World Oil: World oil demand is surging as supplies approach their limits.

National Geographic Magazine
By Paul Roberts

In 2000 a Saudi oil geologist named Sadad I. Al Husseini made a startling discovery. Husseini, then head of exploration and production for the state-owned oil company, Saudi Aramco, had long been skeptical of the oil industry's upbeat forecasts for future production. Since the mid-1990s he had been studying data from the 250 or so major oil fields that produce most of the world's oil. He looked at how much crude remained in each one and how rapidly it was being depleted, then added all the new fields that oil companies hoped to bring on line in coming decades. When he tallied the numbers, Husseini says he realized that many oil experts "were either misreading the global reserves and oil-production data or obfuscating it."
Where mainstream forecasts showed output rising steadily each year in a great upward curve that kept up with global demand, Husseini's calculations showed output leveling off, starting as early as 2004. Just as alarming, this production plateau would last 15 years at best, after which the output of conventional oil would begin "a gradual but irreversible decline."
That is hardly the kind of scenario we've come to expect from Saudi Aramco, which sits atop the world's largest proven oil reserves—some 260 billion barrels, or roughly a fifth of the world's known crude—and routinely claims that oil will remain plentiful for many more decades. Indeed, according to an industry source, Saudi oil minister Ali al-Naimi took a dim view of Husseini's report, and in 2004 Husseini retired from Aramco to become an industry consultant. But if he is right, a dramatic shift lies just ahead for a world whose critical systems, from defense to transportation to food production, all run on cheap, abundant oil.
Husseini isn't the first to raise the specter of a peak in global oil output. For decades oil geologists have theorized that when half the world's original endowment of oil has been extracted, getting more out of the ground each year will become increasingly difficult, and eventually impossible. Global output, which has risen steadily from fewer than a million barrels a day in 1900 to around 85 million barrels today, will essentially stall. Ready or not, we will face a post-oil future—a future that could be marked by recession and even war, as the United States and other big oil importers jockey for access to secure oil resources.
Forecasts of peak oil are highly controversial—not because anyone thinks oil will last forever, but because no one really knows how much oil remains underground and thus how close we are to reaching the halfway point. So-called oil pessimists contend that a peak is imminent or has actually arrived, as Husseini believes, hidden behind day-to-day fluctuations in production. That might help explain why crude oil prices have been rising steadily and topped a hundred dollars a barrel early this year.
Optimists, by contrast, insist the turning point is decades away, because the world has so much oil yet to be tapped or even discovered, as well as huge reserves of "unconventional" oil, such as the massive tar-sand deposits in western Canada. Optimists also note that in the past, whenever doomsayers have predicted an "imminent" peak, a new oil-field discovery or oil-extraction technology allowed output to keep rising. Indeed, when Husseini first published his forecasts in 2004, he says, optimists dismissed his conclusions "as curious footnotes."
Many industry experts continue to argue that today's high prices are temporary, the result of technical bottlenecks, sharply rising demand from Asia, and a plummeting dollar. "People will run out of demand before they run out of oil," BP's chief economist declared at a meeting early this year. Other optimists, however, are wavering. Not only have oil prices soared to historic levels, but unlike past spikes, those prices haven't generated a surge in new output. Ordinarily, higher prices encourage oil companies to invest more in new exploration technologies and go after difficult-to-reach oil fields. The price surge that followed the Iran-Iraq war in the 1980s, for example, eventually unleashed so much new oil that markets were glutted. But for the past few years, despite a sustained rise in price, global conventional oil output has hovered around 85 million barrels a day, which happens to be just where Husseini's calculations suggested output would begin to level off.
The change is so stark that the oil industry itself has lost some of its cockiness. Last fall, after the International Energy Agency released a forecast showing global oil demand rising more than a third by 2030, to 116 million barrels a day, several oil-company executives voiced doubts that production could ever keep pace. Speaking to an industry conference in London, Christophe de Margerie, head of the French oil giant Total, flatly declared that the "optimistic case" for maximum daily output was 100 million barrels—meaning global demand could outstrip supply before 2020. And in January, Royal Dutch Shell's CEO, Jeroen van der Veer, estimated that "after 2015 supplies of easy-to-access oil and gas will no longer keep up with demand."
To be sure, veteran oilmen like de Margerie and van der Veer don't talk about peak oil in a geologic sense. In their view, political and economic factors above ground, rather than geologic ones below, are the main obstacles to raising output. War-torn Iraq is said to have huge underground oil reserves, yet because of poor security, it produces about a fifth as much as Saudi Arabia does. And in countries such as Venezuela and Russia, foreign oil companies face restrictive laws that hamper their ability to develop new wells and other infrastructure. "The issue over the medium term is not whether there is oil to be produced," says Edward Morse, a former State Department oil expert who now analyzes markets for Lehman Brothers, "but rather how to overcome political obstacles to production."
Yet even oil optimists concede that physical limits are beginning to loom. Consider the issue of discovery rates. Oil can't be pumped from the ground until it has been found, and yet the volume discovered each year has steadily fallen since the early 1960s—despite dazzling technological advances, including computer-assisted seismic imaging that allows companies to "see" oil deep below the Earth's surface. One reason for the decline is simple mathematics: Most of the big, easily located fields—the so-called "elephants"—were discovered decades ago, and the remaining fields tend to be small. Not only are they harder to find than big fields, but they must also be found in greater numbers to produce as much oil. Last November, for example, oil executives were ecstatic over the discovery off the Brazilian coast of a field called Tupi, thought to be the biggest find in seven years. And yet with as much as eight billion barrels, Tupi is about a fifteenth the size of Saudi Arabia's legendary Ghawar, which held about 120 billion barrels at its discovery in 1948.
Smaller fields also cost more to operate than larger ones do. "The world has zillions of little fields," says Matt Simmons, a Houston investment banker who has studied the oil discovery trend. "But the problem is, you need a zillion oil rigs to get at them all." This cost disparity is one reason the industry prefers to rely on large fields—and why they supply more than a third of our daily output. Unfortunately, because most of the biggest finds were made decades ago, much of our oil is coming from mature fields that are now approaching their peaks, or are even in decline; output is plummeting in once prolific regions such as the North Sea and Alaska's North Slope.
Worldwide, output from existing fields is falling by as much as 8 percent a year, which means that oil companies must develop up to seven million barrels a day in additional capacity simply to keep current output steady—plus many more millions of barrels to meet the growth in demand of about 1.5 percent a year. And yet, with declining field sizes, rising costs, and political barriers, finding those new barrels is getting harder and harder. Many of the biggest oil companies, including Shell and Mexico's state-owned Pemex, are actually finding less oil each year than they sell.
As more and more existing fields mature, and as global oil demand continues to grow, the deficit will widen substantially. By 2010, according to James Mulva, CEO of ConocoPhillips, nearly 40 percent of the world's daily oil output will have to come from fields that have not been tapped—or even discovered. By 2030 nearly all our oil will come from fields not currently in operation. Mulva, for one, isn't sure enough new oil can be pumped. At a conference in New York last fall, he predicted output would stall at 100 million barrels a day—the same figure Total's chief had projected. "And the reason," Mulva said, "is, where is all that going to come from?"
Whatever the ceiling turns out to be, one prediction seems secure: The era of cheap oil is behind us. If the past is any guide, the world may be in for a rough ride. In the early 1970s, during the Arab oil embargo, U.S. policymakers considered desperate measures to keep oil supplies flowing, even drawing up contingency plans to seize Middle Eastern oil fields.
Washington backed away from military action then, but such tensions are likely to reemerge. Since Saudi Arabia and other members of the Organization of Petroleum Exporting Countries control 75 percent of the world's total oil reserves, their output will peak substantially later than that of other oil regions, giving them even more power over prices and the world economy. A peak or plateau in oil production will also mean that, with rising population, the amount of gasoline, kerosene, and diesel available for each person on the planet may be significantly less than it is today. And if that's bad news for energy-intensive economies, such as the United States, it could be disastrous for the developing world, which relies on petroleum fuels not just for transport but also for cooking, lighting, and irrigation.
Husseini worries that the world has been slow to wake up to the prospect. Fuel-efficient cars and alternatives such as biofuels will compensate for some of the depleted oil supplies, but the bigger challenge may be inducing oil-hungry societies to curb demand. Any meaningful discussion about changes in our energy-intensive lifestyles, says Husseini, "is still off the table." With the inexorable arithmetic of oil depletion, it may not stay off the table much longer.

Millenium Development Goals

The Millenium Development Goals (MDGs) were officially established at the Millenium Summit in 2000. 189 United Nations have agreed to try to achieve these goals by 2015. There are 8 goals and 21 targets:

1. Eradicate extreme poverty and hunger. Extreme poverty is a state in which people cannot meet basic needs for survival. The World Bank characterizes extreme poverty as living on US $1 or less per day. It is estimated that 1.1 billion people currently live under these conditions. It is most common in Sub-Saharan Africa, Southeast Asia, and Central America.

• Halve the proportion of people whose income is less than one dollar a day (from 1990-2015)
• Achieve full and productive employment and decent work for all, including women and young people. Decent work refers to opportunities for women and men to obtain work in conditions of freedom, equity, security and human dignity. According to the International Labour Organization (ILO), Decent Work involves opportunities for work that is productive and delivers a fair income, security in the workplace and social protection for families, better prospects for personal development and social integration, freedom for people to express their concerns, organize and participate in the decisions that affect their lives and equality of opportuniyu and treatment for all women and men.
• Halve the proportion of people who suffer from hunger (from 1990-2015)

The number of people in developing countries living on less than US $1 a day fell to 980 million in 2004; down from 1.25 billion in 1990. The proportion of people living in extreme poverty fell from nearly 19 percent over this period.

This goal has not yet been achieved. A world map with the current statistics can be found at http://www.mdgmonitor.org/map.cfm?goal=0&indicator=0&cd

2. Achieve universal primary education

• Ensure that children everywhere will be able to complete a full course of primary schooling

682 million children worldwide are enrolled in primary school. But there are still around 77 million children who are missing out on a primary education.

This goal has not yet been achieved. A world map with the current statistics can be found at http://www.mdgmonitor.org/map.cfm?goal=1&indicator=0&cd

3. Promote gender equality and empower women

• Eliminate gender disparity in primary and secondary education, preferably by 2005, and at all levels by 2015.

In 2006, 13 women were heads of state or government compared to 9 in 2000 and 12 in 1995. A record number of women took up top positions in 2006 – in Chile, Jamaica, Liberia, the Republic of Korea and Switzerland.

This goal has not yet been achieved. A world map with the current statistics can be found at http://www.mdgmonitor.org/map.cfm?goal=2&indicator=0&cd

4. Reduce child mortality. Child mortality refers to the death of infants and children under the age of five. About 26,000 children die every day, mainly from prevetable causes. In 2006, 9.7 million children under five died. About half of child deaths occur in Africa. UNICEF estimates that one million child deaths could be prevented annually at a cost of US $1 billion/year (about $US 1000 for each child).

• Reduce by two-thirds the under-five mortality rate (from 1990-2015).

Under-five mortality rates dropped from 185 per 1,000 live births in 1990 to 166 per 1,000 in 2006.

This goal has not yet been achieved. A world map with the current statistics can be found at http://www.mdgmonitor.org/map.cfm?goal=3&indicator=0&cd.

5. Improve materal health

• Reduce by three quarters the maternal mortality ratio (from 1990-2015). Maternal mortality is the death of a woman during or shortly after a pregnancy. In 2000, the United Nations estimated global matermal mortality at 529,000, of which less than 1% occurred in the developed world.
• Achieve universal access to reproductive health. Reproductive health implies that people are able to have a responsible, satisfying, and safe sex life and that they have the capability to reproduce and the freedom to decide if, when, and how to do so. Men and women have the right to be informed of and to have acces to safe, effective, acceptable, and affordable methos of fertility regulation of their choce, and the right of access to appropriate health care services that will enable women to go safely through pregnancy and childbirth and provide couples with the best chance of having a healthy infant.

Since 1990, every region has made progress in ensuring that women receive antenatal care at least once during their pregnancy. Even in sub-Saharan Africa, where the least progress has occurred, more than two thirds of women receive antenatal care at least one time during pregnancy.

This goal has not yet been achieved. A world map with the current statistics can be found at http://www.mdgmonitor.org/map.cfm?goal=4&indicator=0&cd.

6. Combat HIV/AIDS, malaria, and other diseases

• Have halted and begun to reverse the spread of HIV/AIDS
• Achieve, by 2010, universal access to treatment for HIV/AIDS for all those who need it
• Have halted and begun to reverse the incidence of malaria and other major diseases

As of December 2006, an estimated 2 million people were receiving antiretroviral therapy in developing regions. This represents 28 percent of the estimated 7.1 million people in need.

This goal has not yet been achieved. A world map with the current statistics can be found at http://www.mdgmonitor.org/map.cfm?goal=4&indicator=0&cd.

7. Ensure environmental stustainability.

• Integrate the principles of sustainable development into country policies and porgrammes; reverse loss of environmental resources.
• Reduce biodiversity loss, achieving, by 2010, a significant reduction in the rate of loss
• Halve the proportion of people without sustainable access to safe drinking water and basic sanitation.
• By 2020, to have achieved a significant improvement in the lives of at least 100 million slum-dwellers.

The proportion of protected areas globally has steadily increased, and a total of about 20 million square kilometres of land and sea were under protection by 2006.

This goal has not yet been achieved. A world map with the current statistics can be found at http://www.mdgmonitor.org/map.cfm?goal=6&indicator=0&cd.

8. Develop a global partnership for development.

• Develop further an open trading and financial system that is rule-based, predictable and non-discriminatory. Includes a commitment to good governance, development and poverty reduction—nationally and internationally.
• Address the special needs of the least developed countries. This includes tariff and quota free access for their exports; enhanced program of debt relief for heavily indebted poor countries; and cancellation of official bilateral debt; and more generous official development assistance for countries committed to poverty reduction.
• Address the special needs of landlocked and small island developing States.
• Deal comprehensively with the debt problems of developing countries through national and international measures in order to make debt sustainable in the long term.
• In cooperation with developing countries, develop and implement strategies for decent and productive work for youth.
• In cooperation with pharmaceutical companies, provide access to affordable essential drugs in developing countries.
• In cooperation with the private sector, make available the benefits of new technologies, especially information and communications

The world's poorest countries pay over $100 million every day to the rich world.

This goal has not yet been achieved. A world map with the current statistics can be found at http://www.mdgmonitor.org/map.cfm?goal=7&indicator=0&cd.

Countdown to 2015: 6 years 227 days