Demand for oil will start to outstrip supply in the middle of the decade and reserves have been exaggerated by at least 250 billion barrels, new research from Oxford University has found.
The study, by the Smith School of Enterprise and the Environment at Oxford, said the “age of cheap oil” was at an end and that estimates of reserves should be downgraded from between 1,150-1,350 barrels to between 850-900 billion barrels.
Urgent acceleration of the development of alternative energy was necessary as a consequence, the Smith School said. The school’s director, former government chief scientific adviser Sir David King, said: “We have to face up to a future of oil uncertainty much like the global economic uncertainty we have faced during the past two years.”
Nick Owen of the Smith School said that more than half the world’s giant oilfields, which constitute about 60% of supply, were declining “at a pretty significant rate – anywhere between 4.5-6.5% a year”. He added: “Obviously that’s going to have a massive impact on production.
“It does seem that peak oil is a reality and is likely to occur between now and 2015. Demand has gone down since the recession but a good test will be to see how high oil prices go when we come out of the slump.
“Pursuing a policy of oil for economic growth is pursuing a policy of diminishing returns,” Owen said. “Diminished returns will not just be economic, but will also extend to the environment as unconventional tar sand resources are developed, and to energy security as oil supply concentrates on the Middle East.”
Dr Oliver Inderwildi, head of the low carbon mobility centre at the Smith School, said efforts should be made to improve energy efficiency to mitigate demand for oil and that the idea that biofuels could supplement oil effectively was “pie in the sky”. “There is not sufficient land to cater for both food and fuel demand. Instead of relying on those silver bullet solutions, we have to make better use of the remaining resources by improving energy efficiency,” he said.
“Alternatives such as a hydrogen economy and electric transportation are not mature and will only play a major role in the medium to long term,” Inderwildi added.
Dr Colin Campbell, an expert on peak oil theory, welcomed Oxford University’s findings. “They are a turning point,” he said. “Peak oil theory is emerging into the mainstream – it’s a radical change.”