In its second annual report, the UK Industry Taskforce on Peak Oil and Energy warned of a global oil crisis that will take place in the next five years, and whose impact on the world economy may very well be even worse than that of the global financial crisis. The report also warned the British government of a possible shortage in oil supplies, coupled with sharp increases in oil prices. In fact, the taskforce includes members such as Richard Branson of Virgin, Ian Marchant of Scottish and Southern Energy and Brain Souter of Stagecoach. The report recommends that the British government must act and enact quick measures, in order for Britain to avoid facing the same fate that affected its economy during the recent global financial crisis. The report cites the following: “we face a situation during the term of the next government where fuel price unrest could lead to shortages in consumer products and the UK's energy security will be significantly compromised.” The report then enumerates the causes for this potential crisis, which include a shortage in equipment, the lack of an adequate number of drilling heads for exploration or development of oil fields and a shortage in skilled labour. The taskforce thus recommends that the government quickly develop other forms of sustainable alternative energy, especially in the transport sector. In truth, opinion is divided in what regards the concept of ‘peak oil'. Recently, and prior to the publication of the UK Industry Taskforce's report, both the Chief Executive of Saudi Aramco, Mr. Khaled al-Faleh, and the Chief Executive of BP, Mr. Tony Hayward, tackled this issue, along with other officials. It is clear that there are enough oil reserves in the world today, with approximately three billion barrels of reserve oil remaining to be exploited. This is while noting that about one billion barrels of oil have been extracted so far, since the start of the global oil industry. Hence, the problem is not about whether there is enough oil or not, but rather, the problem lies in the volume and quality of investments, as well as in the ability of oil producing countries to increase their production capacity at an opportune time, while overcoming political obstacles. Al-Faleh tackled the issue of peak oil and said that ‘global oil production will be continuously on the rise until 2020-2030. Saudi Aramco's forecasts indicate that an extra million barrels per day can be added yearly to the production capacity, in order to satisfy the growing global demand and compensate for the annual loss of production in the productive fields, which is estimated at three million barrels per day”. He also said that the world “[sic] should be ostracized by its concerns about peak oil”, indicating that a third of Saudi energy reserves are untapped, but that they can be placed on-stream in a very short period of , should the need arise. Al-Faleh also announced that “the company plans to invest about $120 billion in the next five years in oil production, refining and petrochemical projects. Saudi Arabia's aim is to increase its refining capacity by more than three million barrels per day, in addition to building refineries in China, Korea and the Unites States.” It should be mentioned here that the current Saudi production rate is estimated at about eight million barrels per day, while its production capacity is about 12.5 million barrels per day. Saudi Aramco plans to increase its capacity to about 15 million barrels per day in the foreseeable future. Al-Faleh also added: “even with the recognition that most of the remainder of the oil is difficult to exploit, the world can produce an additional 95 to 100 million barrels per day of crude oil”. This is while noting that the current annual production rate is 85 million barrels per day and it is expected to increase to 105 million barrels per day by 2030. In this regard, the UK Taskforce mentions the possibility of increasing global production to only about 92 million barrels per day by 2030. Meanwhile, Hayward confirmed that his company expects global oil production to reach a relatively stable plateau (without any sharp increases or decreases) until the period between 2020 and 2030. He also indicated that his company's forecasts confirm that the global oil reserves will be sufficient to cover the increase in demand, and added: “there is enough oil in the world; that is the truth.” Howard then held that “demand on crude oil will begin to decrease before oil reaches its peak”, and stressed that “more than 60 per cent of the world's energy needs in 2050 will still come from fossil fuels”. Mr Hayward also said that government policies in the developed world were eroding demand at the rate of 1 per cent per year, but that this decrease is being compensated by the growth in demand in the emerging market countries. He expected the global demand for oil to reach about 95 to 110 million barrels per day after 2020. In fact, the weakness of the global oil industry lies in the political instability beleaguering important oil producing countries such as Iraq (it is not yet known whether this country will succeed in implementing its expansion program in this decade, in light of its policy of uprooting opposition instead of resorting to elections), or Iran (recall the complexities of the nuclear issue). This in addition to countries such as Nigeria (where sabotage attacks against oil installations are increasing, as well as the abduction of foreign employees working for the international companies), or Venezuela (where social and political problems are rampant). It is noteworthy here that oil production in the four countries mentioned above has in fact decreased instead of increasing. *. Mr. Khadduri is an energy expert
