Many studies conducted world-wide suggest that the peak for world-wide oil production has either already occurred or will occur before 2010. (reference 1)

This means that the majority of the petroleum that is easiest to get to or cheapest to refine has already been extracted prior to the culmination of the production peak. The near future may be an unstable plateau of production with minor peaks and valleys created by regional overproduction or distribution issues. However, the trend from the peak forward will be a declining slope.

As a matter of a fact, the world currently uses more than 27 billion barrels of oil each year. If every last drop of the remaining 1 trillion barrels could be extracted at current cost ratios and current rates of production - which is extremely unlikely - the entire endowment would last only another 37 years. (reference 2)

The rapid industrialization of both China and India exacerbate the issue of declining oil production. With oil, the United States is still solidly in the lead with consumption triple that of China’s - 20.4 million barrels per day to 6.5 million barrels in 2004. But while oil use in the United States expanded by only 15 percent from 1994 to 2004, use in the new industrial giant more than doubled. Having recently eclipsed Japan as an oil consumer, China is now second only to the United States. (reference 3)

The price of oil, which averaged less than $22 per barrel in 2001, has increased by about $50 per barrel since then, surpassing $70 in recent days. Over the same period, the U.S. Energy Information Administration (EIA) reports that Chinese oil consumption has increased more than 40 percent. That increase has accounted for more than a third of the total growth in worldwide oil demand over the same period. (reference 4)

India's proved oil reserves are currently estimated (as of January 2005) at about 5 billion barrels, or about 4.5% of the world total. Most of these reserves lie offshore near Mumbai and onshore in Assam state. However, exploration is still happening, and India's off- shore and on-shore basins may contain as much as 11 billion barrels. India presently ranks as the 25th greatest producer of crude oil, accounting for about 1% of the world’s annual crude oil production. About 30% of India's energy needs are met by oil, and more than 60% of that oil is imported. A strong growth in oil demand has resulted in India’s annual petroleum consumption increasing by more than 75% from what it was a decade ago, and petroleum consumption is projected to climb to about 3 million barrels per day by 2010. (reference 5)

Furthermore, almost 60 percent of the remaining oil reserves in the world are in the Middle East. As shown in Figure 29 and Table 1, Middle East reserves dwarf the rest of the world in a significant way.




















Table 1. World Oil Reserves by Country as of January 1, 2006 (Billion Barrels)























Reference 6

To sustain world-wide energy growth of 40 percent per decade, few legitimate alternatives have been proposed. With yearly decreases of between 2 and 6 percent in oil production, current niche energy sources such as ethanol, biodiesel, solar, wind and hydroelectric are unlikely to provide the sheer magnitude of the energy requirements in a few decades. Coal and nuclear power may offer a bridge between the present consumption and the shaky energy future. However, those efforts are focused mainly on the production of electricity.

So what are the implications of the decline of cheap liquid fuels? While this may be a planning exercise that is best weighed using the scales of personal experience and cultural world view, I would recommend "The Long Emergency" by James Kunstler which provides a thought-provoking discussion of the topic.

We must shape a vision of the future on the fact that cheap energy may not be common and that availability at any price may be relatively rare. In this future, advancements in technology will not be merely helpful; they will be required to maintain of current standard of civilization. MATRIC will be seeking clear-sighted solutions to contribute to the overall matrix of possible outcomes to this complex equation.

1. Campbell, Colin J. et al. 2005 “Uppsala Hydrocarbon Study”
2. www.danmahony.com/oil_reserves_links.htm
3. www.earthpolicy.org/Updates/Update45.htm
4. www.washingtontimes.com/oped/ 20060419-093142-9219r.htm
5. www.cs lforum.org/india.htm
6. www.eia .doe.gov/oiaf/ieo/oil.html

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