There are two competing explanations for today’s high oil prices. One sees the price rise as the result of a temporary imbalance between supply and demand, exacerbated by a weak dollar and a bubble of speculative commodities trading. Fix these problems, adherents suggest, and the price can return to previous low levels, allowing business to continue as usual. The other sees the current price spike as symptomatic of a much deeper crisis, one that could end life as we know it in the rich, consuming west as global supplies of cheap oil begin to run short, not temporarily, but for ever. As Chris Skrebowski, editor of the UK Petroleum Review, puts it: “This is what I would describe as the foothills of peak oil.” An imminent oil peak is no longer just a fringe theory: increasing numbers of experts view the topping out point as very close, if not actually upon us. “Easy, cheap oil is over, peak oil is looming,” warns Shokri Ghanem, head of Libya’s National Oil Corporation. If they are right, we are about to move into a very different world.
But while the reality of global warming is now nearly universally accepted, the potential problem of peak oil is still widely doubted or ignored. There is no official policy for a smooth transition to a post-oil future; the British government blithely reassures us (in response to a peak oil petition on the No 10 website) that “the world’s oil and gas resources are sufficient to sustain economic growth for the forseeable future”. Both the International Energy Agency and the US government issue projections based on oil reserve estimates which many geologists and oil industry insiders suggest are grossly inflated. This complacency smacks of a fatal combination of ignorance and denial. Recent oil production figures suggest that the peak oil crowd is winning the debate. For the past three years world crude production has flatlined at about 86 million barrels per day, despite a rapid upward trend in prices. This lack of increase in supply, combined with rapidly rising demand in countries such as India, China and Brazil, lies at the root of today’s soaring prices.
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