Oil: A Bumpy Road Ahead

Association for the Study of Peak Oil & Gas

When I was born in 1945, none of the four small farms in my little Swedish village used oil for anything. Ten years later, the oil age had arrived: we had replaced coal with oil for heating, my father had bought a motorcycle, and tractors were seen in the fields. From 1945 to 1970, Sweden increased its use of energy by a factor of five, or nearly 7 percent per year for 25 years. This journey into the oil age transformed Sweden from a rather poor country into the third wealthiest country (per capita) in the world. Ninety percent of the energy increase came from oil. Cheap oil made Sweden rich.

Now consider China, a developing country with 21 percent of the global population. It consumes 8 percent of the global oil supply, and thinks it is fair to claim 21 percent, or 17.6 million barrels per day (mb/d). During the last five years the average annual GDP growth in China has been 8.2 percent and the average increase in oil consumption 8.4 percent per year. We can now see the same correlation between increase in GDP and use of oil in China as in Sweden 50 years ago. If China’s economy grows 8 percent per year over the coming five years, we can expect that it will need an increase in the consumption of oil of 3 million barrels per day. According to Professor Pang Xiongqi of the China University of Petroleum in Beijing, China’s production will remain level till 2009 and then start to decline. This means that the total increase…