A nice overview of the entire question of Big Oil as opposed to the simple fact that yes, in fact, oil is running out. I see this misconception more and more, mainly I think for the very simple, and very human, reason, that it’s much easier to blame some entity, aka, ‘big oil’ for the problems of current oil pricing and supply issues, than to face up to the much harsher reality that oil is simply maxed out, and is now heading into the decline phase of production.

What the world will look like as this happens is already fast becoming obvious, and it’s not hard at all to see why many people do not want to actually think about it.

Oil is expensive because oil is scarce
Polishing the portholes on the Titanic hardly does it justice. This week saw ministers giving an uncanny impersonation of Corporal Jones urging calm over the Grangemouth refinery strike; lorry drivers protesting in Park Lane over a two pence rise in fuel duty; and much righteous indignation over the level of profits reported by Shell and BP. All of which entirely misses the point. These issues are trifling compared to global oil depletion, where there have been several distinct turns for the worse in the last month.

The idea that oil companies are somehow ‘to blame’ for record oil prices and rising fuel costs is seductive but absurd. For all their power and profits, the international oil companies are in fact in trouble. They may still be swimming in cash, but no longer in oil. Despite vast investment in exploration and production, these days they generally fail to replace the oil they produce each year with fresh discoveries, or even to maintain current levels of output. Shell’s oil production has been falling for six years, BP’s seems to have peaked 2005, and this week even the mighty Exxon was forced to admit its output dropped 10% in the first quarter of the year.

None of this should come as a surprise since all the evidence now suggests the world is rapidly approaching “peak oil”, the point when global oil production goes into terminal decline for fundamental geological reasons. Annual discovery of oil has been falling for over forty years, and now for every barrel we find we consume three. Oil production is already shrinking in 60 of the world’s 98 oil producing countries – including Britain, where output peaked in 1999 and has already plunged by more than half. When an individual country peaks it only matters for that country – Britain became a net importer of oil in 2006 – but when global supply starts to shrink the effects could be ruinous for everybody.
David Strahan, Telegraph.co,uk

This entry was posted on Sunday, May 4th, 2008 at 01:44 and is filed under Our World. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.