Emergic: Rajesh Jain's Blog

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Oil’s Future – More or Less?

September 23rd, 2004 · 1 Comment

WSJ writes about “Mr Doomsday” of Oil, Colin Campbell:

Dr. Campbell is at the center of a small but suddenly influential band of contrarians known as the peak-oil movement. They see cause for alarm in the fact that since the early 1980s the world has been pumping more oil out of the ground than it’s been finding. By as early as next year, they say, humanity will have reached a point of reckoning: It will have extracted half the oil it will ever get. Once that “peak” is reached, Dr. Campbell says, global oil production will start falling, never to rise again.

The peak would mark the end of cheap oil. Although people would probably keep using oil for another century or so, prices would steadily rise. To maintain economic growth, the world would have to become radically more energy-efficient, shifting quickly to alternatives such as solar and nuclear power. If the switch wasn’t fast enough — an outcome Dr. Campbell thinks more likely — the global economy would screech to a halt.

“The perception of this decline changes the entire world we know,” says Dr. Campbell, whose wife affectionately calls him Mr. Doomsday. “Up till now we’ve been living in a world with the assumption of growth driven by oil. Now we have to face the other side of the mountain.”

People have been incorrectly predicting oil’s demise since the industry’s early days, and the peak-oil movement has yet to make a serious dent in the energy policies of the U.S. and other developed nations. But the debate is flaring up with new intensity because of some powerful forces changing the geopolitics of oil, among them the rise of an oil-guzzling China and persistent instability in the Middle East and Russia.

The oil industry calls Dr. Campbell a crackpot. Since he began writing about a looming peak, the industry notes, he has progressively postponed his predicted date, from 1995 to 2005. This roughness of the numbers, the industry says, points to a more fundamental problem with the peak-oil theory: It underestimates the power of technology to find more oil — indeed, to broaden the concept of oil itself.

That this debate can occur points to a striking fact: Nobody really knows how much oil exists. More to the point, nobody knows how much can be gotten out of the ground. Much of the oil lies in places with volatile politics, including the Middle East, Russia and Africa. Further complicating the calculation: Beyond the pool of conventional oil that the industry can easily extract today lie vast stores of hydrocarbons that, until recently, haven’t been thought of as oil. Among them: tar-soaked sands in Canada and oil-laden shale rock in places including the western U.S.

So far, over the approximately 150 years since the first oil well was drilled, the world has burned through about 900 billion barrels. Dr. Campbell thinks the world will be able to pump out about that much more. The industry, however, contends Dr. Campbell is being far too pessimistic. Exxon Mobil Corp., for instance, estimates there are something like 14 trillion barrels of fossil fuel still in the ground, including the tar-soaked sands and other nonconventional forms. It figures the industry can extract a good chunk of that.

Whatever be the reality, countries like India need to invest in alternative sources of energy. The best part of their growth lies ahead of them, and they defintiely do not want high energy prices to handicap them.

Another perspective worth looking at is from Amory Lovins, whose book “Winning the Oil Endgame” is expected to be published shortly.

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