Study Discounts Peak Oil Theory

Oil supply is projected to increase.

Photo: CERA

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The world is depleting oil at a rate that will require developing new fields that can supply as much oil as Iran does today.

But that isn't a problem, according to Cambridge Energy Research Associates, a leading oil industry analyst.

CERA has been outspoken about its belief that the peak oil theory is wrong. Its latest report reiterates that idea.

The crux of the CERA study is that the annual rate of decline of existing oil fields is 4.5% – not 8% as is commonly cited.

“Some of the more gloomy, pessimistic ‘peak oil’ views about the future of oil supplies that are current today result from an assumption of high decline rates,” said CERA Oil Industry Activity Director Peter M. Jackson. “This new analysis provides the basis for more confidence about the future availability of oil.

Peak oil is the idea that the world has pumped so much oil that there isn't enough left that can be pumped at a high enough rate to meet world demand. The Daily Green's take on the issue is that political peak oil is a reality, even if geologic peak oil isn't. Because the supply is tight, any disruption or threat of disruption to the supply makes prices spike in a peak oil-like scenario.

The CERA study seems consistent with that idea.

“This analysis increases the quality and reliability of our projections of future oil supply," Jackson said. "However, while our understanding and extrapolation of many belowground factors is improving, careful judgment is still required to accommodate the impact of aboveground factors, such as geopolitics, investment patterns, rising costs, government decision-making, and environmental issues, that will continue to have a major impact on the global forward production capacity profile.”

One point of agreement between peak oil analysts and CERA is that the world will come to rely more and more on oil reserves that are more difficult to exploit, like oil sands, oil shale and deep water deposits. The disagreement is how that shift will affect price and availability – not to mention vulnerability to terrorist attack.

Another likely point of disagreement between peak oil adherents and CERA analysts is the veracity of data coming from Saudi Arabia, the world's biggest producer. Some doubt the figures Saudis quote, and there is no independent third-party analysis.

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