We’ve long unveiled our Earth Mother, and easily stolen her oily milk and fruits. Maybe that’s over.
Today, in the Los Angeles Times, is a front page article on the Peak Oil debate, in which dueling experts vociferously disagree with one another about world oil supplies:
The boiling debate, in which peakists and their critics flay one another’s conclusions and intelligence, is fed by imprecise terminology and oil-field data that are questionable or incomplete. For starters, views vary wildly on how much oil remains in Saudi Arabia — crucial information for projecting worldwide supplies.
In other words, among experts there is no agreement on how to define specific terms surrounding the Peak Oil debate, and information gathering about oil reserves is not systematic and is “incomplete.”
In short, we do not know if world oil reserves are in short supply, but we do know that consistent DEFINITIONS and DATA are.
What to do if you have a definitions and data shortage? Enter FATIH BIROL. He is:
chief economist at the Paris-based International Energy Agency, a watchdog for industrialized nations.
And what is BIROL doing?
Birol is leading a groundbreaking reassessment of the worldwide outlook for oil supplies, investment and production that many believe will deliver bad news when it is released in November.
“We are very concerned about future oil supplies,” he said. “We may have difficult days to come in the oil markets.”
In five years, demand for oil may exceed 94 million barrels a day and continue rising, spurred by growth in China and India, the International Energy Agency estimates. Experts put daily global production at between 82 million and 86 million barrels, and even the most optimistic oil authorities can’t see production keeping up with demand without a big boost from unconventional sources such as Canada’s vast oil sands or U.S. oil shale. Getting crude from such sources is more difficult, expensive and environmentally harmful.
In other words, there is a report due out in November 2008 that should bring greater clarity to the Peak Oil debate, but the early signal from Birol is that the pessimists may be closer to the truth than the optimists. Nevertheless, the LA Times dutifully laid out the optimists’s case as well:
“Unconventional oil includes all these things like tar sands . . . and some people count all that stuff as oil,” said Texas oil investor Jim Baldauf, who in 2005 helped found the U.S. chapter of the Assn. for the Study of Peak Oil & Gas, which has affiliates in 22 countries. “If you do that, then you have a much rosier picture to look at.”
Worries that oil production soon will fall short of demand or begin a steep dive aren’t supported by the data his company has compiled, said consultant Daniel Yergin, chairman of Massachusetts-based Cambridge Energy Research Associates and author of “The Prize,” a Pulitzer-winning oil history. But anxiety about long-term supply, he said, has “contributed to this very fevered psychology in the oil market.”
Cambridge researchers acknowledge that the Earth’s oil production eventually will max out. But Cambridge Energy Research Associates director Peter Jackson said that day is continually being pushed back because sizable oil reserves still are being found and technologies are boosting yields and paving the way for deep-sea drilling and other options not previously contemplated.
California’s 108-year-old Kern River oil field, for instance, was read its last rites several times over the years. But the field recently produced its 2 billionth barrel and is still going, thanks to ever-evolving recovery techniques.
Jackson’s conclusion: Don’t panic.
He expects worldwide output — including the unconventional variety — to continue rising and satisfying demand until at least 2020. Once production peaks, he believes it will level off in an “undulating plateau” before an irreversible decline sets in.
And here’s the pessimist position, which led off the LA Times article:
With gasoline and oil costing once-unthinkable barrels of cash, the notion that things in our petroleum-addicted world soon will get worse — maybe much, much worse — is spreading fast.
Fear pushed oil to $131.04 a barrel in New York futures trading Monday, closing $2.16 higher after tumbling more than $16 last week. Supply concerns drove the increase as the market fretted about the potential for Tropical Storm Dolly to harm Gulf of Mexico oil operations.
But behind today’s oil mania lies a deeper dread: that the world has found all the easy-to-reach oil, and the daily supply of the essential black goo will fall further and further behind escalating global demand.
“As much as you’re uncomfortable with today’s oil prices, these are going to be the good old days,” oil expert Robert L. Hirsch told a recent Santa Barbara gathering of policymakers and environmentalists. “We’re talking about pain here that is unimaginable.”
The day-to-day cost of oil reflects a sharply weaker dollar, market speculation and geopolitical events such as unrest in Nigeria and other oil-exporting countries. At the same time, producers are barely slaking the world’s energy thirst, and the market increasingly is fixated on the long-term supply picture.
Adding to the angst, several industry heavyweights caution that above-ground issues — including instability among oil-producing nations and shortages of drilling rigs and engineers — threaten to impose a “practical peak” on oil output that could be just as wrenching as the geologic peak envisioned by Hirsch and others.
If it bleeds, it leads. Notice that the article might just as well have started with an optimistic scenario, or a calm discussion of the fact that definitions and data surrounding the Peak Oil debate are still up in the air. But the LA Times went with what would attract energy-jittery readers. You can’t fault a paper, or its editors, for trying to attract eyeballs, but we should also note that the inherently sensational and potentially apocalyptic nature of the story does not readily lend itself to calm rationality and clarity of thought. Later in the article, Hirsch’s pessimistic position was elaborated upon further:
Hirsch, author of a widely cited 2005 Energy Department report on peaking oil output, sees a more urgent situation.
When he spoke at last month’s energy summit, Hirsch said that large oil fields were emptying faster than expected, remaining reserves were overestimated and new finds and technology would offer only incremental additions.
“There’s no question in my mind that we’re likely to see oil production go into decline somewhere between 2010 and 2012,” said Hirsch, senior energy advisor to Management Information Services Inc., an Alexandria, Va., consultancy.
His views reflect the core principle of “peak oil,” a decades-old doctrine that holds that global crude production will crest sooner than expected and then begin a precipitous decline. Predictions about the timing vary: Some say we’ve already hit the peak, while others posit that it won’t arrive for another decade or more.
Forecasting is a perilous business. Earlier peak oil predictions, including some from the 1970s supply crisis, missed the mark. Non-peakists have erred in production estimates. And nearly everyone failed to predict the leap in oil prices over the last year.
Geologists and others in the oil industry hotly dispute peak oil predictions, but an increasingly alarmed public has injected fresh momentum into the movement.
“Peak oil is percolating all over the place,” a seismic shift from when peak oilists were considered the petro-world’s “lunatic fringe,” Hirsch said.
Notice that the range between expert optimists and pessimists with regard to Peak Oil is fairly narrow—Hirsch’s 2010 v. Jackson’s 2020.
I don’t know if oil production is peaking yet—and neither do you.
But one thing is certain: Emotions are running high. And one of those emotions may be Oedipal guilt. Especially as Americans, with our oil guzzling habits, we’ve unveiled and stolen from our “Mother Earth” for a long time, and with impunity, and we may now be, subconsciously, expecting to be punished for it.
The painting I’ve posted above might well be studied carefully for the psychological territory that we are entering.
We’ve been naughty, and Big Daddy Judgement Day seems to be coming. But even if it doesn’t, expect a lot of hysterical Peak Oil anticipation—and charlatans prepared to exploit the collective guilt and fear that it generates—to make a buck or obtain cultural, religious, or political power.
Here’s the link to the full LA Times article: http://www.latimes.com/news/printedition/front/la-fi-peakoil22-2008jul22,0,1701908,print.story
Pingback: Most Professional Contributors to TheOilDrum.com Think the World Reached PEAK OIL in 2008 « Prometheus Unbound