Readers letters
I am sorry that you gave such prominence to the Ricardo study on forecasting crude oil demand and production rates (PE May).
One thing we learned when I was head of products and applications development at Shell International in the 1960s was that our forecasts of demand and production, even for the following year, were always wrong. That was part of the reason for the introduction of “scenario planning”.
My colleague M King Hubbert was wise enough only to estimate that US crude oil production would peak some time in the early 1970s – not in a particular year. In my book Energy – To Use or Abuse, published in 1976, I followed his example, suggesting that crude oil production rates would reach a global maximum some time “in the early years of the 21st century” unless everybody began to use oil much more rationally and efficiently.
For a few years, until climate change became the main concern, energy conservation was top of the agenda, following the oil crisis in the 1970s. Even the president of the European Economic Community in 1979 pronounced that “energy conservation must be the cornerstone of our policy... if we do not change our ways whilst there is still time our society will risk dislocation or collapse”.
Even though considerable improvements have been made in energy efficiency, global consumption has continued to grow at a fairly constant rate.
However, now that new sources of crude oil are not producing sufficient to replace falling production in mature oil provinces, there seems to be fairly widespread agreement that the era of cheap oil is over. So, if we are facing higher prices, demand rates can be expected to fall because there are no cheaper alternatives, and new crude oil is becoming more costly to produce.
My guess is that we face several years during which conventional crude oil production will plateau before it begins to fall. During these years more costly sources of petroleum – like tar sands – will maintain total production; and higher prices will keep supply and demand in balance at a fairly constant level.
We shouldn't imagine that improved energy efficiency will make a big difference any more than it did in the past. Transport costs are likely to continue to rise.
We need to start thinking about the future of global supplies of natural gas, which contribute another third of energy supplies. They are expected to reach their peak of production around the middle of this century.
John Davis, Swanage, Dorset
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