The world’s oil supply is not running out according to a major new study of 800 oilfields by the Cambridge Energy Research Associates (CERA). They have concluded that rates of decline are only at 4.5% per year, which is almost half of the rate previously believed, which supports their conclusion that oil output will continue to rise over the next decade.
The report’s author Peter Jackson said ‘We will be able to grow supply to well over 100 million barrels per day by 2017.” Current oil world output is around 87 million barrell’s a day. Many will ask where this leaves theories on peak oil. Those at CERA conclude that world oil production will peak as demand is weakened by taxation and government efforts to reduce greenhouse gas emissions. Essentially politics, not geology is identified as the limiting factor.
The research and theory on the future of oil supply and demand can be interestingly compared with the human and current story of oil consumption in Venezuela reported in today’s Guardian.
In Venezuela, which has the seventh largest oil reserve in the world, the world where oil costs $100 a barrel is literally and metaphorically a million miles away. A litre of fuel costs 0.7p, meaning that filling the tank of a large car costs a total of 42p, which is equal to the cost of a cup of coffee in the area. When exchange rates are taken into account petrol is 45 times cheaper than in Britain, due to Government subsidy introduced in the 1940s. As a result people view cheap fuel as a birthright, which is also the case in other fuel producing countries such as Burma, Indonesia, Iran and Nigeria. Revolts are likely if prices rise. Domestic consumption in Venezuela has soared to 780,000 barrels a day and the subsidy costs the Government around £4.5 billlion annually. The consumer boom has doubled the number of cars on Venezuela’s roads and has caused significant pollution and grid lock.
This example provides a stark illustration of the CERA research findings working in todays world. It would certainly appear that politics rather than production drives use and consumption of fuel and in a future as the challenges of global warming become more pressing and prominent, theories of peak oil are likely to be less relevant to the debate than geo-political realities.
The Times Friday 18th January 2008
The Guardian Friday 18th January 2008