International Energy Agency's Top Economist Says Oil Peaked in 2006

As recently as five years ago, most anyone carrying on about "peak oil" was dismissed as part of the lunatic fringe.

The idea that global oil production had peaked wasn't taken seriously by anyone except doom-mongering survivalists and hardcore greens. Those two groups, who generally inhabit the opposite extremes of the political spectrum, made for odd bedfellows, but were equally exercised about peak oil.

It seem that those "wackos" are being vindicated. A month ago I wrote about how HSBC's chief economist worried that "there could be as little as 49 years of oil left."

Then last week, Faith Birol, the chief economist for the International Energy Agency, which is widely regarded as the most reliable intergovernmental energy forecasting agency, dropped this bombshell to an Australian news network:

When we look at the oil markets the news is not very bright. We think that the crude oil production has already peaked in 2006

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Wow. Birol is the "voice of the mainstream" (that's how reporter Dr. Joanna Newby describes him), a man who "who just 5 years ago was confidently saying oil production will rise to 120 million barrels a day by 2030."

I can't embed the video of the piece, but click here to watch. Birol's comment is around 2:25.

As you can hopefully make out in the image above, Birol is speaking of "crude oil" production alone. He wouldn't hazard a guess as to when total oil production—which includes oil from tar sands and natural gas liquids and other non-conventional forms of oil—would actually peak. The overall increase that you see above in light gray is based on ambitious predictions about future extraction rates. In fact, the IEA's estimates figure that oil will be extracted from yet undiscovered fields at a rate twice as fast as has ever been accomplished in history.

When asked at the end of the segment "how urgent is this?" Birol responds, "I think it would have been better if the governments have started to work on it at least ten years ago."

This is yet another piece of evidence (see here and here) that we cannot drill our way to lower gas prices. Our country has a voracious hunger for a diminishing resource, and we'll be paying out the ear for it unless we figure out better ways of getting around.