Peak Oil 15 Months Away ?
By Adam Porter
03 October, 2004
Aljazeera
In a world dominated by self-censorship,
only the brave speak out. But in a world running on cheap energy, with
all the consequences that it brings, only those who value their integrity
above their wallet are worth listening to.
Back in April one
man, Iranian oil and energy analyst and expert Ali Bakhtiari did just
that. He stood up and made a prediction that could have seen him ridiculed.
"By the end
of the year we will see oil at $50 a barrel," he told an audience
at the annual gathering of the Association for the Study of Peak Oil
(ASPO) in Berlin.
To make a prediction
that takes in record high prices is one thing. To name the price is
another altogether. But now, while OPEC, the major industrial nations
and Saudi Arabia chant their mantra that there is "no problem",
Bakhtiari seems more vindicated than ever.
"That is what
I said in April, that we would get to fifty dollars by the end of the
year. And we have arrived three months early," he says with a chuckle.
"I think that was really quite a good prediction you know."
Trouble is, the
rise of oil's price range is an undoubted economic threat. Not to the
super rich, the top 1% of global earners, or the super poor, the 50%
of the world's people who live on less than $2 a day, but to everyone
else. Around three billion of us.
"I am afraid
I think the price will go higher," says Bakhtiari worryingly. "I
had hoped it would stay in the $40 range. I think, at that level, economies
could start to cope, but now the price of oil is out of anyone's control."
The argument goes
that instead of planning a structure for using oil, it has been left
to the market fundamentalists to determine the future of these valuable
biological assets.
The collapse of
oil pricing in the 1990s, as well as the weakness of the dollar, had
meant that the real value of oil was incredibly low.
As a result no oil
majors or producer nations were interested in spending billions of dollars
in new investment, because there was no short-term profit.
No one was interested
in spending billions on fuel efficiency because there was no short-term
profit. Why no one was interested in spending billions in solar, wind
or hydrogen energy is anybody's guess.
"The big economies
are just starting to get used to the idea of $40 a barrel. We have passed
that financial and psychological barrier, but if we moved straight into
the $50 range, then that is not good at all"
The same train of
thought says that as well as these factors, oil has been physically
guzzled up like there is no tomorrow.
Ironically, it is
that very appetite, growing at an exponential rate due to demand in
the USA, China and India, that could exacerbate the problem.
Bakhtiari says,
"I hope that we don't move into a fifty-dollar range. The big economies,
and by that I mean the US, the EU, China, India and Japan, are just
starting to get used to the idea of $40 a barrel. We have passed that
financial and psychological barrier, but if we moved straight into the
$50 range, then that is not good at all."
However, he does
not see the forty-, or fifty-dollar, range as something that will last
forever. Indeed not even for very long at all. Instead, he says the
price is being driven by something far more fundamental.
"No one can restrain the price any more. For example, everyone
thought that it would be OPEC who could manage demand. But that is now
in the past.
Now it is really
peak oil that is behind the wheel of the car. Peak oil is driving the
rise in price and demand is not the real question. We are entering a
new era, but we are only at the very beginning of it."
The idea behind
"peak oil" is this. That, as the planet reaches the halfway
point of consuming all its available oil, then a combination of bullish
demand, slowing fields and insurmountable supply bottlenecks will create
brutal price shocks. Almost certainly slicing the head clean off the
world economy in the process.
This peak in oil
supply will act as an economic guillotine. Yet the thread suspending
the blade above our heads will be released without warning.
Politicians, producer
countries, major oil companies and consumer states are not about to
announce their own demise. It would not be good for business, or re-election,
or both.
"If there was
nothing to be worried about, then there would be no price increases,"
explains Bakhtiari.
"If there is
no reason to worry, because there is plenty of oil and OPEC or Yukos
or whoever can simply pump some more, then there would be no problems
and no rises in price. The market would not be worried at all."
Whilst Bakhtiari
admits predictions are fraught with danger, his own research, so far
extremely accurate, says peak oil has yet to arrive. Like Hurricane
Ivan blowing in from the ocean, we may only be experiencing the first
stormy gusts.
"I think the
peak will arrive around 2006, 2007. But, this is only 15 months away.
That is all. At that point, no one can say what is going to happen.
Except the price is going to go up. And no one will be able to stop
it."