Peak oil and industrial adaptation

Global energy markets are continuing to experience an increase in petroleum prices. From a relatively low $20 per barrel in 2002, prices reached as high as $78 per barrel in 2006. During this time, there has been increasing discussion of “Peak Oil”—the concept that global oil production is peaking and beginning an irrevocable decline.

Even among those who do not consider Peak Oil a near-term problem that merits concerted action, there is a growing consensus that prices are trending higher and that increasing proportions of the world’s conventional oil1 supply will be coming from nations that are members of the Organization of the Petroleum Exporting Countries (OPEC), especially those in the Middle East. The world is entering a period where growing global demand, OPEC dominance of oil production, and numerous geopolitical threats to supplies have combined to create great uncertainty about the future cost and security of oil.

Meanwhile, domestic natural gas production is lagging behind demand growth despite major demand destruction in certain U.S. industrial sectors. Major expansions of liquid natural gas imports, largely from OPEC countries, are being proposed to fill the supply gap. With these energy supply problems in mind, I review some predictions concerning both oil and natural gas production peaks and discuss how these peaks would impact industry.

Published in: Environmental Quality Management, Volume 17, Issue 1, October 2007, Pages 83 - 90
Available from: Wiley Interscience