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Peak Oil ComingA long view on oil from Marketplace commentator Mark Hertsgaard. (Mark Hertsgaard) It used to be, only environmentalists and conspiracy nuts warned about the world running out of oil. Not anymore. A growing number of industry insiders now admit that the earth's oil is finite; scarcities and skyrocketing prices are imminent; and our governments and economies are utterly unprepared for the chaos ahead. The insiders include Matthew Simmons, an investment analyst who's briefed President Bush, and Exxon-Mobil, which recently projected— without issuing press releases—that non-OPEC production will peak by 2010.Peak oil is the key phrase. The earth is not about to surrender its last drop of oil. Rather, peak is when half of a given amount of oil has been pumped out and half still remains. But that second half is much costlier and uncertain to obtain. With global demand increasing every year, that means higher and higher prices and more frequent shortages. Think back to the oil shocks and gas lines of the 1970s. Then imagine those shocks continuing for decades. In this peak oil future, suburban living will be impossible. Economies could crater and nations go to war. Conventional wisdom says the magic of the market will solve the problem: higher prices will call forth more supply. In particular, Saudi Arabia is assumed to hold inexhaustible reserves. But Simmons, the analyst who briefed President Bush, demolishes those assumptions in his book, Twilight in the Desert. Simmons notes there is virtually no verifiable data that Saudi oil is inexhaustible; outsiders have essentially been taking the Saudis' word for it. Simmons believes Saudi oil is now at or beyond peak and the world is heading for a crash. All of which casts a harsh light on the debate in Washington, with its posturing about ending U.S. dependence on foreign oil. If the peak oil prophets are right, $3 a gallon gas will soon sound cheap, and the real imperative is to end our dependence on oil altogether. |
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