Debate about the available, global oil supply has been around for some time. The particular date at which the global oil supply will peak has remained elusive and controversial among those who have tried to estimate it. The Economist reported yesterday on the comments of both Daniel Yergin in the weekend Wall Street Journal and James Hamilton in its own article, Peaks and Spikes.
Hamilton, in response to Mr. Yergin, isolated three propositions that he believes are at the core of the issue.
- The annual flow rate of oil production from a given reservoir eventually reaches a maximum, after which it declines.
- The annual flow rate of total global oil production will eventually have to decrease as a necessary consequence of (1).
- This peak in global production will be reached relatively soon.
Whether one accepts these three propositions, the impact of the continued growth in demand for energy, particularly from developing countries, is easily observable. As we grapple with the issues of sufficient supply, it will be critical that we maintain an even-handed pragmatism – about (a) the need for continued exploration for oil and the development of it as an important energy resource, (b) the importance of exploiting the substantial availability in the U. S. of natural gas from shale beds as a transitional, lower carbon fuel, and (d) the significance of investing in research that leads to additional, lower cost renewable sources of energy for the longer run.