Peak Oil in Three Charts

For those of you with an interest in the world's most important commodity, if you haven't already done so, stop by The Oil Drum for some of the best information, analysis, and discussion on the topic of "Peak Oil".

This is a subject about which most Americans are blissfully unaware.

That feeling has only been enhanced by the precipitous decline in crude oil prices in recent months, from the uncomfortable highs near $80 to what now seems like bargain basement prices near $50.

The expense of filling up an SUV will soon be back down at comfortable levels and all will seem right in the world of energy - at least for a while.

How long a while?

That's what the peak oil debate is all about.

Google the phrase Peak Oil and you'll get Matt Savinar's Life after the Oil Crash at the top of the list. Given what appears on the main page, a casual passer-by could easily come away with the impression that peak oil means that the end of the world is at hand, quickly dismiss the whole idea, and then quickly move on.
If the end of civilization as we know it really is at hand, it's not clear how you would convey that to others without sounding alarmist - it seems that's part of the problem with the Peak Oil discussion.

It's kind of like calling a stock market bubble a bubble, or calling a housing bubble a bubble. No one wants to be told that the good times are coming to an end - that there really are no free lunches (or, in this case, that there really isn't an endless supply of cheap oil).

Being a mere novice on the subject in comparison to the staff at The Oil Drum, all that is being attempted here today is to show a few charts on the topic to perhaps add a bit of clarity to the picture - to "dumb it down" for those without a PhD.

Three charts should do the trick.

The first chart is from the International Energy Outlook 2006 report from the International Energy Administration (IEA) and shows projected world oil consumption going out a few decades.

Pretty straightforward stuff - the update for 2007 will be out this summer and this data from last summer may have been revised since it was released, but it's good enough for use here today.
The second chart is from the January 2007 Peak Oil Update by Khebab at The Oil Drum, posted earlier this week.

Again this is pretty straightforward stuff.

What you see below is the current world oil production of about 85 million barrels per day - a production level that can be matched up with what one could reasonably extrapolate from the chart above.

The current demand is something less than the current production of about 85 million barrels per day - whether it is two million less or four million less is a discussion best left to others.
Chart number three below (also from Khebab at TOD) is where things get complicated.

The debate regarding the demand for oil in the future pales in comparison to the debate about its supply in the years ahead, as clearly indicated by the multi-colored lines in the chart below, each one showing a different rate of production over time.
Which line will prove to be the correct one? Who knows.

Only one of the lines intersects the year 2010 at a level above the expected demand of 92 million barrels per day. That's the outlook being offered by the uber-optimistic CERA (Cambridge Energy Research Associates), an organization whose motives many have questioned.

That could be a problem.