Time for a peak oil update. We live in a world of cheap conventional crude oil. The following fact is useful. We're using less oil because the developing world is using more. This may cause prices to rise.

The Myth of Peak Oil Demand and the Example of Loma Prieta - Seeking Alpha

"The first, of course, has been the inability of global crude oil production to exceed its annual peak of 73.781 mbpd (million barrels per day) set back in the year 2005. That fact alone, both simple and incontrovertible, has been powerfully deterministic in reducing OECD oil demand growth through the mechanism of price."


Plus, the IEA, long denying peak oil existed, now states that peak oil arrived four years ago. But they say we should be okay. Maybe. Trust me baby.

International Energy Agency Says 'Peak Oil' Began in 2006 | Reuters
International Energy Agency Says 'Peak Oil' Began in 2006

The International Energy Agency has released its World Energy Outlook for 2010, forecasting for the first time that the global crude oil production peak that so many have long feared, has in fact already been reached-more than four years ago. International demand has since fallen slightly thanks to a recent global economic downturn, but once economies around the world have recovered, the IEA says daily crude production alone will no longer be sufficient to meet their needs.

So is the world is headed for a Mad Max-style apocalypse? Not according the IEA. The 2010 report projects that increases in other fossil fuels like natural gas and tar sands will mostly supplant crude in meeting new demand-with clean, renewable energy sources also making major gains.

The IEA says that daily global oil production will "plateau" at around 68 million barrels per day by 2035, as total energy demand increases by more than 35 percent over the same period. Thanks in part to pledges from governments to reduce their countries' reliance on fossil fuels though, new contributions to the energy mix will help to avert the sort of catastrophic oil spike that many have predicted to coincide with the start of the "peak oil" age.

Apocalypse Later

But while the projection may bode well for the world economy, the IEA is convinced that even if governments live up to the pledges they made in lowering greenhouse gas emissions, the 2009 Copenhagen Accord's goal of limiting climate change to less than 2 degrees C will not be reached. If the world continues on its current trajectory, the organization says that average global temperatures will likely rise by at least 3.5 degrees C.

The group recommended that the following conditions must be met to achieve the Copenhagen Accord's intended outcomes, which it calls the "450 Scenario:"

- Oil demand must peak sooner and decline more sharply than it would under natural "peak oil" conditions.

- Coal will have to play a significantly smaller role in the energy balance, with global demand peaking in 2020 and declining steadily thereafter.

- Demand for gas and liquified natural gas must also also peak before the end of the 2020s.

- Renewables and nuclear power must double to represent nearly 40 percent of the energy market by 2035.

Advanced vehicles will also have to make rapid gains in the coming years-to levels in the upper reaches of what most analysts believe is possible. By 2035, the IEA says that not only will 70 percent of new worldwide vehicle sales will have to come from advance technology plug-in hybrid and electric vehicles, but that that those cars will need to run mostly on electricity generated from nuclear and renewable sources rather than fossil fuels.

The IEA's Outlook is considered by many to be one of the most comprehensive and authoritative annual energy market analyses available to the public. (Though last year's report came under fire after the agency was accused in The Guardian of downplaying the severity of the impending oil crunch in an effort to not "anger the Americans.")

The IEA has worked independently with the United States and 27 other member countries to help minimize the fallout from energy market instabilities since 1974, when it was created in response to the 1973 oil crisis. Its current mandate is the promotion of what it describes as "the three E's": energy security, economic development, and environmental protection.

Reprinted with permission from HybridCars