Many if not most of you probably saw this at Kevin Drum's place, but it's kind of important and I'd like to think energy-blogging is still something I do every once in a while.
Apparently, Stuart Staniford at The Oil Drum (your one-stop energy news shopping destination) has crunched the numbers, and says that Saudi Arabia's oil production is now in decline. Moreover, the decline looks like the same pattern we've seen in other modern, full-spectrum production fields like the North Sea -- 8% this year, with the likelihood of accelerating declines in years to come.
Not, as they say, a good thing.
Now the obvious retort is that as prices have "fallen" this year, the Kingdom has cut production artificially. Staniford attempts to address that hypothesis -- to my mind, convincingly -- but this issue is obviously going to require more analysis.
Some further thoughts below the fold.
My immediate reaction to this news is that the Iranians can breathe easier if it's true. One of the main theories flying around is that the Saudis would try and artificially lower the price of oil to hurt Iran's finances. If Saudi production has indeed peaked, the reverse is likely to happen: the price of oil will start increasing again, and by 2010 or so the market could be short by 2 million barrels a day. Add in Chinese and Indian growth, and, well, I hope you're saving up for a Prius. Or a Volt.
For the environmentally inclined, you could read this as "good news", in the sense that the Saudis have taken to boasting that they can destroy the alternative energy market by simply pushing the price down through the basement. If that's no longer true, one of the 800-lb gorillas most hostile to alternative energy and climate change measures -- the Saudi government -- is less dangerous.
The problem, of course, is that the substitutes in the short and medium term are likely to be much worse than Saudi crude. The USAF is looking at liquid fuels from coal, and Canada is trying to expand it's tar sands capacity despite massive economic and environmental damage. Both CTL and tar sands are worse from an environmental and financial point of view. The only thing they have going for them is not funding al Qaeda, which admittedly isn't nothing.
As we tiptoe closer to that time when global oil production peaks, and starts to decline, I hope people will begin to seriously deal with the fact that there is no supply-side solution to this problem. We can't expand production of any of the alternatives fast enough to cope. Efficiency and conservation are going to be the name of the game.