Oil demand cannot be met at current pace


Finally, someone has hit the nail on the head. Christophe de Margerie, head of exploration for Total and heir presumptive to the French energy multinational, has stated quite clearly what should be obvious right from the start: that the world lacks the means to produce oil to meet rising demand over the next decade.

The world, de Margerie points out, is focused almost exclusively on the problem of oil reserves. But this is not the main problem. The main problem is the capacity to produce oil. Forecasters have failed to consider the rate at which new resources can be brought into production. “Numbers like 120 million barrels per day will never be reached, never,” he said.

De Margerie believes that the world has confused the issue of reserves with the problem of producing those reserves. “The oil reserves are there, that is the good news, but what we can bring on today to meet demand is limited by factors other than what scientists see in a lab or think-tanks.”

Commentary: Oil reserves may, of course, be a problem, particularly in the future, but de Margerie is right to focus on demand side problems. The biggest problem we're facing in the immediate future is that demand is outstripping supply, and must outstrip supply, regardless of size or lack of size of reserves. There is no way the current demand for oil can be reached—no way. It's impossible. That is why gas prices will continue to skyrocket and why there's no quick fix to this problem.

Posted: Sun - April 9, 2006 at 02:30 PM          

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