The Peak Oil Crisis: Waiting for Winter  

Tom Whipple's latest update on Peak Oil at the Falls Church News Press looks at the delayed impact of Katrina on US oil and petrol supplies.

Last week the Department of Energy reported US demand for petroleum products had dropped by 2.3 percent as compared to 2004. The American Petroleum Institute did DOE one better by announcing that demand during September had dropped by nearly 4 percent. This was backed up by a consumer survey in which 69 percent claimed to be driving less.

There you have it. Economic theory worked. Higher gas prices have finally driven Mr. and Mrs. America to slow down, ride a bus now and them, or to simply stay at home and watch TV. Supply and demand will soon be back into balance and the crisis will be over for a while. There is no doubt some are cutting back on their driving, but how much and will it last enough to bring supply and demand back into balance without sharply higher prices?

That the US 's hurricane-disrupted crude production fell to less than 4 million barrels per day during September — the lowest since 1943 — does not seem to bother anybody. Just for the record, this means we are currently importing or withdrawing from our strategic reserve some 80 percent of our daily oil consumption.

Why didn't we fall flat on our backs with much of our crude production and significant pieces of our refinery production still out of service in the last six weeks? The answer is, our fellow members in the International Energy Agency (IEA) are letting us have an additional 800,000 barrels of gasoline per day out of their reserves. Moreover it seems our domestic refineries are still deferring maintenance and are still cranking out gasoline rather than switching over to more heating oil production at the end of the summer driving season. It is this combination that has kept us going.

The IEA, however, has already voted to stop letting us have world reserves beyond what was voted immediately after Katrina and the advent of colder weather will quickly force a choice between driving and staying warm.

On top of all this, some commentators are voicing concern that instead of reporting an actual reduction in demand, the government is really measuring a reduction in refinery output which, given all the flooded refineries, should be completely obvious.