Over the past year, American drivers have found themselves longing for the days when two dollars per gallon seemed expensive. Oil prices are rising at an unprecedented rate, and as a result, many are questioning whether the Earth's available oil supply has reached its peak. Are there still oceans of oil awaiting our discovery? How much pain you'll be feeling at the pump in the future depends on the answer.
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I am also someone who subscribes to the Peak Oil idea, but I think some fundamental things have happened with the global financial meltdown and the US basically being forced into bankruptcy. This will dramatically reduce consumption in the US for some time and will push out the date for Peak Oil. Peak Oil is when demand outstrips supply. It looks like Saudi and Russia still have enough supply coming online over the next couple of years to offset global declines. This is a temporary situation however. The question mark or exclamation point on this will the the undefined extent of the global recession and collapse of the banking system on the demand for oil and how wide spread this recession/depression reaches.
So while I am firmly a Peak Oil person, I think the time line for the actual peak is still a couple of years out for production. And it looks like a dramatic pullback in US demand will give the world a little breathing room to figure out what we are going to do. Sadly we as people wait until everything is a crisis or emergency before we do anything. So I wouldn't bet on anyone learning anything or doing anything to change the course we are on.
The fun part about Peak Oil is the investigation and research into the way things were done before oil was the dominant energy source. Steam power, stirling engines, wind power, and taking advantage of the things provided by environment we live in. So technology has existed prior to oil, and will exist after the demise of oil that will continue to make our lives better and easier, but probably not a pervasively as it is today. It will be an interesting and exciting time to see new technologies move ahead. There is no question that the way we live is dramatically about to change, but I don't believe it has to be the doom, death, and destruction that many in the Peak Oil community make it out to be. People need to draw on the past to see how things were done before and how we can make tomorrow a better future even without oil.
- Longsnowsm
September 28, 2008 12:13PM
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Dr. Schoppers:
My last comment pertained to your words about OPEC reserves at the end of your post on the end of affluence. I hadn't read this one, where you discuss OPEC exaggerations. Hopefully what I wrote commplements what you have written in this one.
- Steve Athearn July 26, 2008 12:30AM
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In the mid 1980s, 6 of the major OPEC countries raised their claimed "proved" reserves by huge amounts - between 50 and 200%, literally, in each case, from one year to the next - in the course of competition for export quotas. The increases were not accompanied by announcements of major discoveries. The posted reserves for the Neutral Zone - shared by Saudi Arabia and Kuwait - were NOT raised, but continued to decrease with production. A January 2006 report in Petroleum Intelligence Weekly reported on a 2001 internal Kuwait Oil Company audit which put actually "proved" reserves at a quarter of the official number. Former Iranian National Oil Co. exec. Dr. Bakhtiari was one analyst who claimed that Iran's reserves are overstated by almost 100 billion barrels. As recently reported in the Wall Street Journal, a former top Saudi Aramco executive, Dr. Sadad al-Husseini, has now publicly endorsed the idea that world reserves are overstated by as much as one third - 300 billion barrels.
- Steve Athearn July 26, 2008 12:19AM
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I have long been an advocate of renewable energies. But you have raised an extremely important issue: Oil is just one of hundreds of non-renewable resources. It is funny how one can so completely ignore all the items in a store when everybody talks about just the gooey black stuff.
I will surely look into this in great depth in the near future! Unfortunately it is just one more seemingly-impending disaster awaiting our species just around the next corner. As if we haven't had enough troubles lately! But it would be universally foolish to ignore the growing scarcity of our planet's natural resources.
Thanks for keepin' it real.
- sonofwill September 18, 2008 1:14PM
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Excellent comments on the rate of decline as the key issue. It has slowly been dawning on me that this is the key question. Unfortunately, there seems to be little data from which to draw conclusions.
- Backcreek July 24, 2008 11:35AM
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While pondering this "how fast" question I collected quite a few decline rates (e.g. Cantarell declining 13-15%), but also realized that those are but one factor among many that will affect the decline rate of U.S. oil-imports (e.g. only 10% of our imports come from Mexico). I now have a short note listing such factors, under-pinning my choice of best, worst, and most-likely scenarios, but that note was too long to post as an "argument", and the O.V. web-site won't upload docs as "evidence". I guess the O.V. team will fix that sometime.
- Dr Marcel Schoppers July 25, 2008 12:05AM
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I've seen lots of web pages that say about 70% of our oil use is for energy, 30% is for feedstocks, and I wish that were true, but I don't see how to get such numbers from the EIA break-down at http://tonto.eia.doe.gov/dnav/pet/pet_cons_psup_dc_nus_mbblpd_a.htm . The EIA is saying that only 45% is used for motor cars. That's terrible news, because it means that even if all cars became totally oil-free overnight, we'd STILL be importing a lot of crude oil - one third of the 65% we import now - for "natural gas liquids" and everything from "finished aviation gasoline" down. Even grounding all cars AND planes wouldn't get our imports down to zero. That's a bitter pill to swallow.
- Dr Marcel Schoppers August 1, 2008 12:56AM
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Really? This statement is plain-old factually incorrect. Of course resources on our planet are finite.
Many populations of animals have been wiped out by permanent or transient lack of resources. Food, water, etc.
If you don't agree that natural resources are even theoretically finite, I find it hard to trust anything else you might say.
- apinstein July 24, 2008 1:48PM
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Higher official reserves don't necessarily mean that peak production is delayed: official U.S. oil reserves were at their highest level in 1970 - exactly the same year that U.S. production peaked and began its decline. Current "known" world reserves include at least 300 billion OPEC "paper barrels": created in the 1980s during the "race to declare higher figures for reserves, driven by the anxiety about the quota system, which everybody knows" (OPEC Acting Secretary General Shihab-Eldin, Oct. 2005). The figures cited for San Joaquin Valley oil are evidently predicted and actual _cumulative_ production, not annual. The field is not typical - a heavy oil/high permeability combo which could benefit from steam flooding - if we forget to count the large quantities of fossil fuels burned to create the steam. The field is now in permanent decline in any case. For corrective background info see: http://www.energybulletin.net/node/36384 and http://www.energybulletin.net/node/27170
- Steve Athearn July 25, 2008 10:35PM
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I think the objection was needed due to the statement that oil is not "finite". However that was not really her point. Her point was that we do not have full knowledge of the amount of resources available to us at all times.
However, the overstatement in the Objector's case is when he stated that we will stop pumping "oil will run out".
We will eventually stop pumping but never run out of oil. The way in which we treat oil as a market commodity ensures that we will switch to another alternative long before the oil runs out. When the cost of delivering petrochemicals increases beyond what the market will bear, people will switch to alternatives.
- sumwatt July 26, 2008 8:18AM
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In response to "slight overstatement," and the argument that "we do not have full knowledge of the amount of resources available to us at all times." The only other argument contained in the post was that oil is treated as a market commodity. The import seems to be that since we cannot know everything, we cannot know anything: that there simply are no facts on which to hang a case one way or the other (apart from the principles espoused in Econ 101). But we do know that Mexican production is declining at such a rate that its export capacity will be gone (assuming "normal" internal consumption) within 5 years or so. We know that 4 of the 5 largest sources of oil imports to the U.S. showed reduced oil exports from 2005 to 2006, and that all 5 showed reduced oil exports from 2006 to 2007 (see e.g. http://www.theoildrum.com/node/4092 ). We know many other facts relevant to this debate. It would be nice if the peak oil opponents would appraise themselves of some of them.
- Steve Athearn July 28, 2008 12:58PM
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Only the US and a few other countries believe oil is a finite resource. Most of the rest of the world think oil has a totally different process of formation, and is naturally formed on a continuous basis. The US claim makes for better politics.
There are several other oil fields that are far larger than the ones in the Saudi regions. Even Canada has huge untapped reserves. Most of the other fields are in and around countries that no one wishes to invest in. The unstable dictatorships in the third world are way too prone to nationalizing. China has a policy that to cultivate such resources will be manned only by Chinese nationals. They pay out to the dictators a fee for the oil taken, and refuse to allow the country to participate in the production, for fear the country will take over if enough or any employees learn the process.
The bottom line is that any oil production stays below the cost to produce shale oil products. The great mid west shale oil deposits by far outstrip any oil deposits that are being tapped today. They can push the prices a bit, but there is a finite limit to what they can do until shale oil becomes profitable.
I find it particularly interesting how Saudis recently walked out of OPEC, and completely gutted the organization.
I also find it interesting how some people whistle blew on BP, claiming they floated cheap oil off the coast of the US and brought it back ashore as high priced oil. Seems the people who brought it to the attention of the media were taken into protective custody, and the SIRIUS radio news broadcasts about the incident were dropped without any national media attention.
What is this country coming to?
- tomcat2200 September 14, 2008 4:36AM
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tomcat,
Did you just make all of this up? It's obvious you know nothing about the oil industry, and particularly nothing about petroleum geology. What this country is coming to.... is a nation of people who are economically illiterate and get their news from third rate rumors, as your post shows so well.
- hitac September 26, 2008 8:51PM
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Nice comentary. I love the way you disprove everything with your facts. Pleas continue, as no one is in information overload with your response.
Any idea what is going on? no? Thought so.
- tomcat2200 October 11, 2008 5:25PM
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tomcat,
I have a master's in geology and an executive MBA, and 30 years experience in petroleum geology, in both technical and management roles. I have ridden seismic boats in the Arctic, drilled wells in the Persian Gulf, run unitization meetings in the North Sea, prospected in Texas and Louisiana, and explored for oil in 15 countries. I've lived in the Middle East and Scotland. I've been on the strategic planning staff of a major oil company and involved in meetings at the CEO level.
I could write volumes on your ignorance, and why you're wrong, citing proof with hard data. But why bother? A fossilized mind will always stay fossilized. I have been down this road before with other clueless people whose only qualification, as with your case, is some irrational hatred and suspicion of the oil industry.
Even with oil prices dropping by $90 per barrel, you will continue to make up explanations involving conspiracies.
Believe me, I know what's going on. And you're miles away from reality.
- hitac November 15, 2008 12:10PM
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Official forecasts predict a "large" amount of oil and gas in these regions collectively - though probably not enough to ever reverse the long-term decline in U.S. oil production. But exploration and geological assessment which has already occurred argue that those estimates are probably exaggerated: Atlantic shelf - not very prospective; Southern CA Shelf -prospective for oil and gas, Northern CA not; Offshore FL - prospective for gas only; large areas of northern AK opened for drilling (proximate to ANWR) under Clinton and Bush, little oil found (see Roger Blanchard on these topics). The necessary water supplies needed to produce western US oil shale don't exist, and there are no proven techniques to produce oil from the shale (kerogen) without a net loss in energy, despite decades of costly research. As the opposing expert has pointed out, it doesn't matter whether the price is $1 or $1 million per barrel - if it cannot be produced at an energy profit, it won't be produced.
- Steve Athearn July 25, 2008 11:00PM
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Talking about rising oil prices seems to me to be completely missing the point - the fact that oil prices are rising is precisely what peak oil is all about. PO is *not* about running out of oil, but about trying to predict (what will happen) when daily production levels out and starts to decline, most likely with demand still on the rise.
The question is, are prices rising because we have peaked, or because of other factors, like war in the middle east, etc. With all the talk about biofuels, oil shales, deep water reservoirs, etc, I think we're at least very close.
- erlend July 28, 2008 1:35PM
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Given that fundamental predicament of our industrial civilization is its "overwhelming dependence on an exhaustible resource" (William Catton), it is not surprising, to those familiar with human psychology, that it is precisely those resources that are invariably described as "vast", "huge," "enormous" etc. Plainly, this is an important cultural denial mechanism. Notice that I said "cultural"; though Ms. Furchtgott's particular perspective is rather right-wing, many examples of the same denial mechanism at work can be found accross the standard political spectrum. Notice also that, in the context of the question at issue, Ms. Furchgott-Roth's argument must be taken to mean that the US region has not really reached its geological peak oil. But in fact, US lower-48 production peaked in 1970 and has been declining ever since. Even with the most advanced extraction technologies, Prudhoe Bay - largest in N Am - began its terminal rapid decline only 12 years after its first production.
- Steve Athearn July 25, 2008 11:26PM
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Have We Reached Peak Oil?
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prisoners dilemma and conservation
The arguments for peak oil are much more detailed and persuasive. Even the testimony of Ms. Furchtgott-Roth to Congress suggests that we are facing a long term problem with oil supplies. If there is not a debate about a protracted shortage and spiraling prices in oil, then perhaps the debate is about the finer points of when if ever there will be lasting price relief. In the meantime, action is indicated. What are the motives of the analysts and policy makers here? Unfortunately, the individual and group optimums are at odds. Its a prisoners dilemma. It makes sense that policy makers will want to keep the calm even as individuals in the know take action to protect themselves. Conservation seems like a strategy for common good, but even that may run counter to economic growth. The good news is that rising prices are forcing conservation upon us. Lets hope that short term policy designed to raise consumer confidence or cushion the inevitable does not derail efforts to conserve.
- dwtung July 14, 2008 9:21PM
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Review the Data
Intelligent readers will not be satisfied with opinions expressed on opposing sides -- they will want to have a look at the raw data to see which side's argument the data support.
A simple on-line tool is available for looking at historical production, consumption, import and export data for all the major oil producing nations. It's called the "Energy Export Databrowser" and can be found at http://mazamascience.com/OilExport /
The data visualizations found at this databrowser go a long way to explaining what has happened, what is happening and what is likely to happen with regard to oil production and cost.
- Jonathan Callahan July 24, 2008 10:18AM
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Typical Economist viewpoint
I am an engineer in the energy industry. Studying the business led me to the thoery of peak oil. The arguments are very sound and I have come to believe the theory. The most persuasive chart is the amount of oil discovered over time, this peaked in the 1960's. All those big discoveries are now in decline, Cantarell being the most obvious (and frightening). Having dealt with both NOCs and IOCs, the difference in how they operate is astounding! With the exception of Brazil, the NOCs cannot move projects along except at a snail's pace. It is a wonder that they can keep their assets operating at all. And they control 80% of the reserves! The point of my headline is that economists do not understand the underlying science of oil extraction and production and are thus wrong nearly 100% on this subject. Peak oil is here, mostly thanks to resource nationalism.
- Stevenkay July 25, 2008 5:39AM
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Peak Diamonds Too!!
Look, oil is controlled by a cartel. Just like diamonds. Drill in America. Stop sending our money to people who hate us and the price will drop. Increase supply. Global warming is a fake science that props up the terror states and starves the 3rd world as we divert food supplies to energy. The oil is out there, let's go get it.
- joelinda July 25, 2008 12:18PM
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Peak diamonds => an American oil cartel??
1) Yes indeed let's stop sending our money to OPEC. But what will fuel our cars? I say much smaller cars, natural gas, electricity, maybe some (bio)diesel and propane.
2) American oil is not controlled by a cartel. America has been so drilled, there's not much left to find. Of the 41,000 oil fields known in the world, 31,000 of them are in these United States! Increasing supply is easier said than done.
3) If you believe the supply is here, or "out there" (and believe me, at these prices, people are looking), I challenge you to calculate how many days it will keep us going, consuming 21 million barrels per day. Please see the NO side's 2nd argument "As Oil Prices Rise", and my Objection item (4), for an example.
- Dr Marcel Schoppers July 25, 2008 5:48PM
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100% or 200%?
My recollection is that Dubai raised its declared reserves by some 197 percent during the OPEC quota wars of the 1980s. The other 5 countries in question raised their reserves by between roughly 50 and 100% - the range given by Dr. Schoppers.
- Steve Athearn July 26, 2008 12:46AM
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Attention: Council of Economic Advisers
Though her politics are very different from mine, in the past I've not been unsympathetic to Dr. Furchtgott-Roth's work critiquing feminist exaggerations regarding pay discrimination. But being reminded that she served as Chief of Staff on President Bush's Council of Economic Advisers, I'm struck at how the economists within the Administration seem not to have received the memos about Peak Oil: within the decade "the hydrocarbon society can't be with us to the extent it is today" (Bush, 4/19/2005); "oil-hungry economies will compete for dwindling supplies of hydrocarbons" (UK Amb. David Manning, 3/2006); "the warping now of diplomatic efforts by the all-out rush for energy supply" (Condoleezza Rice, 4/2006); "We're in a race with China and so far we're losing" (Cheney aide, Insight Magazine, 5/16/2006); "If they [the Saudis] don't have a lot of additional oil to put on the market, it is hard to ask somebody to do something they may not be able to do" (Bush, 1/15/2008) - and others.
- Steve Athearn July 26, 2008 1:35AM
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Quantify "vast"
Can you tell me exactly how many barrels of oil counts as "vast" in your argument? How does it stack up against 20 million barrels per day that we use? How does it match up against a _conservative_ estimate of 4% decline per year for existing mature fields?
I know we haven't started drilling in the areas where we supposedly have "vast" reserves, so you may argue that it's impossible to give a number. In that case, how do you know they are "vast" to begin with? Can't we at least come up with an estimate within an order of magnitude? If you did, you would demonstrate how little the "vast" reserves look in the big picture.
Our ONLY long-term solution is to GET OFF OIL AS FAST AS WE POSSIBLY CAN.
- scientastic July 27, 2008 8:41PM
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Supposedly "Vast" Reserves
U.S. proved reserves stand at 21 billion barrels, according to the Energy Information Agency of the DOE. That would last us less than 3 years. (But they cannot be produced that fast.)
http://www.eia.doe.gov/basics/energybasics101.html
- Dr Marcel Schoppers July 27, 2008 10:03PM
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