In what I hope to be the first of many, friend of the blog ESL has a guest post about a topic I find very interesting. It's also very pertinent to those of us who have nearly soiled ourselves at the site of the the number registering at the end of a fill-up.
You don’t have to be a genius to understand how supply and demand is causing the cost of oil to set new record highs almost daily. On Friday, Saudi Arabia told President Bush that it would not increase the production of oil from its current levels. Saudi oil minister, Ali al-Naimi, said the kingdom decided on May 10 to raise production by 300,000 barrels, at the request of customers, and that increase was sufficient. Al-Naimi said, "Supply and demand are in balance today".
Whether supply and demand are in ‘balance’ or not, it got me to thinking about the production side of the oil business. Could all of our woes be solved by increased production? That question led me to the discovery of Peak Oil.
Peak oil is the point in time when the maximum rate of global petroleum production is reached, after which the rate of production enters its terminal decline. The chart below estimates that we are approaching, or just past, the Peak Oil point for the world.
You will notice that it looks very much like a bell curve. Here’s the problem with looking at this just as a bell curve though. If peak theoretically happened in 2000, then on a bell curve, we’d have as much oil in 1980 as we would in 2020. However, the population of the world will have almost doubled from 1980 to 2020 and more countries have become industrialized. India alone is expected to triple its demand for oil from 2005 to 2020.
So wouldn’t you think that in the interest of our nation’s future and security we’d be hearing a little bit more from our politicians and leaders about what their long term plans are to get this country off of its petroleum addiction? This problem isn’t going away and, as we have seen, is affecting many other economic sectors. We need to be demanding a lot better answers than just gas-tax holidays.