Paul Roberts is an internationally renowned expert on Oil and writes regularly on the state of the oil industry and our preparations for a world beyond peak oil. He is also the author of the book “The End of Oil” which is a tour de force of the prevailing scenario with regards to the hydrocarbon economy and the future of oil and how we can have an orderly transition to the next stage.
Any discussion about Oil prices must take into account the factor of “Peak Oil” and its effects on the world price of oil. The phenomenon of peak oil states can be described as when the oil production hits a peak and the rate of extraction and production falls below the level of what it was earlier and thus the production is said to have hit a “peak” in terms of the output.
Thus, this is one major criterion for determining the output of oil and subsequent dynamics of energy production are dependant on how much can be extracted with depletion of the oil supplies. This is the major factor behind the current increase in oil prices.
The article’s major assertion is the “denial” of the western governments and policymakers when it comes to admitting the state of the precarious situation as far as our known reserves of oil are concerned. As he points out, “Some pessimists tell us the peak has already come, and that calamity is imminent. That’s unlikely. But the optimists’ forecast – that we don’t peak until around 2035 – is almost as hard to believe”.
There are two major reasons for this. Developing countries and India and China, in particular, are industrializing at a pace that is faster than most countries did earlier and the consequence of this modernization is their huge appetite for oil. Thus, as we have already witnessed wars in the Middle East over oil, the other facet that has gone largely unnoticed is the “oil diplomacy” being engaged by China and India in the African republics to secure reserves of oil.
The next reason for the optimistic scenarios to go bad is the fact of new discoveries being rare and hard to come by. This is making the price of oil volatile to such an extent as never seen before. Though this article was written in 2004, Roberts’ views on Oil have a resonance that is relevant and very pertinent even now. It would be interesting to see how he would react to the current oil price volatility.
Roberts’ article makes the attitude of the American government towards the Middle East in perspective as he says that Oil companies want to get into the Middle East, a market they were in before the nationalizations of the 1970s. As he states, “Get us back into the Middle East or be prepared for trouble. And the Bush administration seems to have taken the message to heart”.
What is clear from this article is that we are not prepared for another “Oil shock” as we saw in the 1970s and we better prepare ourselves for a transition to another energy source. There is a lot of vision in Roberts’ article when he warns us against complacency as far as the timing of the peak is concerned.
In conclusion, it is clear that the article by Paul Roberts is timely when it was written and even now. It is hoped that our governments wake up to the possibility of the “hydrocarbon man” having had his time and we should move on.