Summary: The peak oil hysteria provides rich lessons for us today about learning from activists and the value of listening to our major professional institutions. Easy cynicism led people to believe outlandish forecasts, wasting valuable time and resources. Worse, we have had many such barrages by doomsters — aided by their clickbait-seeking enablers in the media — which have left us almost numb to warnings, no matter how well-founded. We can do better.
Where were you during the peak oil hysteria? It began in 2005 and died in 2013, marked by the opening and closing of The Oil Drum website. Despite their analysis and forecasts proving to be mostly wrong, most of their authors are still “experts” publishing elsewhere (see this bizarre example). That follows the pattern of modern American doomsters, such as those in the 1970s who predicted global catastrophes from pollution and famine. Perhaps the activists predicting a climate catastrophe will add their names to this list in the next decade.
It’s not just historical trivia. We must learn from these bouts of irrationality if we have any hope of regaining the ability to govern ourselves.
Maximum World Oil Production Forecasts
Memories have faded, but a decade ago the predictions of end of oil were hot news. Comment threads overflowed with people terrified of the future. Conferences were held and books sold trumpeting certain disaster as the lifeblood of our industrial civilization dried up. Many of the following names were highlighted in journalists’ Rolodexes as the go-to people for hot quotes. Then as now, the names least often consulted proved to have the more accurate forecasts.
- 2005 – Pickens, T. Boone (Oil & gas investor).
- 2007 – Bakhitari, A.M.S. Oil Executive ((Iranian National Oil Co. planner).
- 2007+ – Groppe, H. (Oil / gas expert & businessman).
- 2007 – Herrera, R. (Retired BP geologist).
- 2008+ – Westervelt, E.T. et al (US Army Corps of Engineers).
- 2009 – Deffeyes, K. (retired Princeton professor & retired Shell geologist).
- 2009 – Simmons, M.R. (Investment banker; see the posts about his work).
- 2010 – Goodstein, D. (Vice Provost, Cal Tech).
- 2010 – Wrobel, S. (Investment fund manager).
- 2010 – Bentley, R. (University energy analyst).
- 2010 – Campbell, C. (Retired oil company geologist; see the posts about his work).
- 2010 – Skrebowski, C. (Editor of Petroleum Review).
- 2011 – Meling, L.M. (Statoil oil company geologist).
- 2012 – Koppelaar, R.H.E.M. (Dutch oil analyst).
- 2012 – Pang Xiongqi (Petroleum Executive, China).
- 2015 – Husseini, S. (retired Saudi Aramco).
- 2020 – Laherrere, J. (Oil geologist , France).
- 2020+ – CERA Energy (consultants).
- 2020+ – Wood Mackenzie (consultants).
- 2025+ – Shell.
- 2030+ – EIA and IEA.
- No visible peak – Lynch, M.C. (Energy economist).
These predictions were made during 2003 – 2008 (collected by Robert Hirsh; most sources are listed here). Most were given with qualifying language expressing uncertainty about the dates. Some of these people, especially those associated with the Peak Oil movement, had given different dates — moving them out as time passed. Most of these are documented, but details of some have been lost over time.
Note that the forecasts of major energy agencies’ look good a decade later. Much as with climate change, activists disparage (often contemptuously) analysis of the professional institutions — but in hindsight it is clear who we should have listened to.
Let’s look at these predictions in the context oil production history.
Forecasts of Oil Production made in 2008
The following table shows the actual production of crude oil and liquid fuels — and the IEA forecast for production in 2015 from their World Energy Outlook 2008, published as energy prices were on their way to a record high? Eight years later, how accurate was IEA’s forecast? It was eerily accurate — somewhat accidentally, as the IEA did not foresee the 2008-09 global recession and so over-estimated GDP growth.
Note: the IEA and EIA use similar definitions for “liquid fuels”.
World Production vs. the WEO 2008 Forecast
The bottom line: liquid fuel production increased by 15% during the decade after 2005, so that prices have plunged (exacerbated by the Saudi price war). Prices will remain under pressure unless OPEC reestablishes its control, production coming online from investments in the giant fields of Iran and Iraq, the spread of fracking to other nations, and new tech (e.g., hybrid and electric cars).
Also note the increasing difference between production of crude oil and all liquid fuels. The rise in crude oil and, more broadly, liquid fuels were driven by new sources whose potential was mostly ignored by the Peak Oil doomsters). Crude production rose from deepwater and fracking wells, plus mining bitumen (aka oil sands, which technically does not produce crude oil). Liquid fuels production rose from production of natural gas liquids, biodiesel, ethanol, and those converted from coal and gas. Most numbers you see for “world oil production” are for all liquid fuels.
While in 2008 the IEA accurately estimated liquid fuel production for 2015, they over-estimated demand. As a result, the WEO 2008 price forecast for 2015 was too high.
“The era of cheap oil is over … The average IEA crude oil import price, a proxy for international prices, is assumed in the Reference Scenario to average $100 per barrel in real year-2007 dollars over the period 2008-2015 and then to rise in a broadly linear manner to $122 in 2030.”
As many of us predicted during the peak oil hysteria, high oil prices had three great effects — all predictable…
- Increased efficiency of energy use — as consumers and businesses invested to increase the efficiency of the more expensive energy (and R&D produced more ways to do this).
- Increased production of oil (boosted by R&D making more “resources” into usable “reserves”. Today’s $30 oil shows that production growth has exceeded demand.
- New sources of liquid fuels — including both new hydrocarbon-based supplies (bitumen in Canada and Venezuela), new carbon-based fuels (e.g., coal to oil, although oil prices never rose to make this viable), and new carbohydrate-based supplies (e.g., ethanol from corn).
Only time will tell about the IEA’s forecast for 2030 of $122 oil (in 2007 dollars). But today’s oil glut gives us an opportunity to prepare alternative supplies in an inexpensive and orderly manner, not only reducing the risk of energy price shocks but also reducing pollution and the risk of unpleasant anthropogenic climate change. Let’s make use of the gift.
Equally important is that we learn from this experience with the peak oil movement. Activists and enthusiasts have terrible track records at long-range forecasting, despite their confidently loud predictions of doom — echoed by clickbait-seeking journalists . That does not imply that we should blindly trust major institutions (as the scandal about Flint’s water supply shows), but skepticism pays large dividends and allows more rational preparing for the future.
For More Information
For a deep look at these issues see Exxon’s new report “The Outlook for Energy: A View to 2040“.
- Important: Recovering lost knowledge about exhaustion of the Earth’s resources (such as Peak Oil).
- When will global oil production peak? Here is the answer!
- The three forms of Peak Oil (let’s hope for the benign form).
- Peak Oil Doomsters debunked, end of civilization called off!
- Prepare now, for oil prices will rise again.
To learn about the minerals that power our world, and will for many years more, I recommend reading the IEA report Resources to Reserves 2013. Here is a brief slidedeck of its contents. For a deeper look, see the IIASA’s Global Energy Assessment (a widely cited source document, including by the IPCC’s AR%). Here is a 113 page summary.