Here Comes the Peak?
Sooner or later, oil production in the world is going to peak and then go into a long, slow decline. If you understand that getting oil from underground rock strata is not like pumping it from a tank but like wringing it from a sponge, you know that you get a lot of easy oil early in a field's life. Later, you still have plenty of oil in the ground, but it takes more and more effort to wring it out. U.S. and North Sea oil locations have already peaked. The Middle East is a bit more of an unknown because Saudi Arabia is very secretive on the subject, but evidence based on the salinity of Saudi oil indicates that the peak isn't far off. One of the first things to look for is for OPEC to give up on quotas. That will happen when they can no longer maintain the illusion that they have plenty of spare capacity. Well, it looks like it may have just happened:
The Organization of Petroleum Exporting Countries pledged all its remaining extra capacity, or an additional two million barrels of oil a day amounting to 7 percent of the group's output, in a last-ditch attempt to bring prices down from their record highs. Source: NY Times
Can they deliver? Time will tell. It looks to me like an excuse for stepping aside from the quotas without having to announce that they are very close to being unable to pump that much anyway.
I want to mention one other thing here. I keep hearing from some that the solution is more drilling. However, we don't know of any other large, untapped reserves. Yes, we can go drilling in the arctic. That is expected to yield about a 10 month supply of oil for the U.S. at current consumption rates. However, the field will actually have to be pumped dry over the usual lifetime of a field -- say about 40 years. So that's 100% of our needs for 10 months if we could pump it like it was in a tank. However, since it will actually be pumped over a 40 year period, it will (on average) provide for about 2% of our needs over that time provided we have NO growth in consumption. Overall, new drilling is just not going to put a sizable dent in our needs. Time to get our heads out of the sand and make the move to newer technologies (electric-ethanol hybrids, perhaps?). Putting more rigs in our wildlife refuges and off our beaches is NOT going to save us: it's just going to spoil our beaches and endanger wildlife we'd hoped to protect.
It's like flooding in New Orleans: everyone knew the Big One was going to happen sooner or later, but no one wanted to pay for levees then that would protect the city now. If we don't start moving away from our dependence on oil NOW, we'll have an economic and political crisis on our hands as we fight over an ever-dwindling supply.