Tuesday, 7 December 2010

Peak oil was in 2006

It sort of slipped by mainstream news, but a few weeks back the World Energy Outlook published by the International Energy Agency declared that Peak Oil happened in 2006 and that oil production will be around 68 million barrels a day for the next 25 years. Read more here if you can't afford the $120 price tage for the report (or would prefer to spend your $120 on one and a half barrels of crude instead...). Strangly, the BBC simply reported the expected 53% growth in energy demand, failing to mention that there wasn't going to be the energy available to meet this demand, thus pushing prices skyward or throwing the world into even deeper recession.

The impact that this will have on the world's economies cannot be underestimated. Oil is the primary driver for most economies and there will chaos until governments and people work out how to live without economic growth. But it's worse than that, there is already a rebalancing of economies starting. The Celtic Tiger was shot, stuffed and mounted in the IMF board room last week; Greece has gone the same way; and Portugal is following close behind. Of course, none of them have benefitted from having their own currencies and the additional flexibility that this gives them, but being Eurozone has only hastened the inevitable.

Finding a way to descend the oil ladder without civil unrest is going to be a big challenge for the next few decades. Living as if there is a future would be a good start.

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