Analysts claim early peak in world oil production
By OGJ editors
HOUSTON, Aug. 12 -- The world is drawing down its oil reserves at an unprecedented rate, with supplies likely to be constrained by global production capacity by 2010, "even assuming no growth in demand," said analysts at Douglas-Westwood Ltd., an energy industry consulting firm based in Canterbury, England.
"Oil will permanently cease to be abundant," said Douglas-Westwood analysts in the World Oil Supply Report issued earlier this month. "Supply and demand will be forced to balance—but at a price."
The resulting economic shocks will rival those of the 1970s, as oil prices "could double and treble within 2 or 3 years as the world changes from oil abundance to oil scarcity. The world is facing a future of major oil price increases, which will occur sooner than many people believe," that report concluded.
Production to peak soon
"The world's known and estimated 'yet to find' reserves cannot satisfy even the present level of production of some 74 million b/d beyond 2022. Any growth in global economic activity only serves to increase demand and bring forward the peak year," the report said.
A 1% annual growth in world demand for oil could cause global crude production to peak at 83 million b/d in 2016, said Douglas-Westwood analysts. A 2% growth in demand could trigger a production peak of 87 million b/d by 2011, while 3% growth would move that production peak to as early as 2006, they said.
Zero demand growth would delay the world's oil production peak only until 2022, said the Douglas-Westwood report.
However, the International Energy Agency recently forecast that world oil demand would reach 119 million b/d by 2020.
"Clearly a major supply and demand imbalance is in prospect," the report said. "In short, it seems likely that during the first 25 years of this century, we will witness the beginnings of the end of the age of oil. The discussion is not if it will happen, but when."
Cheap oil supplies on which developed countries have depended to fuel economic growth for "at least the last century" still make up 40% of global energy consumption.