Oil at $300? Get Ready!

This is an interesting interview with Charles T. Maxwell (and I think correct assessment):

Strauss, Lawrence C., 2011. Whatever happens in eqypt, oil will hit $300 by 2020. Barron's, Feb. 12.

From the interview:

" ... demand for oil continues to rise from greater economic activity around the world. Societies that are modernizing are using more oil for cars, trucks, airplanes and boats and, suddenly, we are back on that growth-of-demand upward ramp. It is pretty obvious to analysts and to the general public that oil companies are straining to get more oil to meet the world's needs. And the question behind it, of course, is this: In three or four years, will the ability to produce the extra barrels needed be met? The answer is increasingly a question mark, and that pushes higher and higher the present values of the oil in the ground and the desire of holders of oil to add to their supplies."

Mr. Maxwell is predicting peak oil in 2015:

"We are producing about 87 million to 88 million barrels a day, and I would put global capacity at another five million barrels on top of that. So our capacity is about 92 million to 93 million barrels a day, and I see our capacity as reaching perhaps as much as 95 million barrels a day at the peak in about four or five years, probably around 2015. But I think production will go very modestly above that point, if at all, and, in effect, we will reach a plateau. It will be a little bumpy in 2015, 2016, 2017 and 2018. But by 2020, the first signs will become very evident that we can't go any higher than that in production. So we will begin to settle very slowly and gradually in a world in which we need more oil each year, but we can't get more."

These are scary projections. For example, I am especially concerned about trends in China toward automobile ownership. In addition, many countries like China and Iran are extremely inefficient in using energy. These and other factors raise the stakes. Of course in the US, there could be more advances in urban mobility, mass transit, and changes to the automobile.

The trend toward regional agricultural systems for both food an bio mass look strong to me. Those interested should see the following blog post:

Oil Price Increase and Regional Agricultural Systems

By 2020, energy prices will drive huge changes in American and global society. More than ever, there needs to be unified research in energy, water, and agriculture. All three are interlinked. This is our goal at the MIT Field Intelligence Lab.