Michael Klare: Have the Obits for Peak Oil Come Too Soon?

By Michael T. Klare, a professor of peace and world security studies at Hampshire College and the author, most recently, of The Race for What’s Left. A documentary movie version of his book Blood and Oil is available from the Media Education Foundation. Originally published at TomDispatch

Among the big energy stories of 2013, “peak oil” — the once-popular notion that worldwide oil production would soon reach a maximum level and begin an irreversible decline — was thoroughly discredited.  The explosive development of shale oil and other unconventional fuels in the United States helped put it in its grave.

As the year went on, the eulogies came in fast and furious. “Today, it is probably safe to say we have slayed ‘peak oil’ once and for all, thanks to the combination of new shale oil and gas production techniques,” declared Rob Wile, an energy and economics reporter for Business Insider.  Similar comments from energy experts were commonplace, prompting an R.I.P. headline at Time.com announcing, “Peak Oil is Dead.”

Not so fast, though.  The present round of eulogies brings to mind the Mark Twain’s famous line: “The reports of my death have been greatly exaggerated.”  Before obits for peak oil theory pile up too high, let’s take a careful look at these assertions.  Fortunately, the International Energy Agency (IEA), the Paris-based research arm of the major industrialized powers, recently did just that — and the results were unexpected.  While not exactly reinstalling peak oil on its throne, it did make clear that much of the talk of a perpetual gusher of American shale oil is greatly exaggerated.  The exploitation of those shale reserves may delay the onset of peak oil for a year or so, the agency’s experts noted, but the long-term picture “has not changed much with the arrival of [shale oil].”

The IEA’s take on this subject is especially noteworthy because its assertion only a year earlier that the U.S. would overtake Saudi Arabia as the world’s number one oil producer sparked the “peak oil is dead” deluge in the first place.  Writing in the 2012 edition of its World Energy Outlook, the agency claimed not only that “the United States is projected to become the largest global oil producer” by around 2020, but also that with U.S. shale production and Canadian tar sands coming online, “North America becomes a net oil exporter around 2030.”

That November 2012 report highlighted the use of advanced production technologies — notably horizontal drilling and hydraulic fracturing (“fracking”) — to extract oil and natural gas from once inaccessible rock, especially shale.  It also covered the accelerating exploitation of Canada’s bitumen (tar sands or oil sands), another resource previously considered too forbidding to be economical to develop.  With the output of these and other “unconventional” fuels set to explode in the years ahead, the report then suggested, the long awaited peak of world oil production could be pushed far into the future.

The release of the 2012 edition of World Energy Outlook triggered a global frenzy of speculative reporting, much of it announcing a new era of American energy abundance. “Saudi America” was the headline over one such hosanna in the Wall Street Journal.  Citing the new IEA study, that paper heralded a coming “U.S. energy boom” driven by “technological innovation and risk-taking funded by private capital.”  From then on, American energy analysts spoke rapturously of the capabilities of a set of new extractive technologies, especially fracking, to unlock oil and natural gas from hitherto inaccessible shale formations.  “This is a real energy revolution,” the Journal crowed.

But that was then. The most recent edition of World Energy Outlook, published this past November, was a lot more circumspect.  Yes, shale oil, tar sands, and other unconventional fuels will add to global supplies in the years ahead, and, yes, technology will help prolong the life of petroleum.  Nonetheless, it’s easy to forget that we are also witnessing the wholesale depletion of the world’s existing oil fields and so all these increases in shale output must be balanced against declines in conventional production.  Under ideal circumstances — high levels of investment, continuing technological progress, adequate demand and prices — it might be possible to avert an imminent peak in worldwide production, but as the latest IEA report makes clear, there is no guarantee whatsoever that this will occur.

Inching Toward the Peak

Before plunging deeper into the IEA’s assessment, let’s take a quick look at peak oil theory itself.

As developed in the 1950s by petroleum geologist M. King Hubbert, peak oil theory holds that any individual oil field (or oil-producing country) will experience a high rate of production growth during initial development, when drills are first inserted into a oil-bearing reservoir.  Later, growth will slow, as the most readily accessible resources have been drained and a greater reliance has to be placed on less productive deposits.  At this point — usually when about half the resources in the reservoir (or country) have been extracted — daily output reaches a maximum, or “peak,” level and then begins to subside.  Of course, the field or fields will continue to produce even after peaking, but ever more effort and expense will be required to extract what remains.  Eventually, the cost of production will exceed the proceeds from sales, and extraction will be terminated.

For Hubbert and his followers, the rise and decline of oil fields is an inevitable consequence of natural forces: oil exists in pressurized underground reservoirs and so will be forced up to the surface when a drill is inserted into the ground.  However, once a significant share of the resources in that reservoir has been extracted, the field’s pressure will drop and artificial means — water, gas, or chemical insertion — will be needed to restore pressure and sustain production.  Sooner or later, such means become prohibitively expensive.

Peak oil theory also holds that what is true of an individual field or set of fields is true of the world as a whole.  Until about 2005, it did indeed appear that the globe was edging ever closer to a peak in daily oil output, as Hubbert’s followers had long predicted.  (He died in 1989.)  Several recent developments have, however, raised questions about the accuracy of the theory.  In particular, major private oil companies have taken to employing advanced technologies to increase the output of the reservoirs under their control, extending the lifetime of existing fields through the use of what’s called “enhanced oil recovery,” or EOR.  They’ve also used new methods to exploit fields once considered inaccessible in places like the Arctic and deep oceanic waters, thereby opening up the possibility of a most un-Hubbertian future.

In developing these new technologies, the privately owned “international oil companies” (IOCs) were seeking to overcome their principal handicap: most of the world’s “easy oil” — the stuff Hubbert focused on that comes gushing out of the ground whenever a drill is inserted — has already been consumed or is controlled by state-owned “national oil companies” (NOCs), including Saudi Aramco, the National Iranian Oil Company, and the Kuwait National Petroleum Company, among others.  According to the IEA, such state companies control about 80% of the world’s known petroleum reserves, leaving relatively little for the IOCs to exploit.

To increase output from the limited reserves still under their control — mostly located in North America, the Arctic, and adjacent waters — the private firms have been working hard to develop techniques to exploit “tough oil.”  In this, they have largely succeeded: they are now bringing new petroleum streams into the marketplace and, in doing so, have shaken the foundations of peak oil theory.

Those who say that “peak oil is dead” cite just this combination of factors.  By extending the lifetime of existing fields through EOR and adding entire new sources of oil, the global supply can be expanded indefinitely.  As a result, they claim, the world possesses a “relatively boundless supply” of oil (and natural gas).  This, for instance, was the way Barry Smitherman of the Texas Railroad Commission (which regulates that state’s oil industry) described the global situation at a recent meeting of the Society of Exploration Geophysicists.

Peak Technology

In place of peak oil, then, we have a new theory that as yet has no name but might be called techno-dynamism.  There is, this theory holds, no physical limit to the global supply of oil so long as the energy industry is prepared to, and allowed to, apply its technological wizardry to the task of finding and producing more of it.  Daniel Yergin, author of the industry classics, The Prize and The Quest, is a key proponent of this theory.  He recently summed up the situation this way: “Advances in technology take resources that were not physically accessible and turn them into recoverable reserves.”  As a result, he added, “estimates of the total global stock of oil keep growing.”

From this perspective, the world supply of petroleum is essentially boundless.  In addition to “conventional” oil — the sort that comes gushing out of the ground — the IEA identifies six other potential streams of petroleum liquids: natural gas liquids; tar sands and extra-heavy oil; kerogen oil (petroleum solids derived from shale that must be melted to become usable); shale oil; coal-to-liquids (CTL); and gas-to-liquids (GTL).  Together, these “unconventional” streams could theoretically add several trillion barrels of potentially recoverable petroleum to the global supply, conceivably extending the Oil Age hundreds of years into the future (and in the process, via climate change, turning the planet into an uninhabitable desert).

But just as peak oil had serious limitations, so, too, does techno-dynamism.  At its core is a belief that rising world oil demand will continue to drive the increasingly costly investments in new technologies required to exploit the remaining hard-to-get petroleum resources.  As suggested in the 2013 edition of the IEA’s World Energy Outlook, however, this belief should be treated with considerable skepticism.

Among the principal challenges to the theory are these:

1. Increasing Technology Costs: While the costs of developing a resource normally decline over time as industry gains experience with the technologies involved, Hubbert’s law of depletion doesn’t go away.  In other words, oil firms invariably develop the easiest “tough oil” resources first, leaving the toughest (and most costly) for later.  For example, the exploitation of Canada’s tar sands began with the strip-mining of deposits close to the surface.  Because those are becoming exhausted, however, energy firms are now going after deep-underground reserves using far costlier technologies.  Likewise, many of the most abundant shale oil deposits in North Dakota have now been depleted, requiring an increasing pace of drilling to maintain production levels.  As a result, the IEA reports, the cost of developing new petroleum resources will continually increase: up to $80 per barrel for oil obtained using advanced EOR techniques, $90 per barrel for tar sands and extra-heavy oil, $100 or more for kerogen and Arctic oil, and $110 for CTL and GTL.  The market may not, however, be able to sustain levels this high, putting such investments in doubt. 

2. Growing Political and Environmental Risk: By definition, tough oil reserves are located in problematic areas.  For example, an estimated 13% of the world’s undiscovered oil lies in the Arctic, along with 30% of its untapped natural gas.  The environmental risks associated with their exploitation under the worst of weather conditions imaginable will quickly become more evident — and so, faced with the rising potential for catastrophic spills in a melting Arctic, expect a commensurate increase in political opposition to such drilling.  In fact, a recent increase has sparked protests in both Alaska and Russia, including the much-publicized September 2013 attempt by activists from Greenpeace to scale a Russian offshore oil platform — an action that led to their seizure and arrest by Russian commandos.  Similarly, expanded fracking operations have provoked a steady increase in anti-fracking activism.  In response to such protests and other factors, oil firms are being forced to adopt increasingly stringent environmental protections, pumping up the cost of production further.

3. Climate-Related Demand Reduction: The techno-optimist outlook assumes that oil demand will keep rising, prompting investors to provide the added funds needed to develop the technologies required.  However, as the effects of rampant climate change accelerate, more and more polities are likely to try to impose curbs of one sort or another on oil consumption, suppressing demand — and so discouraging investment.  This is already happening in the United States, where mandated increases in vehicle fuel-efficiency standards are expected to significantly reduce oil consumption.  Future “demand destruction” of this sort is bound to impose a downward pressure on oil prices, diminishing the inclination of investors to finance costly new development projects.

Combine these three factors, and it is possible to conceive of a “technology peak” not unlike the peak in oil output originally envisioned by M. King Hubbert.  Such a techno-peak is likely to occur when the “easy” sources of “tough” oil have been depleted, opponents of fracking and other objectionable forms of production have imposed strict (and costly) environmental regulations on drilling operations, and global demand has dropped below a level sufficient to justify investment in costly extractive operations.  At that point, global oil production will decline even if supplies are “boundless” and technology is still capable of unlocking more oil every year.

Peak Oil Reconsidered

Peak oil theory, as originally conceived by Hubbert and his followers, was largely governed by natural forces.  As we have seen, however, these can be overpowered by the application of increasingly sophisticated technology.  Reservoirs of energy once considered inaccessible can be brought into production, and others once deemed exhausted can be returned to production; rather than being finite, the world’s petroleum base now appears virtually inexhaustible.

Does this mean that global oil output will continue rising, year after year, without ever reaching a peak?  That appears unlikely.  What seems far more probable is that we will see a slow tapering of output over the next decade or two as costs of production rise and climate change — along with opposition to the path chosen by the energy giants — gains momentum.  Eventually, the forces tending to reduce supply will overpower those favoring higher output, and a peak in production will indeed result, even if not due to natural forces alone.

Such an outcome is, in fact, envisioned in one of three possible energy scenarios the IEA’s mainstream experts lay out in the latest edition of World Energy Outlook. The first assumes no change in government policies over the next 25 years and sees world oil supply rising from 87 to 110 million barrels per day by 2035; the second assumes some effort to curb carbon emissions and so projects output reaching “only” 101 million barrels per day by the end of the survey period.

It’s the third trajectory, the “450 Scenario,” that should raise eyebrows.  It assumes that momentum develops for a global drive to keep greenhouse gas emissions below 450 parts per million — the maximum level at which it might be possible to prevent global average temperatures from rising above 2 degrees Celsius (and so cause catastrophic climate effects).  As a result, it foresees a peak in global oil output occurring around 2020 at about 91 million barrels per day, with a decline to 78 million barrels by 2035.

It would be premature to suggest that the “450 Scenario” will be the immediate roadmap for humanity, since it’s clear enough that, for the moment, we are on a highway to hell that combines the IEA’s first two scenarios.  Bear in mind, moreover, that many scientists believe a global temperature increase of even 2 degrees Celsius would be enough to produce catastrophic climate effects.  But as the effects of climate change become more pronounced in our lives, count on one thing: the clamor for government action will grow more intense, and so eventually we’re likely to see some variation of the 450 Scenario take shape.  In the process, the world’s demand for oil will be sharply constricted, eliminating the incentive to invest in costly new production schemes.

The bottom line: global peak oil remains in our future, even if not purely for the reasons given by Hubbert and his followers.  With the gradual disappearance of “easy” oil, the major private firms are being forced to exploit increasingly tough, hard-to-reach reserves, thereby driving up the cost of production and potentially discouraging new investment at a time when climate change and environmental activism are on the rise.  

Peak oil is dead!  Long live peak oil!

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  1. Chauncey Gardiner

    Thank you for an informative article and narrative. Some links to historical data and charts on total global Oil production over the past ten years would be useful, if available and fairly reliable.

    I appreciate the difficult nature of many of the fields from technical, cost, environmental and political perspectives, and the relatively rapid depletion rates of extractable oil from tight shale like Bakken and Eagle Ford. But what I am hearing from my fellow travelers are impassioned arguments that the benefits far exceed these costs, and that supply will always respond as is reflected in the evidence that U.S. production is rising sharply: http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRFPUS1&f=M

    There is very strong emotional resistance to change so long as that change can be deferred.

    1. scott

      We’ll be talking about peak topsoil and peak fresh water more than “peak oil” ten years from now, I predict.

  2. kimyo

    stoneleigh / nicole foss has an excellent piece up at the automatic earth:

    Many people seem to believe there is a linear relationship between carbon dioxide as a driver and increasing temperature as the result, but if there is one thing we know about climate it is that it is not linear. The models, while complex, have not been accurate predictors of the current situation and are therefore incomplete…..

    There are multiple complex feedback loops that are not well enough understood, all of which interact with each other in highly complex ways. There is also a very long term cycle of natural forcings (note the time scale in thousands of years) providing the backdrop to anthropogenic impacts, and that is also not well enough understood. The net effect of the the very long term natural cycle and the much shorter term anthropogenic impacts is unknown. Global dimming, due to particulate matter in the atmosphere, affects incident solar radiation reaching the Earth. This is also not adequately modelled.

    In my view the situation is too complex and chaotic to make reliable predictions.

    1. Fiver

      OK. Let’s accept that the overwhelming majority of both scientists generally, and climatologists as a discipline cannot be 100% confident today. But it’s also true that they’ve become increasingly confident as the years became decades, having also given all peer-reviewed alternatives full consideration on an ongoing basis – we are talking about an enormous amount of work.

      Do you typically opt for a less than one in ten chance of survival if your view is wrong? We also have to consider the flip side, i.e., what if it’s coming much faster, say, by the introduction of a major carbon gas volcano that lops our time in half?

      The most important thing to know here is that virtually everything we need to do on this planet in order to successfully dodge the fatal errors for ourselves and the rest of living species is the same if Climate Change didn’t exist. This planet simply cannot absorb the cumulative damage from the fossil fuel cycle – oceans, soils, forests, freshwater systems, the air we breathe, all are now so full of dangerous chemicals, metals, insecticides (the Doom of the North American honey bee) – all around the Great Lakes, all areas with heavy concentrations of people and industry have increasing numbers of kids born with some gruesome news about what toxins did to their bodies and brains. The oceans are the recipient of all of this death from dead and dying rivers all over the world. Our entire oil-based economy is running down the total stock of life on this planet since 1980. The oceans are essentially done by 2050. They will not be able to support many, many species already terribly depleted by overfishing.

      We need to transform the whole shooting match inside of the next 20 years. If you’re right, it was a 20-year boom, but no big deal. If wrong, it was the best investment any humans ever made.

    2. optimader

      “The models, while complex, have not been accurate predictors of the current situation and are therefore incomplete”
      which models are you referring to that you imply are linear??

  3. from Mexico

    With this article, it looks like Klare has really upped his game from some of his previous reporting.

    It is a thorough, balanced and well-considered overview of the various scenarios future oil and gas development might take.

    I’d just add that it appears the U.S. has retooled its energy strategy. Carter began the process of militarizing U.S. energy policy with the Carter Doctrine. This, however, has proved to be a failed strategy with the disastrous military adventures in Iraq and Afghanistan.

    As a result of this and the opening up of new avenues of oil production through enhanced technology, the U.S. has turned its attention closer home, to Mexico and Canada and latching onto their vast non-conventional oil and gas resources.

    This is what Mexico’s recent energy counter-reform and the privitization of PEMEX is all about. This counter-reform will prove disastrous for the Mexican people, but the U.S. believes Mexico is its backyard so it can exploit and soil it at will.

    We will see, however, how that works out. The IOCs tried this in Venezuela (which has fabulous non-conventional oil resourses in the Orinoco Basin) and it backfired. What they got instead was Chavez. Of course now the U.S. is hoping to reverse that situation. So again, we will just have to wait and see what happens in Venezuela as a very politically volatile situation plays out.

    1. Synapsid

      Mexico has vast unconventional oil and gas resources? Can you tell us where?

      Pemex’s production has been declining for years, in spite of abundant non-Mexican expertise, via service contracts, in the Mexican oil industry. All those outsiders have been no more successful than Mexican geologists have been at finding major new resources in Mexico. Texas’ Eagle Ford Shale does extend into Mexico and offers an unconventional source of natural gas but it’s not what they call a game-changer. There’s a lot of oil in the Chicontepec field but little success in getting it out–come to think of it, I believe Chicontepec is a conventional resource, but I’m not sure.
      The restructuring of Mexico’s oil industry is an effort to save Mexico’s oil industry. Everyone in the oil patch knows that. Just look at the production history and you’ll see the need.

        1. Synapsid

          Thanks for the link.
          The map says that shales in the parts of Mexico where oil has been found may contain shale-oil resources. If we recall what “resources” means we’ll see that it isn’t known if there is in fact any shale oil there–that is determined by drilling. Resources aren’t reserves. The geology is similar to the geology where shale oil is found, so there may be shale oil there. The resource estimate is derived from the geology.

          Better than nothing, but it looks like that’s all at this point.

      1. from Mexico

        Synapsid said:

        “The restructuring of Mexico’s oil industry is an effort to save Mexico’s oil industry. Everyone in the oil patch knows that.”

        What are you? Some kind of torch bearer for the IOCs?

    2. Newtownian

      Not sure if Klare is being that insightful. I’ve been readings all the points he raises in the Dec special edition of the Transactions of the British Royal Society.

      While I believe in peak oil as a concept its clear when the peak is happening depends a lot on what is viewed as oil and the data going into this analysis is very incomplete. The starting reference is Miller RG, Sorrell SR. 2014 The future of oil supply. Phil. Trans. R. Soc. A 372: 20130179. http://dx.doi.org/10.1098/rsta.2013.0179

  4. Fiver

    Good piece. How could the IEA reverse so fast given the factors cited were known when the last report was issued? Should heads roll for that prior report? Some thoughts/queries:

    As noted by Mr. Klare, Peak Oil was always conceived as applying to conventional oil, proved true in the US, and was not an unreasonable model for the globe as a whole if only large conventional reserves were counted. Even so, there was an awful lot of conventional oil “out there” until the US majors, and the US State itself successively failed to adopt policies that ensured normal, mutually respectful commercial relationships with many of the producing States with the best quality and cheapest to produce oil.

    What made “Peak Oil” a household and “markets” theme was Michael Simmons claims re the stability of production rates of Saudi Arabia against a backdrop wherein Iran, Iraq, Libya and Venezuela had all developed their resources far more slowly than would otherwise be the case but for the incredibly anti-US’s real interests political schisms and wars. Simmons was an advisor to Bush and of course, Cheney – who chaired the secret Energy Task Force, into which I’ll bet Bandar Bush had plenty of input, before, during and after its ‘work’.

    So the “Peak Cheap Oil” sits in the ground in Iran, Iraq and Libya while the US majors and minors go berserk ripping up a continent to access the crappiest, dirtiest goop on earth using technologies that had already been developed in the ’90’s.

    Given we cannot exceed the 450 carbon dioxide deadline (one which methane from melting permafrost all across Canada, Alaska, Siberia, Northern Europe will bring closer faster) and given the unconventional oil is so much nastier all around, is there anyone who doesn’t believe the US and the Saudis have conspired to shut down production/development of Saudi (and Big Oil’s) competitors’ capacity in order to maintain prices and obscene profits even though it brings drop dead day much closer?

    Is there a prison strong enough to contain such evil?

    1. Thor's Hammer

      “Among the big energy stories of 2013, “peak oil” — the once-popular notion that worldwide oil production would soon reach a maximum level and begin an irreversible decline — was thoroughly discredited. The explosive development of shale oil and other unconventional fuels in the United States helped put it in its grave.”

      This statement could only come from a totally deranged and delusional mind. Peak oil is not an outdated “notion” but a fact. Any finite resource that is being consumed will reach a peak and subsequently fall into decline— the only question is one of timing.

      Ask a Texas wildcatter in the 1930’s what he means by oil and he will tell you it is a black and smelly liquid that comes out of the ground when you drill a well in the right spot. According to that definition the world did indeed reach peak oil about a decade ago. Now bitumin, kerogen shale, or anything that can be processed to produce something resembling oil is lumped into the “oil resources” that are supposed to make the US the new Saudi Arabia. But those substances are in no way energy reserves unless they can be extracted and turned into usable forms at a price that society can afford to pay for their use value.

      Peak production and decline are not static “notions” but rather dynamic relationships between resources and the costs necessary to extract them and refine them into a useable form.

      Those who view this dynamic through the prism of the EROEI (energy returned on energy invested) formula miss the key characteristic of energy— its quality or use value. Exceptionally “clean” electrical energy concentrated into a laser is qualitatively different from the same “amount” of energy contained in crude oil. Oil is useful because it is (or has been) cheap, highly concentrated, easily transportable, and refineable into something suitable for confined explosions. It is in no way directly interchangeable with electrical energy or nuclear energy,

      It is impossible to place peak oil or peak unconventional oil into a time frame without an accurate accounting of the cost side of the production equation. The world market price of Brent crude or Canadian Bitumen at the railhead is simply a current measure of financial market casino activity, bearing only a spurious relationship to the total cost of oil or gas production. If we accept the overwhelming scientific consensus about climate change, the true cost of oil must also include its major contribution to loss of agricultural productivity, rising sea levels, eventual loss of real estate in places like Miami, New York, and Bangladesh, mass species extinction, and decline in the world ecosystem’s ability to support human life. Care to put a dollar or gold value on that ?

      By any rational measure we are far beyond Peak Oil and Peak Fossil Fuel. The point where we could afford to extract and burn them is decades in the past if we used anything like a realistic cost accounting.

      1. optimader

        “This statement could only come from a totally deranged and delusional mind”
        most humans tend to be impatient, time reference become abstract beyond a few generations.

  5. JGordon

    To the deniers of peak oil, it’s useful to mention that oil hovering around $100 per barrel has some very nasty pernicious effects on the industrial economy. Negative or no real growth being one of them.

    If thier theories about techno-dynamism are so wonderful, we could ask them why all their unfettered technology (after all you can have a horrific accident in the Gulf of Mexico or cause tap water to become flammable in the locales near where you conduct your oil extraction activities and the government will eagerly cover it up for you and shield you from liability as much as possible) hasn’t brought the price of oil back down to a level where the economy can start booming again.

    Or better yet, why hasn’t anyone developed an alternative to fossil fuels that would accomplish the same yet, despite all the technotards prognostications about renewables and green energy… which always seems to be just over the horizon. Although it would have been real handy to have this stuff back in 2005, back when peak oil first started messing with the financial system.

  6. hyperpolarizer

    My problem with this article is the blithe assumption that shale oil and gas are just there for the taking, albeit with certain technical difficulties to be overcome.

    This completely ignores the threat to aquifers, not to mention other unknown geological and environmental consequences, of injecting massive quantities of toxic chemicals into the earth.

    It is altogether a scandal that tracking operators are allowed to conceal the ingredients in their chemical mixes, under the pretense that these are trade secrets.

    My arse.

    1. Jagger

      Anything that puts ground water at risk, such as fracking, scares the hell out of me. I would think it would scare anyone that thought about it for a minute or two. Goes on anyway.

  7. TimR

    He addresses the “techno-dynamism” argument, but isn’t there also a claim about “abiotic” oil by some? I came across the idea from F.William Engdahl, who seems like kind of a smart guy. Apparently many Russian scientists subscribe to this? It disputes the idea that oil is from ancient plant matter, claims it’s an ongoing process somehow deep in the bowels of the earth. If credible, this seems like a stronger argument against peak oil than “techno-dynamism.”

    1. Synapsid

      The abiotic-oil idea was thought up by Tommy Gold at Cornell, a world-class astronomer. (I don’t know if he was the first to propose the idea.) The chemistry can be shown to work on paper; nothing we know about the formation of oil or about conditions in Earth’s mantle, which underlies the crust, suggests that oil is in fact formed there, and we have a good deal of information that confirms oil’s origin from the remains of microscopic photosynthesizers, which is the accepted view.

      At any rate, an exploration geologist will just ask “Where is it then?” They’re really, really good at finding oil, you know. The unconventional oil and gas that get so much attention right now have been known about for decades; it took oil selling for $100 a barrel to make it profitable to go after them. Even if abiotic oil were to exist it would be found in the same kinds of traps as biotic oil is, and finding those traps is easier (and more expensive) now than it was twenty years ago.

  8. notjonathon

    kimyo brought up Nicole Foss’s name–she believes that one major factor in peak oil is not the total amount of stored carbon material but rather EROEI, or energy returned on energy invested. Thus it’s not just the cost of extraction; if it takes more energy to extract the petroleum or petroleum family material than the energy that material can produce, then there’s absolutely no incentive to extract it anymore. There’s the real end of oil.

    1. Brooklin Bridge

      Not entirely. You omit the very significant influence of political corruption for one thing. Big oil will continue to receive massive tax subsidies inspired by payola to the politicians who control those subsidies. Too many people in too many important positions are making too much money for this to stop simply because it is no longer intrinsically profitable.

      Eventually yes, but EROEI does not accurately reflect all the factors and is therefore not a valid predictor by itself.

  9. Eeyores enigma

    You speak of “non-conventional” as if it were actually viable.

    Non-conventional oil is about as viable as the junky scraping together all the droppings and lint from between the couch cushions, packing it in a pipe and smoking it in desperation.

    We had wild growth as we poked more and more straws into the ground and oil gushed out and finance launched off the spring board.

    We had strong steady growth as mankind came up with ever more ways to create STUFF from ever more fossil fuel (FF) production and Finance saturated every nook.

    We experienced a peak in the exponential increase in FF and Finance was cut loose from all constraints with the naive belief that finance would solve the resource constraint.

    We experienced a financial bubble beyond anything previously thought possible backed by a future completely unable to fulfill the promises.

    We are now living through a period of TPTB shuffling the books in order to make all of those who actually matter (in their opinion at least) whole again.

    The added side effect is a global power down.(check developed world fuel consumption). So what if it is not equatable in the least, the rich are better people anyway as everyone knows so all is right in the world.

    Peace out!

  10. Larry Barber

    It doesn’t really matter if “Peak Oil” is true or not, even though it’s obviously true, the earth does not have an infinite supply of oil. But we have enough oil gas and coal in proven conventional reserves to fry the planet. That we are looking for and developing non-conventional sources of oil is just a demonstration of our collective insanity.

  11. Ted

    Some day the sun will supernova too! Just you wait, it’s coming! Watch out (and please, oh please, buy my new books!).

    I remember bumping into peak oil hysteria back in 2000, when this crowd predicted every sort of apocalyptic outcome starting in the year 2005. They produced a raft of models that, in turn, produced graphs showing lines that went up and down (very scary stuff). Not unlike Ilargi’s seemingly weekly promise that the stock market will crash and house prices will be 20% of their peak value, or that we will run out of cash soon and resort to eating the elderly to survive (ok, I’m pretty sure he did not say that last one … at least not in print).

    Several of the most ardent hucksters made a good bit of coin selling books that wove tales of the coming oilpocolypse. Like so many of our beloved hysterians going back to the dawn of industrial society, their predictions have not quite panned out, but then the money was spent and careers were made, so who cares.

    It’s too bad NC is increasing slipping into this mode rather than being a site of informed political economic analysis that made for compelling reading back in the dawn of the last financial crisis.

    1. kimyo

      Former BP geologist: peak oil is here and it will ‘break economies’

      At a lecture on ‘Geohazards’ earlier this month as part of the postgraduate Natural Hazards for Insurers course at University College London (UCL), Dr. Richard G. Miller, who worked for BP from 1985 before retiring in 2008, said that official data from the International Energy Agency (IEA), US Energy Information Administration (EIA), International Monetary Fund (IMF), among other sources, showed that conventional oil had most likely peaked around 2008.

  12. MrColdWaterOfRealityMan

    We don’t have an oil supply problem. We *do* have an energy supply problem and a price problem. As time goes on, the world’s remaining oil is going to cost more to get, and yield far less physical energy than it did in the past. Period. End of story. The rest is detail.

    Yes, prices will flucuate with the economy and changes in geopolitics. Yes, we can probably still run an industrial scale economy on hydrocarbon fuels for at least a few more decades, but at a certain point, the interdependent system of worldwide supply chains dependent on *cheap* transportation fuel are not longer viable due to high prices, and the economy, including economic efforts to get more energy, collapse.

    This year’s “peak oil is dead” propaganda effort was most likely generated by oil companies who have every interest in keeping their asset prices up and stock prices high so that financing (and of course, bonueses) continue to roll in. Gullible journalists and well purchased editors are partly to blame, but most people simply won’t take the time to understand the issues, or have a strong economic interest in NOT understanding the issues.

    We may yet get out of this. All that’s required is a way to store electricity at higher energy densities than are currently provided by oil at comparable prices. Solar power and thorium nuclear get very useful if you can store the output. There is, of course, no guarantee.

    1. Brooklin Bridge

      All that’s required is a way to store electricity at higher energy densities than are currently provided by oil at comparable prices.

      It’s certainly more complex than that. It’s not simply a technical problem. You have to overcome political inertia including a total gridlocked system of corruption before technological advances will shift from carbon based extraction to those of solar, wind or any of the “renewable” sources of energy. Assuming that current levels of political payola depended on the solar industry, for instance, and not on the oil industry, you would see intense efforts put into energy storage technologies and corresponding results. But even that wouldn’t be enough. The whole corrupt system of the owner class is dependent on and very comfortable with Big Oil and it’s continuation and that includes putting obstacles in the way of anything that constitutes significant change.

      When the overlords are convinced that carbon extraction is no longer in their best interests (probably after it is far too late to avoid disaster for overwhelming majority of humankind) or when a more enlightened system takes its place, then you will see the technology of energy storage and energy transmission bloom.

      By that time, however, we may be too far gone to really do much about it. We may have lost the “industrial strength” for instance, or the educational and scientific infrastructure, to deal with energy usage, not to even get into water, air and food, on a large scale.

      1. Nathanael

        Ah… but we don’t, you see.

        The wonderful thing about solar and wind is that they are distributed. Watch the “off the grid” movements happening…

  13. Susan the other

    So. Oil. How do we love it. Let us count the ways. We love it to heat and cool our homes, our schools and our businesses. We love it to produce massive amounts of agribusiness products. We love it for plastics and fleece and synthetics. We love it to fuel our obscene cars so we can drive to the gym and work off all the disgusting food we overindulged in. All we need to do is eliminate one or two of our love affairs and oil becomes a non-problem. Take home heating and cooling. Instead of reacting to weather we could embrace weather. Love the cold in winter for the cool pillow and fresh air. Love the heat in summer for lemonade in the shade. Turn our thermostats to 55 in winter and 85 in summer. And we should just kick gasoline out, tell it to get lost, because we would rather ride bikes or take buses. Or, god forbid, walk.

  14. craazyman

    I remember reading an article in the “Cro-Magnon Journal of Economic Resource Strategies” in 17,000 BC about “Peak Stone”. The author predicted the stone age would end when all the world’s stones were used up in axes and fireplaces and altars for praying to the gods of the forest. Lacking access to new stones, everybody would compete for the scarce supply of stone tools and kill each other. He was sort of right, but not completely.

  15. Minor Heretic

    Peak oil is a theory the way gravity is a theory. The earth is not making any oil right now. It hasn’t for millions of years. The facts of petroleum geology are inescapable. At some point world oil production will reach a maximum, start dropping, and never reach that maximum again. As Randy Udall said, “Eventually the politics of energy give way to the physics of energy.”

    You can jump out of an airplane and debate when you are going to hit the ground, and at what speed, but not whether.

    Aside from actual resources, there are the above-mentioned problems of economic drag, EROI, and financial return.

    The economist Steve Kopits has noted that every economy has a carrying price for oil. That’s the point at which price elasticity gives way and the economy starts ramping up efficiency, conservation, and alternative sources. He puts the U.S. carrying price at $110 and China’s around $120. He also noted that 4 out of the last 5 recessions have followed closely on oil expenditures exceeding 4% of GDP.

    Energy return on investment is an important subject, as EROI for all non-renewable sources has been dropping for a while. Cutler Cleveland, who studies energy and EROI, has posited that a modern civilization can’t exist at an EROI of less than 5:1. Newly discovered oil is headed there, led by tar sands.

    In a similar vein, investments in dollars per foot of well drilled and barrel produced have been going up with the new, difficult oil.

    Technology has a double assignment: Extract oil at a sufficiently low price to prevent economic slowdown and conservation/switching, and extract oil at a sufficiently high EROI to make it worth doing. See skydiving analogy above.

    Peak oil was never dead, just temporarily blanketed under oil industry propaganda.

  16. optimader

    headline at Time.com announcing, “Peak Oil is Dead.”

    Doesn’t the Time.com headline guarantee the validity of Peak Oil?

  17. Otter

    The US military machine runs on oil. The other WMD, the US agribusiness also runs on oil.

    It is highly unlikely that accurate estimates or forecasts are available. Quite the opposite.

    A good general strives to ensure that he has more oil than the other side. A clever general strives to ensure that the other side will run out of oil first. A great general strives to ensure that he has reserves of oil which the other side is ignorant of. Or which the other side thinks are insufficient and inaccessible.

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