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Transcript of The Energy scenario
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The Energy Crisis:
Future Directions for Indias Energy Policy
1.25 MW Wind Capacity Installed in Tamil Nadu
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Objective of this Presentation
As Indias oil consumption is increasing, world oil
supply will soon stabilise and then start dwindling
while oil prices are bound to rise further
For economic as well as environmental reasons weneed to shift to alternative non-polluting sources
of energy.
The aim of this presentation is to raise questions
and provoke discussion regarding the future ofIndias energy policy and to consider various
possible solutions
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Sections of the Presentation1. Global facts on Oil2. Our Oil Obsession
3. World Oil Supply
4. World Oil Demand5. Indias Energy Demand
6. The Oil Peak7. Peak Oil
8. Contradicting Optimistic Views
9. Oil Economy
10. Future Exploration
11. Future Extraction
12. Illustrating Oil Extraction process
13. ERoEI
14. Future alternatives15. Non-conventional Oil to the Rescue?
16. After OilNatural Gas?
17. SOSThe Energy Emergency!The Way to a New Tomorrow
1. SorryThere are Limits to Supply
2. Reducing Our Requirements
3. The Population Predicament1
4. The Population Predicament2
5. Tackle the Transport Industry
24. Tackle the Transport IndustryUrban1
25. Tackle the Transport IndustryUrban2
26. Energy Reduction in Industry
27. GNP reductions after Oil Price rise28. The transition toAlternative Energy Sources
29. Electricity From Renewable Sources
30. More Renewable Energy
31. HydrogenNot a Feasible Fuel
32. Watts From the Winds1
33. Watts From the Winds2
34. Super Solar Power135. Super Solar Power2
36. Renewable Energy Policy
Formulating a Strategy124. Formulating a Strategy2
25. Formulating a Strategys3
26. Formulating a Strategys4
27. Formulating a Strategys5
28. The Transition29. A Smooth Transition?1
30. A Smooth Transition?2
31. A Smooth Transition?3
32. References1
33. References2
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Our Oi l Obsession
Our civilization has evolved based on an abundant
supply of cheap oil
The transportation industry and agricultural
fertilizers heavily depend on oil The current world oil production and consumption
rates are almost equal
World oil consumption grew 2.9% from 2003 to
2004 (projection from Quarter 1, IEA, 2004)
Oil demand is projected to rise to 121 million
barrels per day by 2025 (International Energy Outlook, EIA,2004)
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5Source: EIA, 2004
World Oil Supply
0.00
10.0020.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
2000 2001 2002 2003
Mill
ionBarrels
perDay
Total OECD
Total OPEC
Former USSR
China
Other Non-OECD
Total Supply
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World Oil Demand
0
10
20
30
40
50
60
70
80
90
2001 2002 2003 2004
MillionBarrels
perDay
Brazil
India
China
Europe (OECD)
US
World
World Demand
2001-2004Growth Rate:
1.8 %p.a.
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Indias Energy Demand
From 20012004, Indias oildemand has been growing by
2.68% but it will grow by
6.33% from 20032004
(projection from Qtr 1, IEA, 2004)
Oil and gas represent 38% of
Indias energy consumption
(IBEF, 2004)
By 2010, India will be the
fourth largest consumer of oil
and gas in the world (IBEF,2004)
(In fact, Chinas demand growth is
even more - disastrously - rapid)
Oil Demand
0
1
2
3
4
5
6
7
2001 2002 2003 2004
Summary of Global Oil Demand
(Mb/day)
Mb/d China
India
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Peak Oi l
ASPO (Association for the Study of Peak Oil and Gas) predicts
world oil production will peak around 2007, as shown above.
PRODUCTION
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Contradicting Optimistic Views
The Energy Crisis is often overlooked based on thefollowing misconceptions:
1. Higher prices will bring in larger investments, which willlead to more production
2. Rise in prices will lower consumption
3. Oil shale and tar sands will replace conventional oil
4. Fudging of reported reserves by oil companies and countriesfor political/economic reasons
5. Many previous crisis predictions proved wrong this onewill too
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Oil Economy
The world market can be said to depend on OPEC almost
entirely since it has 77% of the current world oil reserves The day-to-day market prices of oil reflect many factors like the
current stocks, shipments, economic situation, speculativeinvestment, etc. and not so much the size of reserves of oil
We have now reached a stage in the exploitation of the earthwhere trying harder to produce more oil can have only limitedresults
Oil consumption on a short-term basis does not depend on theprice of oil, as is the case for other goods. There is a large time
lag before consumers shift to alternatives or reduce demand In fact, some experts believe that a rise in oil prices increases
demand on a short term basis. E.g Oil and natural gas demandgrowth rates in China have been in the range of 7-15% per yearsince 1999, despite the tripling of oil prices since then
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Future Exploration
The major oil fields in the world have already been
discoveredthe largest fields are always found first
Except for some parts of the China Sea and of the
western desert in Iraq, major regions in the world have
been fully explored. Advances in geological technology allow us to predict
promising areas for oilwe now know reasonably well
where new oil will be found
Oil in the Caspian Sea has high sulfur content whichcorrodes the pipes and is expensive to extract and
refine. Caspian Sea oil is not likely to become a
significant factor in the world oil scenario.
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Future Extraction
The best known extraction techniques are already in use in manyof the giant fields in the Middle East
Increase in the fraction of Oil-in-Place which is actuallyrecovered will require diligent field management, technicalknowhow, motivation and discipline, as well as capitalinvestment, which may not always be feasible
Oil which can be recovered using these techniques could give usonly a breathing break, e.g. advanced recovery fromIndian
fields could amount to 4 MMM bbl more (Narayanan, 1999). Atcurrent Indian consumption rates, this would give us about 4years more supply, though at world consumption rates, this willlast for less than 2 months
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ERoEI
Oil is important to us as a source of energy;it is not amineral resource
A certain amount of energy must be invested to recoveroil from wells
ERoEI (Energy Returned on Energy Invested) mustbe greater-than-one for the extraction to be useful
Oil is not like goldthe energy invested to extract thegold is irrelevant
If enhanced extraction requires more energy input thanthe output oil contains, clearly, that oil will neverbeextracted
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Af ter Oil Natural Gas?
Natural Gas cannot be a permanent replacement for oil Use of natural gas in daily life, (e.g. as transport fuel)
requires extensive infrastructure build-up
The production of natural gas will peak between 2020 -
2030 as well, hence it is only a temporary solution(Goodstein)
Delhi has shifted to running all its public transportationbuses on gas, greatly reducing the levels of air pollution
India does not have large gas reserves. The best optionfor India is to obtain gas from Iran, but a gas pipelineacross Baluchistan (Pakistan) may have significantsecurity liabilities
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SOSThe Energy Emergency!
We seem to be running out of the cheap
sources of energy.
No solution is immediately apparent
The date of the oil peak is widely debated ingeological circles around the world.
We need to refocus our attention to the more
practical questionof What next? rather
than debating When?
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SorryThere are limits to
Supply
Geological, technical and economic
constraints limit supply growth
With advanced technology, we are aware of most of
the new discoveries which will be made Increases in the ratio of recovered oil to Oil-in-Place
are also limited; optimistic predictions (of suchincreases) should be viewed skeptically
Possibility of production improvements fromexploration and extraction are useful but limited
Increase in supply will only postpone, but notalleviate the problem.
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Reducing Our Requi rements
Curbing demand and wanton use of energyresources is a much more effective and practical
strategy
Energy conservation efforts must be taken up byGovernment bodiesand private agencies - on a
large scale. Very large savings are possible.
Energy prices should be graded to punish wasteful
behavior and reward efficiency
The three major areas to attack are
Energy reduction in industry
in Transport -- by the Population
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The Population Predicament1
India has a comparatively low percapita energy consumption of 1.5
barrels/capita-year, but it is increasing(Europe-Japan-US consume 12-25 barrels/capita-year,
McKillop, 2004)
Large population growth will itself
cause an increase in energy
consumption
World population grew 0.33% fasterfrom 1979-1999 than did world energy
production
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The Population Predicament2
Policies to reduce population could be orientedtowards high energy consumption groups
Indian society is based on large families with many
children. This makes effectively implementing abirth control policy much harder.
A one child policy must consider sociological and
cultural issues.
b u t
Efforts to reduce population will go a long way
towards reducing demand for energy
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Tackle the Transport I ndustry 90% of the transport industry is fueled by oil
Improve public transportationquality of vehicles
and comfort of journey - use specialised bus-bodies
for different services.
Major obstacleConvenience of private vehicle v/sthat of public transportation
Encourage railway use for long distance goods
transport. Trains running on electricity are more
environment friendly as well as more energy
efficient, since the frictional force of
steel on steel is the lowest
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Tackle the Transport I ndustryUrban 1
Unified ticket/pass valid along all routes could makethe journey more comfortable and viable
Have a shuttle service in residential areas to enablethe commute to bus station
Have different types of bus routes serving differentcustomers
E.g. Point-to-point Express buses for the businesstraveler at peak hours; but also frequent buses with
more stops for shoppers / casual travelersGradation in quality of busesa/c buses, luxury
buses, regular buses etc, to suit the convenience ofthe passenger
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Tackle the Transport I ndustryUrban 2
Private contractors could operate large busstations, with facilities like bookstores, cafs,
restaurantsand parking
Involve employers to encourage use of public
transport (e.g. Bus-passes through employer etc)
Provide late night service and early morning
services
Etcetera
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Energy Reduction in I ndustry
Indian Industrial associations have had energy-
conservation programmes for a long time.
There are many energy-efficiency engineersNow we need a Crash Programme, with many
more incentives and bonuses for energy reductions in
processes, product design and product user -- and
penalties for failure.
Japan has shown that it is possible to drastically
improve its GNP:Energy ratio ..
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GNP reductions after Oil price r ises
Although Japan imports virtually all of its oil, rising crude
prices do not hurt as much as they have in the past becauseJapan's economy has now been made less oil-dependent.
Japan's dependence on oil for its energy needs, which
stood at 77% around the time of the first oil crisis of 1973,
has now dropped below 49%, according to Japan's Agency for
Natural Resources and Energy.
This decline reflects the progress of efforts in industry
to reduce the amount of oil and energy used. As a direct
result of these efforts ...
For a $10 increase in oil price, according to the IMF (2004),Japans GNP would lose 0.4%,. By way of contrast,
Chinas GNP would lose 0.8%;
The Philippines GNP would lose 1.6 %
Indias GNP would lose 1.0 %
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The transition to Alternative
Energy Sources
Demand can only be reduced in limited amounts
To sustain our population, we must make an
effective shift towards alternatives, and preferably
to renewable sources of energy
A smooth transition to the new sources of energy
is also crucial and the importance of this may be
overlooked. We need to start this transitionmechanism soon, even if the oil peak may not be
immediate
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Electr icity F rom Renewable Sources
Maximal generation of electricity from renewable
sources, like wind and hydro, on a large scale, is onedirection India could move toward in the post-peak era.
Wind farms are still very underdeveloped in India, theycan be linked to grids based on long distance
transmission of electricity at HV-DC which has verylow losses
Electricity is an environmentally friendly option, as itsuse does not result in any emissions
Electric vehicles could become economical with risingoil prices(Efficiencies of 50% are envisaged assuming renewablesources, battery losses of 20%, regenerative braking, etc Rechsteiner,2004)
Hydel Power has been explored in our country; the
potential in Nepal has been explored, but not yet tapped
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More Renewable Energy
Energy from biomass and household use of solarenergy can effectively be implemented at a more locallevel
Biomass today generates about 468 MW (MNES, 2003.)
Biomass potential could be about 19,500 MW ofwhich 16,000 MW could be grid quality power (MNES,2003.)
Solar power for purposes of cooking and drying has
been used for many years in our country.
A box solar cooker for small families can save 3-4LPG cylinders / year. Larger cookers for 40-50 peoplecan save up to 30 LPG cylinders / year (MNES, 2003.)
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HydrogenNot a Feasible Fuel Hydrogen is not a means to generate energyit is an
energy carrier Conversion of energy from one form to another always
involves a loss of energy
The breakdown of water to obtain hydrogen for fuel
cells and convert it to electricity will necessarily resultin a loss of net energy; hydrogen will always be moreexpensive per unit energy than the energy source usedto produce it (Rechsteiner, 2004)
Many friends of hydrogen fuel cells fail to consider allthe processes involvedcompression, liquefaction,transport, storage, re-expansion etc, while calculatingthe practicality of hydrogen fuel (Rechsteiner, 2004)
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Watts F rom the Winds1 Indias wind power potential has been assessed
to be 45,000 MW but the installed capacityis only 1,700 MW (MNES, 2003)
Even so, India is the fifth largest wind power-producing nation in the world (MNES, 2003)
Locations having annual mean power density of150 MW at 30 meter height can be consideredsuitable for projects (Bakthavatsalam, IREDA, 2000)
Wind energy will prove to be one of the main
sources of renewable energy in the future The ERoEI for wind energy is very highin
the range 80100 (Wind Power Note, 1997)
Despite high initial energy and monetary investment, the
zero fuel costs make them economical on a life-cycle basis
W tt F th Wi d 2
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Watts F rom the Winds2 A 1MW wind farm required, in 2000, an investment of
USD 1 million & annual maintenance cost of USD
15,000 with a payback period of 5-6 years and FIRR(Internal rate of return)of 29% (Bakthavatsalam, IREDA, 2000);theeconomics are, in fact, improving every day with largergenerators (currently upto 3 MW per unit!)
Wind farms have short building times of 2-20 weeks(Rechsteiner, 2004)
Other advantages include no emissions, no fuel ordisposal costs and low maintenance requirement
Wind energy is one of the largest contenders to buildour energy futurewe need to realize this and act!
Fluctuation in power output with wind-speed requireseither a largish grid or a mechanism (e.g. pumped
hydro) to store energy
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Super Solar Power 1
India has the advantage of being atropical country which receives more
than 5,000 trillion kWh solar energy
per year.
The main obstacle in utilizing solar power is the
high technology cost involved and low energy
density
Solar energy can be exploited using two methods:
Solar photovoltaic
Solar thermal
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Super Solar Power 2
Solar water heaters are
being commercialized
and the pay back period
varies from 26 years(MNES, 2003)
Solar Photovoltaic power
projects of an aggregate
of 2.5MW have beenestablished in the country(MNES, 2003)
2500 lpd Solar Water Heating System at Teachers'
Training Center at Bellary, Karnataka
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Renewable Energy Policy Renewable energy currently accounts for 3700MW, about
3.5% of total installed capacity from all sources (MNES,2003)
Solar power development has the largest budget of allrenewable energy sources
The budget for wind energy development is much smaller incomparison. The potential for large scale power generationfrom wind appears to be much higher than that of solar, andis also less capital intensive. Wind energy deserves more
attention. The current policy seems directed towards increasing use ofrenewable energy sources for remote and rural areas wheregrid power is not available. In addition to this, we need to
focus now on replacing electricity from fossil fuels bysolar and wind on a lar er scale
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Formulating a Strategy1
We are not sure when oil is going to peak we cannot predict
the oil peak accurately because of uncertainty of data and
technique -- but it does not matter. We need to start action NOW.
There are three aspects to consider in our energy outlook, and
each must be coordinated with the other two for the effort to besuccessful. Isolated implementation will be ineffective. These
aspects are:
Who is involved?
I ncrease of supply (Scientists / Technicians / Managers) Reduction of Demand (Economists and Policy Makers)
Alternative energy sources (Scientists and Economists)
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Formulating a Strategy3
Research and Development money may be spent on
studying, researching and evaluating various new
possibilities, such as methane hydrates and hydrogen
fuel cells, to determine their potential, but
Given that India is a developing country with limitedresources, and many needs for investment, we must be
very conservative when making decisions about large
operational investments in such new technologies
India should channel operational investments towards
more proven, but under-exploited, energy resources
such as wind energy, and proven techniques of
improved oil recovery from existing wells
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Formulating a Strategy 4
Renewables, Renewables, RENEWABLES!!!They will help us answer all the questions aboutthe future of energy
Localized applicationsSolar and Biomass
Large scale applicationsWind, Hydro, Solar
Policy is currently focused on use of renewableswhere conventional power supply does not reach,or is impractical. We need to start pushing forrenewables to replace other power sources
Wind Energy is the most promisingNon-polluting, great potential, economically feasible
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Formulating a Strategy5
Lastly, but not the least, we should also directattention to facilitating a smooth transition
between the current energy sources and the next
generation of energy sources. This transition
period could be as long as 20 years.
Effective planning and diligent
application will take us
towards a brighttomorrow
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A Smooth Transition?1
Any transition to alternative energy sources will be a massiveworld wide eventcomparable to the extinction of dinosaurs,or to the dot-com era. It will involve changes in lifestyle foreveryone
Therefore, India needs a unif ied energy policy. There is today
a lack of coordination between the various ministries dealingwith Coal and Hydro, Electricity, Petroleum, Non-conventional energy, and Scientific energy research.
Systems (a consultation process? an organization?) must beestablished to coordinate their policies and develop a unified
energy policy for India. Such a policy should take intoaccount petroleum depletion, conservation efforts, and thetransition to renewable sources, as well as other relevantissues, such as pollution-control and global warming(which constrain many options, such as using more Coal).
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A Smooth Transition?2 The transition to the next generation of energy includes
-- Political recognition, at the highest level, of the importance of this transition Accumulation of (our own) reserves of extractable oil through technologicalinnovation
Time-targeted set up of plants for alternative and renewable energy
Time-targeted and sector-wise reduction in our petroleum consumption andCO2 generation (which leads to Global Warming)
Anticipation of geo-political and economic changes that will occur in the worldas related to energy issues
Identification of specific sectors where reforms need to be implemented
Prudent decision making regarding investment in research and development innewer energy sources (e.g. methane hydrates)
Implementation of effective and transparent politico-economic policies toencourage the setting upand profitable survival -- of renewable power plants,such as wind farms, micro-hydel power plants, solar thermal: covering issuessuch as subsidies v/s buyback v/s tax rebates v/s simplified licensing, as wellas other incentives, and administrative facilitation.
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A Smooth Transition?3
The transitional changes must be gradual and will involve longterm planning and policy, starting from today
India as a developing country may have an advantage overmore developed countries; we have the opportunity to set upinfrastructure with a broader outlook; our economy is not yet as
locked into petroleum as some others - and has a low percapitaconsumption.
Renewable sources of energy are preferable in many ways tothe use of fossil fuels, we dont need to wait till we run out of
oil to change over Global policy needs to be considered so that we can continue
importing oil till we can sustain ourselves with other energysourcesthus, collaboration with other nations to introduceglobal rationing is definitely an idea to consider
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References1 Ministry of Non-Conventional Energy Sources, Annual Report 2003, India
Notes on Demands for Grants, 2001-2002, MNES, India Wind Energy Development Incentives in Selected Countries, Louise Guey-Lee, EIA
Wind Energy in India, V. Bakthavatsalam, Indian Renewable Energy Development AgencyLtd., India
Power Generation from Wind Energy in India, www.techo-preneur.net
Potential for use of renewable sources of energy in Asia and their cost effectiveness in air
pollution abatemento Tata Energy Research Institute, India
o Energy Research Institute, China
o Wageningen Agricultural University, The Netherlands
o IIASA, Austria
Wind Power: experiences and future direction, TERI, India www.teri.org
Viable Alternatives, Arcot Ramchandran, TERI, India Ten Steps to a Sustainable Energy Future, Rudolf Rechsteiner [email protected]
The Association for Study of Peak Oil and Gas, Newsletter42, June 2004 www.peakoil.net
Energy Information Administration (EIA), India Report, March 2003 www.eia.doe.gov
EIA website data, World Oil Supply2000-2004
The End of Cheap Oil, Colin J. Campbell & Jean H. Laherrre, Scientific American, Mar 98
http://www.techo-preneur.net/http://www.teri.org/mailto:[email protected]://www.peakoil.net/http://www.eia.doe.gov/http://www.eia.doe.gov/http://www.peakoil.net/mailto:[email protected]:[email protected]:[email protected]://www.teri.org/http://www.techo-preneur.net/http://www.techo-preneur.net/http://www.techo-preneur.net/ -
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References2
Nationmaster.com
Worldoil.com
Radovic Oil, 1999
Oil market report, IEA, June 2004 www.oilmarketreport.org
Oil Strategy and Energy Economic Considerations for India, Andrew McKillop, March 2004
Indian Energy Strategy and Central Asia, Maj. Gen S.C.N Jatar
InterviewDr. Colin Campbell, Petroleum Geologist, Dec 2002 www.peakoil.net
The Future of Energy, Guinness Atkinson, 2004
Indias Quest for Energy, India Brand Equity Foundation, 2004
Challenges and Opportunities for Re-development of Mature Fields, Dr. Kottilil Narayanan,Petrotech, 1999
Energy, Technology and Climate: Running Out of Oil, David Goodstein
ICFAI Questionnaire, Oil Shock v/s Global Economy, Replies and Comments, Andrew
McKillop March, 2004 Energy Trends, Country Profiles, India 2000
Three World Oil Forecasts Predict Peak Oil Production, Richard C. Duncan, Institute onEnergy and Man
United States Geological Survey data
Predicting the World Oil Peak, Cavallo, April 2003
http://www.oilmarketreport.org/http://www.peakoil.net/http://www.peakoil.net/http://www.oilmarketreport.org/