The Hindu Business Line : Poking a finger at the `peak oil' theory

Welcome to CERA.com, the site of Cambridge Energy Research Associates. They have some good news for you: That the world's capacity to produce oil can `continue to expand well into this century'.

A recent press release on the site states, "CERA believes the global inventory is some 4.8 trillion barrels, of which about 1.08 trillion barrels have been produced, leaving 3.72 trillion conventional and unconventional barrels."

This view is in sharp contrast to the popular `peak oil' theory according to which `world oil production will soon reach a peak and go into sharp decline'. And CERA's estimate of inventory is `three times as large as the 1.2 trillion barrels estimated by the peak oil theory's proponents'.

While that should let you breathe easier, there are fast counters to the comforting research. "CERA's analysis is lacking," castigates Dave Cohen on www.energybulletin.net. "The world's oil supply will not continue to grow to meet ever-rising global demand, and worse, the consequences could irrevocably damage global economies."

He alerts readers that such an outcome would have harmful effects on people's lives. "This debate is not `academic' - much depends on a correct analysis of the future oil supply," he emphasises. "Many reputable people from the oil & natural gas industry and elsewhere are concerned about peak oil. We are not a doomsday cult," declares Cohen.

"There is a bottom line here for people trying spot the signal vs the noise here," writes Steve Andrews, after listing the views of many experts on `peak oil', on the site. "Ask whether the risk is greater if decision-makers act earlier based on the views of peak oil `concernists,' or if those decision-makers accept the notion that `peak oil theory is garbage' and defer action beyond granting oil companies access to resources and simply letting markets work." Accountants would generally vote for the conservative approach.

There is even a site called www.peakoil.com. The latest post on the homepage is about how "fifty-five percent of Americans believe that gas prices are high because oil companies manipulate them," as a Pew Research Centre poll found in October.

Have they found out something like that closer home too? "The oil business has been a profitable one. The six biggest refiners had $400 billion in profits since 2001, according to Public Citizen, a consumer group, and corporate reports," reads more from peakoil.com, citing Dallas Star Telegram.

Boost up your spirits by reading CERA's press release, which quotes the organisation's Chairman Daniel Yergin: "This is the fifth time that the world is said to be running out of oil... Each time - whether it was the `gasoline famine' at the end of WWI or the `permanent shortage' of the 1970s - technology and the opening of new frontier areas has banished the spectre of decline. There's no reason to think that technology is finished this time."

Critical issues are not served by `a superficial analysis of reservoir constraints,' warns CERA. "It will be aboveground factors such as geopolitics, conflict, economics and technology that will dictate the outcome." Aboveground questions also include "timing and openness to investment, infrastructure development, and the impact of technological change on demand for oil."

The 16-page report titled `Why the Peak Oil Theory Falls Down: Myths, Legends, and the Future of Oil Resources,' is priced $1,000, informs www.spectrum.ieee.org.

E&OE@TheHindu.co.in