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Michael T. Klare: It’s Official — The Era of Cheap Oil Is Over, Energy Department Changes Tune on Peak Oil

June 12, 2009

Michael T. Klare

Every summer, the Energy Information Administration (EIA) of the U.S. Department of Energy issues its International Energy Outlook (IEO) — a jam-packed compendium of data and analysis on the evolving world energy equation. For those with the background to interpret its key statistical findings, the release of the IEO can provide a unique opportunity to gauge important shifts in global energy trends, much as reports of routine Communist Party functions in the party journal _Pravda_ once provided America’s Kremlin watchers with insights into changes in the Soviet Union’s top leadership circle.

As it happens, the recent release of the 2009 IEO has provided energy watchers with a feast of significant revelations. By far the most significant disclosure: the IEO predicts a sharp drop in projected future world oil output (compared to previous expectations) and a corresponding increase in reliance on what are called “unconventional fuels” — oil sands, ultra-deep oil, shale oil, and biofuels.

The usually optimistic analysts at the Department of Energy now believe global fuel supplies will simply not be able to keep pace with rising world energy demands.”

So here’s the headline for you: For the first time, the well-respected Energy Information Administration appears to be joining with those experts who have long argued that the era of cheap and plentiful oil is drawing to a close. Almost as notable, when it comes to news, the 2009 report highlights Asia’s insatiable demand for energy and suggests that China is moving ever closer to the point at which it will overtake the United States as the world’s number one energy consumer. Clearly, a new era of cutthroat energy competition is upon us.

**Peak Oil Becomes the New Norm**

As recently as 2007, the IEO projected that the global production of conventional oil (the stuff that comes gushing out of the ground in liquid form) would reach 107.2 million barrels per day in 2030, a substantial increase from the 81.5 million barrels produced in 2006. Now, in 2009, the latest edition of the report has grimly dropped that projected 2030 figure to just 93.1 million barrels per day — in future-output terms, an eye-popping decline of 14.1 million expected barrels per day.

Even when you add in the 2009 report’s projection of a larger increase than once expected in the output of unconventional fuels, you still end up with a net projected decline of 11.1 million barrels per day in the global supply of liquid fuels (when compared to the IEO’s soaring 2007 projected figures). What does this decline signify — other than growing pessimism by energy experts when it comes to the international supply of petroleum liquids?

Very simply, it indicates that the usually optimistic analysts at the Department of Energy now believe global fuel supplies will simply not be able to keep pace with rising world energy demands. For years now, assorted petroleum geologists and other energy types have been warning that world oil output is approaching a maximum sustainable daily level — a peak — and will subsequently go into decline, possibly producing global economic chaos. Whatever the timing of the arrival of peak oil’s actual peak, there is growing agreement that we have, at last, made it into peak-oil territory, if not yet to the moment of irreversible decline.

Until recently, Energy Information Administration officials scoffed at the notion that a peak in global oil output was imminent or that we should anticipate a contraction in the future availability of petroleum any time soon. “[We] expect conventional oil to peak closer to the middle than to the beginning of the 21st century,” the 2004 IEO report stated emphatically.

Consistent with this view, the EIA reported one year later that global production would reach a staggering 122.2 million barrels per day in 2025, more than 50% above the 2002 level of 80.0 million barrels per day. This was about as close to an explicit rejection of peak oil that you could get from the EIA’s experts.

**Where Did All the Oil Go?**

Now, let’s turn back to the 2009 edition…

Read more at TOMDISPATCH.COM

Michael T. Klare is a professor of peace and world security studies at Hampshire College in Amherst, Massachusetts, and the author, most recently, of Rising Powers, Shrinking Planet: The New Geopolitics of Energy (Henry Holt). A DVD of the documentary film based on his previous book, **Blood and Oil**, is available by clicking here.

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Copyright 2009 Michael T. Klare

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