There was a long front page article in the November 19, 2007 issue of the Wall Street Journal with a rather scary title: Oil Officials See Limit Looming on Production. Though the article described peak oil theory as “an older, often-derided notion”, it provided a convincing amount of support for the theory as I understand it. The general concept is that the world has produced a large portion of the easy to produce oil.
Though there is still a lot of oil remaining to be produced, much of it is in more difficult to reach locations, requires more capital investment, and requires more time to bring on line. The implication of those facts is that the rate at which oil is produced is likely close to as high as it will ever get. There will come a time when new production is just enough to make up for depletion – at that time, the production rate stops going up. In order to balance supply and demand, that means that demand for oil must stop increasing either by finding alternatives, using energy far more efficiently, or by price rationing that causes some people to stop using as much.
I found one bright ray of hope in the article, though it was only a couple of sentences nearly buried at the end of a lengthy article.
Oil executives who believe a production ceiling is coming are making plans to stay relevant in a world where oil production is constrained.
Mr. de Margerie said at Total’s annual meeting this spring that the company was “looking into” nuclear-industry investments and had hired nuclear experts to help make strategic decisions.
When oil companies begin “looking” hard at nuclear power, I predict that they will see vast opportunities that are not restrained by physical access issues, national oil companies, or having to deal with self important dictators.