Friday, May 28, 2004

Black Gold

The Washington Monthly's Political Animal talks oil:


Twenty years ago the world had about 15 million barrels/day of spare pumping capacity. Ten years ago we had about 5 million barrels of spare capacity. Today we have close to none. There are ways of increasing this capacity, of course, but it takes time to build additional pumping, pipeline, and refinery capacity, and time is something we've run out of. What's more, although we can increase pumping capacity in the medium term, we will eventually run into an absolute limit on global pumping capacity, which is something on the order of 100 million barrels/day. We are probably within about ten years of reaching this absolute production peak.

In other words, even though there's a lot of oil in the ground, oil supplies are going to become permanently tight within the next couple of years and will become disastrously tight within the next decade or so. In the meantime, demand will continue to grow inexorably at about 2% per year, which means that over the next few years the price of oil is going to skyrocket and not everyone is going to get all the oil they want.


And, on a related note, I took a ride in Will Burnham's Honda Civic Hybrid last night. Wow. Paint me green with envy.


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