Monday, March 21, 2011

BP: Peak Oil is Here -- well almost.

Two great graphs from BP's latest annual report. At left is where the energy is coming from, and it is less and less from the OPEC nations. This means that OPEC will have less pricing power in the future. Why is their influence declining, because petroleum will have less and less dominance of the world's energy supply.

At left is the form that the energy comes in, and the black layer at the bottom is petroleum. Notice how it is barely increasing.

The time when the production of oil maxes out is called Peak Oil, and it has been predicted for years. The fact that a major oil company is predicting essentially flat oil production in the face of 40% growth in energy demands says something important about the state of the energy economy. It says that all the cheap oil has been found, and to get the remainder we are going to have to work for it.  Just how serious that is, is anyone's guess. I tend to think the peak will be very rounded, as oil companies look harder and harder for more oil. They will also tap more and more unconventional super-heavy crude.

Notice the light gray band at the top. That is wind and solar. Just under that is hydropower, which is a significant piece of the picture.