Hand ringing over the supply of oil has prompted more than one politician, planner and pundit to push for “alternative” energy sources. Most of this politicization of the energy industry is driven by concerns over so-called “peak oil”. Peak oil is the theory that we have already tapped into the world’s supply of oil to the point we can not sustain current or future consumption levels. So, oil will become less and less scarce, forcing rising energy prices and, for some, the collapse of oil-based economies (e.g., the industrialized world). A new report from Cambridge Energy Research Associates shows why “peak oil” is largely irrelevant. As reported in the newpapers The Australian Business in an article published 19 January 2008:
A landmark study of more than 800 oilfields by Cambridge Energy Research Associates has concluded that rates of decline are only 4.5 per cent a year, almost half the rate previously believed, leading the consultancy to conclude that oil output will continue to rise over the next decade.
A more interesting point was made by Peter Davies, BP’s chief economist:
The optimistic view of the world’s oil resource was also given support by BP’s chief economist, Peter Davies, who dismissed theories of “Peak Oil” as fallacious. Instead, he gave warning that world oil production would peak as demand weakened, because of political constraints, including taxation and government efforts to reduce greenhouse gas emissions.
Thanks again to our friends at the National Center for Policy Analysis for bringing this new study to our attention through their Daily Plicy Digest.