reserves are now declining about 4 to 6 percent a year worldwide. He
says 18 large oil-producing countries, including Britain, and 32 smaller
ones, have declining production; and he expects Denmark, Malaysia,
Brunei, China, Mexico, and India all to reach their peak in the next few
years. “We should be worried,” he told the Guardian in 2005.19 “Time is
short and we are not even at the point where we admit we have a problem,”
he says. “Governments are always excessively optimistic. The
problem is that the peak, which I think is 2008, is tomorrow in planning
terms.” Bill Powers, editor of the Canadian Energy Viewpoint, an investment
journal, adds: “There is a growing belief among geologists who
study world oil supply that production is soon headed into an irreversible
decline. . . . The U.S. government does not want to admit the reality of
the situation. Dr. Campbell’s thesis and those of others like him are becoming
the mainstream.”20
Thus what seems to be indisputable is the fact that world oil demand is
growing while supply isn’t growing as fast. In the long term, the International
Energy Agency (IEA), a Paris-based energy watchdog for rich countries,
which also collates national figures and predicts demand, says
developing countries could push demand up 47 percent to 121 million barrels
per day by 2030, and that oil companies and oil-producing nations must
spend about $100 billion per year to develop new supplies to keep pace.
The IEA reckons that demand rose faster in 2004 than in any year since
1976; that may be due to additional demand growth from China and India.
China’s oil consumption, which accounted for a third of extra global
demand last year, grew 17 percent and is expected to double over 15
years to more than 10 million barrels a day, half of current U.S. demand.
India’s consumption is expected to rise by nearly 30 percent in
the next five years. If world demand continues to grow at 2 percent a
year, then almost 160 million barrels per day will need to be extracted
in 2035, twice as much as today. That kind of demand is almost impossible
to satisfy.
According to industry consultants IHS Energy, 90 percent of all
known reserves are now in production, suggesting that few major discoveries
remain to be made. Shell says its reserves fell last year because it
found only enough oil to replace 15 to 25 percent of what the company
produced. BP said recently that it replaced only 89 percent of its production
in 2004. And Repsol downgraded its reserves estimate in early 2006
because of political problems in Latin America, where it has many assets.
THE END OF AN ERA? 39