We have just published a new report at the Institute for Policy Research & Development (IPRD) which finds that world oil production peaked between 2005 and 2008, and is currently in inexorable decline. Authored by the renowned 40-year veteran petroleum geologist Dr. Colin J. Campbell, who has worked and consulted for leading oil companies such as British Petroleum (BP), Shell and Exxon, the report warns that the “first half of the Oil Age” is over, and the “second half” – characterized by a gradual but increasing decline in production, has now arrived.
Drawing on an extensive country-by-country analysis of oil production data, Dr. Campbell concludes that world regular conventional oil peaked in 2005, prompting oil prices to rise dramatically as traders bought contracts on the oil futures market. The oil price shocks were instrumental in triggering the 2008 economic recession, which dampened demand and allowed prices to reduce. Regular conventional oil is currently declining at 3 per cent a year, with the decline of all categories of oil being about half that rate for the next decade or so before edging upwards.
“We are now inhabiting a post-peak economy”, said Dr. Campbell. “In the first half of the oil age, cheap, mainly oil-based energy has fuelled economic prosperity and related money supply. There is a fundamental difference between going up and going down. In the second half of the oil age, although the decline has begun gently, it represents a turning point of historic magnitude.”
In May 2005, Dr. Campbell predicted that an imminent peak in world oil production would lead to a stock market decline and banking crisis between 2008 and 2012. Dr. Campbell now forecasts a future price limit of around $100 per barrel – at current dollar value – noting that coming oil price shocks will impose further economic recession, dampening demand. He further critiques government bank bailouts to stimulate consumerism by pumping out more credit as doomed to failure, as any economic recovery would lead to a rise in demand for oil, again hitting the supply barrier leading to another price shock and renewed recession. Such policies could lead to “rampant inflation and dollar devaluation.”
The £100 price limit would restrain investments in more expensive unconventional oil and gas, which in any case will “have little impact on peak itself” but may be “important in ameliorating the post-peak decline.” World production of conventional gas is likely to peak around 2015 – with unconventional gas peaking much later, though subject to “slow and costly extraction rates.”
The Campbell report also warns that “resource wars” for control of the world’s remaining oil reserves have already begun, noting efforts to kick-start oil production in postwar Iraq, and that the war in Afghanistan, although less successful, “lies on a planned pipeline route from the Caspian.” Similarly, tensions with Iran cannot be de-linked from its substantial oil and gas resources. Dr. Campbell calls for greater governmental efforts at adaptation, highlighting that a failure to develop viable alternative energy supplies would make projected population growth unsustainable.
Dr. Campbell's outstanding new report confirms my own findings, as elaborated in my new peer-reviewed study, A User's Guide to the Crisis of Civilization, which examined a variety of academic and industry reports both for and against 'peak oil'. Despite every year insisting that peak oil will not happen for another 40 years, BP's own 2010 production data shows that world oil production was on a plateau between 2005 and 2008, and has been declining every since. The data is now unequivocal: we inhabit a 'post-peak' world, and it is imperative for policymakers to pay attention.