Crude Oil: Uncertainty about Future Oil Supply Makes It Important to Develop a Strategy for Addressing a Peak and Decline in Oil Production
GAO-07-283
Published: Feb 28, 2007. Publicly Released: Mar 29, 2007.
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Highlights
The U.S. economy depends heavily on oil, particularly in the transportation sector. World oil production has been running at near capacity to meet demand, pushing prices upward. Concerns about meeting increasing demand with finite resources have renewed interest in an old question: How long can the oil supply expand before reaching a maximum level of production--a peak--from which it can only decline? GAO (1) examined when oil production could peak, (2) assessed the potential for transportation technologies to mitigate the consequences of a peak in oil production, and (3) examined federal agency efforts that could reduce uncertainty about the timing of a peak or mitigate the consequences. To address these objectives, GAO reviewed studies, convened an expert panel, and consulted agency officials.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Energy | While uncertainty about the timing of peak oil production is inevitable, reducing that uncertainty could help energy users and suppliers, as well as government policymakers, to act in ways that would mitigate the potentially adverse consequences. Therefore, the Secretary of Energy should take the lead, in coordination with other relevant agencies, to prioritize federal agency efforts and establish a strategy for addressing peak oil issues. At a minimum, such a strategy should seek to do the following: (1) monitor global supply and demand of oil with the intent of reducing uncertainty surrounding estimates of the timing of peak oil production. This effort should include improving the information available to estimate the amount of oil, conventional and nonconventional, remaining in the world as well as the future production and consumption of this oil, while extending the time horizon of the government's projections and analysis; and (2) assess alternative technologies in light of predictions about the timing of peak oil production and periodically advise Congress on likely cost-effective areas where the government could assist the private sector with development and adoption of such technologies. |
With regard to GAO's recommendation, EIA staff is pursuing a project focused on long-term global oil scenarios that considers key drivers such as demand, resources, recovery factors, and other factors that may affect supply. EIA has been actively seeking input and advice from outside experts in petroleum geology and engineering. Earlier this year, EIA staff participated in the Reserve-Growth Workshop hosted by the U.S. Geological Survey (USGS). Subsequently, in the context of a briefing on the recent USGS assessment of resources in the Arctic region, EIA and USGS entered into a dialogue regarding methodologies for assessing the long-term availability of oil. We expect these discussions to continue. EIA's 2008 Annual Energy Conference, held in April 2008, included a session entitled "Peak Oil: Has the World Oil Production Peaked." EIA estimates that over 600 persons attended the session. EIA staff made a presentation on their ongoing project. In addition, and recognizing that long-term oil production scenarios will vary based on underlying assumptions, EIA invited two other recognized experts (Matt Simmons of Simmons & Company International and Peter Jackson of Cambridge Energy Research Associates, Inc.) to provide their views on this topic. EIA also made all 3 presentations available on its web site. EIA believes that this action addresses GAO's recommendation and also provides a solid framework for future steps.
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Alternative energy sourcesCrude oilEnergy consumptionEnergy costsEnergy demandEnergy policyEnergy researchFuel consumptionFuel researchGasolineOil importingPetroleum explorationPetroleum productsPrices and pricingProjectionsTransportation planningTransportation policiesUnderwater pipelinesSupply and demand