Summary: A common rebuttal to “peak oil” is to show that we are not running out of oil. While true and comforting, this is irrelevant and can blind us to the serious danger of declining oil production. Things will certainly work out in the long run, but that will not offset pain during our lives — and our children’s.
The Four Horsemen of the Energy Apocalypse Caused This Oil Mess“, the Rush Limbaugh radio show (29 April 2008) –Excerpt:
Have you seen these stories, these scaremongering, fear-oriented stories? Some people predicting $200 a barrel per oil. Somebody out there saying $10 a gallon gasoline. Now, let’s not get carried away here and pile on the panic, but for heaven’s sake, can we look at the real world? Not at the windmill wackos and how they would like us to see the real world.
Let me give you some reality, and this is from Bloomberg: “Brazil may be pumping ‘several million’ barrels of crude daily by 2020, vaulting the nation into the ranks of the world’s seven biggest producers.” Several million barrels of crude daily by 2020. They’re talking about pumping oil 12 years from now, folks. How can that be if we’re running out?
That stupid question that Bush got about we’re reaching our peak, asinine. Absolute BS, undiluted, pure stinky BS! They’re pumping billions of dollars into developing the Caspian Sea for oil 20 years from now. We are not running out.
Limbaugh is the mass-market voice of the “we are not running out” rebuttal to Peak Oil. He finds support from many sources. Their optimism comes in several forms.
- The theory that oil has abiogenic origins, and reservoirs are replenished from below. Thomas Gold is the best known advocate of this in the west.
- Much oil remains to be found.
- Technology will increase recovery rates from existing fields and allow tapping of unconventional sources such polar, deep sea, bitumen (aka oil sands), and kerogen (aka oil shale).
“The bottomless beer mug“, The Economist (28 April 2005) — “Why the world is not running out of oil.” (Non-subscribers can see it here) Excerpt:
And yet, despite this history of innovation and abundance, concerns about depletion are once again clouding the industry’s future. This time round, argue the doomsayers, depletion really is looming, and technology will not come to the rescue, as it has done in the past. If they are right, today’s oil prices are but a harbinger of much, much worse to come.
“Forget everything you think you know about oil“, WorldNetDaily (18 October 2005) — Review of Black Gold Stranglehold by Jerome R. Corsi and Craig R. Smith, which “explodes common myths” about oil. A grab-bag of theories, but their case ultimately rests on belief in abiogenic oil.
“It’s a myth that the world’s oil is running out“, Irwin Stelzer, Sunday Times (28 April 2008) — Stelzer is a business adviser and director of economic policy studies at the Hudson Institute. Excerpt
Another myth: we are running out of oil. According to WorldPublic Opinion.org, “majorities in 15 of the 16 nations surveyed around the world think that oil is running out … Those majorities who think we are running out of oil include 85% of the British and 76% of the American citizens polled. Luckily, they are wrong.
Production of oil is being constrained by several forces, none of them due to God’s failure to put enough of the black gold under our feet. … There is a lot of oil out there to be found and produced, not even including the vast reserves in Canada’s tar sands. We might have reached the age of peak panic about oil supplies, but not of peak oil.
Quite right, of course. The world has immense petroleum reserves, enough to meet our needs for generations. Let’s assume all three of the optimist’s beliefs are correct.
#1, Abiogenic oil — Oil fields are exhausted (massive production declines) in years or decades. Abiogenic sources might recharge them, but probably over millennia (at the least). Oil does not move quickly through rock. If correct, the Texas oil fields will be gushing again in 50,000 AD. I doubt our descendants will care.
#2 and #3 are almost certainly true. The significance of this lies in the details. How quickly can production ramp up at these new sources? At what price can companies tap these sources? And to what extent do these offset declining production of the world’s super-giant fields — Ghawar, Burgan, Cantarell, etc?
These things are comforting, but irrelevant — like most “Straw man” arguments. “Peak Oil production” does not mean “no oil production.” Peak production occurs when declining output from conventional sources (cheap and easy to produce) outpaces the growth in output from unconventional sources. Given the complexity of unconventional sources, it is an unequal race. All forecasts from mainstream experts forecast peaking in the by the middle of this century, with most forecasts in the next decade or so — and those assume increased production from Saudi Arabia, which their King says will not happen.
From an economic perspective, the solution to peak oil lies the realtionships between supply, demand, and price. In simple terms, insufficient supply of a good increases its price — which brings forth new supplies. Although denied by many in the peak oil community, this is certainly true of energy (or more narrowly, liquid fuels). Over time some combination of increased efficiency and new sources will keep our economic engines running. Over time.
But this *long run* is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again.
“A Tract on Monetary Reform” John Maynard Keynes (1923)
We must think of long-term factors, but we live in the short-term. As the Hirsch report (“Mitigations”) showed, the adaptation to peak oil will take at least two decades. We might not have two decades, in which case our complacency might result in years of economic pain and turmoil. Knowing that things will work by 2200 will be cold comfort during a long, deep recession.
Update
For an excellent analysis of the relationship between global growth patterns, currencies, and oil prices, see “The Economist and Goldman on oil and the dollar“, Brad Setser, RGE Monitor (4 May 2008) — Excerpt: “high real oil prices contribute to a weak dollar more than a weak dollar contributes to a high dollar price of oil.”
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For more information about Peak Oil
- When will global oil production peak? Here is the answer! (1 November 2008)
- 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)
Here is an archive of my articles about Peak Oil.
Here are other resources about Peak Oil.
