When oil and gas production peaks -- in about 10 years' time and onwards, according to a recent study -- there won't be a sudden collapse in supply. It will be a long, slow decline lasting, maybe, another century or more. But that's not really the issue, as is pointed out in the article appended below. It is that the demand will still be growing steeply and exceeding any amount that the world's resources can supply.

Earlier this year, the invasion of Iraq -- the second largest potential source in the world -- by America and the UK on various implausible pretexts suggests that at least those two countries are fully aware of the crunch to come. America also has fairly close physical access to Nicaraguan oil. Also Nigeria, another major producer, is only across the Atlantic from America.

However, if China were to make constructive proposals to Saudi Arabia sometime in the next few years then it could become a major importer of oil and gas and compete with America for access to Middle East oil supplies. Some three years ago some major oil corporations, including American-based ones, were denied access to some vast oil and gasfields in Saudi Arabia because they were not prepared to carry out additional make-work projects for the growing number of young unemployed Saudi Arabian males.

I would not be surprised if China and Saudi Arabia are not already secretly discussing proposals for these sorts of labour-intensive schemes. However, bearing in mind that China has quite a long way to go in the coming years in solving some major domestic problems of its own (particularly its state banks being loaded with bad debts from Mao Zedong's previous regime), it is unlikely to be too eager to commit itself at the present time. Also, China would not want to provoke America in the near future while it does not yet posses a geostationary satellite system of its own from which to direct nuclear missile attack on America if the latter were ever to hreaten China. A GPS system is due to be started soon. Nor would China want to endanger its vast and growing export trade to America at the present time until the South-East Asian market becomes large enough and independent enough from east-west trade.

Keith Hudson

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OIL AND GAS RUNNING OUT FASTER THAN EXPECTED, SAYS STUDY

Charles Arthur

World oil and gas supplies are heading for a "production crunch" sometime between -- 2010 and 2020 when they cannot meet supply, because global reserves are 80 per cent smaller than had been thought, new forecasts suggest.

Research presented this week at the University of Uppsala in Sweden claims that oil supplies will peak soon after 2010, and gas supplies not long afterwards, making the price of petrol and other fuels rocket, with potentially disastrous economic consequences unless people have moved to alternatives to fossil fuels.

While forecasters have always known that such a date lies ahead, they have previously put it around 2050, and estimated that there would be time to shift energy use over to renewables and other non-fossil sources.

But Kjell Aleklett, one of a team of geologists that prepared the report, said earlier estimates that the world's entire reserve amounts to 18,000 billion barrels of oil and gas -- of which about 1,000 billion has been used up so far -- were "completely unrealistic". He, Anders Sivertsson and Colin Campbell told New Scientist magazine that less than 3,500 billion barrels of oil and gas remained in total.

Dr James McKenzie, senior assistant on the climate change programme at the World Resources Institute in Washington, said "We won't run out of oil -- but what will happen is that production will decline, and that's when all hell will break loose."

Present annual oil consumption is about 25 billion barrels, and shows no signs of slowing. That would suggest a "production crunch" -- where consumption grows to meet the maximum output -- within the next couple of decades.

Dr McKenzie said that on this topic the argument split between economists and geologists. "The economists think it will just force the price of oil up, which will mean it will become economic to extract it from all sorts of unusual places, such as tarry sands or deposits which are 90 per cent rock and 10 per cent oil. But the geologists say "You tell us where the deposits are and we'll find them. We've looked and we can't."

One side-effect of having lower oil reserves might be that the worst predictions of climate change would be forestalled -- because there would be less fuel to bum, and therefore less carbon dioxide, the greenhouse gas, produced.

The Uppsala team's estimates are lower than any considered by the International Panel on Climate Change (IPCC), whose minimum estiimate for the total reserves was 5,000 billion barrels.

But Nebojsa Nakicenovic, an energy economist at the University of'Vienna in Austria, who headed the IPCC team that produced the reserves forecasts, said the Swedish group were "conservative", and that his team had taken into account a wider range of estimates. Dr Nakicenovic added that, if oil and gas began to run out, "there's a huge amount of coal underground that could be exploited".

Dr McKenzie said "We have to accept the fact of oil and gas production peaking, and get concerned with substitutes. It's not when will we run out, it's when will production be unable to meet demand.

"And 97 or 98 per cent of transport depends on it. You can use coal to make methanol to power your cars or buses. But the reality is that it's all about where the oil is."

The Gulf countries -- Bahrain, Iran, Iraq, Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates -- produce about 25 per cent of the world's oil at the moment, and hold 65 per cent of the world's oil reserves.

"That's why we went to war in Iraq," said Dr McKenzie. "Gas might have comparable reserves to oil, but it's not in the right place and we don't really have the infrastructure to transport it."

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Independent 2 October 2003