Insider: Peak oil

Ten arguments in support of and against peak oil theory.

Followers of the peak oil theory argue the world has already or soon will have used up more than half the non-renewable resource. They say current crude prices are just the beginning. Skeptics insist there is no reason to believe that carbon-based capitalism has started to run out of gas. Today’s record prices, they argue, are driven by massive market speculation. Canadian Business writers Thomas Watson (anti-peak) and Jeff Sanford (pro-peak) debate the issue below.

10 Reasons not to buy Peak Oil

1. High prices do not prove the world is running out of oil. After the dot-com market implosion, housing prices soared. After real estate crashed, the cost of oil spiked. People still have homes and Internet access.

2. Higher prices do mean that a lot more money will be invested in finding more oil and better recovery technologies.

3. Peakers take turns dismissing technology on YouTube, then watch each other on credit-card-sized iPods more advanced than computing systems on the first space shuttle.

4. Future oil prices are lower, not higher.

5. Peakers say supply is running out but demand can’t fall, even during a global recession. But the International Energy Agency has been lowering global consumption forecasts.

6. Brazil just found a supply of oil like the ones peakers claim no longer exist.

7. Peakers are like cultish folks who want to believe the end in near. Industry experts like Nansen Saleri, former head of reservoir management at Saudi Aramco, say the point of peak supply isn’t even close.

8. According to Saleri, the world has consumed about one trillion barrels of oil. But remaining conventional and unconventional (oil shale, oilsands, coal, etc.) resources each represent six to eight trillion barrels left to be harvested.

9. According to a recent U.S. energy task force, America’s unconventional resources alone could produce seven million barrels of crude a day as early as 2035, which is about 35% of total current U.S. oil consumption.

10. Global warming will dramatically reduce oil demand — or kill us all — before the peak show hits.

10 Reasons to buy Peak Oil

1. Oil is a finite resource, and we’ve ramped up production from basically zero in 1859 to our current production of 85 million barrels a day. There are 800 million cars on the road and 70 million more built each year.

2. Discoveries of easily accessible super “elephant” fields peaked around 1965 and have been in consistent decline since. U.S. domestic production peaked in 1970; conventional production in the Western Canada Sedimentary Basin peaked in the early ’80s.

3. Technology just helps us get it out of the ground faster.

4. Domestic consumption in oil exporting countries is rising faster than production. Peak exports will impact the economy before peak production.

5. Russian oil production dropped in the first quarter of this year — an event some suggest shows the country’s production has peaked.

6. Depletion is relentless. A depletion rate of 5% per year means by 2015 we’ll need to bring new production of 20 million barrels a day online. That’s more than 10 times what the oilsands are producing now.

7. Saudi Arabia’s King Abdullah recently ordered new oil discoveries left untapped and preserved for future generations.

8. Three of the world’s largest oilfields — Bergen in Kuwait, Cantarell in Mexico and Daqing in China — are in decline; the fourth — Saudi Aramco’s Ghawar, the world’s largest — is also said to be past peak.

9. National oil companies, whose interests diverge from consuming nations’, control 90% of reserves. “Practical peak oil” looms. A skilled labour shortage, weather events and geopolitics will also hinder energy flows.

10. Why else would Dick Cheney and George Bush bother to lie about WMDs?