Even the most optimistic scenarios have the right-side of the curve pushed out to 2040 or so:
Now, as I pointed out in the first installment, along with the higher price of oil comes new methodologies of extraction, like shale oil. These same sorts of development may push the availability of oil out for another 500 or 1000 years, but the question/problem is the rate of production versus rate of consumption. At the risk of sounding like cursed Cassandra, I now have a few more authoritative voices to back up my fears: consider The Economist's article this week on C. de Margerie, CEO of Total Oil.Mr de Margerie's opinions also stand out, at least within the ranks of senior oilmen. Last year he declared that the world would never be able to increase its output of oil from the current level of 85m barrels per day (b/d) to 100m b/d, let alone the 120m b/d that energy analysts predict will be needed by 2030. That is in stark contrast with the view of Rex Tillerson, the chief executive of Total's larger American rival, Exxon Mobil, who argues that the world is neither short of oil, nor likely to be any time soon. It also contradicts the line of the Organisation of the Petroleum Exporting Countries (OPEC), which claims that the only thing that prevents its members from producing more oil is the fear that no one will buy it.Although I doubt we'll see doomsday scenarios like this one playing out any time soon, it is necessary to be mindful of how many other predictions about oil have been wrong -- like how, back in August, experts declared it would never go up to $100/barrel. I'm ready to buy that Honda hydrogen car & power station now.
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Mr de Margerie is careful to point out that he is not predicting “peak oil” in a geological sense. His definition of peak oil is “when supply cannot meet demand”. He believes that the fuel that the world needs to keep its cars and factories running may well be out there, somewhere. It is just getting harder and harder to extract, for technical as well as political reasons. For one thing, he points out, the output of existing fields is declining by 5m-6m b/d every year. That means that oil firms have to find lots of new fields just to keep production at today's levels. Moreover, the sorts of fields that Western oil firms are starting to develop, in very deep water, or of nearly solid, tar-like oil, are ever more technically challenging. There is not enough skilled labour and fancy equipment in the world, he believes, to ramp up production as quickly as people hope.
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Perhaps the best measure of Mr de Margerie's gloomy outlook for the oil industry is his eagerness to get Total into nuclear power. Though he says he is not about to increase Total's token 1% stake in Areva, France's nuclear-engineering giant, he clearly sees nuclear energy as part of Total's future. Why would an oil firm want to enter such a controversial field, unless it feels that it is already out on a limb?
