“Peaking of World Oil Production – Impacts, Mitigation and Risk Management” was researched by a team from independent research group Science Applications International Corporation and used sophisticated modelling techniques to analyse the likelihood of a peak oil crisis and the possible ramifications.
“Peak oil” describes the point at which global oil supplies have reached their maximum output in relation to remaining stocks and therefore begin a steady decline in world supply.
The primary conclusions drawn were:
- Peak oil is going to happen
- Peak oil could severely damage the US economy
- Oil peaking would represent an abrupt and unique challenge in human history
- Liquid fuels (primarily from the transportation sector) are the main issue
- Any attempts at mitigation require significant lead time
- Government intervention is required
- Given sufficient lead time, mitigating efforts with current technology could reduce economic upheaval
Three main scenarios were envisioned, involving mitigation action taken 10 and 20 years prior to peak oil, and action taken once it peaks. It showed that acting 20 years in advance would possibly avoid a liquid fuels shortfall, while action 10 years before would leave a decade of shortfall, and acting after the peak would see a minimum two decades where a liquid fuel deficit would cause significant global issues.
“The obvious conclusion from this analysis is that with adequate, timely mitigation, the costs of peaking can be minimised,” the report said.
“If mitigation were to be too little, too late, world supply/demand balance would be achieved through massive demand destruction (shortages), which would translate to significant economic hardship.”
The report canvassed possible mitigation efforts, including the much-discussed use of oil sands and shale to supplement global oil stocks. The report found that although conversion programs would help, they would not come near to solving the problems faced unless part of a long term process of oil dependency reduction.
According to the report, insufficient information is currently available to discern whether or not a peak oil crisis is about to happen, or has already begun. The primary issue is the lack of information from middle-eastern oil producers who, although responsible for a major percentage of global oil production, refuse to divulge how much oil remains in their fields.
“The peaking of world oil production presents the U.S. and the world with an unprecedented risk management problem,” the report’s executive summary said.
“As peaking is approached, liquid fuel prices and price volatility will increase dramatically, and, without timely mitigation, the economic, social, and political costs will be unprecedented. Viable mitigation options exist on both the supply and demand sides, but to have substantial impact, they must be initiated more than a decade in advance of peaking.”
www.cge.uevora.pt/aspo2005/abstracts.php
