The world is just five years away from reaching the point at which oil cannot be extracted fast enough to meet demand.
The world is just five years away from reaching the point at which oil cannot be extracted fast enough to meet demand.
And the ramifications for Western Australia’s highly oil dependent economy and society in general could be catastrophic.
That is the warning from Swedish physicist and president of the international Association for the Study of Peak Oil & Gas, Professor Kjell Aleklett, in Perth recently to launch the Australian branch of the association.
‘Peak oil’ is the time at which global oil production peaks and then moves into decline as demand cannot be met.
“It is inevitable, unavoidable, and our data points to it happening in 2010. We need to be making plans for that now,” Professor Aleklett told WA Business News.
Australia’s oil production peak was back in 2000.
“When there is not enough oil, who gets it will be determined largely by price. The recent temporary world oil shortage resulting from the US hurricanes showed just how fast a peak effect can reach the petrol bowser,” Professor Aleklett said.
He said prices may ease temporarily in the near future and there may be new discoveries, and new alternative technologies, but they would not be good enough to avoid the 2010 peak.
WA, with its widespread and remote population, mining and agricultural wealth, was particularly vulnerable. Transport costs to overseas markets were also critical so “a significant jump in fuel costs could affect your backbone industries”.
While in Perth Professor Aleklett gave formal briefings to the WA ALP caucus, the Chamber of Commerce & Industry, the Australian Institute of Energy, the RAC and senior state government bureaucrats.
US petroleum giant Chevron has estimated the world is using two barrels of oil for every new barrel discovered.
“Many of the world’s major oil fields, possibly including the major Saudi fields, are either in decline or approaching peak. Kuwait revealed recently that the world’s second largest oilfield is in decline,” Professor Aleklett said.
To meet anticipated demand over the next decade or two, he said, the world needed to find another two oil fields as big as Saudi Arabia, and the chances of that were slim.
The peak oil debate has long had a political edge to it.
“In a few years, 75 per cent of the world’s oil will be held by Muslim countries,” Professor Aleklett said.
China was also making deals to guarantee it supply into the future.
“That means everyone else will get less,” he said.
There were many actions that could be taken to alleviate the shortage, but they would take years, even decades, to set in place.
“What’s urgent is to start making preparations now,” Professor Aleklett warned.
