Peak oil hasn't gone away

Sharon Astyk explains why peak oil hasn't gone away, despite the rapid deflation in oil prices. The Financial Times this week published findings from a leaked draft of a forthcoming International Energy Agency report showing that output from the world's oil fields is declining faster than experts thought. And a UK industrial task force -- note well: an industry task force, not environmentalists -- examining the potential for declining oil availability to affect the British economy published alarming results this week. Yes, new discoveries are being made, but if we were going to match the rate of depletion, we'd have to find a new Saudi Arabia every 18 months. Sharon explains why this rate of decline news is so important in this excerpt:

Peak oil was never about price - yes, if we've passed the halfway point of extraction, prices will probably go up. But the key word is not "expensive" but "volatile" - that is, of course if rising energy prices help tank the economy, the cost of energy that people can't afford to buy will go down. And they'll probably go up again, too, just at the moment most of us find it hard to pay. That's pretty much common sense. The idea that it is only peak oil if the price goes up every time is just wrong.

Now here's what you most need to know about these numbers - I can't speak for any other peak oil activist, but they are much higher than I expected. And that's really bad news. There has been a lot of speculation over the years about what the decline rate really is, and there are a lot of smart people out there who have good and useful cases on this subject. Matt Simmons, for example, author of _Twilight in the Desert_ and Jeffrey Brown, the creator of the Export Land Model have both been telling as many people as they can that the decline rates, for a host of reasons, are going to be higher than most people expected. Maybe they anticipated this. But I sure didn't. And I don't think most people did.

We're not going to find the equivalent of a new Saudi Arabia every 18 months - most of the new discoveries you've heard about in the media are a long way from development. And the biggest thing needed to keep up oil production is a lot of investment money - precisely the sort of thing that is disappearing in the credit crisis. Peak oil folks get accused of having too bleak an outlook - but right now, I don't think it would be inaccurate to say that most of us have actually had too rosy an outlook - we've been expecting a depletion rate considerably lower than that.

Sharon points out that a lot of the "green" projects to help transition to alternative energy sources depend on a big infusion of investment capital -- which, in case you haven't noticed, is drying up fast these days. T. Boone Pickens' plan is particularly at risk.
Again, I think Sharon's attitude is one of joyful, self-reliant realism. She doesn't say, "OMG, the sky is falling, woe is us!" Her point is, "OMG, the sky is falling, but hey, we can adapt creatively -- but we've got to start now."