Published on Saturday, May 25, 2002 by the Associated Press Specialists Warn Days of Cheap Oil Numbered by Bruce Stanley
UPPSALA, Sweden - Global supplies of crude oil will peak as early as 2010 and then start to decline, ushering in an era of soaring energy prices and economic upheaval, an international group of petroleum specialists said yesterday.
"There is no factual data to support the general sense that the world will be awash in cheap oil forever," said Matthew Simmons, an investment banker who helped advise President Bush's campaign on energy policy. "We desperately need to find a new form of energy."
Colin Campbell, a retired geologist who helped organize the two-day conference, said governments are too caught up in short-term issues to focus on the long-term threat of depleted oil reserves. Oil companies prefer not to talk about it for fear of upsetting their investors, he said.
Their warning defies more commonly held view that global crude reserves will remain plentiful for decades. Critics say similar predictions of scarcity at the time of the 1973-74 Arab oil embargo didn't come true.
"There's a lot of phony baloney in there," economist Michael Lynch of the U.S. business-forecasting firm DRI-WEFA said by phone from Lexington, Mass. "A lot of prominent geologists just laugh at this."
"There are wolves out there, but if you keep crying wolf and no wolves show up, you start to lose credibility," he said.
The dispute centers on the precise timing of what is variously described as "peak oil" or "the big rollover" - the predicted date when existing oil production, together with new discoveries of crude, can no longer replenish the world's reserves as quickly as countries are depleting them.
Roger Bentley, head of the Oil Depletion Analysis Center in London, insisted the predictions made in the 1970s were basically correct. About 50 countries, including the United States, already have passed their point of peak oil output.
The world's total reserves of crude, excluding oil found in shale and tar sands, are estimated to exceed 3 trillion barrels, according to the U.S. Geological Survey and other conventional sources of data.
Campbell insisted the true figure for reserves is closer to 2 trillion barrels, due partly to what he described as overstated reserves reported by Saudi Arabia and other OPEC nations.
He played down the significance of new oil discoveries in the Caspian Sea region of Central Asia and in deep waters off the coasts of Brazil and West Africa and in the Gulf of Mexico. Now that geologists have effectively surveyed the globe for crude, Campbell and others at the conference said they doubted that any giant new oil fields still await discovery.
Campbell said improvements in the technologies used to explore and drill for oil will increase production by only modest amounts.
As a result, Campbell forecast that oil output would peak by 2010 - at least 26 years sooner than the rollover point predicted in a U.S. government study prepared in 2000.
"It's not a cataclysmic event," he said. "But oil will become scarcer and more expensive. That's undeniable."
Simmons, the banker, predicted that the United States would suffer an energy scare even sooner, due to a 10 percent decrease he foresees in U.S. production of natural gas this year.
Simmons said Americans will have to embrace coal and even nuclear power once fossil fuels pass their global peak in production.
Higher and more volatile prices are sure to accompany the transition period, he said.