So, was the oil price rise to $147/bbl in 2008 an indication of Peak Oil? All the evidence suggests, yes, it was.
Consider this: In 1930, oil DISCOVERIES in the USA reached a maximum only to decline ever since. 40 years later oil production peaked in the USA. Using this 40 year lag between peak discoveries and peak production, world oil production should have peaked around 2005. While in 2008 there was a marginal and very brief increase in oil production over the maximum 2005 level, global oil production has essentially stayed flat since early 2005, despite ever increasing oil prices. What the market is telling us is that Peak Oil is here.
As the The Oil Drum article I referenced in my first post mentioned, when expenditures for oil rise above 4% to 5% of United States GDP, it pushes the US into recession. This level of expenditure corresponds to an oil price of $80/bbl to $85/bbl. Currently, the USA is experiencing anemic growth relative to past levels and yet the oil price is close to $80/bbl. What this means is that if the USA were to experience strong growth again, it would lead to oil prices above $85/bbl, causing the USA to fall back into recession. And remember, this is with FLAT GLOBAL NET EXPORTS. If global net exports were to fall, it would have a disastrous effect upon the US economy.
If Peak Oil looks like an abyss, it's because it is. It is why I have taken the time to discuss it here. Public consciousness of Peak Oil is virtually nonexistent, despite the skyrocketing prices of oil in 2008. It is ignorance the world simply cannot afford. |
