The suspicion has grown that the mideast's vaunted oil reserves are “political reserves.” That is, they are figments of OPEC country calculations, driven by rules that only 2% of reserves should be produced per year. This rule [may have] induced certain producer-countries to overstate their reserves in order to justify higher production quotas.
Higher priced energy will cause an economic recession and more unemployment. These developments increase the urgency to stop bloating our labor force with more immigrant labor. Jobs should be saved for established immigrants and Americans.
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http://www.guardian.co.uk/oil/story/0,11319,1470330,00.html
Analyst fears global oil crisis in three years
John Vidal, environment editor
Tuesday April 26, 2005
The Guardian
One of the world's leading energy analysts yesterday called for an
independent assessment of global oil reserves because he believed that
Middle Eastern countries may have far less than officially stated and
that oil prices could double to more than $100 a barrel within three
years, triggering economic collapse.
Matthew Simmons, an adviser to President George Bush and chairman of
the Wall Street energy investment company Simmons, said that “peak
oil” – when global oil production rises to its highest point before
declining irreversibly – was rapidly approaching even as demand was
increasing.
“This is a new era,” Mr Simmons told a conference of oil industry
analysts, government officials and academics in Edinburgh. “There is a
big chance that Saudi Arabia actually peaked production in 1981. We
have no reliable data. Our data collection system for oil is rubbish.
I suspect that if we had, we would find that we are over-producing in
most of our major fields and that we should be throttling back. We may
have passed that point.”
Mr Simmons told the meeting that it was inevitable that the price of
oil would soar above $100 as supplies failed to meet demand. “Demand
is pulling away from supply…and we have to ask whether we have the
resources that we think we do. It could be catastrophic if we do not
anticipate when peak oil comes.”
The precise arrival of peak oil is hotly debated by academics and
geologists, but analysts increasingly say that official US Geological
Survey estimates that it will not happen for 35 years are over-optim-
istic.
According to the International Energy Agency, which collates data from
all oil producing countries, peak oil will arrive “sometime between
2013 and 2037”, with production thereafter expected to decline by
about 3% a year.
While oil from conventional sources is expected to decline, more and
more is expected to come from “unconventional” supplies found in oil-
rich rocks, especially in the US and in deposits of tar found in Ven-
ezuela.
The former UK energy minister Brian Wilson, a supporter of both
nuclear power and renewables, said that Britain would be unwise to
rely completely on importing gas from politically sensitive countries
as North Sea reserves declined.
“Seventy percent of our electricity by 2020 will come from gas and 90%
of that gas will be imported…We should be planning for an indigenous
energy future,” he said.
But he added that global reserves were not overestimated. “The concept
of peak oil needs to be taken very seriously indeed, [but] my working
assumption is that both global oil and gas reserves continue to be
significantly underestimated.”
But other oil analysts argued strongly that a major financial crisis
could occur as soon as 2008. Chris Skrebowski, of the Energy Institute
in London, which monitors all major oil discoveries and developments,
said depletion of global conventional oil reserves was running at a-
bout 5% a year, according to Exxon figures.
“Norway, Venezuela, the UK and Indonesia and many others are all de-
clining production. I expect Denmark, Malaysia, China, Mexico and
Brunei to peak within three years…I estimate that we have, at best,
32 months before [the crisis] hits.
Mr Skrebowski predicted, using UK government figures, that production
from the British sector of the North Sea would halve within 10 years.
“We have a congenital bias to optimism…12 fields in the North Sea
basin are seeing rising production, but they are mostly small. Over-
all, production peaked in 1999. It fell 10% last year and 8.5% the
year before,” he said.
“Oil will not run out for many years,” said Colin Campbell, former
vice-president of Fina and chief geologist of the oil giant Amoco.
“The information governments give is grossly unreliable. Oil companies
report less than they discover for pragmatic reasons, but Opec coun-
tries have overestimated what they think their reserves are.”
He said many Middle Eastern Opec countries, including Iraq, Saudi
Arabia and Kuwait, had all significantly lifted their estimated re-
serves in the late 1980s to benefit from larger quotas, but they had
not discovered new fields or changed their estimates since then.
“The real issue is not the actual date of peak production – which I
believe is next year – but what happens during the decline of produc-
tion.
“I think we are in for an extended period of restricted economic ac-tivity. I do not think that we will adjust very smoothly,” he said.
