Casaubon's Book

Daniel Yergin in the Wall Street Journal:

Since the beginning of the 21st century, a fear has come to pervade the prospects for oil, fueling anxieties about the stability of global energy supplies. It has been stoked by rising prices and growing demand, especially as the people of China and other emerging economies have taken to the road.

This specter goes by the name of “peak oil.”

Its advocates argue that the world is fast approaching (or has already reached) a point of maximum oil output. They warn that “an unprecedented crisis is just over the horizon.” The result, it is said, will be “chaos,” to say nothing of “war, starvation, economic recession, possibly even the extinction of homo sapiens.”

The date of the predicted peak has moved over the years. It was once supposed to arrive by Thanksgiving 2005. Then the “unbridgeable supply demand gap” was expected “after 2007.” Then it was to arrive in 2011. Now “there is a significant risk of a peak before 2020.”

But there is another way to visualize the future availability of oil: as a “plateau.”

In this view, the world has decades of further growth in production before flattening out into a plateau–perhaps sometime around midcentury–at which time a more gradual decline will begin. And that decline may well come not from a scarcity of resources but from greater efficiency, which will slacken global demand.

There’s something very anti-climactic about “This specter goes by the name of peak oil.” One gets the sense that Yergin was trying to sound impressive, and didn’t quite pull it off.

This is the usual nonsense from CERA. Oh, yeah, peak oil was supposed to arrive in Thanksgiving 2005. Right, except, of course, that was one person’s guess – Kenneth Deffeyes, not the analysis of every geologist. And as Jeffrey Brown rightly points out, well, we did hit a plateau in 2005. The only way you can argue otherwise is to change the terms of the discussion from oil to “oil” or “liquids” – when you mix in biofuels and a whole bunch of other things that aren’t crude oil, you can disguise said plateau. It works rather like my saying “Wow, we’re nearly halfway out of beer” and someone else saying “Yes, but that’s no problem, look at all the Prune Juice!” It is true that both are edible liquids, but it is also true that there are some noticeable differences between beer and prune juice, and between Crude oil and “oil.”

Jeffrey Brown also rightly points out that Daniel Yergin and CERA don’t exactly have a stellar record of predicting oil prices, and that despite their cheerful (and historically baseless) statement that efficiency fairies will magically make us consume less oil (Jevon’s Paradox unfortunately has held true – as we use less oil in different segments of the economy, we use more oil overall). Indeed, the demand-side story is radically different than Yergin portrays it:

However, the real story is Global Net Oil Exports (GNE), which have shown a measurable multimillion barrel per day decline since 2005, and which are measured in terms of total petroleum liquids, with 21 of the top 33 net oil exporters showing lower net oil exports in 2010, versus 2005. An additional metric is Available Net Exports (ANE), which we define as GNE less Chindia’s (China + India’s) combined net oil imports. ANE have fallen at an average volumetric rate of about one mbpd per year from 2005 to 2010, from about 40 mbpd in 2005 to about 35 mbpd in 2010 (BP + Minor EIA data, total petroleum liquids).

At the current rate of increase in the ratio of Chindia’s net imports to GNE, Chindia would consume 100% of GNE in about 20 years. Contrary to Mr. Yergin’s sunny pronouncements, what the data show is that developed countries like the US are being forced to take a declining share of a falling volume of GNE. In fact, our work suggests that the US is well on its way to “freedom” from its reliance on foreign sources of oil, just not in the way that most people hoped.

Our replacement of Oil with “oil” has had considerable consequences. Some of them are ecological, upping the rate of climate disturbance, rendering water toxic and destroying whole ecosystems. Others have been the reinvention of world-scale hunger as biofuels tie food and energy prices together in ways that make the world’s most vulnerable more subject to market vagaries. Yergin not only has a long history of erroneous predictions, he suffers from an acute inability to describe even the extant present. There is a hallucinatory quality to the world Yergin describes, in which a bright energy and economic future stands just over the horizon – always just a little out of reach.

Sharon

Comments

  1. #1 Joseph Ormond
    September 19, 2011

    Well, I glad you found something to do with your time this morning! I took a “global issues” class at Humboldt State University last fall and the head of geography department was quoting Daniel Yergin to a room of 200 home students back then. I think he was over impressed that Yergin had won a Pulitzer Prize

  2. #2 Karen
    September 19, 2011

    Thanks, but I’ll still worry.

  3. #3 LMADster
    September 19, 2011

    “Peak Oil” in the broadest will not exist for a thousand years. Forget oil from conventional wells (many of which replenish after decades of lying fallow), oil exists in other forms as well such as tar sands and oil shale. Today, the “recoverable” estimate is only 10% of the underlying resource; as prices go up and technology advances, that “recoverable” amount goes up.

    But even after the last drop of crude has been extracted, we can then easily crack coal and natural gas into sweet Texas crude using process going back to the 1930s and successfully developed by the Nazi’s to run the second half of the war. Two tons of coal makes one ton of crude… Same for Natural gas.

    Natural gas can be found all over North America, especially off the Eastern Cost in the form of gas hydrates.

    So lets do the math for the US and Canada:
    Conventional Crude Oil: 50 years+
    Oil Sand/Oil Share: 50 years +
    Natural Gas: 100 years/2
    Coal: 300 years/2
    Offshore gas hydrates: 10,000 years/2

    Put simply, we have thousands of years before “peak” oil peaks.

  4. #4 FarmerAmber
    September 20, 2011

    LMADster, you may want to read up on EROI – Energy Returned on Energy Invested. The principal is that even though those resources exist, it is so expensive (in money and energy) to recover them that it isn’t worth the effort. It would cost more to do it than to leave it in the ground. “Peak oil” isn’t about running out of oil – its about passing the midpoint in extraction and using up the “easy” oil.

    I hope for your sake that you aren’t relying on the numbers you cite for your family’s security. Please prepare and we can all hope that it turns out better than we hope.

  5. #5 Rick Parmlee
    September 20, 2011

    Seems to be a live for the moment, Easter Island mentality about Peak.

    I guess with the current mindset we should all celebrate that we have up to fifty years of oil left. Maybe we should set aside new oil basins when discovered so newborns won’t be greasing the wheels of their carts with chicken fat by 2100.

  6. #6 Rick Parmlee
    September 20, 2011

    Seems to be a live for the moment, Easter Island mentality about Peak.

    I guess with the current mindset we should all celebrate that we have up to fifty years of oil left. Maybe we should set aside new oil basins when discovered so newborns won’t be greasing the wheels of their carts with chicken fat by 2100.

  7. #7 Richard Eis
    September 26, 2011

    So lets do the math for the US and Canada:
    Conventional Crude Oil: 50 years+

    I will also add that you can’t drive a car under 5 feet of water where your coastal towns used to be.

    50 more years of oil, what a terrifying thought!