The world is quickly running out of oil. In the year 2000, global
production stood at 76 Million Barrels per Day (MBD). By 2020, demand
is forecast to reach 112 MBD, an increase of 47%. But additions to
proven reserves have virtually stopped and it is clear that pumping at
present rates is unsustainable. Estimates of the date of "peak global
production" vary with some experts saying it already may have occurred
as early as the year 2000. New Scientist magazine recently placed the
year of peak production in 2004. Virtually all experts believe it will
almost certainly occur before the end of this decade.
And the rate of depletion is accelerating. Imagine a production curve
that rises slowly over 145 yearsthe time since oil was
discovered in Pennsylvania in 1859. Over this time, the entire world
shifted to oil as the foundation of industrial civilization. It
invested over one hundreds trillion dollars in a physical
infrastructure and an economic system run entirely on oil. But oil
production is now at its peak and the right hand side of the curve is
a virtual drop off. Known reserves are being drawn down at 4 times the
rate of new discoveries.
The reason for the drop off is that not only have all the "big"
discoveries already been made, the rate of consumption is increasing
dramatically. Annual world energy use is up five times since 1945.
Increases are now driven by massive developing countriesChina,
India, Brazilgrowing and emulating first or at least second
world consumption standards. Fixed supply. Stalled discoveries.
Sharply increased consumption. This is the formula for global oil
depletion within the next few decades.
The situation is especially critical in the US. With barely 4% of the
worlds population, the US consumes 26% of the world's energy.
But the US produced only 9 MBD in 2000 while consuming 19 MBD. It made
up the difference by importing 10 MBD, or 53% of its needs. By 2020,
the US Department of Energy forecasts domestic demand will grow to 25
MBD but production will be down to 7 MBD. The daily shortfall of 18
MBD or 72% of needs, will all need to be imported.
Perhaps it goes without saying but it deserves repeating anyway: oil
is the sine qua non of "industrial" civilizationthe one thing
without which such civilization cannot exist. All of the world's 600
million automobiles depend on oil. So do virtually all other
commodities and critical processes: airlines, chemicals, plastics,
medicines, agriculture, heating, etc. Almost all of the increase in
world food productivity over the past 50 years is attributable to
increases in the use of oil-derived additives: pesticides; herbicides;
fungicides; fertilizers; and machinery.
When oil is gone, civilization will be stupendously different. The
onset of rapid depletion will trigger convulsions on a global scale,
including, likely, global pandemics and die-offs of significant
portions of the world's human population. The "have" countries will
face the necessity kicking the "have-nots" out of the global lifeboat
in order to assure their own survival. Even before such conditions are
reached, inelastic supply interacting with inelastic demand will drive
the price of oil and oil-derived commodities through the stratosphere,
effecting by market forces alone massive shifts in the current
distribution of global wealth.
If the US economy is not to grind to a halt under these circumstances
it must choose one of three alternate strategies: dramatically lower
its living standards (something it is not willing to do);
substantially increase the energy efficiency of its economy; or make
up the shortfall by securing supplies from other countries. President
Bushs National Energy Policy published in March 2001 explicitly
commits the US to the third choice: Grab the Oil. It is this choice
that is now driving US military and national security policy. And, in
fact, the past 60 years of US policy in the Middle East can only be
understood as the effort to control access to the worlds
largest supply of oil.