This post at The Oil Drum blog goes a long way towards explaining why oil prices have risen so sharply over the last couple of years. According to international oil agencies, global oil production has been pretty flat since the middle of 2004, even as economic growth around the globe has boosted demand. The chart below, derived from US Energy Information Administration figures, shows OPEC production only; but world figures are much the same.
Of course, the global petroleum system is so huge, and some production poorly enough tracked, that there’s a lot of uncertainty in the graph above. But it’s hard to escape the notion that high prices are being caused by actual global supply limitations, not by oil company malfeasance or somesuch.
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So it’s worth pondering a bit—what happens if oil demand continues to grow, even as supplies remain flat? Will we look back 5 years from now, thinking of $3 per gallon oil as a bargain? And if so, what will that mean to the automobile and housing markets in the Pacific Northwest? And what about transportaiton policy?
Seems to me that those are huge questions that state and provincial transportation agencies, in particular, aren’t facing squarely. There’s still a presumption out there that the big highwayprojects that were deemed smart in the 1950s will remain smart through 2050—a presumption that’s seeming harder and harder to justify.
Clark, it’s great to see you guys finally take Peak Oil seriously. I can’t think of anything more important to explore. For instance, San Fransciso has commissioned a study to see how the city will respond to Peak Oil. (www.energybulletin.net covers all these topics.) We need some serious thought here too. It may not be too bad for us here in Seattle at first. High gas prices will force people from the countryside and suburbs back into the city. Of course, can they find work?The viaduct/tunnel options ought to be nonstarters, right?
Glad you like, Colin.We’ve actually done a bit on peak oil before (see http://www.sightline.org/search?SearchableText=peak+oil).Perhaps the only reason I don’t focus on it more is that I don’t have much to add to the discussion. Just the obvious—it’s out there, it could be soon or even now, it’s huge, and we should be thinking hard about it.
I’ve found the series on oil by Kevin Drum at Political Animal to be very insightful especially Part 4. In Part 4 he has a chart by Amy Jaffe Myers that shows “OPEC’s spare capacity—and thus the world’s—has dropped nearly to zero in the past few years.” Myers is with the Baker Energy Insitute at the James A. Baker III Institute for Public Policy in Houston, TX in the heart of oil country.
Correction: in the above post it is Amy Myers Jaffe at the Baker Energy Forum