Menace of Peak-Oil!

``Nobody likes the idea of Peak Oil. Firstly, you have the politicians. Naturally, a politician will never say that there is such a thing as Peak Oil. It is suicide to give bad news, so a politician will never do that…Secondly you have the media. The media do not like Peak Oil. Why? There is no sponsorship for Peak Oil. The oil companies do not like Peak Oil because you should not say that your soup is cold; you should always say that it is very hot and very tasty, yes? So nobody wants to hear of this phenomenon of Peak Oil.” -ALI SAMSAM BAKHTIARI is a retired “senior energy expert,” formerly employed by the National Iranian Oil Co. (NIOC) of Tehran, Iran.

Lastly, is the threat of the validity of the Peak-Oil!

Figure 8: WhiskeyandGunpowder.com: The Menace of Peak Oil

Recently we have noted of the output declines of major oilfields in Burgan Kuwait (“second largest oilfield”), and Cantarel Mexico (“second largest oil-complex”). These are major oilfields whose outputs contributed greatly to the present supplies. But whose rate of production has been dwindling with prospective intensifying declines in the near future as the well matures, as shown in Figure 8.

Yet, despite the massive search for reserve replacement (in terms of expanding present proven reserves-via new technology processes or new wells) as noted for above, recent oil “discoveries” have not been sufficient to replace rate of depletion (thought to be at least 5%). In other words, for every 4-5 barrels consumed only 1 barrel is replaced, said conservatively. And that is what the Peak oil theory is all about.

According to WhiskeyandGunpowder.com geologist Byron King, ``That is, you cannot extract what you have not discovered. Peak Oil is a shorthand way of saying that mankind’s ability to extract conventional oil from the Earth is “peaking” because mankind has found most of the world’s oil deposits. And it also appears that mankind has extracted about half of all of the conventional oil that will ever be extracted. This is the basic premise. Keep your eye on that ball.”

Even with the prospective unconventional oil candidates as “tar” or “shale” oil for possible substitutes (aside from solar, windpower, hydrogen, biofuels, coal gasification) for the “fossil fuel”, these would take massive Dollar investments, additional energy inputs (as natural gas), humongous amount of water and widespread infrastructure networks, aside from of course, overcoming over political obstacles. All these combined would take a rather lengthy period of gestation while the present rate of oil production decreases.

So even if the world economy does slowdown led by the US, if the validity of Peak Oil theory is accurate, then higher trending prices could be the norm.

At the end the day, the present world has been built under the assumption of a sempiternal or everlasting environment of cheap oil and easy money. It would probably take tremendous bouts of angst before cognizance, acceptance and enlightenment would prompt both private and public sectors of the world to act accordingly upon the required adjustments.

Give or take away Peak Oil Theory, the cycle is definitely not over.