merefaith: salvation in the desert

In one sense, the peak is behind us. Conventional oil - the black, liquid goo you think of when you hear the word - topped out at 70 million barrels per day in 2006. Total liquid production rose through 2008, and may rise in the future, through the development of "unconventional" sources - "heavy" oil from Venezuela and the Alberta tar sands, for example. There are problems with ramping up these sources as simple fixes to the black gold shortage. The net energy delivered is significantly lower because a lot of energy is used to extract usable oil. Also the process reaps a terrible harvest of environmental destruction; especially in the case of the Alberta sands, which involve pumping huge volumes of water.

This means a future of higher prices for less oil at greater cost to the natural world. All the while, the great old oil fields will experience rapid, declining production. The IEA believes we can comfortably coast along until 2035, but that projection involves certain assumptions that may be, shall we say, rosy. For example, Kjell Aleklett, professor of physics at Uppsala University, Sweden, and president of the Association for the Study of Peak Oil and Gas, points out a discrepancy between the current WEO and last year's. In 2009, the IEA stated that steady global economic growth would require 106 million barrels/day of oil (total liquids) by 2030. In the current report, there is no discussion of economic growth and the IEA predicts only 99 mb/d by 2035.

As Nafeez Ahmed writes, we can expect that the vagaries of oil supply and demand alone are sufficient to generate a prolonged period this century of economic volatility. Or, as another commentator puts it, we would be facing perpetual recession.