FPN04-14

Pending Oil Crisis Demands Action Soon

February 9, 2005

"Waiting until world conventional oil production peaks before implementing crash program mitigation leaves the world with a significant liquid fuel deficit for two decades or longer," according to a report prepared for the Department of Energy's National Energy Technology Laboratory (NETL) by Science Applications International Coporation (SAIC). The report, "Peaking of World Oil Production: Impacts, Mitigation, & Risk Management," dated February 2005 is available from lead author Robert L. Hirsch (RLHirsch@comcast.net).

The report notes that although alternatives to conventional oil exist (such as coal liquifaction), putting the plant infrastructure in place to produce liquid fuels from these sources on the scale required to alleviate projected shortfalls from conventional sources requires decades of advance construction. Noting that oil peaking is often projected sometime in the next 15 years, the authors conclude that a crash program must be initiated 20 years before peaking in order to avoid the a world liquid shortfall for the post-peak period. "In developed nations, the economic problems associated with world oil peaking and the resultant oil shortages will be extremely serious. In developing nations, economic problems will be much worse," the report says. The authors conclude, "Prudent risk management demands urgent attention and early action."