Not If We Run Out, But When
The crash of the oil price from a peak of almost $140 last year swept the question of 'peak oil' from the media radar screen. However it's sneaking back again as the price creeps up with hopes for economic recovery. 'World is fast running out of oil, warns IEA' proclaimed the Business Report of Aug 4 2009.
In this article Fatih Birol, the International Energy Agency's chief economist was reported to be trying to help world leaders get a grip on petroleum reality.
In 2007 the IEA estimated that production in existing oilfields was declining at 3.7% a year. The latest estimate is 6.7 %. Birol put it graphically, observing that if demand remained stable the world would have to discover the equivalent of four new Saudi Arabias between now and 2030 just to maintain production. With the projected increase in demand, six new Saudi Arabias would be needed.
This almost certainly isn't going to happen and Birol warns that there will be a peak in oil production in around ten years. Which sounds quite a long way off, but Birol also said that due to failure to invest in oil infrastructure, there will also be an 'oil crunch' within five years. Supply will struggle to keep up with demand resulting in the price volatility we saw last year, a situation which can only be made worse by a speculative market.
This is very bad news for a developing country hoping for an economic turnaround to halt and reverse the growing rate of unemployment. The economic constant of plentiful oil that we could more or less depend on in the past, is no longer. Hence as the world economy starts to warm up, it consumes more scarce oil, which then goes up in price, aided and abetted by speculators.
Birol foresees an extremely bumpy economic, political and environmental ride. Oil-scarcity, apart from hindering an economic recovery, will also affect the balance of world power. Big oil producers like Saudi Arabia and Russia, will become more influential. Oil wars are a distinct possibility. More oil will be squeezed out of normally uneconomic sources, such as the tar sands in Canada, but this process will also dump more carbon dioxide in the atmosphere and will not ultimately solve the supply problem. Nothing lasts forever, especially if it is being consumed at the rate of over 80 million barrels per day.
Christians might ask what this forbidding sign of the times is saying to us? One thing seems clear: it will be very difficult to uphold the principle of the universal common good in a world of endemic oil wars. In addition, the priority of the needs of the most vulnerable might easily be forgotten in the coming dogfights.
Furthermore in the short to medium term, and perhaps beyond, it seems less likely that we will be able to offer the poor the prospect of more jobs through limitless growth. Oil-scarcity is a powerful, non-theoretical sign of absolute limits on economic growth. Greater redistribution ('more sharing' in bluntspeak), in a new kind of economy may be the only way to achieve the justice that God desires.
