Peak Oil

Big Picture: Global oil production may have reached its peak.

This would mean that we are already producing oil at the highest rate possible — a devastating prospect for our oil-addicted economy.

What is peak oil?

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“Peak oil is not about ‘running out of oil,’ it’s about the peak rate of oil production. It’s not the size of the tank which matters, but the size of the tap.”

—Chris Nelder, peak oil expert, whose definitive guide to peak oil provides much of the information below.

— Over the past few years, world production has reached a plateau of about 86-87 million barrels a day. According to the Association for the Study of Peak Oil, this global production rate:

> may never increase more than another 1-2 million bbls/day

> is not expected to rise above 90 million bbls/day

— In the next 3-6 years, world production will likely begin its permanent decline.

— New oil production must compensate for the depletion of old fields before there’s a net benefit.

> Oil fields can decline as much as 20% per year after they peak, depending on their management

> Of top 21 oil producers worldwide, 11 are already past peak

— U.S. oil production is already in decline and drilling offshore or in ANWR won’t help.

> At the absolute most, domestic drilling would increase U.S. oil production by 2-3 million bbls/day.

> According to the U.S. DOE, drilling in ANWR would not lower the price of gas for another 20 years, and even then it would be by less than 4 cents.

CONCLUSION: With the rate of global consumption increasing (another 1 million bbls/day this year), this very plausible decline in production would have devastating economic consequences.

“When the production rate of oil reaches its geological limit and begins to decline, the world’s economies will be forced to live within a shrinking, not expanding,

energy budget.”

—Chris Nelder