International Energy Agency: Peak Oil Has Already Passed

oil jackpump

The imminent arrival of peak oil, or the point in time when the maximum rate of worldwide petroleum extraction has been reached and enters into a continuous decline, has long been regarded as a fringe theory. As oil prices have crept up in recent years, the concept has gradually entered the mainstream--and now the International Energy Agency, an intergovernmental organization that offers energy analysis to 28 countries, has announced that peak oil passed us by in 2006. There is nowhere for our oil supply to go but down. So what do we do?

The IEA, which has been accused in the past of downplaying the risks of peak oil, explained in the 2010 edition of the annual World Energy Outlook (WEO) that production of conventional crude oil peaked in 2006 with a production rate of 70 million barrels each day. That doesn't mean crude oil will disappear entirely. The IEA explains:

Globally, fossil fuels remain dominant over the Outlook period in the New Policies Scenario, though their share of the overall energy mix falls in favour of renewable energy sources and nuclear power. Oil nonetheless remains the leading fuel in the energy mix by 2035, followed by coal. Of the three fossil fuels, gas consumption grows most rapidly, its share of total energy use almost reaching that of coal.

Oil prices will, according to the IEA, creep up to $135 per barrel by 2035, but oil supply will remain steady for the next 25 years thanks to new oil field discoveries. The bad news is, of course, that CO2 emissions will continue to rise as long as long as oil and coal are readily available--a fact that the IEA readily acknowledges in its report.

If our economy is to survive, it will be thanks to a drastically increased use of renewables, a large infrastructure for alternative energy (and pedal-powered) vehicles--and the elimination of fossil fuel subsidies. Is there reason to be hopeful? We suggest taking a look at how many hybrid and electric vehicles are featured at this week's L.A. Auto Show. It's a heartening display.

Ariel Schwartz can be reached on Twitter or by email.

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