Peak Oil? Or false summit?

Protester with hands covered in oil

The doomsters have spoken.  We’re facing “Peak Oil” — a point of maximum production, followed by an inexorable decline, when oil prices will skyrocket, and petrol and diesel cars will rust by the road-side.

In 1922, a US federal commission predicted that “production of oil cannot long maintain its present rate”, and 55 years later, President Jimmy Carter declared that world oil production would peak by 1985.

Back in the sixties, Professor Paul Ehrlich of Stanford University, no less, told us how it would be.  By the seventies, he said, hundreds of millions would starve.  Population control was the only answer.  He predicted that “within ten years” all major life in the seas would be gone, and the coast uninhabitable for the stench of dead fish.  By 1985, mankind would enter an age of scarcity, as resources were depleted.  By 1980, average US life expectancy would be 42 years, because of pesticides (in fact, of course, as we now know, life expectancy is increasing at a record rate).  By 1999, the population of the US would drop to 22 million.  Oh, and by the way, we’d run out of oil.

But as I love to quote: “The Stone Age didn’t end because we ran out of stones”.  It ended when we discovered better technologies.  Like bronze and iron.  A good rebuttal of all this nonsense comes from Matt Ridley’s “The Rational Optimist”.  He points out that when resources run short, or become more expensive, we find more.  Or we find alternatives.  Or we find totally new technologies.  In resource management, as in economics, the worst errors arise from assuming we have a static model, when the real world is dynamic.

Of course the amount of fossil fuels in the world is finite.  No question.  But it is also rather bigger than we imagine.  “Contrary to what most people believe,” claims a recent study from the Harvard Kennedy School of Government, “oil supply capacity is growing worldwide at such an unprecedented level that it might outpace consumption.”

Currently the American economy is being transformed by low-cost shale gas.  In the process, US competitiveness is increasing dramatically.  Jobs are “on-shoring”, coming back from Asia.  America’s industrial renaissance poses a real threat to European competitiveness, as we agonise over our green credentials and ignore energy prices and security of supply.

In fact the USA could well be self-sufficient in energy by 2030, and may by then be the world’s biggest oil producer, ahead of Saudi Arabia.  Where there’s shale gas, there is frequently oil as well.  This is a geo-political game-changer.  The US may be less enthusiastic about keeping the peace in the Middle East, and defending the straits of Hormuz, when it doesn’t need Saudi oil.  Europe should take note.

But it’s not just the USA.  Some estimates in the UK suggest we may have gas reserves for 1000 years — and there may be oil here as well.  There is more gas, and perhaps oil, across Europe.

In the Eastern Mediterranean, major new oil and gas fields are being discovered.  We may see some jockeying between Greece, Italy, Cyprus — and especially between Israel and the Palestinians — but either way, there’s a lot more oil and gas about than we realised.

Recent researches have pointed out the prospect of 500 million barrels of oil off Ireland and South China Sea.

All around the world, we’re seeing new resources coming on stream.  We have fossil fuel availability for the foreseeable future.

There are also 1200 new coal-fired power stations in the global pipeline.  So if you think that continuing carbon dioxide emissions will lead to a calamity for the human race, despair now.  On the other hand, you may prefer to wake up and smell the coffee.

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13 Responses to Peak Oil? Or false summit?

  1. B Hough says:

    Just a couple of layman comments.
    Better increase the price of fuel, jut in case!!
    And funny how the UK is never allowed to make use of our own resources, always a problem, ie. Earthquakes caused by fracking, no problem anywhere else just here.

    • ianbrettcooper says:

      I live in Maryland, USA. I experienced an earthquake caused by fracking last year – in suburban DC – an area that isn’t even supposed to be on a fault line. I used to live in Los Angeles and this quake was as bad as the Northridge quake, which I experienced in LA. So they do happen elsewhere – it’s just that quakes in the US are not well reported in the UK.

  2. I simply do not understand why fracking has not become a major industry in this country. It would rejuvenate the North, it would save a lot of money, it would guarantee electricity supplies and it would keep the Conservatives in power for ever more.

    • DougS says:

      Indeed, it would do all that you say Mike.

      However, the ‘green’ eco-loon lobby is against for the very same reasons.

  3. DougS says:

    Roger, you mention Paul Ehrlich, a man who has been shown to have catastrophically insane judgement. He’s been about as wrong as you can get about almost everything that he’s pontificated about. You might imagine that he’s currently hiding shamefacedly under a table in some far off wilderness. But no. He’s Professor of Population Studies at Stanford University – you really couldn’t make it up!

    And his good-buddy, John Holdren, who made similarly catastrophic (and wrong) predictions – where’s he?

    He’s just the senior advisor to President Barack Obama on science and technology!!!!

    People who employ these folk can only be doing so because they know that they can be relied upon to come up with scary scenarios that will allow their employers to remove large amounts of money from the sheeple in the form of taxes – to save the planet of course!

  4. catalanbrian says:

    Fortunately for both you and me both of us will be pushing up daisies by the time that fossil fuel resources run out, or become so scarce that they become unaffordable, but I am not so sure about my grandchildren, or theirs. Let’s keep the orchestra playing, then!

  5. ianbrettcooper says:

    Hate to burst your bubble, folks, but shale oil is a scam. Shale plays usually last at most 5 years before the wells run dry – and that’s only if you have vast resources that come from rube investors who are willing to stake their life savings on these junk wells. The idea that shale oil and fracking are going to make a mockery of peak oil is ludicrous. Don’t believe me? All you have to do is wait five years. Not even that long if you’re willing to look at US plays – take the Bakken for example – it’s doing great now, but it’s been in play for 4 years now. Wait a year and see if the Bakken is still booming.

  6. Ed says:

    Why is the price of oil so high if we have so much of it ?

    Let me explain why.

    World Oil production (measured in barrels produced) has been on a bumpy plateau since 2005. However if you consider that since 2005 the easy to get oil is depleting and is being replaced by hard to get new supplies of oil it means the net energy from oil is already declining. You guys need to google EROEI . Energy returned on energy invested. In the 1950’s you could find oil with a EROEI of more than 100. The best deposits of shale oil has a EROEI of just 3.5. It doesn’t matter how much oil there is left in the ground, once it takes one barrel of oil equivalent to recover one barrel of oil then production stops whatever the price.

    If that wasn’t enough consider this. There 33 major oil exporters at the moment but this number is going down by about one per year. The US became a net importer in 1970’s and the UK in 2000. It has been calculated that Saudi Arabia will become a net importer by 2030. If China and India continue to grow at their current pace, they will consume ALL the oil available for export in the world by 2030.

    If you think shale oil will come to your rescue, then you will be disappointed. Apart from the fact that the EROEI for shale oil is so rubbish it suffers from an even worse problem. The depletion rate for oil wells are as high as 70% in the first year alone. As you use up all the best areas first and move to more marginal areas you need to sink more wells to just to get the same volume out. In effect the EROEI gets even worse.

    For your information the average EROEI of wind turbines is over 30. Don’t look at the US or France for our energy policy. Look at Germany. By 2050 they will not need to import any oil, gas, coal or uranium.

  7. machokong says:

    After seeing War of the Worlds (2005) (I saw the original as well) to realise the machines used our blood to run their machines and then was told that oil was dinosaur blood, it made me feel quite queasy.

  8. bodge says:

    The connection between fracking and earthquakes is solid and proved many times over in the states but hey, there is money to be made and as money means much more than life now it will carry on regardless of risk and it will not be until a major disaster that kills many people will anyone look at the problem (not whilst theres money to be made) as for the “Peak Oil” it is not a question of how much oil there is in the ground, only how much oil can be extracted at peak performance given our extraction technology to date.

  9. Patryk says:

    Another good text Roger. I will add one more doomster though. In 2012 a Nigel Farage predicted that in 2013 29 million Romanians and Bulgarians will come to live in the UK. Let’s how wrong he will be!🙂

    • David says:

      Maybe he said “Can come”. Check his video,s.
      No one thinks the whole population will come. Lets just say the main worry is how many criminals & benefit seekers will come.

  10. Bill says:

    resources run short, or become more expensive, we find more. Or we find alternatives. Or we find totally new technologies.

    VOILA!!!

    Pouring WATER on troubled oil might be the answer!! CLICK BELOW!!
    http://ukipsupporter.blogspot.co.uk/2013/03/pouring-water-on-troubled-oil-might-be.html

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