Everyone, even the most fervent fossil fuels fanatic must agree that the supply of petroleum is finite. As global climate change becomes more and more distinct and undeniable, the wisdom of burning gigatons of oil becomes all the more questionable. But the more immediate problem is that of peak oil. For those who are not clear on this term, it is that point in an oil field’s life when the oil that is easy to extract has been extracted. The energy cost of getting out more oil goes steadily up until it is no longer profitable to pump the well. On a global scale, peak oil is the sum of all the developed oil reserves. Take collectively, they display the same behavior, yielding less and less oil per unit of energy expended to get it out.
There is a growing body of evidence that we are, in fact, at the peak oil point; world oil production has been essentially flat for the past several years, and the price of oil has risen steadily higher until it is now over $100 per barrel. This is consistent with a global peak oil scenario.
Even though the Unites States no longer gets most of its oil from Saudi Arabia, it is still a very important resource for the energy needs of America and other nations. The question is, how much does Saudi Arabia have left? On this point the Saudis have been famously reticent to provide numbers that are believable. For years there have been rumors that the Saudis have been using techniques on some of their wells that imply that they have passed their maximum production. From a business standpoint, keeping such facts quiet is understandable, if wrong-headed. Ironically, if oil becomes scarce, Saudi Arabia may well fall the farthest. But we are also dealing with cultural issues. In the Middle East, matters of honor or “face” are paramount, and to acknowledge certain kinds of weakness in matters such as national prosperity or wealth constitutes a serious social and political liability.
Now, thanks to Wikileaks, we have some credible information with numbers. According to a 2007 diplomatic cable, Dr. Sadad al-Husseini, who is the former Executive Vice President for Saudi Arabia has overstated the size of their reserves by about 40% or 300 billion barrels. Dr. al-Husseini also believes that as a result Saudi Arabia will have trouble meeting its production goals and cannot therefore help keep oil prices in check.
An important takeaway point from this is that it further supports the idea that we are in fact going through peak oil now. It also creates an added incentive to find ways to reduce or even eliminate our dependence on oil. This is an extremely difficult problem; oil touches virtually everything in our lives, so as prices continue to rise we will face the need not merely to adjust, but to completely remake our civilization into something more sustainable and not nearly so specialized in where it gets its energy. It is probably high time for you to start thinking about this issue, because it has the potential to make this insipid economy even worse, and sweep away any pretense of “recovery.”