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Global Oil Reserves 'Exaggerated by a Third'
March 23, 2010 9:49 AM   Subscribe

Global Oil Reserves 'Exaggerated by a Third:' The world's oil reserves have been exaggerated by up to a third, leading UK scientist Sir David King claimed today, warning of oil shortages and price spikes within years.
posted by ZenMasterThis (112 comments total) 9 users marked this as a favorite

 
The scientist and researchers from Oxford University claimed official figures are inflated because Opec member countries over-reported reserves in the 1980s when competing for global market share.
posted by ZenMasterThis at 9:50 AM on March 23, 2010


but, but, my bottled water is SOO TASTY compared to the stuff around here!
posted by Kwine at 9:53 AM on March 23, 2010 [4 favorites]


Oh man looks like God answered the GOP's prayers. Now they have an issue to run on.
posted by graventy at 9:55 AM on March 23, 2010


The scientist and researchers from Oxford University claimed official figures are inflated because Opec member countries over-reported reserves in the 1980s when competing for global market share.

From Wikipedia:

OPEC had seen its share of the world market drop to less than a third in 1985, from nearly half during the 1970s. In Feb 1982, the Boston Globe reported that OPEC's production, which had previously peaked in 1977, was at its lowest level since 1969. Non-OPEC nations were at that time supplying most of the West's imports. OPEC's membership began to have divided opinions over what actions to take. In September 1985, Saudi Arabia tried to gain market share by increasing production, creating a "huge surplus that angered many of their colleagues in OPEC."

I don't understand why it would be beneficial for OPEC to over-report reserves to solve this problem. Anyone?
posted by sallybrown at 9:56 AM on March 23, 2010


what, you mean as an excuse to invade everyone with oil reserves so as to defend our 'national security'?
posted by dunkadunc at 9:56 AM on March 23, 2010


"Next gas station, 600 800 miles."
posted by swift at 9:57 AM on March 23, 2010 [1 favorite]


I really don't know, but I could find an equal number of authoritative articles saying we have plenty of oil for a long time to come. Even among big oil company CEOs, they come out publicly saying opposite things. It's a very difficult to get a hold on, and I've been following it for probably over 10 years. Surely Peak Oil will happen "some day", but how soon really is the big question. Too soon, or in time to replace with alternative power.
posted by stbalbach at 9:59 AM on March 23, 2010


I don't understand why it would be beneficial for OPEC to over-report reserves to solve this problem. Anyone?

Perhaps to discourage potential competition? Or alternative energy?
posted by hackly_fracture at 10:00 AM on March 23, 2010 [1 favorite]


This is not new. I seem to recall a documentary from the 1980s where this fellow named Max (he was angry I recall) had pitched battles with punk rock / pro-wrestlers over the few remaining fuel supplies.
posted by dances_with_sneetches at 10:01 AM on March 23, 2010 [25 favorites]


stbalbach: "Too soon, or in time to replace with alternative power."

There is no known energy source that will sustain the American Way of Motoring. A rational response to the situation would require a Manhattan Project-level commitment to mass transit and walkable communities.

Needless to say...
posted by Joe Beese at 10:03 AM on March 23, 2010 [3 favorites]


I think I'll stop putting off that bicycle tune-up.
posted by gurple at 10:05 AM on March 23, 2010 [5 favorites]


I don't understand why it would be beneficial for OPEC to over-report reserves to solve this problem. Anyone?

It wasn't in the arena of OPEC vs non-OPEC share where inflating oil reserves helped, but in gaining share with respect to other OPEC nations.

OPEC had some kind of a formula where each nation could produce an annual amount proportional to its proven reserves, leading to an arms race situation where each nation inflated its 'proven reserves' so as to be able to sell more oil that year and improve that year's balance sheet.

If every other OPEC nation were inflating their reserves by, say, two times then any country that refused to also inflate would, by OPEC's agreement among its member nationas, find itself able to sell only about half the oil they would if they gave the inflated number.

Thus, almost irresistible pressure to inflate those estimates as much as they thought they could get away with.
posted by flug at 10:05 AM on March 23, 2010 [10 favorites]


I seem to recall a documentary from the 1980s

I think I saw that one as well, as I recall, my takeaway was "Plan? There ain't no plan!".
posted by quin at 10:07 AM on March 23, 2010


OMG THE OIL PRICE MUST BE SKYROCKET OH UP 14 CENTS nevermind
posted by dw at 10:07 AM on March 23, 2010 [1 favorite]


dw, you must be a day trader.
posted by anthill at 10:09 AM on March 23, 2010 [5 favorites]


I'm not worried, my motorcycle runs off of Tennessee white lightning. Ok maybe I am a little worried.
posted by nola at 10:09 AM on March 23, 2010


I don't understand why it would be beneficial for OPEC to over-report reserves to solve this problem. Anyone?

OPEC sales quotas are based on reported reserves. The more you say you've got, the more you're allowed to sell.

I could find an equal number of authoritative articles saying we have plenty of oil for a long time to come. Even among big oil company CEOs, they come out publicly saying opposite things.

I'm sure you could come up with lots of citations, but I'd question the "authoritative" part. For an oil company CEO to admit to peak oil is basically to declare the industry a twilight industry. This is not terribly good for long-term investment, share-price stability or internal morale. If oil will be so prohibitively expensive within 20 years that you can't base an economy on it, there goes your central place and massive influence in that economy. If you're an oil co. executive, the status quo is the most profitable way forward. You have no interest in upsetting that balance. The fact that even some oil execs - and almost all of their senior geologists - will confess to the emerging reality of peak oil tells you just how compelling the case has become.

Anyway, by way of authoritative info, here's the chief economist of the IEA confessing to the fact of peak oil and placing the official estimate at 2020 under probing questioning by the Guardian's George Monbiot.

And here's a self-link to the most authoritative sources I could find on this as a journalist. Nothing quite like having the chief of exploration for one of Canada's largest fossil fuel cos. argue vehemently that 86-87 million barrels per day - the summer of 2008 production rate, at $150/barrel - was the most we'll ever see. (By the way, he was an anonymous source because his company does not want to be on record saying their industry's on the wane.)
posted by gompa at 10:11 AM on March 23, 2010 [14 favorites]


"Too soon, or in time to replace with alternative power."

That's sort of the the wrong question. It will be replaced with alternatives when it becomes expensive enough for other power sources to compete.

Now we could go ahead and increase taxes on fossil fuels now, to force the development of alternatives to happen while there's still oil to do it with. But of course we won't in any meaningful way. It won't make any difference in the long run, globally, but it will probably mean the US has a tough time of it in the short run.
posted by rusty at 10:13 AM on March 23, 2010 [1 favorite]


I hate these shitty press releases where the actual journal article isn't even freely available. And it has a really awful abstract, for that matter.

I'm also somewhat amazed they changed "by up to one third" to "by a third" in quotes.
posted by smackfu at 10:14 AM on March 23, 2010


There is no known energy source that will sustain the American Way of Motoring.

Well, there are no unknown energy sources, we know them all. It's a matter of harnessing existing energy sources. There is plenty of sunlight energy and/or nuclear energy to create liquid fuel in the form of hydrogen to power the world's vehicles. It's an engineering question. Not that those are the only "solutions" (they may not be), but it's not for lack of energy sources that the problem lies.
posted by stbalbach at 10:15 AM on March 23, 2010 [2 favorites]


Also, apparently one motivation for Saudi Arabia (in particular) to greatly increase their production in the 80s, was exactly that they were observing that increased oil prices after the oil crises, OPEC embargoes, etc, were causing a destruction of demand for oil.

So they greatly increased production to ensure that oil prices would stay low and oil would remain the dominant form of energy used, particularly for transportation.

(There is something as well to the theme the Saudis reiterate often, that both producers and users benefit from having a stable and predictable price for oil, and so Saudi Arabia since the early 1980s has acted to stabilize global oil supplies in order to stabilize global oil prices. One of the causes of oil spikes in the recent past, and likely in the future as well, if & when such spikes happen, is when we get into a situation where demand surges beyond Saudi Arabia's capacity to increase production and fill the gap.)
posted by flug at 10:15 AM on March 23, 2010


I myself am fairly skeptical of the notion that the earth and its contents are finite.
posted by shakespeherian at 10:18 AM on March 23, 2010 [9 favorites]


Related: Bumper stickers for both sides, from "I only burn fuel because burning hippies is illegal" to "Go around me, I'm hypermiling!"

Please note: the OPP article is only talking about conventional oil, which is estimated to be 30% of total oil reserves (the other oil resources require something other than simple drilling to obtain the resource). Unconventional sources become more appealing as the price of oil rises, and new technologies and methods may make extraction less costly to further move oil companies to other sources for oil.

In older news, Saudi Aramco chief executive Khalid Falih claimed peak oil hasn't come yet, and that the planet has been "endowed" with 4 trillion barrels of oil, and only 1 trillion has been produced (the article is unclear, but perhaps he is talking about unconventional sources).
posted by filthy light thief at 10:21 AM on March 23, 2010


I worry about Peak Vinegar.
posted by chronkite at 10:21 AM on March 23, 2010 [2 favorites]


If the EESU (from EESTOR) isn't vaporware, a properly-equipped car might travel about 500 miles on a single charge. The electricity would run the equivalent of about 45 cents per "gallon." Charging time, given the kinds of cables which could sustain the amperage, would be under five minutes. We need not wait for anything so extravagant. Any design good for about seventy miles per charge would win the hearts of many.

Backing up that electrical energy consumption is more complex. I suspect some folks would "bottom-up" design, by installing solar panels on their homes to charge up their vehicles. Others would rely on our electrical system, which would have to shift to nuclear. We'll have to start pumping out new nuclear power plants, whether they be old-school, tried-and-mostly-true designs using uranium or the new hotness, thorium, in any case. I suspect we'd see both approaches used.

Ultimately, this will probably be cheaper and more likely than trying to move everyone into cities dense enough for public transit to become efficient. Los Angeles sprawls like Stretch Armstrong. St. Louis has the population profile of a drunken cephalopod dropped from near-Earth orbit — there's definitely a relatively dense lump in the middle, but the splatter stretches for miles. It takes at least a generation to move cities around.

Granted, we ought to have been on this issue since the mid-seventies, at least. I don't think it's too late, but a significant fraction of the population of the planet with enough free time on their hands that they aren't just trying to find a way to feed their children and not get shot by other people will have to put down their war toys and postpone their ego-trips to Mars that they might devote what will be trillions of dollars and perhaps billions of person-hours to solving this.

Given human nature, however, I suspect I might be better served by buying seeds; reading Alas, Babylon for tips; and working on my Lord Humongous cosplay.
posted by adipocere at 10:21 AM on March 23, 2010 [4 favorites]


Here is the actual paper, and here is the Smith School's actual summary, in case anyone wants to read something other than an illiterate newswire hash.
posted by cromagnon at 10:22 AM on March 23, 2010 [1 favorite]


Well, there are no unknown energy sources, we know them all.

So far as we know. But you never know about the unknowns, do you?
posted by ZenMasterThis at 10:24 AM on March 23, 2010 [3 favorites]


There is no known energy source that will sustain the American Way of Motoring.

It's not an energy problem, it's a fuel problem.
posted by Mental Wimp at 10:24 AM on March 23, 2010


If you really had an accurate way to determine world oil reserves, one that included locations of untapped fields, and accounted for yet-to-be-created technologies that could unlock other sources of oil that are currently too expensive to be marketable, you'd be an instant kazillionaire.

Yet strangely, these guys are still working at Oxford. Hmm. Odd.
posted by Cool Papa Bell at 10:29 AM on March 23, 2010


stbalbach: Well, there are no unknown energy sources, we know them all.

zenmasterthis: So far as we know. But you never know about the unknowns, do you?


As we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns--the ones we don't know we don't know.
posted by headnsouth at 10:31 AM on March 23, 2010 [2 favorites]


adipocere: "St. Louis has the population profile of a drunken cephalopod dropped from near-Earth orbit — there's definitely a relatively dense lump in the middle, but the splatter stretches for miles. "

That is the funniest goddamn thing I've ever read.
posted by notsnot at 10:33 AM on March 23, 2010 [4 favorites]


shakespeherian: "I myself am fairly skeptical of the notion that the earth and its contents are finite."

Huh? Is there some magic resource generator that I don't know about?
posted by octothorpe at 10:34 AM on March 23, 2010 [1 favorite]


Time for another Yellowstone Caldera Armageddon post!
posted by sararah at 10:35 AM on March 23, 2010 [1 favorite]


Can't someone find a way to harness our collective fatness? We could slim down, power our cars, and continue to eat Doritos. The American Dream.
posted by sallybrown at 10:39 AM on March 23, 2010 [2 favorites]


Huh? Is there some magic resource generator that I don't know about?

We will never reach peak hamburger.
posted by shakespeherian at 10:40 AM on March 23, 2010 [3 favorites]


There is no known energy source that will sustain the American Way of Motoring.

It's not an energy problem, it's a fuel problem.


It's not a fuel problem, it's a carbon-based oxidational chemical reaction problem.

no idea what I'm talking about.
posted by nola at 10:40 AM on March 23, 2010


Don't worry, Exxon Mobil is hard at work on some Jurassic Park style voodoo to replenish the carbon fuels. Oil for everyone! (Warning: Some statements may be forward looking.)
posted by haveanicesummer at 10:41 AM on March 23, 2010


If you really had an accurate way to determine world oil reserves, one that included locations of untapped fields, and accounted for yet-to-be-created technologies that could unlock other sources of oil that are currently too expensive to be marketable, you'd be an instant kazillionaire.

Yet strangely, these guys are still working at Oxford. Hmm. Odd.


You make a good point. On the other hand, math.
posted by shakespeherian at 10:41 AM on March 23, 2010 [1 favorite]


You make a good point. On the other hand, math.
posted by shakespeherian


Oxford? I think you mean maths.
posted by haveanicesummer at 10:42 AM on March 23, 2010 [4 favorites]


I'm piqued.
posted by dhartung at 10:44 AM on March 23, 2010 [1 favorite]


I worry about Peak Vinegar.

I thought we hit Peak Wingnut this weekend, but apparently not.
posted by octobersurprise at 10:48 AM on March 23, 2010 [2 favorites]


By the time the oil runs out everyone will be walking anyway because we won't have a dime to pay for it.
posted by digsrus at 10:54 AM on March 23, 2010


I myself am fairly skeptical of the notion that the earth and its contents are finite.

what
posted by Kadin2048 at 10:56 AM on March 23, 2010


I myself am fairly skeptical of the notion that the earth and its contents are finite.

what
posted by Kadin2048


shakespeherian was referring to the imminent invention of the perpetual sarcasm machine.
posted by haveanicesummer at 10:59 AM on March 23, 2010 [5 favorites]


This will be treated with the same skepticism and ridicule as climate change by conservatives.
posted by Daddy-O at 11:00 AM on March 23, 2010


This kind of thing makes me wonder if I should just drop out of school and start raising rabbits and making my own booze. You know. Just in case.
posted by showbiz_liz at 11:08 AM on March 23, 2010 [1 favorite]


I worry about Peak Vinegar.

If Endless Ocean 2 is any indication, we can always break into the strategic reserve of vinegar that's been at the bottom of the ocean for hundreds of years. As a bonus, there's also lots and lots of soy sauce down there. Delicious!
posted by Copronymus at 11:10 AM on March 23, 2010



I myself am fairly skeptical of the notion that the earth and its contents are finite.

what
posted by Kadin2048 at 1:56 PM on March 23


Well, I think that person was being sarcastic. But there is some truth to the concept: all the gold on earth, including the gold in whatever jewelry you are wearing, came from the core of a neutron start that exploded long before the sun ever formed.

More relevantly, most of the energy on earth, including all of the energy stored as oil, actually came from the sun.
posted by Pastabagel at 11:10 AM on March 23, 2010


It will be replaced with alternatives when it becomes expensive enough for other power sources to compete.

Replaced to whatever level the alternatives can support.

For example, taking the bus wins over walking, but it has enough differences that it's not an exact "replacement" for a society built on every family owning one or more cars. A bigger question, is how does this affect food transport? Economy? What's life like when imports and exports are slowed/restricted due to our fuel supplies or options?

"Too soon" is this: can we adapt in time to meet the new restrictions, or will it be an ugly, ugly trip there?

I hate the false hope that "people will find a way" as if the alternatives don't involve serious changes or costs along the way... and that we can just cruise along and expect it all to work out.
posted by yeloson at 11:14 AM on March 23, 2010 [2 favorites]


Seems like there sure is a lot of coal around. Coal can be turned into petrol, donchaknow?

Some friends are working on a saner alternative, though.
posted by poe at 11:16 AM on March 23, 2010


This kind of thing makes me wonder if I should just drop out of school and start raising rabbits and making my own booze. You know. Just in case.

Speaking as someone with experience in this, it takes a lot of patience. No amount of carrot schnapps will get your bunnies to pull the wagon more than 25 mph.
posted by robocop is bleeding at 11:16 AM on March 23, 2010 [9 favorites]


On the other hand, math.

What other hand? I said if they really have solved a colossal math(s) problem, they'd have something far more significant on their hands besides "oh noes OPEC is lying we're all doomed." But they don't, so they don't.

I've said it before ... 20 years ago for a college physics course I had to outline and discuss alternate forms of energy because the professor in question knew -- KNEW -- we'd be flat out of oil in 20 years. He did the math(s), too.

I just drove to work this morning, powered by gasoline that is not really terribly more expensive than it was 20 years ago. Not even a single order of magnitude more. Amazing how wrong he was.

Oil is running out. CO2 levels are rising. We're not doomed.

Polar bears are fucked, though. I'd buy an electric car tomorrow if I could.
posted by Cool Papa Bell at 11:17 AM on March 23, 2010 [1 favorite]


Bear in mind that even if we completely stop burning fossil fuels (either because they are too expensive or out of concern for greenhouse gas emissions) we will still need oil for the petrochemical industry. At this point in our cultural evolution, it would be harder to give up plastic than it would be to give up internal combustion engines. However, the petrochemical industry can also switch to biologically derived oil, just as cars can also run on bio-fuel, so in the end, even if all the petroleum is used up, there are other sources of oil. I am actually more concerned about what will happen to the atmosphere of the planet Earth if we do manage to burn every last bit of fossil fuel.

I also thought it was very odd that the linked article claims that the Canadian tar sands may never be economically attractive - even while predicting rising oil prices. The tar sands are already a multi-billion dollar industry in Alberta, and tar sands can only get more economically attractive as other oil reserves are depleted - although, of course, they are also environmentally unattractive. But I don't think that's going to stop anyone from exploiting them.
posted by grizzled at 11:19 AM on March 23, 2010


yeloson: I hate the false hope that "people will find a way" as if the alternatives don't involve serious changes or costs along the way... and that we can just cruise along and expect it all to work out.

In my fairly offhand phrase "the US will have a tough time of it in the short run" I was including the possibilty of things like massive food riots and a lot of internal refugees from densely-populated places like Phoenix and L.A. that will no longer have enough food or water to sustain their populations.

"People will find a way" is probably true, but that way is increasingly likely to hurt some of us a lot.
posted by rusty at 11:28 AM on March 23, 2010


grizzled: If conventional oil gets expensive enough for alternatives to be economically viable, tar sands have no particular advantage over things like solar, geothermal, tidal, wind, nuclear, etc etc. They're not just competing with oil, they're competing with everything. And they have a lot of pretty severe drawbacks (enviromental devastation in both the mining and burning, for example).
posted by rusty at 11:31 AM on March 23, 2010


I think this is probably the defining challenge of the 2000s. How societies deal with the loss of fossil fuels will determine what they're like in a hundred years' time. There will be different responses, some obviously stupid (such as ignoring it), others with unintended costs (back to the country), and hopefully many quite smart which allow things to continue as close to possible as before (reductions and renewables).

I personally think cars are doomed for general use. The need to find other sources of energy for everything but transportation will make the energy use in cars seem very profligate. When presented with how to use a much smaller amount of energy per person, few will choose to waste it on a car. The exception, of course, is highly unequal societies, where car use for some can continue to combine with energy poverty for many.
posted by Sova at 11:31 AM on March 23, 2010


I've got 300 barrels of oil in my basement, my leather outfit is oiled, and my motorcycle is tripped out and ready to go. I am going to be the freaking KING of my little 20-block fiefdom.

PS: There are several good hair salons in my future sphere of control, so I'll have the futuristic spiky hairdo covered when the time comes.
posted by Salvor Hardin at 11:36 AM on March 23, 2010 [3 favorites]


Oh, and I'm currently taking applications for positions in my posse, like ugly smart guy who invents diabolical junkyard things for me, and several slots for beefy henchmen.
posted by Salvor Hardin at 11:37 AM on March 23, 2010 [3 favorites]


In the short term, the amount of oil reserves isn't even the greatest risk to energy security. The greatest risk is economic recovery and cash liquidity. As the economy picks up steam consumption will drive energy prices higher, as will speculation. The crazy days of $150/barrel of oil are maybe a year away, and this is just as disruptive as peak oil.
posted by KokuRyu at 11:38 AM on March 23, 2010 [1 favorite]


"If the EESU (from EESTOR) isn't vaporware, a properly-equipped car might travel about 500 miles on a single charge. The electricity would run the equivalent of about 45 cents per 'gallon.'"

It's looking about as likely as a retail release of DukeNukem.

"If you really had an accurate way to determine world oil reserves, one that included locations of untapped fields, and accounted for yet-to-be-created technologies that could unlock other sources of oil that are currently too expensive to be marketable, you'd be an instant kazillionaire." "Yet strangely, these guys are still working at Oxford. Hmm. Odd."

Money is not the be all end all motivator to all people. And a 1/3rd isn't all that precise of a number. Does it really matter if the actual over report is a 1/6 or a 1/2?
posted by Mitheral at 11:39 AM on March 23, 2010


Future AskMe: I'm thinking of starting a whale farm in response to the worldwide lack of oil, but I don't live on a coast. In ground pool or above ground?
posted by haveanicesummer at 11:39 AM on March 23, 2010


Interesting BBC program IF The Oil Runs Out. Exploring possible consequences dramatically (takes place in 2016), interspersed with interviews of experts familiar with the issues.
posted by Pirate-Bartender-Zombie-Monkey at 11:41 AM on March 23, 2010 [3 favorites]


What other hand? I said if they really have solved a colossal math(s) problem, they'd have something far more significant on their hands besides "oh noes OPEC is lying we're all doomed." But they don't, so they don't.

Wowee, Prof Autodidact, you'd really have a point if the science of estimating proven oil reserves and the science of discovering new sources used the same maths, the same equipment and the same general scientific disciplines. As it is, very few research chemists like Sir David King spend much of their time gathering and analyzing seismic data using advanced GIS systems, and the specific question of proven reserves is mainly a statistical analysis problem. So, you know, on the other hand.

In any case, having talked to a good many geologists tasked with the latter job, I can tell you that when they look beyond their little corner of the fossil fuel world, they notice how much money and research is being poured into the Athabasca Tar Sands and deepwater pockets far off the coast of Brazil, and they reckon if there were any better source for the stuff, Exxon et al. wouldn't be messing around with bitumen and 30,000-foot open-ocean drilling.

But hey, you met a physics prof who was a bit of a flake, so maybe there's nothing to this.
posted by gompa at 11:46 AM on March 23, 2010 [7 favorites]


adipocere: If the EESU (from EESTOR) isn't vaporware, a properly-equipped car might travel about 500 miles on a single charge. The electricity would run the equivalent of about 45 cents per "gallon."
When I hear these sorts of projections, I think of The Jevons Paradox, and I wonder just how big SUVs will get if it turns out middle-class Americans can afford to fuel them.

Although on the other hand, if practical, affordable electric vehicles made any sort of headway in the market, I expect the price of electricity would skyrocket, which would tend to keep a lid on things.
posted by Western Infidels at 12:00 PM on March 23, 2010


1) Keep in mind this is about reserves (that can be extracted at about present costs), rather than resources (total amount of oil in the ground); kneejerk in the appropriate direction.

2) or an oil company CEO to admit to peak oil is basically to declare the industry a twilight industry

I don't follow this stuff closely enough anymore to know what CEOs are going to say about the issue these days, but you (all) should know that what we think of as "oil companies" generally position themselves as "energy companies." That 90% of that revenue may be oil is undeniable, but their mission is specifically written with the aim of controlling alternatives to fossil fuels. Whether that control means earning money off of them or buying up the patents and sitting on them is going to depend on how profitable it is to bring up remaining oil reserves.
posted by whatzit at 12:01 PM on March 23, 2010 [1 favorite]


Please have a list of all unknown energy sources on my desk by 4pm. We'll solve this crisis!
posted by blue_beetle at 12:03 PM on March 23, 2010


dw, you must be a day trader.

No, I'm saying that the oil traders already know this and have it priced in. There are Peak Oil deniers among traders, but most understand the problem and what the supply projections look like.

I really wish the OH NOES PEAK OIL stuff would stop. People have been screaming it pretty much since the first well was sunk, and it just hasn't happened, because every time the price spikes a) people drive less and b) it opens up another couple billion barrels that would have been too expensive to extract at the previous price. And the screaming just makes everyone think the Peak Oil sorts are crying wolf.

But the price of oil is surprisingly easy to game. Just review the run-up to $140/barrel in 2008 -- mostly driven by speculators, not by a real shortage in oil. And yet just the talk of a 10% drop in demand caused the price to plummet, which was driven on as the speculators dumped their oil back on the market. Thing is, the price of oil has zero to do with supply. Anyone who grew up in Oil Country can tell you that. Oklahoma, Texas, Louisiana are all places where Boom And Bust has been the name of the game.

I do think at some point we will hit Peak Oil in the next 50 years. Will we find something to replace it with? Will we finally be able to pry the sugars out of switchgrass to make ethanol without cannibalizing our food supplies? Will be able to make coal into a clean fuel? Will we all be living in some hell of James Kuntsler's masturbatory dreams or will it be more of the utopia the optimists keep hoping for?

I don't know. I just know that like climate change and daily temperature, the price of oil today has no relevance to whether we're facing Peak Oil tomorrow or 100 years from now. It just doesn't. It's just an indicator of what people are willing to pay today. And I feel the same about profs with math papers about Peak Oil -- they are only one piece of a big information puzzle that won't be solved until we've passed through Peak Oil. Who thought 20 years ago that North Dakota would today be the second leading producer of oil in the US? Who thought 20 years ago that China would be the world's #2 consumer of oil?
posted by dw at 12:08 PM on March 23, 2010 [4 favorites]


or an oil company CEO to admit to peak oil is basically to declare the industry a twilight industry

So as to promote the newest and greenest alternative energies, being on the front edge of a wave of CEOs saying oil is done is forward thinking and probably good for long-term profits.
posted by Blazecock Pileon at 12:11 PM on March 23, 2010


I worry about Peak Vinegar.

I'm more worried about Peak Vinegar Strokes.
posted by Pope Guilty at 12:21 PM on March 23, 2010


Notes toward the impending Grim Meathook Future(TM Warren Ellis):

1) Refresh knowledge of basic bicycle repair.

2) Hoard replacement parts for bicycle, esp. tires, grease.

3) Buy crossbow, bolts, spare strings, other accessories (bicycle handlebar mount?).

4) Practice target shooting xbow w/out shooting self; use various target silhouettes. Also, practice whittling bolts out of wood, bone. (Replacement string from sinew? Will need tendons from large species...)

5) Learn to track, kill, clean deer, tan hide w/brains, preserve meat. Also identify wild herbs & edible fungi.

6) Study comparative anatomy in case secondary food supply necessary (Silence of the Lambs accurate reference?)

7) Look at places in the country.
posted by Halloween Jack at 12:33 PM on March 23, 2010 [1 favorite]


I've said it before ... 20 years ago for a college physics course I had to outline and discuss alternate forms of energy because the professor in question knew -- KNEW -- we'd be flat out of oil in 20 years. He did the math(s), too.

Your professor didn't know what he was talking about. I don't just mean he was wrong by our standards today, he was wrong by what people who knew what they were talking about knew back then. As said above, he was a flake and did not understand what he was talking about. One misunderstanding by a college physics professor you had once does not invalidate the whole concept.

No, I'm saying that the oil traders already know this and have it priced in.

I am really, really, really not sure of this. I hear it all the time, but I don't see how it can possibly be true, because there is so much that no one knows. No one knows what the full impact of any of the decline scenarios that have been proposed would be. People talk about "Peak Oil" like it represents one possible outcome, but there are many possibilities. No one knows, really, how big the reserves are. Lots of them are in hands that are not interested in transparency. No one knows what the eventual decline rate is going to be, globally, and if net exports will affect this, and if so how much. I looked at futures prices a couple of years ago, and they were basically flat out 8 years in the future. Look at them right now. $81.91 for May 2010 delivery, $90.58 for Dec 2018 delivery. That's not even keeping up with inflation. The traders are betting that the real price of oil will decline in that period? I just don't think the information is out there for the price to be an accurate reflection of supply. In fact, you don't seem to believe this yourself, since you later on say, "Thing is, the price of oil has zero to do with supply." I'm not sure what you're getting at with this contradiction.
posted by adamdschneider at 12:39 PM on March 23, 2010 [2 favorites]


There is no known energy source that will sustain the American Way of Motoring.

Apparently the US is not number one per capita. (Canada I get, but Luxembourg?)
posted by IndigoJones at 12:43 PM on March 23, 2010


More relevantly, most of the energy on earth, including all of the energy stored as oil, actually came from the sun.

Well sure, but it became useful energy in the form of oil in a process that takes a very long time, meaning that it can still be depleted. I guess my question for people who don't believe in Peak Oil is: I mean, you know what 'run out' means, right?
posted by shakespeherian at 12:47 PM on March 23, 2010 [1 favorite]


We do however have lots of coal and natural gas.
posted by beepbeepboopboop at 12:58 PM on March 23, 2010


Peak Oil is: I mean, you know what 'run out' means, right?
posted by shakespeherian at 3:47 PM on March 23


Peak Oil does not mean we will run out of oil, it means it takes a barrel of oil worth of energy, chemicals, etc. to extract another barrel from the ground. At that point, extraction stops--leaving oil still in the ground.
posted by Pastabagel at 1:02 PM on March 23, 2010 [1 favorite]


It feels like we wasted a 30 year reprieve- even if some magic free energy solution was found today or even if peak oil is 20 years off, how many years would it take to scale/ramp up new technologies and new power plants enough to meet demand previously met by oil? But yeah, there's always coal...

In other news, Bill Gates is investing in nuclear power tech...
posted by Esteemed Offendi at 1:06 PM on March 23, 2010


We do however have lots of coal and natural gas.

I hope that was irony. I attended a talk about how the US could shift to natural gas instead of oil for transportation, and the guy just failed to recognize that you'ld only buy yourselves another couple of decades at most. Coal would last longer, but if use was increased, it could still peak relatively soon. There's really no way round the loss of fossil fuels.
posted by Sova at 1:08 PM on March 23, 2010 [1 favorite]


(Canada I get, but Luxembourg?)

Luxembourg always pops up on these tables for energy and oil use and carbon output. The population of Luxemburg roughly doubles during the day with workers commuting from outside the country. Those people use energy and fuel oil while they are there but do not count towards the national population, in effect driving up the average when they divide total oil or energy use by resident population.
posted by biffa at 1:10 PM on March 23, 2010 [2 favorites]


Peak Oil does not mean we will run out of oil, it means it takes a barrel of oil worth of energy, chemicals, etc. to extract another barrel from the ground. At that point, extraction stops--leaving oil still in the ground.

Yes but my point is that thinking there's no such thing as Peak Oil is the same thing as thinking the Earth is bottomless.
posted by shakespeherian at 1:11 PM on March 23, 2010


To those of you who are wondering whether Canada's oilsands are economically viable yet... guess what single nation currently supplies THE MOST oil to the U.S.? (Hint: maple leaf, hockey, Mounties, Tim Hortons)

Yup, us Canadians are leaving no forested Alberta hill unturned in our earnest efforts to turn that sandy gooey shit into oil and pump it south just as fast as we possibly can.

At this point in our cultural evolution, it would be harder to give up plastic than it would be to give up internal combustion engines.

Hush. That's tomorrow's problem. Hey just roll up the windows, crank up the A/C and push that accelerator down another 10 mph. Mmmmmmm, nice, huh?

We're gonna keep turning northern Alberta into luvly cheap oil, so that those nasty gas pumps won't take any more of your hard-earned pay. You didn't cause the problem, it's not your fault. SUVs ARE safer. Global warming's a crock too.

That's it... relax. Is that a smile? Are u smiling?

Everything's gonna be all right.
posted by Artful Codger at 1:13 PM on March 23, 2010 [3 favorites]


Try this test - do a Google search for 'After 2015, easily accessible supplies of oil and gas probably will no longer keep up with demand'. You will discover that it is a quote from the Chairman of Royal Dutch Shell in Feb 2008 which was widely reported around the web at the time.

Strangely the quote from his annual report has now been removed from the Shell site, and even from the Google cache.

This blog page has a fairly comprehensive and incisive overview of the whole situation if you're interested.
posted by Duug at 1:17 PM on March 23, 2010 [2 favorites]


grizzled: I also thought it was very odd that the linked article claims that the Canadian tar sands may never be economically attractive - even while predicting rising oil prices. The tar sands are already a multi-billion dollar industry in Alberta, and tar sands can only get more economically attractive as other oil reserves are depleted...
rusty is right, but there's another aspect as well: The tar sands mining operations in particular involve burning quite a lot of oil; so their costs rise with the price of oil.

And there's also the idea that oil can't stay expensive enough to make alternative production techniques (like tar sands) profitable for long, because punishingly high prices do curtail demand at some point.

You can see all of those objections as part of a larger pattern of oversimplification in relation to many proposed harebrained cutting edge / near future oil production techniques: there is an assumption that (insert expensive super-duper oil recovery system here) can happen in a magic bubble where the price of oil goes up (and stays up) but nothing else changes much.
posted by Western Infidels at 1:25 PM on March 23, 2010 [1 favorite]


Its all irrelevant if we have reached Tipping Point.
posted by adamvasco at 1:29 PM on March 23, 2010


Peak Oil does not mean we will run out of oil, it means it takes a barrel of oil worth of energy, chemicals, etc. to extract another barrel from the ground.

No, that's 1:1 EROEI (Energy Return on Energy Invested). Peak Oil is the point of maximum extraction rate.
posted by adamdschneider at 1:36 PM on March 23, 2010 [1 favorite]


There is a reason why people will still want gasoline even if they have windmills and solar power etc., which is that there is a gigantic, multi-trillion dollar investment in internal combusion engines that run on gasoline rather than electricity that can be generated by other means - however, that can change, and it is beginning to change as new kinds of cars are being manufactured and sold (although the favorite model, the hybrid, still uses gasoline along with electricity). However it is still not true, even if electric cars completely replace internal combustion engines, that tar sands have no advantage over wind mills etc. That advantage, as I pointed out in my previous comment, is that oil is also used in the petrochemical industry as well as being an energy source. You can't use wind to make plastic. You need oil. As for the rising cost of oil making it more expensive to produce oil from the tar sands, obviously the industry produces more oil than it consumes, otherwise it would never be possible to operate it at a profit no matter what the price of oil is. And if it is profitable at current prices it will be more profitable at higher prices.
posted by grizzled at 1:39 PM on March 23, 2010 [1 favorite]


but, but, my bottled water is SOO TASTY compared to the stuff around here!

What does that have to do with anything? It's better to sequester that oil in plastic then burn it for energy, releasing CO2
posted by delmoi at 1:43 PM on March 23, 2010


The bottled water is also an energy burner, as it has to be shipped by truck to the supermarket (and around the world if you drink Fiji), instead of being pipelined to you. So, you're using up oil in a few ways, and definitely contributing to global warming.
posted by mccarty.tim at 1:48 PM on March 23, 2010


Let me quote myself here from the ASPO VII Conference dossier (PDF file, 3,7MB):
Peak Oil does not mean that we are going to run out of oil soon. Peak Oil is not about the size of the reserves, Peak Oil is about oil flows. What we are running out is the capacity to reemplace the oil flows that we lost each year due to depletion of older oil wells. 20% of the oil we consume today comes from fields more than 40 years old. Also the size of oil fields is diminishing, the giant old fields are getting older and we need to develop a greater number of oil wells to compensate. New technology can ameliorate a little bit this tendence, but can not reverse it. The North Sea and Texas are proof that new technology and investment can not create new reserves, they just get the oil faster from the ground.

This ageing of the global oil fields makes harder and harder not just to grow the production flow, but to stand still: every year, two thirds of new oil supply goes to compensate for the depletion of old fields. Also, the size of oil discoveries started a downward trend in the sixties. Recent discoveries such in deepwater areas in the Gulf of Mexico and Brazil are indeed big, but they are not going to change the picture drastically. In fact, discoveries are falling short of what was expected. The US Geological Survey expected 939 billion barrles of oil discoveries between 1996 and 2030, but by the beginning of 2006, just 131 billion oil barrels were discovered. Furthermore, most of the most promising prospects for the oil industry are located in difficult locations, be it for being technically challenging, be it for political inestability or lack of access.

What is often called “surface issues” (lack of access because of various factors such geopolitics or legal issues) is playing a part, but again, the fundamentals of this situation are geologic. If we could keep developing 1 mbd onshore oil fields, we will not talk about drilling ultra deep wells or developing unconventional hydrocarbons. The domestic situation at the main producing and exporting countries is also important: oil prices for the domestic markets are often regulated and even imports of distillated products are subsidized. In turn, huge revenues from the sell of oil induce new economic activity, which increases domestic consumption, thus reducing oil export capacity.

Oil sands, oil shales and heavy oils such those in the Orinoco Belt amount to huge volumes. But again, flows is what it is all about. Scaling unconventional oil production to compensate for the decline of conventional crude oil is going to be impossible. Oil sands and oil shale resources, although enourmous in volume, will hit all kind of limits: water, natural gas for the upgrade and steam generation, environmental regulations, etc.
posted by samelborp at 1:50 PM on March 23, 2010 [3 favorites]


I myself am fairly skeptical of the notion that the earth and its contents are finite.

Yea, I mean, we started with one, and now there are like seven of them, plus a bunch of islands and shit.
posted by clearly at 2:05 PM on March 23, 2010 [2 favorites]


OMG THE OIL PRICE MUST BE SKYROCKET OH UP 14 CENTS nevermind
Any energy trader who knows anything will know most of this stuff already. Everyone knows they are over counting. What this guy is saying is common knowledge. And it's just one more data point.

And if we're going to go by market reaction, there was a huge jump in the share price of solar energy companies solar energy companies today Since correlation = causation and all. Must be due to the report!

But the problem with figuring out pricing in the long term is that we don't know how people will react. If everyone switches to alternative energy: builds wind, solar and Nuclear a new grid, hydrogen cars, etc, then the price of oil will crash.

Global warming, even without peak oil provides a motivation to do that anyway. So the price of oil could be far less in the end.
Oil is running out. CO2 levels are rising. We're not doomed.
This is an important point. The sooner oil runs out, the less of a problem global warming will be! So we should all be hoping it cuts out as soon as possible. (And hope we don't all switch to coal!)

---

Also, and someone what annoyingly, some people seem to think that peak oil means oil production is just going to STOP and then no more oil. That's not how it will work at all. Instead what happens is that oil production just starts to decline over time, and the ratio of oil prices to oil demand starts to slowly go up (It doesn't even mean oil prices go up that much, just that people will start to use other sources of energy when they become price competitive)

In fact, when you look at oil discovery global oil reserves peaked in 1960. Every year we discover less oil then we use, and that's been the case for a long time.
posted by delmoi at 2:05 PM on March 23, 2010


I started riding my bike to work a couple months before Atlanta had it's big gas scare. It was nice to leisurely ride my bike past mile long lines of cars waiting for gas pumps.

Start now, that way you've got all the gear before gas prices go up, and everyone wants a bike.
posted by toekneebullard at 2:25 PM on March 23, 2010


Even if reserves are marginally higher than estimated, it's hard for me to see how demand from Asian and maybe even African industrialization isn't going to cause price spikes and possibly even shortages over the next decade or so.
posted by weston at 2:47 PM on March 23, 2010


So as to promote the newest and greenest alternative energies, being on the front edge of a wave of CEOs saying oil is done is forward thinking and probably good for long-term profits.

It might well be, but when BP and Shell (among others) tried to make clean energy a major pillar of their R&D and brand image, their share prices took such a mighty thumping that they backed away hard and now mumble vagaries about being in the generic energy biz.

Big shareholders, interested primarily if not exclusively in quarterly earnings statements, tell them: Hey, look at Exxon's profit margins, even as they do nothing but actively deny the existence of a problem. You were built to find and refine oil, so do that. Let some Silicon Valley nutjobs invest in perpetual motion machines, and if one of 'em manages to build one that works, we'll buy 'em outright in Q4-2019. Meantime, stick to yer knitting - er, drilling.

(By the way, my source for this - though I'm paraphrasing heavily and it was an off-the-record informal chat at a conference - is a former chief geologist from Royal Dutch/Shell.)
posted by gompa at 3:52 PM on March 23, 2010 [2 favorites]


When I hear these sorts of projections, I think of The Jevons Paradox, and I wonder just how big SUVs will get if it turns out middle-class Americans can afford to fuel them.

They can be gigantic, as big as you want, as long as they are made out of Nerf.
posted by krinklyfig at 4:08 PM on March 23, 2010


It might well be, but when BP and Shell (among others) tried to make clean energy a major pillar of their R&D and brand image, their share prices took such a mighty thumping that they backed away hard and now mumble vagaries about being in the generic energy biz.

Right. But before the combustion engine, oil was very cheap and wasn't really considered a valuable resource - more of a natural pollutant when people came across it. All I'm saying is that things change. At some point we will start favoring other methods and fuels, and the money will follow, but nobody wants to stick their neck out while there's uncertainty. It also appears that there will be no better investment in terms of profitability than oil (also in terms of energy input-output ratios), at least not that anyone can forecast, so the status quo is preferable to those who profit from it at the moment.
posted by krinklyfig at 4:14 PM on March 23, 2010


This is an important point. The sooner oil runs out, the less of a problem global warming will be! So we should all be hoping it cuts out as soon as possible. (And hope we don't all switch to coal!)

Yeah, that is a problem, but the industry looks favored right now, mostly because it's so cheap compared to other alternatives (and we're already using a lot of it for electricity anyway). Coal is a lot worse in many ways, and "clean coal" is a joke, but they've even got Obama pushing it.
posted by krinklyfig at 4:20 PM on March 23, 2010


I hope that was irony. I attended a talk about how the US could shift to natural gas instead of oil for transportation, and the guy just failed to recognize that you'ld only buy yourselves another couple of decades at most. Coal would last longer, but if use was increased, it could still peak relatively soon. There's really no way round the loss of fossil fuels.

I believe the smart way to think about natural gas is as a transition fuel, with the cars being electric and new electric plants being natural gas until we can get enough nuclear going. Using it directly as a fuel in cars is not going to be as easy, and it won't last long enough as a permanent solution. But this is not unknown to people in the industry. The real problem is that investment money will follow but not lead. We do need a government-backed project, but then again the highway system was a massive government project that strongly established the use of oil in our economy, not to mention the trade agreements and wars we deal with over it.
posted by krinklyfig at 4:25 PM on March 23, 2010


Considering that the original peak oil model predicted that world oil production would flatten out sometime around now, and the fact that oil production has been pretty darn flat (hovering between 73 and 75 mbd) for the last 4 or 5 years, you think that the general populace who seem to mistake snow for a lack of global warming and readily attribute any sort of slightly unusual weather to climate change would be freaking the hell out right about now...
posted by Zalzidrax at 4:31 PM on March 23, 2010


ZenMasterThis: "Well, there are no unknown energy sources, we know them all.

So far as we know. But you never know about the unknowns, do you?
"

Sorry didn't mean to sound so absolute, but for all practical purposes the basic forces are known: nuclear, solar, fossil, wind, geothermal - it's highly unlikely we will discover a basic new source of energy. Except for Dark Energy, which accounts for 74% of the total mass-energy of the universe, but that's negligible.
posted by stbalbach at 4:49 PM on March 23, 2010


As usual, I come late to this thread -- a subject near and dear to my heart, and as usual, the thread is littered with confusion.

Gompa:

I love you man. I favorite your posts left and right, and I know you've been pretty seriously covering this file for a while now. But, I have to say, I was hoping for more out of your Walrus article. For one thing, balance. Did you talk to Yergin at CERA? Adelman at MIT? Smil at Manitoba (possibly the most prolific and wide ranging researcher and writer on the world's energy systems)? Campell and Laherrere's 1998 Sci. Am. article really got me thinking some twelve years ago, and while there's something compelling about the narrative of industry-geologist-who-can-now-speak-the-truth-upon-retirement, but leaning too strong on that sort of thing is a kind of appeal to authority.

I also respectfully disagree with you about the "inside take". My experience is that the mood at oil companies, is overwhelmingly sanguine from wellsite geologist to CEO. They might be horribly misled and mistaken, but the general consensus that I can gather is that what impresses most explorationists and reservoir engineers is how estimates of recovery and reserves almost invariably turn out to be drastically underestimated, and how changes in technology not only transform resource to reserve, but create new resources entirely. Of the major CEOs, Christophe de Margerie (Total) comes closest to pessimism about global production capacity. Apparently, their analysis is that production could hit an "undulating plateau" of 90 - 100 million barrels a day (I have to say, I like the landscape metaphors -- peaks, plateaus -- a bit better than the alphabetical ones -- L vs. W shaped recessions).

Confusion about what "Peak Oil" means.

Adamschneider has it right. Its not when we run out, it isn't when the energy cost of extraction equals the yield. Its the rate of maximum extraction. Importantly, peak oil might come about because we simply can't produce more, but it might also occur because we simply don't consume as much. Lest you think this is unrealistic, most analysts concur that the OECD demand for oil has more or less peaked, and future increase in demand will have to come from the rest of the world, mostly BRIC nations. Also worth thinking about: we've already had two major transitions in our energy systems. We largely replaced biomass by coal and then largely replaced coal with oil. Each time, the transition occurred because the replacement was better (where "better" could mean cheaper, but also could mean cleaner, or more suited to the new kinds of energy demands -- coal simply wasn't a good automotive fuel, Fisher-Tropff and the Stanley Steamer notwithstanding).

I would be absolutely chuffed if we hit Peak (Demand for) Oil in 2014, because of the absolute lack of effective action on the climate change file. But that's not what these folks claim in their analysis. Their claim is stronger, that we'll hit Peak (Supply of) Oil in 2014. That would lead to a tremendous amount of economic dislocation and hardship, no doubt.

However, I find it hard to square with the amount of spare capacity in the world today. In the last two years Saudi Arabia has idled as much production as ExxonMobil's total yearly production (which of course, says something about the relative size and clout of Saudi Aramco and Exxon). In Iraq all the supermajors and NOIs lined up at the trough to sign marginally economic contracts to boost production by millions of barrels a day (of course, who knows whether these targets will get made. If they don't it won't be for geological or engineering reasons, though).

But the biggest question mark looming over the Peak Oil story is how technology and investment essentially "create" new reserves. The Athabasca oil sands is a well-known story. Shale gas is probably a bigger game-changer. Five years ago, most analyses (US EIA, BP Statistical Review, IEA, Colorado School of Mines, etc) had the US with relatively small and declining natural gas reserves and production. LNG terminals were built to import gas from overseas. These same terminals are now likely to be re-purposed for export and people are talking about 80 - 120 years of supply.

Other game changers: 3D seismic -- which revived old basins and created oil provinces where earlier assessments completely ruled it out. Horizontal drilling and multi-frac completions are adding literally billions of barrels in the Alberta basin, which has been pronounced as being in terminal decline more than a couple of times in the last few decades.

So tl;dr and all that. Sorry. But that FPP didn't impress me that much (one link? to a news release? no supporting material? what about the dozens of FPPs on this over the years?), and I think that the story is far more complicated and uncertain than has been treated in the thread.

Do I believe in Peak Oil? Absolutely. We'll transition to something else either because of supply constraints, necessity of external costs (esp. climate change), or because the replacement will drive us away from oil. Will it happen in the next four years? I would bet against it. Will it happen in the next fifty years? Probably. Will it be accompanied by hardship and dislocation or will this be a largely positive transition? I have no idea. All I know is that it will be extremely interesting to witness.
posted by bumpkin at 4:50 PM on March 23, 2010 [9 favorites]


It's not just cars. Our ability to produce and distribute food is almost wholly dependent on fossil fuels.

And it's not like we can switch to agriculture without fossil fuels in one season (scroll down to "Meeting the Beeltes"). Without petrochemicals, much of what we call "farmland" is now just a hyper-salinated dirt that won't grow anything "organically" if we wanted to.
posted by Pirate-Bartender-Zombie-Monkey at 6:33 PM on March 23, 2010


I think the real story in peak oil is in the developing world. Even if OECD demand has peaked, it is unlikely to decline markedly, and growth in places like China and India will support demand growth for a long time. This has implications for transport in the developed world, as electric cars not withstanding, the 1st world transport industry will continue to rely on oil for a long time yet.
A change to alternative fuels will be costly, and it is hard to see which emerging system will be most practical, but at the bottom line, this is an economic problem.
As growth in oil production (of even expensive tar sands or deep water of bio) trails demand growth, prices will rise. This will bring on more supply, but the peak oil theory says the ability to grow will be hampered by the difficulty in extracting alternatives, to the point where the growth in non-traditional production will be less than the decline in old, cheap to extract fields.
That is when peak oil occurs, and prices will rise until higher prices dent demand.
The question then, is what will you do without? If fuel is dearer, you can use less or use the same and make savings in other ways, but you must give something up.
For most citizens in the developed world there are various options, for somebody in the developing world the choices are starker.
Note too, the change to an alternative fuel source is not a given. Solar hot water heaters or CFL bulbs pay for themselves pretty quickly, but the only places I have seen them with any sort of wide adoption is where the government has intervened (or where grid power sucks). In the same way, how many families with budgets strained by high fuel prices will be able to afford the capital costs to move to an electric vehicle any time soon?
Note also, as well as high prices there may be supply gaps. As, for example, Iran or Venezuela's internal oil consumption grows, the decline in their exports marches in time. Will they be prepared to sell all their oil abroad at any price if doing so would mean shortages for their populace? I can't imagine they will.
posted by bystander at 6:49 PM on March 23, 2010


Industry, agriculture and petrochemicals are all higher value uses of oil than transport. Their needs could conceivably be met through coal to liquids or similar with out too much price increase, but transportation is extremely sensitive to fuel costs.
posted by bystander at 6:52 PM on March 23, 2010


My experience is that the mood at oil companies, is overwhelmingly sanguine from wellsite geologist to CEO.

Yes! And if you look closely at de Margerie et al, they are often hedging their words with allusions to a 'supply crunch' caused by a medium-term lack of investment - ie not an explicit reference to a geological shortfall. I agree with Bumpkin that we don't really know how this is going to play out. There are a lot of unpredictable factors in terms of both economics and technology.

I think it's far more interesting though to listen to what fossil fuel company execs say, privately, on the topic of climate change. They'll probably admit to fearing for their kids' and grandkids' futures (unless they work for Exxon). If you meet one in a social setting, ask.
posted by 8k at 8:25 PM on March 23, 2010


b) it opens up another couple billion barrels that would have been too expensive to extract at the previous price.

The reason they were too expensive to extract is that it took more energy to extract than made economic sense. So when you extract these subpar sources of oil (like the tarsands) you're getting less energy per unit of energy you put into extracting it than you would from sources that are easier to get to. Which brings me to my next point...

But the price of oil is surprisingly easy to game. Just review the run-up to $140/barrel in 2008 -- mostly driven by speculators, not by a real shortage in oil.

How do you know it wasn't driven in some part by supply constraints? China is growing fast, and their demand for oil is increasing. Why isn't production rising to meet that demand? We're past the peak. Either in 08 or 05 or whatever, but we're past the peak.

I don't know. I just know that like climate change and daily temperature, the price of oil today has no relevance to whether we're facing Peak Oil tomorrow or 100 years from now.

Well, the price in conjunction with other statistics can definitely be useful. There's been a lot of talk within sustainability/peak oil circles about how the other side of the extraction curve will play out, and one of the most widely accepted theories is that the economy will try and recover, hit a certain consumption level after which price rises dramatically (summer 08), then fall back down, and repeat again except the consumption level at each price peak will fall a bit after each repetition. If this is how it will play out then price is a very easy way of seeing when the next crash will be because it's starting to represent the supply side of things more and more. When the next economic crisis happens check out the price of gas.
posted by symbollocks at 5:36 AM on March 24, 2010


There's been a lot of talk within sustainability/peak oil circles about how the other side of the extraction curve will play out, and one of the most widely accepted theories is that the economy will try and recover, hit a certain consumption level after which price rises dramatically (summer 08), then fall back down, and repeat again except the consumption level at each price peak will fall a bit after each repetition.

The "undulating plateau".
posted by adamdschneider at 7:08 AM on March 24, 2010


@nola

There is no known energy source that will sustain the American Way of Motoring.
It's not an energy problem, it's a fuel problem.
It's not a fuel problem, it's a carbon-based oxidational chemical reaction problem.
no idea what I'm talking about.


I don't understand this either. If you have sufficient energy (solar, fusion, nuclear..) then you don't have a fuel problem. In the worst case you could just use hydrogen, made from water. Better ideas would be to use CO2 and reduce it to methanol or CO and then synthesize fuel (Fischer–Tropsch process).

If you have enough energy then you can make fuel. The question of the efficiency remains but if there is energy then there is fuel.
posted by yoyo_nyc at 7:50 AM on March 24, 2010


And by the way a few interesting links:

Bill Gates invests in nuclear energy

The Navy invests in this fusion program. (Warning, Video Link)
posted by yoyo_nyc at 7:56 AM on March 24, 2010


if there is energy then there is fuel

This is the same as saying, "if there is gold, there is money," and it falls to the same objection. There is not enough. Not now, anyway. Scrubbing CO2 from the air and cracking it to make CO for use in Fischer-Tropsch is a novel idea, but then you'd need the H from somewhere (cracking H2O, perhaps?), and I suspect this double crack would be a huge energy loser, requiring an enormous energy surplus which we currently simply do not have, and probably will not have for the foreseeable future.
posted by adamdschneider at 8:13 AM on March 24, 2010 [1 favorite]


@adamdschneider
"if there is gold, there is money,"
No, since gold is a precious metal, a thing. Modern money is credit. You can't run a modern economy on gold (hint: divide the US M3 money supply by the worlds total gold reserve).

The idea to make fuel out of C02 is not new. The efficiency if the problem.
Fusion energy would maybe make this possible. Energy or fuel would not be free, but it would be possible. If Bill gates small nuclear reactors are used then there is plenty of energy. Again, we have an energy problem, not a fuel problem. Give me energy, I make you fuel.
posted by yoyo_nyc at 9:17 AM on March 24, 2010


Give me energy, I make you fuel.

This is like saying "if you give me cows, I can give you hamburger." Which is nice, but we're anticipating a cow shortage here.

There are lots of solutions to the fuel problem given enough energy. Enough energy. If you have unlimited energy — if we postulate cold fusion or ZPE or just garden-variety magic — then you can make all sorts of fuels. You can synthesize hydrocarbon fuels, or crack water for hydrogen, or compress air, or trade rechargeable batteries, whatever you want. This is not really in doubt. If you have enough energy, you can pick your energy-transport medium (which is all a fuel is) at will, because you don't care about conversion costs/waste.

But in the real world, energy is very much not unlimited, and that is a problem. Petroleum and other fossil fuels are cheap, (were originally) plentiful, and are easy to transport and utilize. There is nothing else quite like them. Switching away from them as a primary energy source is very much non-trivial. Although energy is cheap from a historical perspective (think about how many watts you have at your command versus how many a person throughout history would have had at theirs!), it is still expensive, and thus the choice of energy-transports is limited.

It's nice that someone is putting some money into researching small, intrinsically-safe reactors, but unless we properly manage nuclear technologies and implement a full fuel cycle, we could conceivably run ourselves out of natural fissiles. That would be dumb. Plus, even though I'm personally quite a fan of some of the modern nuclear systems, it's still arguable whether it will compete economically with other options.

Either way, energy supply is by no means a solved problem. It is not enough just to have some theoretical ideas on a drawing board; those ideas need to be turned into actual products and those products need to be built and tested and survive in the marketplace.
posted by Kadin2048 at 9:47 PM on March 28, 2010


...here are lots of solutions to the fuel problem given enough energy. Enough energy.

As I understand it, there is a very large fusion reactor about 93M miles from us (close by cosmic standards) that sheds enough energy onto our planet every day. The problem is how to covert that to fuel.
posted by Mental Wimp at 9:16 AM on March 29, 2010


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