Early this year, the CEO of Royal Dutch/Shell Group was fired for concealing the fact that Shell's oil and gas reserves were 20 percent less than the books showed. Soon thereafter, his successor lowered Shell's estimate of its reserves again, and the company just recently announced it would be delaying its annual report to shareholders.
Another oil and gas company, El Paso Corp., followed with a statement that its reserves appear to be 40 percent less than previously estimated.
Producers currently discover about one barrel of "new oil" for every four barrels that are consumed worldwide, and there have been no large oil or gas discoveries in recent years. Anywhere.
It gets worse. The world's largest oilfields have been producing for many decades and now require heroic measures (such as pumping in seawater or steam) to coax the oil from the ground. Some U.S. oilfields use the energy-equivalent of a half-barrel of oil to lift one barrel from the ground.
Welcome to Peak Oil -- the point in time when a nation or the entire world passes the point of maximum oil production. This happened in the United States in the early 1970s, and today the U.S. produces about one-third of the oil it did then. Peak Oil has come and gone in Venezuela, Libya and Indonesia. But still, there is plenty of oil in the Middle East, right? You would think so, but even the Saudis are hedging, according to a recent New York Times article.
Some energy analysts believe we are witnessing the global peak right now. The most optimistic ones think it might still be 20 or 30 years away, and then production will begin a slow decline lasting the rest of this century until all the recoverable oil is pretty much gone. Some are confident that higher fuel prices will finance the new technology needed to coax difficult-to-extract supplies from the earth. But then we will have, well -- higher fuel prices.
Don't take my word for it. Go to Google and type in the words "peak oil" and see what turns up. There are countless opinions about how much oil is left in the world, about how expensive it will be to recover, and what the likely substitutes are when it runs out. Surf at your own risk -- an errant click swiftly drops you into a doomsday world of black helicopters, energy beamed from outer space and off-the-grid types wanting to sell you a lawnmower that runs on tap water. The discussion runs the breadths of the scientific and political spectra, but almost no one believes oil and gas are going to be more available, cheaper or easier to secure than they are today. Many in the know are extremely, and credibly, pessimistic.
Sure, we have lots of coal near Cincinnati. And most of it floats down the Ohio River on big boats at low cost. But the planes at our international airport, the biggest economic engine of our region, won't fly on coal. We're a center for auto manufacturing and trucking, industries that will suffer if and when Peak Oil starts to bite. Even what little public transportation we have around here is powered 100 percent by petroleum. It's not a pretty picture.
Peak Oil and its aftermath will profoundly affect most of our lives -- and, more severely, those of future generations.