This series will discuss why believers in Peak Oil (aka “Peakists”) are a minority, with little influence over national energy policy in the US and elsewhere. Looking at Peak Oil literature, it appears that the answer is they typical one of American “doomster” communities: “we are smart/visionary/public-spirited; they are stupid/blind/evil-doers-in-thrall-to-dark-forces. In other words, the Peakists are 21st Americans — our mantra is “It is not my fault.”
This series will examine Peak Oil myths to determine if, to some extent, failure of America to mobilize for Peak Oil results from errors of Peakists.
some experts don’t believe in Peak Oil
True, but these folks comprise a trival fraction fraction of oil experts Such as Thomas Gold, believer in abiogenic oil (of non-biological origin). Overwhelmingly experts believe that oil will peak, that prices will rise as we approach peak production, and that this will force evolution of our energy supplies to greater efficiency and reliance on alternative sources. Like the old joke, everyone believes in peaking; the question is when. Peakists believe in peaking soon. Non-peakists believe in a distant peak, 15 or even 30 years away.
Disclosure: I too am a Peakist. I believe that global production of conventional oil will probably peak in the next five – ten years and total production (including arctic, deepsea, heavy, bitumen “oil sands”, kerogen “oil shale”, and biofuels) during the next 10 – 15 years. As described in earlier posts (part I, part II, part III), we do not have the data to reliably forecast peaking. “We” meaning everyone but Middle East elites. Production could peak tomorrow, perhaps sharply (aka, a rapid decline of 4 – 10% after peaking). This uncertainty about these high-impact scenarios creates a major risk for the global economy.
But I believe that the non-peakists do analytical work of far higher quality than do Peakists, and that this one reason why Peakists have little influence. Deservedly so. Hence this series, an encouragement for us to do better.
a shortage of oil technicians limits growth in production over the next decade
The analytical foundation for this belief is pitifully weak, but constant repetition has established it as dogma. Supporting is is the sea of “grey hairs” at meetings of the Society of Petroleum Engineers (SPE), or staff meetings of the large western oil companies. Charts documenting this appear on Peak Oil sites across the web, another reason for readers to despair about our future. Why are the folks running the industry so stupid?
Perhaps because analysis of the numbers shows no serious problem. The US and other western nations train only a fraction of the petroleum engineers needed for the future. But Asian nations have picked up the slack. From Schlumberger’s Surviving the Skills Shortage – 2006 (requires registration):
The 2005 SBC study revealed there were in fact enough petrotechnical graduates in the world, but that many needed to be relocated to areas of high demand. …The main result of the survey was positive: there are enough graduates in the world to fulfill the demand of the industry. However, they are not located where they are needed, with North America and the Middle East showing a huge deficit of students in geosciences and petroleum engineering.
Quite a surprise: cheaper Asian technicians replacing expensive western ones! Has this ever happened before? Also note the deficit vs surplus areas: North America (expensive) and Middle East (low population), vs. Asian (inexpensive and high population).
What happens as the grey hairs retire, taking with them their wisdom and experience? Again, from the Schlumberger report: A better practice would be to to accelerate the time to autonomy. … It is a matter of management philosophy, a willingness to take a risk with people. Innovative companies just have the right mindset to give their personnel the opportunities and training to make autonomous decisions earlier.
This industry has treated its employees as Kleenex. At the bottom of each cycle the old joke returns. “How do you call a member of the SPE? Waiter!” Hence until now they seldom needed to treasure their people, a different mind-set than maximizing efficiency. Scarce talent will now force the industry to do better. The Manhattan Project, the development of the B-29, and the Apollo Program show that a young labor force can do great things if well led.
Why have so few Americans responded to the wonderful opportunities as the industry gears up for peak oil? America’s history suggest that the pace of oil exploration will skyrocket, as we tap smaller, deeper, more difficult to find and tap fields. Glory days for the SPE ahead? An article in the March 2006 issue of Petroleum Economist explains “A greater public understanding of the industry should eventually result in a rise in interest in energy careers.” Here’s why, paraphrased for greater realism and emphasis:
- Your first wife will leave in the early boom years because of frequent relocations, life in vacation spots like Angola, long separations (your kids collect the stamps you post from places like Greenland!).
- During the next decade there will be busts, as a severe global economic recession reduces oil demand just as new sources come online (perhaps from Iraq and Iran). Make sure she has a career to offset your periods of low income or unemployment.
- After you get well-established, your second wife will leave because of your low income (competing against all those Asian and African peers) and long “lay-offs” (due to over-production of petroleum experts by Asian universities).
This is, of course, an exaggeration to illustrate some cold facts: the oil industry will experience the same shift as have so many other American industries. Jobs will be outsourced to those from Asia and other emerging regions, despite these jobs’ high educational requirements (another myth: education as a cure to outsourcing). Wages will not rise as many expect due to competition from emerging nations.
The oil is not in America, and in the future fewer Americans will be in the oil industry. Oil expertise is not a crisis shortage, but just a common short-term resource constraint. Whatever the nationality of those in the oil industry, I’ll bet that the available oil will be found and extracted.
More stories about “The Big Crew Change”
- Education and the Big Crew Change, Society of Petroleum Engineers, 20 slides (January 2004)
- Aging Workforce – The Big Crew Change in Exploration and Production, Energy Insights (summary) (August 2006)
- The Big Crew Change: Turnover in the Oil Workforce, The Oil Drum: Europe (17 March 2007)
For more information
- When will global oil production peak? Here is the answer!, 1 November 2008.
- Links to articles and presentations of some A-team energy experts, 11 November 2007.
- The most dangerous form of Peak Oil, 8 April 2008.
- The world changed last week, with no headlines to mark the news, 25 April 2008.
- Peak Oil Doomsters debunked, end of civilization called off, 8 May 2008.