"We've already gotten the easy oil, the oil that can be produced cheaply," he says. "It used to be we'd drill a well and the oil would flow out, now we have to go through all these complicated and expensive procedures to produce the oil."
The same is true of alternative sources such as tar sands or "fracking" for shale gas, Murray says, where supplies may be exaggerated and production is expensive. Take the promise of shale gas and oil: A New York Times investigative piece last June reported that "the gas may not be as easy and cheap to extract from shale formations deep underground as the companies are saying, according to hundreds of industry e-mails and internal documents and an analysis of data from thousands of wells."
Production at shale gas wells can drop 60 to 90 percent in the first year of operation, according to a world expert on shale gas who was one of the sources for the commentary piece. Murray and King built their commentary using data and information from more than 15 international and U.S. government reports, peer-reviewed journal articles, reports from groups such as the National Research Council and Brookings Institution and association findings.
Stagnant oil supplies and volatile prices take a toll on the world economy. Of the 11 recessions in the U.S. since World War II, ten were preceded by a spike in oil prices, the commentary noted.
"Historically, there has been a tight link between oil production and global economic growth," the co-authors wrote. "If oil production can't grow, the implication is that the economy can't grow either."
Calculations from the International Monetary Fund, for example, say that to achieve a 4 percent growth in the global economy in the next five years, oil production must incre
|Contact: Sandra Hines|
University of Washington