Peaking

The leading energy analysts who foretold Enron's demise are now claiming that the world's major oil companies are almost tapped out. This is a derivation of Hubbert’s Peak, Named after the late Dr. M. King Hubbert with Shell, who developed a model to predict oil production rates. He successfully predicted that US oil production would peak in about 1970 (and decline thereafter), and that world oil production would peak just about. . . now.

The decline in oil supplies may have potentially dire consequences:

The peaking of world oil production presents the U.S. and the world with an unprecedented risk management problem. 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.

Some argue that oil is an underlying cause of the Second Iraq War. This might also be a sign of oncoming resource wars.

The John S. Herold company has developed peak estimates for about two dozen oil companies. 2008 is expected to be a critical year, with Exxon Mobil, ConocoPhillips, BP, Royal Dutch/Shell, and the Italian producer, Eni S.p.A., all hitting their peaks. In ChevronTexaco is expected to peak in 2009. According to Herold, each of the world's seven largest publicly traded oil companies will begin seeing production declines within the next 48 months or so.

The Herold company has its critics, but the energy companies clearly appear to be nervous. And, since we haven't initiated mitigation measures a decade in advance of peaking, as some experts say is needed, so should we.

Thanks to Howling at a Waning Moon for the tip.