With oil hitting $60 per barrel, one has to hope that eventually we will push for more sustainable energy sources on the small and large scale. The difficult thing to know is where we stand with our current oil based economy.
I have been following this issue closely for the past few months and the predictions give a wide range of possible scenarios. Some experts say that we reached a peak in oil production and that as the lines of supply and demand cross, with no extra production to fill the gap, that we will see a spike in oil prices. A few months back analysts at Goldman Sachs forecast the possibility of $100+ oil in the near future. That would obviously have severe ramifications for the US and world economies.
Conversely, US agencies such as the USGS and EIA (Energy Information Administration) predict oil supplies that will not peak until sometime between 2020-35. This is truly a different forecast than the pessimistic forecasts of the more conservative energy experts.
Unfortunately, it seems the only way we will know any thing conclusive is after we have gone past peak production. What we do not know is if there will be a prolonged plateau instead of a peak, when the peak will happen, and what other energy sources (Natural Gas, Nuclear, Hydrogen Fuel Cell, Wind or Solar) will be able to pick up some or all of the slack.
We do know that US production has peaked (early 1970’s) from around 10 million barrels of production a day to a current production of 5 million barrels. It is from this peak that many forecasters predict the world oil peak (using a model know as Hubbert’s Peak).
This is a very interesting subject for us. Obviously our fixed business costs and stream of work would be adversely impacted by such scenarios as $100 oil in the near future. It will be fascinating to see how it plays out.
The organization ASPO predicts that oil production will peak around 2007.
Copyright Association for the Study of Peak Oil & Gas Newsletter
Goldman Sachs “Is There Life after $60/bbl?”
Google News Oil Prices