Oil’s Well?

The Peak Oil Debate

Laurel Graefe, a senior economic research analyst at the Federal Reserve Bank of Atlanta, has written an interesting analysis of ”The Peak Oil Debate” in the Atlanta Fed’s most recent Economic Review.

Observing that the Energy Information Administration in its International Energy Outlook 2009 “projects that world energy demand will grow by nearly 45 percent between 2006 and 2030, with about a fifth of new supply needing to come from oil,” Ms. Graefe discusses the longstanding debate about when the production of oil will reach its zenith and begin to decline. An introductory excerpt:

“Countless numbers of popular books, papers, and blogs are fully committed to either proving or debunking the theory that world oil production either already has peaked or will peak soon. Merely entering a discussion about peak oil can prove to be rather sticky, given the heated, often apocalyptic aspect of the debate. The sense that the peak oil argument tends to be fear-based often plays to people’s emotions, adding more fervor to the dispute. What is fascinating is how little the two sides of the argument have changed over the history of the debate. People have been calling for the beginning of the end of oil for more than half the past century. (Keep in mind that the industrial use of oil began only about 100 years ago.)

“Those who announce that the world is about to reach (or has already reached) peak always have counterparts who disagree. The nonbelievers had yet another victory in early 2009 when the 2008 production figures were released, showing that annual oil production increased to a record high in 2008, dismissing an increasingly popular prediction that world oil output had peaked in 2005 (see figure 1). The doomsayers, of course, must eventually be right—given the fact that oil is an exhaustible resource and will ultimately run out—though they haven’t been right so far. But the counterargument that oil production hasn’t peaked yet, so it isn’t going to, doesn’t prove terribly convincing.”

Just 16 pages long, including useful references, you’ll find it a thoughtful and engaging introduction to the topic.

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Published in: on August 10, 2009 at 2:44 pm  Leave a Comment  

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