Interesting story in the Guardian this week, noting that the BBC had lined up a row of 'experts' to tell us that there's no need to worry about the future of oil supplies. The point they seem to have missed is that the cheap oil is declining fast, and the gap is being filled by expensive oil, and that this expensive oil also takes more energy to get it out of the ground and turned into usable fuel.
"Global production of crude oil and condensates... has essentially remained on a plateau of about 75 million barrels per day (mb/d) since 2005 in spite of a large increase in the price of oil. Even more important, the global net oil exports from oil-exporting countries (oil production minus internal consumption) have peaked and are in decline."
The Eos paper goes on to point out that while "total oil production has plateaued, production of oil from older existing fields has been in decline, dropping roughly 5% annually, corresponding to a loss of 3-4 mb/d." Although production from unconventional oil and gas has balanced this decline, they are "difficult and expensive" with "very low energy return on investment (EROI)." In simpler terms, "it takes energy to get energy, and more is required to produce energy from unconventional sources."
The outcome is of course that oil will cost more, and that limits economic growth.
The result is an undulating production plateau correlating with higher but more volatile oil prices, as well as a prolonged recession punctuated by small cycles of 'recovery' and contraction.
Hmmm, 'prolonged recession punctuated by small cycles of 'recovery' and contraction.' - sound familiar to anyone?
You can read the full article here.