The arguments are so one-sided, it's practically a given that "peak oil" is real and threatening. Or is it? This article examines both sides. It lets readers decide and deals only with supply issues, not crucial environmental ones and the need to develop alternative energy sources. First some background.
The name most associated with "peak oil" is M. King Hubbert. He became the world's best known geologist when he worked for Houston-based Shell Oil Company from 1943 to 1964. His theory goes something like this. Oil is a finite resource. Peak oil, or Hubbert's peak, is the point at which maximum world production is reached, after which its rate terminally declines.
Hubbert first presented his theory in a February 4, 1949 Science magazine article called "Energy from Fossil Fuels." He gained prominence, however, from his 1956 American Petroleum Institute presentation titled "Nuclear Energy and the Fossil Fuels." In it, he predicted that US production would peak between the mid-1960s and early 1970s, and he was largely right (for the wrong reasons at the time) about cheap or what's called light sweet oil.
Most analysts believe US output peaked in 1970 and has since declined. Others, like economist and author F. William Engdahl, disagree. He's been researching oil issues since the early 1970s and believes US output peaked at the time but not because of resource depletion. It's "because Shell, Mobil, Texaco and the other partners of Saudi Aramco were flooding the US market with dirt cheap Middle East imports, tariff free, (and) at prices so low (that) many Texas domestic producers could not compete and" had to shutter their operations.
But Hubbert went further as well. He predicted a worldwide peak in "about half a century" that would progress in bell-shaped curve fashion, now called "Hubbert's curve." Here's how it works for all fossil fuels. Hubbert theorized that after discovery, production increases exponentially, but at some point peak output is reached, after which an exponential decline ensues. Hubbert's curve is symmetrical, it peaks when half of all oil (or other fossil fuel) has been produced, and there's only a single peak after which output declines.
Hubbert's analysis was at a time oil nominally cost under $3 a barrel. Inflation-adjusted that's around $23 in 2008 dollars. Today it's around $100, and some analysts see it heading much higher as the supply of cheap oil declines in the face of growing demand. True or false will only be known in the fullness of time, but consider what Hubbert, in fact, said in his 1956 paper. He estimated:
-- a "total ultimate potential reserve of 150 billion barrels of crude oil for both land and offshore areas of the United States" and acknowledged he was "in substantial agreement with Pratt's figure of 170 billion barrels....;"and
-- a potential of 1.250 trillion "barrels (for) the whole world."
So far, Hubbert was referring to what's called "light sweet" or cheap oil. But he went further as well, yet his comments have been largely ignored. He mentioned other type oils and estimated:
-- "the oil obtainable from oil shales in the United States" is one trillion barrels based on current (1956) US Geological Survey figures; outside the US, he estimated oil shale potential in Brazil at between 300 to 500 billion barrels with "negligible" amounts present in other countries;
-- the Athabaska tar sands in northeastern Alberta, Canada are the "largest known deposit(s)....in the world;" its "extractable oil content....is still not accurately known, but current estimates range from about 300 to 500 billion barrels....;" and
-- "other large (nonconventional oil) deposits of uncertain magnitude exist in eastern Venezuela and in Mesopotamia (Iraq);" these and others like them in the world "might be as much as (another) 800 billion barrels."
Hubbert then stated: "....the culmination of world (oil) production (of the cheap variety)....should occur within about half a century (and within) the United States....within the next few decades." However: "This does not necessarily imply that the United States or other parts of the industrial world will soon become destitute of liquid (oil) and gaseous fuels, because these can be produced from other fossil fuels (including tar sands, heavy and extra-heavy oils and shale) which occur in much greater abundance." In 1956, his and other estimates of their amounts were far below today's figures. More on that below.
Current Opposing Views on Peak Oil
The German-based Energy Watch Group (EWG) believes peak oil is real. It's an "international network of scientists and parliamentarians" that published an October 2007 report with that view. It stated world oil production peaked in 2006, output is now declining by several percent a year, and by 2020 to 2030 global oil reserves will be substantially lower than today and a supply gap will exist.
I am a 72 year old, retired, progressive small businessman concerned about all the major national and world issues, committed to speak out and write about them.
There is ample information around the internet in agreement with Mr. Lendman's points. Abiotic deposits are a reality, deep drilling is happening in and by Russia, so we are living under a huge hoax by American based oil companies which is there only to stimulate high prices and profits.
Of course, we are destroying the eco-system of this planet with oil and gas. I wish we were running out of them, then we would see some real development of zero or negative carbon alternatives. And the huge "alternative" deposits of tar sands have a tremendous environmental cost what with the energy required to get them. Also, using corn for ethanol is analogous, what with the energy based fertilizers needed to grow it.
If I still had a sense of humor, I would think it amusing how grain commodity markets are being manipulated for speculators' benefits in the name of grain based energy. Much of the wheat acreage is not usable for corn. Remember the sugar crisis some 20 years ago? Why did seltzer water go up as well as Coke?
And so the same thing goes on with oil. Up goes the price, and we the people are the resource that gets sucked dry. One additional point that Mr. Lendman didn't mention. If I am not mistaken, oil reserve figures have some basis in financially viable extraction. Doesn't $100 oil result in higher reserve figures? I would appreciate some elucidation on that.
Capitalism is failing us.
Workers of the world......disperse !!
Stephen Maxam
by
Maxamov (0 articles, 0 quicklinks, 0 diaries, 3 comments)
on Thursday, March 6, 2008 at 12:43:32 PM
Stephen, this was a great article. As a futurist, I've followed the hypothesis of peak oil for about five years now. The Peakist extremists have given Peak Oil a cultist overtone by shouting that it's the end of the world as we know it. This extreme approach causes many people to reject the entire premise outright. There are some great discussions on Peak Oil at www.theoildrum.com and www.energybulletin.net by people with experience in petroleum geology and related fields that are quite enlightening. I would encourage readers to visit these sites for more information. Here are some additional bits of data that your readers might want to consider.
In spite of the fact that a small but vocal group of Russians believe in abiotic oil, abiotic oil remains an unproven theory. Although the Russians found oil in unlikely rock formations, it's not proof of abiotic oil There are biotic oil theories to explain why oil could migrate to those locations. Frankly, they are more plausible than oil forming miles underground and then migrating through many miles of non-porous rock. You can find an extensive discussion of abiotic oil at the Energy Bulletin website.
Also, among Peakists, David Yergin at CERA is considered to be a shill for the oil industry. For example, he misstates the premise of Peak Oil, as quoted in your article, as "running out of oil." Peakist claim that this is a deliberate misdirection of the reader. There will always be some oil underground. Peak Oil does not mean that the world is running out of oil. Peak Oil theory says that we will eventually reach a point where we cannot pump the oil out of the ground as fast as we are consuming it. Peak Oil is production/consumption problem, not a problem of running out of the resource itself.
Another point to consider is the overly optimistic forecasts that accompany each new oil discovery. For example, the Alberta oil sands reserves are huge, but the estimate for 2020 is for production of only 4mbd of oil. Today, the world consumes 85mbd. ANWR, the largest discovery in the US in the past 100 years, would produce only 1 mbd at maximum production. When I tell audiences this, they are amazed to discover that these highly touted discoveries are so small on a global consumption scale.
The Saudis reporting of their "reserves" should be taken with a huge grain of salt. Simply, for years they have been pumping oil out of the ground without a comparable decline in reserves or a comparable rise in new discoveries. Thus, their data is suspect.
The world is consuming 4 barrels of oil for each 1 barrel of newly discovered oil
Crude oil production peaked in 2005. In spite of prices more than doubling, production has not passed that peak. That's a very troubling sign.
Another common argument against Peak Oil is "there's a lot of undiscovered oil out there. We'll just find more." This is Pollyanna-ish for three reasons. 1) In spite of increased exploration methods, we haven't found significant (on a global consumption scale) new oil fields so far. 2) New discoveries are likely to be in locations where it will be very difficult to develop large scale production, such as the Artic, the deep oceans, and environmentally sensitive offshore areas. 3) The lag time between discovery and full-scale production is several years. Thus, in the unlikely event that the next super giant oil field is discovered tomorrow, it couldn't prevent a crisis if peak oil occurred in the next few years.
In short, peak oil shouldn't be discounted as a possible future scenario in the next few years. Again, thanks for the article. It increases awareness of peak oil, regardless of one's opinions for or against the theory.
by
Grady Cash (0 articles, 0 quicklinks, 0 diaries, 2 comments)
on Friday, March 7, 2008 at 11:10:18 AM
