Oil Supply Crunch May Hit In Five Years

Posted by: Irvin Dawid
Thanks to: John Hartz

20 August 2008 - 5:00am

Using the term 'oil supply crunch' as opposed to 'peak oil', this British report indicates that the oil crisis will hit by 2013, with prices jumping to $200/barrel. It states that the problem is not insufficient oil but obstacles to its extraction.

"While there is plenty of oil in the ground, companies and governments were failing to invest enough to ensure production," according to the Chatham House report.

"In reality, the only possibility of avoiding such a crunch appears to be if a major recession reduces demand - and even then such an outcome may only postpone the problem," author Professor Paul Stevens said in The Coming Oil Supply Crunch.

From report (pg. 9):
"The main hypothesis of this report is simple. Unless there is a collapse in oil demand sometime within the next five to ten years, the world will experience a serious oil ‘supply crunch’. This will be nothing to do with below ground resource constraints or arguments to do with ‘peak oil’. Rather, it will be the result of inadequate investment by international oil companies (IOCs) and national oil companies (NOCs) which means that below-ground oil resources will not be converted into producing capacity."

Chatham House press release: The Coming Oil Supply Crunch
Chatham House Report: The Coming Oil Supply Crunch (38-page PDF)

Full Story: Oil 'could hit $200 within years'

Source: BBC News, August 8, 2008

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“What we have now is geopolitical peak oil.” (NYT, 8/19)

Submitted by Irvin Dawid on Wed, 08/20/2008 - 07:20.

Interestingly, NYT just reported 8/19 on this issue as well:

"Sluggish supplies have prompted a cottage industry of doomsday predictions that the world’s oil production has reached a peak. But many energy experts say these “peak oil” theories are misplaced. They say the world is not running out of oil — rather, the companies that know the most about how to produce oil are running out of places to drill."

“There is still a lot of oil to develop out there, which is why we don’t call this geological peak oil, especially in places like Venezuela, Russia, Iran and Iraq,” said Arjun Murti, an energy analyst at Goldman Sachs. “What we have now is geopolitical peak oil.”

"The new oil order has been emerging for a few decades. As late as the 1970s, Western corporations controlled well over half of the world’s oil production. These companies — Exxon Mobil, BP, Royal Dutch Shell, Chevron, ConocoPhillips, Total of France and Eni of Italy — now produce just 13 percent.

Today’s 10 largest holders of petroleum reserves are state-owned companies, like Russia’s Gazprom and Iran’s national oil company."

source:
NYT-BUSINESS | August 19, 2008
As Oil Giants Lose Influence, Supply Drops

Irvin Dawid, Palo Alto, CA