How soon will world's oil supplies peak?

If world crude-oil production hits its peak and then falls within the next five to 10 years, would America be ready? The answer is, almost certainly not.

A debate unlike anything seen since the oil embargoes of the 1970s has erupted over the future of world petroleum supplies. A chorus of experts claims that the peak in production may be approaching, and that the impact of a peak and subsequent dropoff would be devastating to the world's economies. Others insist that moment is still distant.

Some nations, including China, already appear to be taking steps to lock in future oil supplies from the Middle East, Africa, Central Asia, Canada, and South America.

The risks of future oil shortages are huge. As if to illustrate that point, the temporary ripple in supplies after hurricane Katrina sent gasoline prices in the US to record levels.

Experts' views on future oil supplies are divided into two major groups - the optimists and the pessimists, David Greene of Oak Ridge National Laboratory said at a recent oil-supply workshop sponsored by the National Academies. On this topic, he said, "the only unbiased opinion is an uninformed opinion."

Pessimists predict the world's output of conventional oil will top out within the next few years at about 100 million barrels a day (m.b.d.) and then decline - perhaps by as much as 8 percent a year.

Optimists contend that there is plenty of oil, particularly in the Middle East, and output will meet worldwide demand through at least 2030.

All sides agree that oil is a finite resource, and that it is vital to know which side is right. But the lack of public data makes that assessment difficult.

At the meeting here, dozens of energy analysts from federal agencies, big and small oil companies, universities, and the Organization of Petroleum Exporting Countries (OPEC) debated salient points concerning the world oil outlook:

• The exact time of a worldwide oil peak is unpredictable, but could happen soon. Once production peaks and begins to fall, it could precipitate a global depression, widespread starvation, high unemployment, and even war.

• If nations are not prepared, prices for crude oil after a peak could rise to hundreds of dollars a barrel, and gasoline could climb to $10 or more a gallon.

• Mitigating the effects of an oil peak would take decades, even for advanced societies like the United States, Japan, and the European Union. Standards of living could plunge.

• Undeveloped nations could be devastated as heating oil, fertilizer, gasoline, and other petroleum products became unaffordable. More than 1 billion people could be put at risk.

Participants emphasized that repercussions from a downturn in production would last decades.

One point of general agreement is that oil output in non-OPEC countries is likely to peak soon after 2010. If this occurs, OPEC's control over supply and price would rise.

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