Lord Oxburgh Warns Oil Demand To Outstrip Supply

The former non-executive chairman of Shell UK will issue a stark warning about the world's oil supply at a conference in Ireland later this week. Lord Oxburgh expects that global oil demand will outstrip supply within twenty years as production hits plateau, and that the oil price could hit $150 in the long term. He accuses some in the industry of having their heads "almost in the sand" about oil depletion, and concludes "we may be sleepwalking into a problem which is actually going to be very serious and it may be too late to do anything about it by the time we are fully aware".

Lord Oxburgh will deliver his speech entitled Out of Oil, Into Hot Water at the Cork conference Association for the Study of Peak Oil (ASPO) on Tuesday. Lastoilshock.com secured an exclusive preview.

Lord Ron Oxburgh

Read the full interview here.

Thank's publishing the interview! I'm really pleased to see a senior director of one of the big non-national oil companies that gets it, that climate change and peak oil are completely entwined and at a crisis level in the world. Bob Ebersole

I found the comment ...

the new business, which is managing CO2.

Q: So having let the genie out of the bottle the oil companies will be paid to put it back in again?

A: I think that’s right. I think that’s how they’ll make a living.

... extreeemly interesting. The UK is being "softened up" for carbon taxes, and this suggests that the government will act as a clearinghouse to pass this revenue onto the Oilcos. Whether CCS actually works or not is another matter, but anything's better than an economy powered by renewables, I guess. That's the sarcanol speaking.

A: It depends on how fast conventional oil continues to decline.
(^Partial response to a question.)

Hmm, the cat is officially out of the bag now?

I may be wrong, but isn't the reason the oil price has been going up is because demand has been outstripping supply for the last 3 years or so?

Of course if you don’t care about climate change then you just burn coal. If you do care about climate change, you have certainly to embrace biofuels and if you’re going to burn coal you have to burn it cleanly.

And when you embrace biofuels to mitigate climate change you mitigate world population increase. Talk about win win, at least for some.

I think we can look fforward to a so-called second generation of biofuels made from agricultural waste products, or byproducts as they are more properly called, such as straw.

Hey, why not eliminate the straw and just burn dirt...oh yes first they burn the straw which starves the soil and turns it into dirt and then they burn the dirt. Wow! Another win win situation!

You said it CrystalRadio. Ancient agriculture took centuries to convert forest to desert. Now that we have biofuels, we can do the job in decades! HOORAY PROGRESS!

For the ultimate in efficiency, we should burn our own bodies for fuel. Then we solve the population problem AND the fuel problem at once! WIN WIN!

Well.... burning the bodies won't help at all.

I did the calculation; suppose that 5 billion would be scraficed and turned into biofuels, that calloric content would equal to 7 days of oil useage by the remaining 1.5 billion.

So, it would only give us a week....

Roger from the Netherlands

Thanks, Chris!

I agree with Lord Oxburgh as shown in the forecast below. I think that production has hit plateau now and that oil prices could reach $150/barrel by end of 2010. Demand could outstrip supply in the next few months.

click to enlarge, updated for 0.5 mbd OPEC quota increase and for IEA Sep 2007 OMR. For a full forecast please click here

However, in an interview with Barron's today
Rothman of ISI group
thinks that oil prices will go to $US45/barrel. I don't think so...


since the two demand/supply lines can never diverge by so much perhaps it would be a good idea to dash them and re-label as something like "Unconstrained Demand Projection" and "Estimated Supply Projection"...

[IMO: Efficiencies of usage and outright demand destruction in places that cannot afford $100+ a barrel is going to bring the top line down towards the horizontal and growth in biofuels, GTL, CTG and other sources is going to raise the lower line. The stresses of trying to keep these two lines together will snap at some point. Recession will cause the upper line to sink but any price reduction will be temporary...]

As I was skimming the article, i came across the double-do-not touch barrier of 'alt-energy will be price competitive at $150/bbl'

I stopped reading after that... he has been dumped into the idiot/agenda file

Sleepingbear, can you explain why?

Not that I disagree with you, just want to hear what you reasoning is on this.

I will be attending a speech tomorrow by John Hofmeister, President of Shell (USA) Oil Company.

Any idea how Lord Ron Oxburgh differs from the current Shell position ?

Any suggestions for questions ?



One writer noted that: "With a
global population that has
quadrupled in the last 100 years
(Al Gore) I see no solution other
than an abrupt decrease in the
population of mankind."

The U.S., Canada and Britain are
using 7-10 times the
amount of resources of the average
person in the 3rd world. This
amounts to the equivalent of
3 billion people if you multiply
400 million by 7. If we refrain from
using the simplistic
argument that the world has to
reduce its population, it would
make more sense to specify the
population that most abuses the
earth's resources. If the developed world
could radically reduce the profligate
amount of resources it is using then
we will do a great deal to salvage
a future for the coming generations. Alternatively if the developed world
could halve their population then the
next generation might have a future..
worth having.

Considering that most of the large oil field have been in production for decades, oil can only be extracted at some maximum rate and world demand is increasing, it is not hard to project that world demand will exceed world supply on a daily basis soon.