Many now suggest that reported Saudi oil reserves have been over-inflated for political and economic reasons. In January 2006, Petroleum Intelligence Weekly reported on leaked documents from the Kuwaiti Oil Company that showed remaining oil reserves to be around 48 billion barrels, down significantly from the previously stated reserves of 99 billion. Overnight the world lost 5% of its total reserves.
The key issue with peak oil, in addition to any direct effect, is that sudden realisation could lead to meltdown in our financial systems if it is found these changes aren’t priced into the market. Jeremy Leggett, author of Half Gone: Oil, Gas, Hot Air and the Global Energy Crisis (2005) has even warned that: “The far right will feed successfully on the legions of newly disenfranchised as the energy crisis rolls out.”
This is not just the stuff of conspiracy theory. In recent months, the Vice-President of Lukoil, the CEOs of ConocoPhillips and Total, the ex head of exploration and production of Saudi Aramco (by far the world’s largest oil company, dwarfing even Exxon ten times) and the International Energy Agency have said we are at or near the peak already. However oil companies and the oil states themselves are suggesting there are up to 30 years more oil. Someone is wrong. In June 2008 the New Scientist reported a survey of oil industry experts, which found that most of them believe global oil supplies will peak by 2010.
Former US Energy Secretary, John Schlesinger has recently said “We can’t continue to make supply meet demand much longer… It’s no longer the case that we have a few voices crying in the wilderness. The battle is over. The peakists have won.”
To prepare for such a shock and adjust in time, we need to shift fast to non-fossil fuels. Companies, individuals and governments all need to be asking: What will a $500 or $1000 barrel world look like and what will it mean for each individual life, for business and society?
