It Is Not Necessarily Peak Oil – It Is That Demand is Outstripping Supply
After all the debate about Peak Oil, the real culprit in the oil and gas chain is that supply without declining can’t keep up with demand. Admittedly, net effect is the same, but the issue of Peak Oil which is about the supply and ultimate decline in oil production is not the deciding issue. It appears that world oil production of 85 mb/d (million barrels per day) will not handle the demand going forward, from the WSJ. Below is part of the article, but the entire article is worth a read.
Once again I realize that the current unraveling of the real estate market is more interesting, but issues like oil supply will probably effect everyone's life more than the on-going state of the real estate market. The Peak Oil issues have been discussed in a previous post, but now the issue is different. It is demand that is the issue not necessarily supply. Is this part of the Super Cycle issue discussed a few days ago here?
World oil and gas supplies from conventional sources are unlikely to keep up with rising global demand over the next 25 years, the U.S. petroleum industry says in a draft report of a study commissioned by the government.
In the draft report, oil-industry leaders acknowledge the world will need to develop all the supplemental sources of energy it can -- ranging from biofuels to nuclear power to oil extracted by unconventional means from the oil sands of Canada -- to meet soaring demand. The surge in demand is expected to arise from rapid economic growth in such fast-developing countries as China and India, as well as mounting consumption in the U.S., the world's biggest energy market.
The findings suggest that, far from being temporary, high energy prices are likely for decades to come.
"It is a hard truth that the global supply of oil and natural gas from the conventional sources relied upon historically is unlikely to meet projected 50% to 60% growth in demand over the next 25 years," says the draft report, titled "Facing the Hard Truths About Energy."
"In geoeconomic terms, the biggest impact will come from increasing demand for oil and natural gas from developing countries," said the draft report, a copy of which was reviewed by The Wall Street Journal. "This demand may outpace timely development of new supply sources, thereby pressuring prices to rise."
The study, which was requested by U.S. Energy Secretary Samuel Bodman in October 2005, was conducted by the National Petroleum Council, an industry group that advises the secretary.
The conclusions appear to be the first explicit concession by the petroleum industry that it alone can't meet burgeoning global demand for oil, which may rise to as much as 120 million barrels a day by 2030 from about 84 million barrels a day currently, according to some projections. . . . .
These conclusions follow hard on the heels of a medium-term outlook by the Paris-based International Energy Agency this month, which suggested a supply squeeze will hit by 2012. The fact that the American petroleum industry is warning of a crunch could have an even greater impact on the debate over energy policy.