Branson Report Warns of Peak Oil as Early as 2015

A group fronted by Virgin CEO Richard Branson released a report this week warning that peak oil is not only real, but closer on the horizon than many might think. The Industry Taskforce for Peak Oil and Energy Security warns that demand for oil could outstrip supply as soon as 2015, a turn of events that would send ripples through nearly every economy and industry in the world. “We must plan for a world in which oil prices are likely to be both higher and more volatile and where oil price shocks have the potential to destabilize economic, political and social activity,” wrote Branson in the forward to the report. “Don’t let the oil crunch catch us out in the way that the credit crunch did.”

The task force recommended swift action from government and business to accelerate the “green industrial revolution,” as well as the creation of actionable contingency plans should an oil crisis take place before a movement away from petroleum is complete. It warned that even if immediate steps are taken, there is a risk of serious shock to the food, transportation, heating and retail sectors. As one of the world’s leading travel providers, Branson’s Virgin Airlines would stand to be hit particularly hard in the event of such a crisis.

Branson is just the latest billionaire to warn of an impending oil crisis. Everyone with a television set, radio or Internet connection is by now familiar with legendary oilman T. Boone Pickens’ warnings on the subject. “The oil just isn’t there—no technology can change that,” Pickens told Mother Earth News in January. “And with China and India pushing up the global demand, new discoveries just can’t keep up with it.”

Both men are of course heavily invested in the transition to sustainable energy. Branson said last year that he plans to invest about $400 million in renewable energy technologies, while Pickens has invested upwards of $60 million on media promotion of his “Pickens Plan” alone. His total investment numbers in the hundreds of millions of dollars.

In a matter of few years, peak oil has grown from a marginalized theory to a serious point of debate within the mainstream energy investment and business communities. In 2007, the United States Government Accountability Office published a report recommending that “the Secretary of Energy [take] the lead, in coordination with other relevant agencies, to prioritize federal agency efforts and establish a strategy for addressing peak oil issues.” The report stated that most experts expect peak oil production “sometime between now and 2040.”

From Peak Oil to… Peak Demand?

Meanwhile, the government of Saudi Arabia is warning of the complete opposite of a peak oil crisis: so-called “peak demand.” Citing fears of reduced demand from the developing world—due to the global economic downturn—and an industrialized world that is increasingly trying to move away from petroleum, the Saudis say they’re trying to diversify their economy to be less reliant on oil. “The concern about peak oil is behind us,” said Khalid al-Falih, chief executive of the Saudi state oil firm Aramco, at the World Economic Forum in Davos last month.

Still, most energy experts see reduced demand in the developing world as a short term correction rather than a long term trend, and there is little evidence that the world is on pace to replace a significant portion of its petroleum use with alternative energies in the near future. Even at face value, the Saudi position is about as far from mainstream consensus as peak oil theory was 10 years ago.


  • AP

    The first time I heard this (1978) we were supposed to run out completely by 1985. Oops!

  • Shines

    When oil prices jump in 4 or 14 or 40 years we will start processing oil shale which will extend the peak another 20 to 50 years…
    then the algae oil development will be in full production extending the peak further. Alternative energy and battery technology will continue to increase as the price of oil rises and at some point oil may no longer be viewed as a fuel. In any case hybrid and battery powered vehicles and alternative energies are a step in the right direction…

  • Lost Prius to wife

    AP, back then the oil industry was still developing techniques to find oil. Things have changed.

    The computer back then that took up a 50 X 50 foot room can now be placed on a 3″ x 3″ chip with room to spare. Although I actually know some people that think oil is being produced, right now below our feet, at rates that will replace all the oil that the world is using, I do not believe that the oil industry believes that oil is infinite.

    Shine, I agree that oil’s rising price and running out will drive both alternative vehicles and alternative energies. Maybe we should start calling it “peak energy” rather than “peak oil”. And starting earlier, rather than later, with both alternative vehicles and alternative energies is definitely “a step in the right direction”.

  • Dave – Phoenix

    Few folks really get the idea that even though we are not out of oil, there is a limit to how much oil the world can produce in one day….

    Most Americans still believe OPEC is significantly limiting oil production and could increase to any level needed if they choose to do so…

    Folks also don’t get the relationship between “oil discoveries” and “oil production”

    “US” oil discoveries peaked in the 1930′s. US oil production peaked in 1971, even before the Alaska pipeline was finished. We still produce less oil daily than we did in 1971….

    “World” oil discoveries peaked in the 1960′s. If the US model holds true, then Branson’s team is correct. World oil production is at or near it’s peak.

    Another crisis like we saw in 2008 is right around the corner…….and nobody knows it….

  • Meekman

    Of course the oil companies and countries are going to say that there is plenty of oil … because they want people not to worry so that they don’t go out and buy hybrid or electric cars.

    The companies want the money now before solar, wind, water powered electric vehicles and homes take over. Who wants oil when solar panels are getting more and more efficient each year?

    Forget about climate change … you take a look at Los Angeles on most days and the smog is still very bad. It’s better than it used to be, but it is definitely something that needs to change. Oil is a 20th Century fuel and it’s dying … and the companies and countries in charge of it know it.

    Oil Shale is still dangerous and expensive to refine. If it comes down to that, then we should have enough for a while longer. However, I think electric will take over before then.

  • AP

    There’s no doubt that oil will “run out” someday, and that today’s usage is unsustainable. My point above is that we are continuing to find more reserves. Some are huge, like the recent one in the Gulf of Mexico. Some are untapped, like off the coast of California. IT WILL continue to become more expensive, but as it does, more reserves become worth developing.

    The question is whether we should continue to use it at today’s rate, and the answer is “no.” Purely from a national security standpoint, we need to reduce consumption. Wouldn’t it be easier to negotiate (i.e., pressure) Iran if they didn’t have the world “over a barrel?”

    CAFE has failed to reduce consumption. It has produce more fuel efficient cars, which we drive more miles per day on cheap gas, creating gridlock and thousands of idling cars (except for hybrids). It has enabled urban sprawl, created the SUV market (since trucks need lower CAFE), and has done nothing to encourage a car maker to “over-achieve” by making a super-efficient car.

    A higher fuel tax would give people the incentive to purchase fuel-efficient vehicles WITHOUT government incentives, and drive it less once it’s purchased (our government has no business handing out money it doesn’t have).

    To offset it, the government should add up all the fuel tax revenue, then distribute it equally among all people who file income tax, as a tax credit.

    So it doesn’t take any revenue out of the economy or put any in. Phase it in over a few years so it doesn’t shock the system, and you could throw CAFE out the window. Who cares if a few rich folk drive Lamborghinis that guzzle gas? Let them have their fun! This isn’t about appearances – it’s about results.

  • Samie

    In the name of bipartisanship energy diversification or “the green revolution” simply means moving more transportation fuels from oil to CNG and LNG and yes getting 1 to 5 percent of our energy needs from new exploration off our coastal areas. Which by all accounts would last less than twenty years….

    What worries me the most in all of this is the short-term ideas of our political leadership. Here is what I think will happen:

    1. As gas prices go up due to greater world demand our politicians will simply increase the subsidies and tax breaks for oil companies to keep the price paid at the pump less than what we should pay. This goes on right now but expect more price controls in the future.

    2. The next problem deals with the special interest groups. There will be greater expansion of ethanol products and uses of natural gas in our vehicles. As prices go up political power will focus on these two things putting electric vehicles on the back burner.

    3. Instead of directly paying the price of oil we will simply fight more wars over petro supplies. Paying for war means 20-30years down the road we pay the hidden costs along with interest. More of this will happen if we see gasoline prices go up from world demand. We also will enter into energy agreements with countries like Russia over cheap CNG supplies (that is the diversification part of the problem). Some petro dictatorships will stay but now we will support natural gas dictatorships also

    4. Americans are told not to sacrifice anything… If we have any chance of diversification this has to happen. We have to start paying the real price for natural resources and the short-term costs of the initial switch to more renewable energy sources.

    5. The politics of this country drive me crazy. We will have Democrats slice and dice any real legislation up not in the name of bipartisanship but in the name of special interests. Republicans on camera say small government and less taxes but really support big government and subsidies to their friends and often distort any real free market solutions so to benefit only a handful of companies. The climate in Washington DC and the stupid political narratives and spin makes me doubt that we can be smart about energy independence and offering long-term solutions not band-aids or short-term fuel schemes.

  • Joshua

    How about using fuel tax to pay for the war in Iraq? Clearly if Iraq was located in a non oil producing part of Africa, we wouldn’t have gone to war there. How about using fuel tax as a tax credit for more fuel efficient cars so there is double incentive to move away from crude oil? How about using the fuel tax to pay for the health care for those suffering from health problems, such as asthma, that are a direct consequence of burning oil?
    Our oil addiction has a lot of consequences. There is no reason why we shouldn’t tax oil to mitigate some of them.
    As for the big discoveries statement we keep on hearing about. The word “big” needs to be defined in terms of how many years it will supply the earth with oil. Currently “big” in defined in months. Furthermore, peak oil theory predicts that we will discover more oil, but just not enough to avoid the economic pain of less oil flow than is demanded.

  • AP

    Samie, you’re exactly right. I have the same concerns.

    Joshua, I like your idea. The only thing is the tax would end at the end of the war. You know how forgetful we Americans are about not buying big cars to drive. We’ve done this what, 4 or 5 times?

  • Joshua

    The entire war was paid for straight out of the national debt. When the war ends, we can start paying for the $750B plus spend far spend in Iraq. That won’t be paid for for quite a while. By that time that is paid for, all the infrastructure should be in place to fund a final shift away from oil.
    I know I am talking pie in the sky. We Americans feel entitled to subsidized oil and won’t tolerate paying the actual price for it. We just don’t acknowledge that it is subsidized. We subsidize it by paying for the war in iraq, both in money and blood, health problems and deaths caused by air pollution, actual subsidies to oil companies for drilling, the damage to the environment from drilling and oil spills and so on.

  • Collin Burnell

    You know the one thing we don’t talk about much is all of the other industries that use Oil and how much of the worlds oil is being used by Transportation and the Energy sectors. I got some info that indicates that the Transportation machines of the world may only use about 12% of the total.

  • Joshua

    According to the Energy Information Administration, almost 70% of oil is used for transportation.

    http://www.eia.doe.gov/pub/oil_gas/petroleum/analysis_publications/oil_market_basics/dem_image_us_cons_sector.htm

    Even if you calculate total energy used per sector, transportation is still 28%.

    http://tonto.eia.doe.gov/energyexplained/index.cfm?page=us_energy_use

    The information that I would like is exactly how much is used for personal transportation, how much is used for transporting goods, and how much is for air transportation. Also, there is no mentioned weather the military is included or excluded from these numbers. One source of information that I have seen puts the military at around 2% of energy consumption and agriculture around 4%. I always assumed that these 2 sectors would be using more fuel.

  • ex-EV1 driver

    AP,
    I can’t see any politician being successfull at ever winning an election if he/she has gone on record in support of increasing oil taxes.
    I agree with your observations about the folly of CAFE.
    The only viable solution I see, then, is to work on doing away with the need for oil for most of our needs. Plug-in vehicles that can run of of any energy source that can be converted to electricity and distributed is a viable approach. That coupled with the outstanding performance that an electric motor can provide (a feature sadly missed in today’s hybrids) make plug-ins an outstanding technology, worthy of support.
    ps: Lamborghinis are over-priced wimps compared to Tesla plug-ins

  • Dave – Phoenix

    “My point above is that we are continuing to find more reserves”

    This is the part about “peak oil” that most get confused on….

    Every year we discover “new” oil reserves, but the number of new discoveries each year is declining. Annual “new” oil reserve discoveries “peaked” back in the 1960′s, and has been declining eery year since…..

    As the “discovered” oil gets used up, it must be replaced by “newly discovered” oil. As the amount of newly discovered oil each year decreases, it eventually leads to a decline in annual production….

  • Todd Ochsner

    I think that one of the biggest issues not discussed regarding a potential shortage/depletion of oil is that of NON-ENERGY usage of oil. I’m talking about all the products produced from petroleum, ie plastic or other petroleum based items. As far as I understand it, oil is pretty much the main staple in the production of such products. When and if the oil runs out, what will we use? Just food for thought…

  • Max Reid

    Last month Chinese bought 1.6 million vehicles and so this year they may sell around 17 million vehicles.

    At this rate, surely the demand will soon hit 90 million b/d and if the OPEC runs out of spare capacity, the oil prices could hit $150 / barrel again.

    So even with higher production if it cannot meet demand, we are in trouble. Time to start buying more fuel efficient vehicles.

  • AP

    Todd Ochsner brings up a point that few people seem to realize. Petroleum is the raw material to make plastics, rubber components, and many other materials. Burning it, when you could use another heat source, is a missed opportunity to build something from it.

    All the more reason to use as much nuclear power as possible for power, then natural gas (which has the least carbon of any fossil fuel), then…

  • Fred Linn

    AP——–” The first time I heard this (1978) we were supposed to run out completely by 1985. Oops!”————–

    The cost of a gallon of gasoline is about 10X the amount of the cost of a gallon of gasoline in 1978. Oops.

    In 1978, the US produced about 75% of the oil we consumed and imported about 25%. In 2010, we produce about 25%, and import about 75% of the oil we consume. Oops.

    AP——” Todd Ochsner brings up a point that few people seem to realize. Petroleum is the raw material to make plastics, rubber components, and many other materials”——–

    During WW2, the US built a large plant that produced ethanol from wood logging and millwork waste. The ethanol produced was used to make butadeine, artificial rubber. Look closely at pictures of US forces from WW2. All of the rubber parts, tires, gaskets, everything else used to build all those airplanes, trucks, tanks, ships, jeeps etc.—-were made with wood from Wisconsin.

    During the later half of WW2, Germany used the Fisher-Tropsch process to produce methanol, ethanol and diesel fuels from wood and coal. They powered everything from submarines to panzer tanks, even jet aircraft and rockets with synthetic fuels.

    That was 70 years ago.

    Todd Ochsner————-” When and if the oil runs out, what will we use? Just food for thought…”———

    Biofuels can do anything that petroleum can do.

  • Prof Baldwin

    This is all probably true, but as the price of energy increases, so will the benefits of moving consumer manufacturing closer to home – it will soon work out cheaper to manufacture back in the USA with the higher salaries, rather than pay the expensive shipping costs of moving raw materials around the world and finished products back again (globalisation starts to fail at about $97 a barrel of oil). All manufacturing requires energy, you cannot build anything without energy, nothing is 100% efficient, so where is this extra energy going to come from? My own fear is that we will be running to keep still with regards to oil demand. In fact in one of my own models, I can actually see OECD oil demand accelerating as a result of manufacturing re-localisation, rather than the fall off as predicted, although to be frank it is only one scenario, where investment into alternative energy only trebles over the coming decade.

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