MichaelCD - The Blog.

The thoughts of Michael Cadwallader. Coffee loving, history book reading, Cheshire man.

Sunday, May 13, 2007

The Earth's Plentiful (?) Bounty

I'm not a fan of the crass headline, but I am pleased to see that the Daily Mail is interested in tackling the subject of oil reserve depletion:

According to David Strahan, a respected business journalist and author of the new book, the early warnings of an oil crisis were correct in every respect, save their timing.

In the next couple of decades or so, he argues, our civilisation will have crossed a point where the peak of oil discovery and production has been reached.

From then on, the story will be of dwindling supplies and rising prices.

Is he right? Well, he marshals some impressive arguments. The rate at which we discover oil has indeed been falling for 40 years.

In the Sixties, geologists found some 55 billion barrels a year. Today, the figure is down to just 9 billion barrels.

Most worryingly, we now consume three barrels for every new one discovered, and out of the 98 oilproducing nations, 60 (including the UK) are now in terminal decline.

Tax revenues here are dropping as North Sea oil production declines.

Indeed, Britain will become a permanent net importer of oil next year - according to The Oil Depletion Analysis Centre - and then our balance of payments and energy security will begin to deteriorate.

Strahan says: "It's the end of a gravy train for Britain."

Indeed. Our trade deficit is already dire and we haven't begun to the feel the pinch of being a net oil importer.

Let's remember that although it is difficult to fix a peak in the production of oil, - Strahan has predicited 2020 by the way - it doesn't change the basic fact that easy oil just isn't being discovered anymore. Tar sands may be numerous, but are far more difficult and expensive to extract than sweet light crude. And then there is demand, which shows no sign of abating. This all points towards oil trending higher and higher, at the very moment Britain is becoming a net oil importer.

So, all in all, I'm thinking Tony got his timing just right. As for you Gordon...oh dear.

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