Credit: Emrah Elmasli/COSMOS
Since oil was discovered at Dhahran, near the Persian Gulf, in 1938, the small oasis has become a modern city, complete with the sleek headquarters of the Saudi Aramco national oil company.
For the Western oil workers who live there - most of them American or British - life is good in the Dhahran Hills, where homes in the suburban enclaves are made of brick or fieldstone. Despite the desert heat, the gardens blossom with large shade trees, flowering bougainvillea and oleander. There are bike paths, a 27-hole golf course, a rugby field and horse stables
There was a time when life was a lot like this for oil workers in Texas, where roadside oil wells were symbols of a new American prosperity. Oil drillers struck a geyser of black gold at Spindletop, near Beaumont, in 1901, and landowners were soon selling US$100 tracts of land for 200 times that value. Instant millionaires were created, leading to the cliché of the hick in cowboy boots who paid cash for his Cadillac.
But today, after yielding 153 million barrels of oil, old Spindletop is mostly a museum site. Texas still has 129 billion barrels of oil, by some estimates (one 'barrel' is 159L), but it is located deep beneath the ground, making economic recovery difficult. The average well in Texas today produces nine barrels of oil a day; this compares to 6,000 barrels in oil-rich Saudi Arabia.
But this situation, too, may be fluid. Despite the reliance on oil evident in nearly all strategic energy planning, Saudi oil is also a finite resource, and some fear that the desert kingdom may be the next mega-producer to lose momentum.
Is the world running out of oil? Ask that question and the geologists and strategic planners will say you're missing the point: we'll no more 'run out of oil' than we will run out of water in the ocean. About half of the world's known reserves are still in the ground. The real issue, they say, is when will the planet reach the peak of oil production - after which a slow decline will inevitably clash with demand that currently grows at two per cent per year. Finally, they add, we'll stop producing oil altogether because it will become uneconomic, or because technology will have moved on - not because we've pumped out the last drop.
We've reached a dramatic crossroads, with highly credentialled experts coming to diametrically opposed conclusions about the future of the world's oil supply. Unfortunately, the more you talk to experts and immerse yourself in technical data - about R/P ratios and constant decline rates - the more confused you become. Unlike the debate over climate change, where the sceptics lost the argument long ago, the war of words over peak oil is still very much raging, with seemingly solid science on both sides.
But one conclusion is irrefutable: the age of cheap oil is over. And even as our appetite for oil seems insatiable - with world demand likely to grow another 50 per cent by 2025 - petroleum itself will end up downsizing. And it's unlikely that the high oil prices of 2005 will be a bubble, as was the 1970s fallout from the Arab oil embargo. Today, not only is oil getting harder to find in economically exploitable form, but the use of what remains is becoming doubtful wisdom as we come up against the hard reality of rising global temperatures and the first real effects of climate change. Even if we had ample oil, in the long run we'd need to switch to renewables, anyway.
