Friday, September 05, 2008

An irreversible energy crisis?

Michael Klare explains in the LRB how conventional oil production has already peaked, and why this surely means that the current energy crisis can only get worse:
  • In 1995 the world was consuming 69.5m barrels a day. Last year that figure had risen to 82.5m barrels a day.

  • Nearly half of this intake comes from 116 massive fields. All but 4 were discovered over 25 years ago and many are already in irreversible decline. (Mexico's largest, Cantarell, has declined by 40% since 2006. Mature fields are declining overall at 5.2% p.a. up from 4% p.a. in 2007, so 3.5m extra barrels will need to be produced elsewhere to keep production levels steady. By 2013 the industry will need to produce 24.7m extra barrels per day to reach the predicted requirement of 94.1m barrels a day.

  • China alone will account for a third of increase over next 5 years. In 1990 China manufactured just 42,000 cars. By 2002 it was making 1m, 2m a year after that. The number of privately-owned cars in China is predicted to rise from 27m in 2004 to 400m in 2030. Until '93 China consumed less oil than the other great powers and mainly satisfied its needs from domestic production. (2.9m per day compared to 17.2m in the US and 5.5m in Japan.) Yet in 2008 China's domestic production remains just above 90s levels - 3.7m per day - and its government continues to build roads and to hold local prices below market rates.

  • Today the US accounts for just 9.6% of output, while the Middle East produces 30.1%, Africa 12.5% and Latin America 12.4%. Non-OECD countries now supply 3/4 of world's oil, and these are nations that are generally more susceptible to violent struggles for regional autonomy/secession, rebellion and ethnic strife, all of which tend to be exacerbated by the presence of energy wealth. Price spikes result from temporary reductions in global supplies and the major producers no longer have the significant reserves, like those the Saudis deployed in 1990.

  • Klare describes the intent behind the Bush/Cheney's National Energy Policy of May 2001 as "the perpetuation of the Petroleum Age by any means at any cost." US consumption has risen by 1m barrels a day through the Bush Presidency whilst output of the country's domestic fields declined by roughly the same amount. Meanwhile the US is taking, shall we say, a more active role in securing access to foreign energy reserves.

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