has begun to decline and the actual science of peak oil is gaining traction and acceptance. Obviously once that really gains a foothold with the investing public the price of oil is going much higher even if peak oil is still several years away.
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