When considering Peak Oil, the US Department of Energy usually stands among the most optimistic sources regarding the depletion of world oil reserves. Now its senior forecaster has come to accept that “Liquid fuel” production will peak next year and from then on decline slowly, with occasional increases, but still on a long term downward trend. And the US army scenario planners agree. They are now basing most of their scenario planning on just such an eventuality.
Glen Sweetnam, who is supervising the DoE’s next annual International energy outlook, is the most prominent official analyst on energy inside the Obama administration.
He says it may still be that some unforeseen source of oil suddenly emerges between now and next year, but admits that the source of that oil is currently “unidentified” His view emerged at a round-table of oil economists that Mr Sweetnam held in Washington, DC. titled “Meeting the Growing Demand for Liquid (fuels)“. Unnoticed, it put forward forecasts that are far more pessimistic than any analysis the DoE has ever delivered.
His unit at the DoE predicts that the decline of identified sources of supply will be steady and sharp : – 2 percent a year, from 87 million barrels per day (Mbpd) in 2011 to just 80 Mbpd in 2015. At that time, the world demand for oil and other liquid fuels should have climbed up to 90 Mbpd.
By 2007, despite huge profits, the top 5 international oil companies were spending a mere 6 percent of their free cash on exploration, compared to 34 percent on share buybacks, according to a Rice University study cited by The New York Times. Back in 1994, those top oil companies were spending 15 percent of their free cash on exploration. Many experts assume that this shift in strategy is forced by a lack of access to new oil reserves, while the world keeps clamoring for more oil.
Sweetnam’s warning comes after a long set of warnings dealing with possible troubles ahead on the supply side of the world oil market. Those warnings have been emitted over the last years through a range of sound sources such as The Wall Street Journal, The Houston Chronicle (main daily newspaper of the world capital of crude oil trade), the CEO of Brazilian oil company Petrobras, a former n°2 of Saudi national oil company Aramco, an International Energy Agency ‘whistleblower’, the chief economist of the IEA himself, the UK Industry Taskforce on Peak Oil & Energy Security or legendary-wildcatter-turned-renewable-tycoon T. Boone Pickens.
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