The press, and especially those in the Western hemisphere, seems obsessed with the idea of the world quickly running out of oil supplies. This is not a new phenomenon. For some time now, there have been no dearth of pundits clamoring and arguing that world oil supplies are coming to an end and that the peak oil has already been reached.
However, it may not be utterly ridiculous to point out that things are often highlighted out of context. Emphasis is laid on aspects that are often said with a perspective. There seems to be a different ax to grind.
Hence, on a Monday morning earlier this month, while at Schiphol on the way to North America, a story in the influential British daily newspaper, The Independent, caught attention with its catchy headline — “Warning: Oil supplies are running out fast”.
The story was written by none other than Steve Connor, science editor of The Independent, based on an interview of Fatih Birol, the Paris-based IEA (International Energy Agency) chief economist.
The first few paragraphs were literally scary, painting a real dismal picture before a naïve audience. “The world is heading for a catastrophic energy crunch that could cripple a global economic recovery because most of the major oil fields in the world have passed their peak production, a leading energy economist has warned. “Higher oil prices brought on by a rapid increase in demand and a stagnation, or even decline, in supply could blow any recovery off course, said Birol.
The Independent continued quoting Birol as saying that the general public and many governments appeared to be oblivious to the fact that the oil on which modern civilization depends is running out far faster than previously predicted and that global production is likely to peak in about 10 years — at least a decade earlier than most governments had estimated.
But the first detailed assessment of more than 800 oil fields in the world, covering three quarters of global reserves, has found that most of the biggest fields have already peaked and that the rate of decline in oil production is now running at nearly twice the pace as calculated just two years ago. All this was indeed scary and troubling. However, just below the above, Birol points out: “On top of this, there is a problem of chronic under-investment by oil-producing countries, a feature that is set to result in an ‘oil crunch’ within the next five years which will jeopardize any hope of a recovery from the present global economic recession.” Indeed, everyone, without exception, has been saying so for months. This underlines that the problem is not of a lack of treasure beneath the surface; rather, the real issue remains how to bring that hidden treasure on stream. Geopolitics remains a major obstacle. Lack of investments continues to haunt. Indeed, if prices remain lousy, investment could easily be deterred. And all these months, like many others, Birol has been vociferous in underlining the issue.
Later in the story, Birol is quoted: “One day we will run out of oil, it is not today or tomorrow, but one day we will run out of oil and we have to leave oil before oil leaves us, and we have to prepare ourselves for that day. The earlier we start, the better, because all of our economic and social system is based on oil, so to change from that will take a lot of time and a lot of money and we should take this issue very seriously.” Now who is contesting that? The elderly and widely respected industry veteran Ahmad Zaki Yamani has been pointing out that coal did not end, the coal era came to an end, leading to the argument that oil will also not end, the oil era will come to an end. Birol is also tuning the same musing, albeit in a different language.
But this should not scare the common man. The world needs to find alternatives, tomorrow if not today. Even Minister of Petroleum and Mineral Resources Ali Al-Naimi concedes that. This is exactly what Birol is emphasizing, he has been doing the same for years now, pleading before the major oil-consuming countries to start preparing for that eventuality. Birol rightly warns that finding sources to meet the future global energy needs is absolutely essential and that there are real impediments to that. But does that mean the world is running out of oil as The Independent story leaves its readers to believe and understand?
The case of crude is also no different from others. That this crude-driven civilization of ours continues to grow and prosper is a tribute to mankind and its endeavors. There are issues confronting the crude world and no one is denying that, yet the fact remains that oil has always been found in human minds. It has been the same in the past with pundits claiming, even in the 70s, that the oil era is just about to end. That never happened.
There is indeed enough beneath the surface. Even Fatih concedes that. He also highlights in the same breath the impediments in exploring them. The Independent and its like need to highlight this too. That is the challenge at hand and we all need to rise up to that.
