Monday, December 19, 2005 Goldman's Murti Says 'Peak Oil' Risks Sending Prices Above $105

Oil-producing nations are seeking to extend the life of their reserves. Norway, which ranks behind Saudi Arabia and Russia in world oil exports, forecasts its production will peak in 2008. Oil and Energy Minister Odd Roger Enoksen in a Dec. 8 interview said he thinks it will come later.

``We had thought we would very quickly see a strong drop in oil production, but now we expect to keep it at a plateau for longer,'' he said.

The biggest questions center around Saudi Arabia, the world's largest oil exporter. The most vocal skeptic of Saudi Arabia is Matthew Simmons, chairman of energy investment bank Simmons & Co. He's author of ``Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy,'' in which he argues that fields are about to decline because water injection has damaged reservoirs.

I understand that in an economist's or consumer's mind, a plateau on the peak would be a good thing. However, when you visualize our current (or higher) rate of consumption and dependency in relation to what the population will grow to in 10 years....that is quite a scary scenario. This will make the crash all that much harder. Sigh. I realize the plummet will be inevitable sooner or later. If this plateau is reality, we have maybe 10-20 years to get switched over to a different way of living. Sounds like it could happen but not likely. Nevertheless, the earth's carrying capacity without fossil fuel inputs is approximately 1.5 billion. We now carry 6 billion. Therw will be alot more people than that in 10 years.

People also talk about demand destruction curbing the peak to a later date. What will this solve? The only thing it might do is give us some time to switch to renewables. Will we really do this? If we don't, we are in for some VERY difficult times.

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