Science: “Oil Peak or Panic?”

This book review nicely expresses messages often discussed on the FM website:  “Oil Peak or Panic?“, David Lloyd Greene, Science, 14 May 2010 — A review of Oil Panic and the Global Crisis – Predictions and Myths by Steven M. Gorelick.  Excerpt:

Peak oil, a serious issue, is not about running out of oil. It is about rates: the rates of oil discovery and production, the rate at which demand grows, and the rate of technological change. The oil peakers’ contribution to understanding the world oil situation can be summed up as follows: rates matter as much or more than quantities, and geology matters as much or more than economics and technology.

It is easy to caricature the oil peakers’ assessment as a mechanistic calculation about using up a fixed resource. It is also easy to caricature their opponents’ view as blind faith that markets and technology will overcome all problems. One of the things that makes Steven Gorelick’s Oil Panic and the Global Crisis well worth reading is that he does neither. It is a book serious students of the world oil market should read, not because Gorelick has all the answers but because his account is well reasoned, well informed, and argued honestly, with respect for responsible opposing viewpoints.

… But what is oil anyway? And what is a resource? Not surprisingly, much of the argument over oil depletion is a result of how these terms are defined. Oil peakers focus on conventional oil. But, as Gorelick points out, there are relatively large quantities of unconventional fossil resources that can be converted to liquid hydrocarbon fuels at costs the world’s economy has demonstrated that it is willing to pay.

… The International Energy Agency has studied this subject in depth and predicted not a peak but a plateau in non–Organization of the Petroleum Exporting Countries (OPEC) production, right about now. Not very different projections have been produced by ExxonMobil. A plateau in non-OPEC production implies increasing dependence on OPEC, a massive transition to high-carbon unconventional fossil resources, higher and more volatile oil prices, a transition to electricity or hydrogen guided by public policy, or a combination of the above.

The timing, extent, and intensity of oil peaking will probably strongly influence whether the transitions are relatively easy or painful. Oil Panic demonstrates convincingly that in the long run there will be more oil and replacements for oil. But as John Maynard Keynes observed, “In the long run, we are all dead.” The transition from oil matters, and we need to understand it better.