Peak Oil : IEA reports global depletion rate could go up to 9.1%, struggle to produce crude oil

+1 1 vote

Peak Oil : IEA reports global depletion rate could go up to 9.1%, struggle to produce crude oil

by Low Ee Mien on 11/17/2008 00:38 0 comments ,197 views

Output from the world's oilfields is declining faster than previously thought, the IEA said in its annual report. Without extra investment to raise production, the natural annual global crude oil depletion rate is 9.1%. The findings suggest the world will struggle to produce enough oil to make up for steep declines in existing fields, such as in the North Sea, Russia and Alaska. The effort will become even more acute as prices fall and investment decisions are delayed. Even with investment, the annual rate of output decline is 6.4%.

Demand is slowing down, but with the expected slowdown in investment the eventual effect will be magnified. The IEA warned that the world needed to make a "significant increase in future investments just to maintain the current level of production". The share of rich countries in global demand will drop from last year's 59% to less than half of the total in 2030, the clearest indication yet that the demand side is moving away from the US, Europe and Japan, towards emerging nations.

- Earlier, I said that it's a race to see whether it's the oil demand or oil supply that will decline faster. But with NYMEX crude oil prices dropping over 60% from the $147.27 record high, it is starting to look more like the former than the latter. Just take a look at the shutdown of 67,000 factories in China. Now we're really talking demand destruction.

This is bad. In the Great Depression of the 1930's, energy usage went down 8%. If we are talking about crude oil prices falling because demand is falling faster than supply is falling, then we're talking about the global economy possibly going to shrink faster than say 9%. Welcome to the Second Great Depression.