“Obama Administration Cops to Likelihood of Looming Global Oil Shortage”

File this one under:  It’s Happening.  Excerpted from the Post Carbon Institute:

In an exclusive interview published March 25 in Le Monde, Glen Sweetnam, the Obama administration’s official expert on the oil market, confirmed nearly every element of the “Peak Oil” scenario that many analysts both in and outside the oil industry have warned of for years:

• A decline of world oil production could begin soon—perhaps next year, and
• Only extraordinary levels of investment by the oil industry can maintain current rates of production much longer.

After decades of ignoring the “Peak Oil” theory that predicts global oil production will peak and then rapidly decline, Sweetnam’s admission marks a profound shift in the U.S. government’s position on energy depletion.

“I understand how difficult it must be for officials of the Department of Energy to acknowledge that the lifeblood of the industrial economy–cheap oil–is disappearing faster than they had previously forecast,” says Richard Heinberg, Senior Fellow at Post Carbon Institute. “But the American People deserve the truth.”

Semantics Won’t Save Us
While Sweetnam and the Obama Administration prefer to use the term “undulating plateau” to “peak,” the terms are nearly identical. Lauren Mayne, responsible for liquid fuel prospects at the Department of Energy notes: “Once maximum world oil production is reached, that level will be approximately maintained for several years thereafter, creating an undulating plateau. After this plateau period, production will experience a decline.”

“Approximately.” “Several years.” In other words, the Obama Administration is predicting declining oil flow rates in the near future. Also known as peak oil. With 2005 now standing as the record year for total world crude production, we are already five years into the “undulating plateau” forecast by the DoE. Regardless of the shape of the mountaintop–years-long plateau or sharp peak–there is wide consensus that we are about to head down the steep opposite slope.

Asher Miller, Executive Director of Post Carbon Institute, calls on the Obama Administration and the DoE to be honest with the U.S. citizenry about pending oil shortages and what it could mean to our economy and way of life. “Since the DoE is as concerned, apparently, as we are about the implications of energy constraints, perhaps the Department could allocate just 1% of the money saved by terminating fossil fuel subsidies to conduct a thorough and timely study of the impacts of high oil prices and shortages, and what could be done to mitigate that impact. The likelihood is that we will never again see an increase in the availability of cheap oil. If we are honest about this, we would immediately shift our investments from highway expansion to public transit and rail.”

A Call for Honesty
Post Carbon Institute hereby issues a formal call for the U.S. Department of Energy to come forward with all possible clarity and directness on where the world stands with regard to future oil supplies. The American people have already paid for this information through their taxes and they will bear the brunt of higher oil prices if these are indeed in the offing.

We also call for urgent updated studies on (1) what would be the economic impacts of high oil prices and shortages, and (2) what could be done mitigate those impacts. Independent analyses have so far suggested that building public transit and rail, rather than more highways, would give the nation more and better options in the event of a permanent decline in world oil production; however, that conclusion will carry far more weight if it bears the imprimatur of the DoE. If, as previous studies suggest, world oil production is at or close to its peak and the economic impacts will be severe, then it is incumbent upon government at all levels to begin preparations.
The Le Monde article follows upon three recent developments prominently reported in foreign news services:

• On February 10, the UK Industry Task Force on Peak Oil and Energy Security, headed by Sir Richard Branson of Virgin Airlines among other prominent industrialists, issued a report, “The Oil Crunch: A wake-up call for the UK economy,” which forecast that “oil shortages, insecurity of supply and price volatility will destabilise economic, political, and social activity potentially by 2015.”

• On March 23, the British government convened a closed-door meeting between energy minister Lord Hunt and the British business leaders responsible for the headline-grabbing report.

• On March 22, the British Government’s former chief scientist, Sir David King, reported that the world’s oil reserves have been exaggerated by up to a third, and warned of shortages and price spikes within years. A peer reviewed paper by Dr. King and others, soon to be published in Energy Policy, supports the conclusion that world oil production may soon go into decline, followed by shortages and price spikes.

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