Record gas prices blamed on peak oil

A prominent energy scientist blames record-high gas prices on the approach of peak oil, a point when the world's oil fields will pump out their maximum amount of oil, then gradually decline.

Manitoba pump price has never been higher in March

Energy experts say the age of oil is fading, causing record high gasoline prices this March 3:13

A prominent energy scientist blames record-high gas prices on the approach of peak oil — a point when the world’s oil fields will pump out their maximum amount of oil, then gradually decline. 

"There's no question that's what's causing it,"says David Hughes, a recently retired geoscientist, who worked with the Geological Survey of Canada for 32 years.

His view defies conventional wisdom that turmoil in Libya is to blame.

Production in that country's oil fields, which represent two per cent of the world's supply, has been shut down. That, say some experts, has led to a spike in gasoline prices.

What is peak oil?

Peak oil is when oil production stops rising. It can be measured globally or nationally.

The U.S. had its peak oil in 1970 and oil production there has dropped ever since, forcing it to be more reliant on foreign oil.

Experts debate when world peak oil will occur. Estimates are between now and 2030.

"If we were not close to peak oil, (Libya) should not have made any difference," Hughes said. "There should have been enough spare capacity in Saudi Arabia to easily offset what's happening in Libya.

"That tells you something about how tight oil production is."

Hughes has been crisscrossing Canada, giving talks from universities to trucking conferences, to sound the alarm that peak oil will cause the price of petroleum fuels such as gasoline, diesel, and jet fuel to skyrocket.

It’s inevitable because oil is finite, and most of the cheap, easy-to-get oil has already been depleted, he said.

He believes federal politicians running in the election are not paying attention.

"I don't think (peak oil) is on the radar of any of our federal politicians, in particular Harper. The mindset is, if we invest enough we can keep growing energy and consumption forever, basically."

March madness at the pumps

Pump prices have never been higher in any March in Manitoba. They just hit more than $1.16 per litre, which is one cent higher than the previous March record set in 2008.

As well, the national average price also hit a March record, reaching $1.23 per litre, a full six cents higher than the previous high in March 2008. 

World oil supplies plateaued five years ago but the price of oil has continued to climb to well over $100 a barrel, which supports Hughes' argument that we are headed to peak oil territory.

He also notes worrisome information coming out of the International Energy Agency (IEA) lately. 

"The age of cheap oil is over. The high prices will come," warned the Paris-based agency's chief economist, Fatih Birol, in a February 2011 video on its website.

Governments in Canada, the U.S. and other countries rely on the IEA for accurate information on global oil supplies.

In its landmark global study, called the World Energy Outlook 2008, the IEA published the average depletion rate of the 800 largest crude oil fields in the world, from Saudi Arabia to Texas.

The report concludes 73 per cent of those oil fields are past their peak and depleting rapidly at 5.1 per cent per year.

At that rate, two-thirds of today's crude oil production will simply be gone by 2030.

Catastrophic concerns

It's the kind of data that fuels many so-called peak oilers — people who believe peak oil will cause ever-escalating fuel prices and force catastrophic effects on society.

Retired geoscientist David Hughes believes world peak oil will likely hit between 2012 and 2015. (CBC)

"There just isn't going to be any gas in a few years," says Gerry Kopelow, a commercial photographer with a studio in Winnipeg.

Kopelow recently converted his 1985 BMW into an all-electric vehicle due to his concerns about peak oil. 

He believes an economic crash is coming and food production will take a major hit.

"So if we haven't grown the food locally and stored it locally, people are going to starve. That’s a worst-case scenario, but just imagine a world without trucks."

Not everybody is so convinced.

Vaclav Smil, a distinguished professor in the faculty of environment at the University of Manitoba, says society will transition into alternative fuels and less gas-guzzling vehicles.

"Most fundamentally, whenever any peak comes it will not be the end of the world as so many uninformed catastrophists insist.

"Natural gas can do anything oil can (except for flying, but that, too, after liquefaction), to say nothing about our inefficient use of gasoline," Smil wrote in an email to CBC News.

Compounding the problem, world oil demand is surging, especially from China. That country recently overtook the U.S. to become the world's top energy consumer.

To cope with these challenges, the IEA says the world needs to invest billions in natural gas and renewables, find new oil sources — such as in the Arctic — and expand unconventional sources like Alberta's tar sands and shale oil in Manitoba.

But those sources are not nearly big enough, said Hughes.

Consequently, he believes peak oil will likely hit between 2012 and 2015.

This graph from the IEA shows the production levels - and predicted production levels - of oil and gas in the world. (IEA World Energy Outlook )