January 27th, 2012 by Nature
The impact of dwindling oil supplies on the economy is a persuasive argument for shifting away from fossil fuels, write Professor James Murray and Sir David King in a Comment piece in Nature published on 26 January 2012.
There was a ‘tipping point’ for oil in 2005. Before then, production of crude oil increased to meet rising demand. But since 2005, production has been limited to about 75 million barrels a day, and it doesn’t seem to be possible to increase supply beyond that to respond to spikes in demand. The result is wild price swings and economic instability that can trigger financial crises, including the one from which we are now emerging.
“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,” say Murray and King.
Industry groups often argue that oil-reserve estimates are actually increasing, and that alternative oil sources — such as tar sands — or ‘fracking’ for shale gas, will save the world from any shortages.
But the authors argue that there is less available fossil fuel than many people think. Production at existing oil fields is declining by 4.5–6.7% a year. A 2011 estimate of coal production was 40% less than 2005 estimates, and about five times less than assumed by some Intergovernmental Panel on Climate Change scenarios.
“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,” the authors write.
“Emphasizing the short-term economic imperative from oil prices must be enough to push governments into action now.”