A press release published by the Post Carbon Institute this week says the Obama Administration has come to the conclusion that there could be a global oil shortage on the horizon. According to an exclusive interview published on March 25 in “Le Monde” Glen Sweetnam, the Obama administration’s official expert on the oil market, has admitted “a chance exists that we may experience a decline” of world liquid fuels production between 2011 and 2015 “if the investment is not there.” The article is interesting, to say the least. It says: Glen Sweetnam, director of the International, Economic and Greenhouse Gas division of the Energy Information Administration at the DoE, does not say that investments will not be “there.” Yet the answer to the issue of knowing when, where, and in which quantities additional sources of oil should be put onstream remains widely “unidentified” in the eyes of the most prominent official analyst on energy inside the Obama administration. The DoE dismisses the “peak oil” theory, which assumes that world crude oil production should irreversibly decrease in a nearby future, in want of sufficient fresh oil reserves yet to be exploited. The Obama administration supports the alternative hypothesis of an “undulating plateau.” This report appears to be good news for the US oil and gas industry because it indicates the light might have come on in Washington and that the Obama Administration has realized there is a critical need to develop domestic oil resources. But that may not actually be the case if you read a bit more of the story. The actual question Sweetnam was asked was if he would acknowledge that if adequate investment is not there, a chance exists that we may experience a first stage of decline in the “undulating plateau.” His answer was: “A chance exists that we may experience a decline. If we do, I would expect investment in new capacity to increase if there is still demand for oil.” To me, the kicker is the odd phrasing at the end – “if there is still demand for oil.” Interesting. I wonder where Sweetnam thinks oil demand is likely to go in the next few years. It is quite possible that the Post Carbon Institute and “Le Monde” are being a bit too optimistic. I don’t want to be a wet blanket, but my guess is the Obama Administration will ignore the Peak Oil issue in and of itself and emphasize the need to replace the “oil demand” component of this view with an “energy demand” perspective that emphasizes alternative fuels and the critical need to develop them now that the world is running out of oil. The “Le Monde” article points to results of a roundtable presentation in April 2009 as evidence that the DoE is aware of a potentially crippling problem in securing a sufficient oil supply, making reference to the presentation and the transcript of the event, which indicate many oil producing regions should see their extractions diminish before 2015. As is far too often the case, the “good news” isn’t really good news at all. The presentation was a year ago, and legislation passed in the interim has not opened up oil production within the US. In fact, there have instead been significant delays to rendering decisions on domestic oil exploration. It seems to me that even if Sweetnam has changed his tune to some degree, the Obama administration is still singing the same old song. None of its actions seem to reflect an interest in increasing oil exploration. From my perspective, it’s a bit early for singing the praises of the administration; so I hope you will forgive me if I don’t join in the celebratory song.
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