I’ve been following Jim Hansen’s Master Resource Report for a few months as a way of keeping up with peak oil news and energy trends. I was turned on to it via Jim Kunstler, he of The Long Emergency and Clusterfuck Nation.  The report is a wealth of data and graphs on different things from week to week, and the overall trend is disturbing. Discovery of new oil fields is nil, new wells are down, and the ones that are producing are diminishing. The data is disturbing, and it appears that world oil production may have peaked sometime in the past few years. If this is correct, we may be on our way to a world wide crisis much like what America went through under the Carter administration. If that is the case, the gas prices we saw last summer is just a small taste of what we can expect to see in the next decades.

It used to be that any decrease in the world oil production could be offset to an increase in production from Saudi Arabia. There now seems to be signs that SA may be nearing the limit of their abilities. If supply has indeed reached a peak, then the increasing demand from India and China spells dire news indeed for the American Lifestyle.

One of the big stories coming out of the Report the past few weeks is that Mexico’s domestic oil production is off as much as 13% since last year, leading American policy makers to fear a collapse of the Mexican government. The Department of Defense has put odds of Mexican instability on par with Pakistan.  Of course, any news of political instability in Mexico is blamed on drug cartels, while it is the loss of oil revenues that means the Mexican government will be unable to stand up to the cartels and thier billions in drug money.

Other countries being affected by the recent drop in oil prices includes Russia, Iran and Venezuala, who all get a majority of their GDP from gas and oil sales and are seeing short term instability. Unlike Mexico, it is believed that they still maintain the reserves to benefit from a future increase in price.

I encourage everyone to take a look at the Master Resource Report weekly to see what’s been going on in world energy production. I am convinced that world oil production may have peaked this decade and that we might be seeing a transformation as the world runs out of oil. The report also keeps me informed on many of the issues surrounding natural gas and energy production.

Here’s  a couple facts out of the lastest report that you may find interesting:

• The total amount of electrical energy lost during the generation, transmission and distribution of electricty, exceeds the amount consumed by 2 to 1!
• US coal supply may only be 20-30 years.
• Disposal of dried up coastal and sea drilling rigs may a future growth industry as the wells dry up.
• China’s car sales now exceed the US market, meaning a change in petroleum demand.

Gas prices may be low for now as the economy runs down. Economic recovery will mean increased demand and increase in oil prices. The public may be enjoying the $2/gallon prices now; it is just a matter of time before we see record highs again. Oil is a finite resource, and scarcity will only lead to an increase in the wild price fluctuations that we have seen in the past few years. I have already invested some of my money in oil futures via USO, and when the big oil investors are done playing contango in the market, we’ll be seeing some high oil prices like never before.