The world is finally beginning to perceive that oil might just be more dear in the future. Today comes another news note pointing to the concept that we may have reached the peak of global oil production. The news is that discovery of new oil reserves in the Gulf of Mexico has hit the lowest level in a decade. Specifically, according to the energy consultancy Wood MacKenzie as quoted in today’s Financial Times and elsewhere, the 2007 new reserves were less than half of those found in 2006.Of course the Gulf of Mexico is far from the only place in the world where oil can be found, or where new reserves may be discovered. But it is a region that has been subjected to the world’s finest exploration technologies for decades. So the disappointing non-discovery in the Gulf might indeed be symptomatic of what is in store elsewhere in the world. As the peak oilers have been saying for years: new oil is going to be increasingly harder to find. Further, whatever new deposits are found will be more remote, deeper, and otherwise harder to extract. Remember that the Gulf of Mexico is the site of one of the deepest, if not the deepest, (and similarly disappointing) wells yet produced. Most of the oil industry’s recent discoveries have been in the area of 100 million barrels, although a few may be in the 500 million barrel range.
For some perspective on this, please note that 100 million barrels of oil constitutes slightly less than 5 days worth of US oil consumption.
This is still more evidence of the inexorable rise in the price of oil. According the the FT article most OPEC member countries are anticipating price rises of at least 10% next year. Although many of these countries can get by with oil at, say, $60 per barrelâ€”at the momentâ€”the trend is definitely up. Oil is likely to hover above $100 per barrel for the next few months, higher if the US economy keeps on its downward trend.
Now, what could we possibly do to reduce our demand for oil? Reduce travel, for example?