For a little background, Energy Depletion thinker Richard Heinberg narrates 300 Years of Fossil-fueled Addiction in Five Minutes.


And the above is a trailer for a film coming out in 2011, The Economics of Happiness.

The latest buzz in energy depletion circles is about the IEA report. Former CIA analyst Tom Whipple writes:

The International Energy Agency released its annual, and controversial, magnum opus World Energy Outlook 2010. Ever since IEA stopped assuming that there would always be enough oil to meet growth during the following 25 years, it has pursued a delicate balancing act of projecting enough oil for the global economy to continue to grow without postulating absurd numbers. This year Outlook 2010 takes a new tack and projects three cases: business as usual; new energy policies; and a major effort to reduce carbon emissions. IEA is also starting to talk about peak global oil production, but in a manner that does not admit geologic constraints.

On his Early Warning blog, former Oil Drum editor Stuart Staniford writes:

If you go to the executive summary of the 2009 International Energy Agency World Energy Outlook, and search for "peak oil", your browser will come up empty.  The whole subject was so beneath the dignity of a serious energy agency that they didn't even bother mentioning it.

However, yesterday, the 2010 IEA World Energy Outlook became available.  And if you repeat the exercise in that executive summary, you will come upon a section titled: Will peak oil be a guest or the spectre at the feast? Followed by an explicit discussion of the whole question.  The IEA's position is summarized in the graph above - conventional crude oil production has already peaked in 2006!  Suddenly, the subject of impending peak has gone from not worthy of discussion to in the past already!

Even though the IEA now kind of, sort of admits to Peak Oil, Gail (the Actuary) Tverberg summarizes twelve "questionable assumptions and major omissions" to the report from the rockheads at The Oil Drum.

8. Failure to address why world oil production has been flat for six years. If the amount of available oil reserves is so great, why hasn't new oil been rushed into production in the last six years, as oil prices spiraled to $147 barrel? If there was difficulty raising production in the last six years, how can one possibly assume in the "Current Policies" scenario that oil production would continue to rise in the future.

One of the issues in the recent flat production is the flow rate of reserves. Some of the unconventional oil is extremely slow to extract. Reserves to production ratios can be extremely misleading, because the fact reserves are there, doesn't mean a reasonable amount can be extracted in a given year. It is a little like having a bank account with $5 billion dollars, that you can only remove $100 a year from.

The IEA report is important within the energy industry, and ultimately affects policy that affects all of us.

The exercise below is speculative, but exciting. It is very long, but in brief, by substituting alternate inflation values, the author graphs a strong correlation between oil price spikes, gold price spikes and recessions.

Was Volatility in the Price of Oil a Cause of the 2008 Financial Crisis?