The Oil Drum

This is a guest post by user Davidyson, who is living in Potsdam, Germany, peak oil aware since May 2004, computer scientist, journalist, consultant, project manager and web specialist, currently freelance consultant, closely acquainted with several senior people in the Potsdam Institute for Climate Impact Research.

When oil prices reached last year’s maximum without causing more than a slight slowdown of economic growth, many pundits claimed publicly that the absence of severe consequences were due to a growing independence of GDP creation from oil in our more efficient and more service-oriented economies.

The following analysis tries to reason to what extent this is really true, and at what point serious consequences will set in.

Introduction

While I believe that a global peak in worldwide oil production presents an unprecedented challenge to the way most of the Western world lives our lives, I do not believe that world oil production has yet peaked. However, in looking at the new oil capacity that is scheduled to come online, and contrasting that with the projected demand growth, it became clear to me over a year ago that demand was going to rise faster than new supply could come online.

This prompted me to propose the idea of "Peak Lite." It is "peak", because the symptoms will mostly manifest themselves as those of a true production peak: Not enough supply to meet demand. In fact, we have already passed the point at which there is enough $25/bbl oil supply to meet everyone's desires. But production can still grow in this scenario, which is why it is "lite". In that case, people may underestimate the significance of the problem.

Many requests to bring this out to its own thread. Have at it. (There is also a very high quality discussion on this topic taking place in our DrumBeat today here...)

The IEA report can be accessed (for the time being) at this link:

http://online.wsj.com/public/resources/documents/iea20070707.pdf

(Thanks to Tim Iacono from The Mess That Greenspan Made for the tip on this free link.)