Five Misconceptions About Peak Oil

Robert Rapier

In 2008, oil prices were receding from record highs, two hurricanes were causing gasoline shortages, and the US economy was headed for trouble. The general mood was that things were rapidly unraveling.

Four years later, the long-term outlook isn’t really any different, but some analysts who predicted imminent doom are starting to change their views on how things will play out.

Rapier doesn’t like the phrase ‘peak oil’ because there are a number of misconceptions and negative connotations associated with it. He talks in terms of resource depletion and a supply/demand imbalance that includes multiple elements—all of which combine to keep upward pressure on oil prices.

The most common misconceptions are: Peak oil equals running out of oil; peak oil beliefs are homogeneous; peak oil is a theory; peak oil was dreamed up by Big Oil to inflate prices; peak oil is denied by oil companies worried about alternatives.

Most analysts agree that global oil production will inevitably decline. Points of contention are the timing, the steepness of the decline, the impact on the global economy and the ability of other energy sources to fill the supply gap. Some believe it will be a non-event, and some people believe it will be catastrophic.

Rapier thinks of peak oil as supply struggling to keep up with demand, which will keep prices at recession-inducing levels. He will be surprised if the world gets past 90 million barrels per day. Shale gas and oil sands production will continue to rise, and global carbon emissions will continue their upward march.

As far as the consequences of peak oil, today’s economic conditions are a prelude to what lies ahead. Expect a slow squeeze on Western economies as developing countries continue to raise their standards of living—keeping fairly constant upward pressure on oil prices. We have entered the long recession.

source: consumerenergyreport