Peter Maass has an article titled The Breaking Point in today's NYT magazine. The article provides a very good roundup of the prevalent views on peak oil, although Maass personally appears a bit pessimistic. It is almost never easy to decipher whether a concern sounded by such an article comes from a profund understanding of the underlying issues or some preconceived notions about the oil problem.
The article quotes Saudi Aramco's Ali-al-Naimi, Matt Simmons, and CERA's Dan Yergin among others, but the interesting piece of the story is in the later half when Maass talked to an Aramco spokesman Ibrahim al-Muhanna and later with retired Aramco executive Sadad al-Husseini:
''They will not tell you,'' he said. ''Nobody will. And that is not going to change.'' Referring to the fact that Saudi Arabia is often called the central bank of oil, he added: ''If an outsider goes to the Fed and asks, 'How much money do you have?' they will tell you. If you say, 'Can I come and count it?' they will not let you. This applies to oil companies and oil countries.''
...''There is no reason for any country or company to lie,'' Muhanna replied. ''There is a lot of oil around.'' I didn't need to ask about Simmons and his peak-oil theory; when I met Muhanna at the conference in Washington, he nearly broke off our conversation at the mention of Simmons's name. ''He does not know anything,'' Muhanna said. ''The only thing he has is a big mouth. We should not pay attention to him. Either you believe us or you don't.''
To me, the metaphor of using the fed doesn't wash well. A lot of uncertainty in the oil markets could be reduced, if Saudi Aramco as well as all major oil producers made a concerted effort to have more transparency in the data. Simmons' claim that Saudi production may be peaking in the next could of years may well turn out to be incorrect, but his push for data transparency is what should get more attention.
''You look at the globe and ask, 'Where are the big increments?' and there's hardly anything but Saudi Arabia,'' he (al-Husseini) said. ''The kingdom and Ghawar field are not the problem. That misses the whole point. The problem is that you go from 79 million barrels a day in 2002 to 82.5 in 2003 to 84.5 in 2004. You're leaping by two million to three million a year, and if you have to cover declines, that's another four to five million.'' In other words, if demand and depletion patterns continue, every year the world will need to open enough fields or wells to pump an additional six to eight million barrels a day -- at least two million new barrels a day to meet the rising demand and at least four million to compensate for the declining production of existing fields. ''That's like a whole new Saudi Arabia every couple of years,'' Husseini said. ''It can't be done indefinitely. It's not sustainable.''
...''It's becoming unrealistic,'' he said. ''The expectations are beyond what is achievable. This is a global problem . . . that is not going to be solved by tinkering with the Saudi industry.''
...Husseini, for one, doesn't buy that approach (to pressure OPEC to increase supply). ''Everybody is looking at the producers to pull the chestnuts out of the fire, as if it's our job to fix everybody's problems,'' he told me. ''It's not our problem to tell a democratically elected government that you have to do something about your runaway consumers. If your government can't do the job, you can't expect other governments to do it for them.''
Al-Husseini's explanation is that steadily increasing demand is the major reason behind the current unrest in the oil markets. Unfortunately, this is the aspect that is most often overlooked when dealing with the issue. Moderating demand for oil now, so that we can keep using oil for longer periods until clear alternative emerge may be the best option ahead. This job has to be done at home. Don't blame the Saudis for the high prices now or in the future. Simple laws of economics tell us that if demand keeps increasing at current rates, the oil markets will continue to be tight even with additional capacity, and prices will increase steadily. The time for action is now, unless you don't mind paying for that high priced oil.