World oil reserves are now beyond tipping point
Professor Sir David King has published an analysis of the oil market in Nature this week with Professor James Murray of the University of Washington, which demonstrates that since 2005 oil supply has reached a ceiling of economically affordable rates.
The resulting unheralded oil price spikes, ranging between $40 and $140 per barrel, act as a headwind against any economic recovery. This, they argue, is a more convincing reason than ever to end our fossil fuel fixation.
Despite projections of increasing oil demand, conventional crude oil production has stalled at between 72 and 75 million barrels per day. The resulting ‘oil price crunch’ is seen as a major contributor to the 2008 recession, exacerbated by a widespread ‘credit crunch’. The US and Europe each now spends $1bn per day on oil imports.
The authors also conclude that the oil price rise since 2005 has been a significant contributor to the Euro crisis.
Sir David and James commented:
“Others have remarked on this step change in the economics of oil around the year 2005, but the point needs to be lodged more firmly in the minds of policy-makers.”
“There is less available fossil fuel than people think, but what really matters is the production rate. The approaches needed for tackling the economic impacts of resource scarcity and climate change are the same: moving away from a dependence on fossil-fuel energy sources and emphasising the short-term economic imperative from oil prices must be enough to push governments into action now.”
To read the Comment article, click here.