Lessons from the hysteria about peak oil (2005-2013)

By Larry Kummer, from the Fabius Maximus website

Summary: The peak oil hysteria provides rich lessons for us today about learning from activists and the value of listening to our major professional institutions. Easy cynicism led people to believe outlandish forecasts, wasting valuable time and resources. Worse, we have had many such barrages by doomsters — aided by their clickbait-seeking enablers in the media — which have left us almost immune to warnings, no matter how well-founded. We can do better.

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Where were you during the peak oil hysteria? It began in 2005 and died in 2013, marked by the opening and closing of The Oil Drum website. Despite their analysis and forecasts proving to be mostly wrong, most of their authors are still “experts” publishing elsewhere (see this bizarre example). That follows the pattern of modern American doomsters, such as those who in the 1970s predicted global catastrophes from pollution and famine. Perhaps the activists predicting a climate catastrophe will add their names to this list in the next decade.

It’s not just historical trivia. We must learn from these bouts of irrationality if we have any hope of regaining the ability to govern ourselves.

Maximum World Oil Production Forecasts

Memories have faded, but a decade ago the predictions of end of oil were hot news. Comment threads overflowed with people terrified of the future. Conferences were held and books sold trumpeting certain disaster as the lifeblood of our industrial civilization dried up. Many of the following names were highlighted in journalists’ Rolodexes as the go-to people for hot quotes. Then as now, the names least often consulted proved to have the more accurate forecasts.

  • 2005 – Pickens, T. Boone (Oil & gas investor).
  • 2007 – Bakhitari, A.M.S. Oil Executive ((Iranian National Oil Co. planner).
  • 2007+ – Groppe, H. (Oil / gas expert & businessman).
  • 2007 – Herrera, R. (Retired BP geologist).
  • 2008+ – Westervelt, E.T. et al (US Army Corps of Engineers).
  • 2009 – Deffeyes, K. (retired Princeton professor & retired Shell geologist).
  • 2009 – Simmons, M.R. (Investment banker; see the posts about his work).
  • 2010 – Goodstein, D. (Vice Provost, Cal Tech).
  • 2010 – Wrobel, S. (Investment fund manager).
  • 2010 – Bentley, R. (University energy analyst).
  • 2010 – Campbell, C.  (Retired oil company geologist; see the posts about his work).
  • 2010 – Skrebowski, C. (Editor of Petroleum Review).
  • 2011 – Meling, L.M.  (Statoil oil company geologist).
  • 2012 – Koppelaar, R.H.E.M. (Dutch oil analyst).
  • 2012 – Pang Xiongqi (Petroleum Executive, China).
  • 2015 – Husseini, S. (retired Saudi Aramco).
  • 2020 – Laherrere, J. (Oil geologist , France).
  • 2020+ – CERA Energy (consultants).
  • 2020+ – Wood Mackenzie (consultants).
  • 2025+ – Shell.
  • 2030+ – EIA and IEA.
  • No visible peak – Lynch, M.C. (Energy economist).

These predictions were made during 2003 – 2008 (collected by Robert Hirsh; most sources are listed here). Most were given with qualifying language expressing uncertainty about the dates. Some of these people, especially those associated with the Peak Oil movement, had given different dates — moving them out as time passed. Most of these are documented, but details of some have been lost over time.

The forecasts of major energy agencies’ look good a decade later. Much as with climate change, activists disparage (often contemptuously) analysis of the professional institutions — but in hindsight it is clear who we should have listened to.

Let’s look at these predictions in the context oil production history.

Forecasts of Oil Production made in 2008

The following table shows the actual production of crude oil and liquid fuels — and the IEA forecast for production in 2015 from their World Energy Outlook 2008, published as energy prices were on their way to a record high? Eight years later, how accurate was IEA’s forecast? It was eerily accurate — somewhat accidentally, as the IEA did not foresee the 2008-09 global recession and so over-estimated GDP growth.

The IEA and EIA use similar definitions for “liquid fuels”.

World Production vs. the WEO 2008 Forecast
(million barrels/day)

Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Crude Oil 73,864 73,478 73,164 74,062 72,871 74,653 74,734 76,160 76,248 77,833 N/A
Liquid Fuels 85,099 85,135 85,130 86,515 85,703 88,099 88,532 90,466 91,014 93,201 97,900*
WEO 2008 86,000 96,000

Historical data from the EIA website.
* The 2015 total is for Q3.

The bottom line: liquid fuel production increased by 15% during the decade after 2005, so that prices have plunged (exacerbated by the Saudi price war). Prices will remain under pressure unless OPEC reestablishes its control, production coming online from investments in the giant fields of Iran and Iraq, the spread of fracking to other nations, and new tech (e.g., hybrid and electric cars).

Also note the increasing difference between production of crude oil and all liquid fuels. The rise in crude oil and, more broadly, liquid fuels were driven by new sources whose potential was mostly ignored by the Peak Oil doomsters). Crude production rose from deepwater and fracking wells, plus mining bitumen (aka oil sands, which technically does not produce crude oil). Liquid fuels production rose from production of natural gas liquids, biodiesel, ethanol, and those converted from coal and gas. Most numbers you see for “world oil production” are for all liquid fuels.

While in 2008 the IEA accurately estimated liquid fuel production for 2015, they over-estimated demand. As a result, the WEO 2008 price forecast for 2015 was too high.

“The era of cheap oil is over … The average IEA crude oil import price, a proxy for international prices, is assumed in the Reference Scenario to average $100 per barrel in real year-2007 dollars over the period 2008-2015 and then to rise in a broadly linear manner to $122 in 2030.”

Conclusions

As many of us predicted during the peak oil hysteria, high oil prices had three great effects — all predictable…

  • Increased efficiency of energy use — as consumers and businesses invested to increase the efficiency of the more expensive energy (and R&D produced more ways to do this).
  • Increased production of oil (boosted by R&D making more “resources” into usable “reserves”. Today’s $30 oil shows that production growth has exceeded demand.
  • New sources of liquid fuels — including both new hydrocarbon-based supplies (bitumen in Canada and Venezuela), new carbon-based fuels (e.g., coal to oil, although oil prices never rose to make this viable), and new carbohydrate-based supplies (e.g., ethanol from corn).

Only time will tell about the IEA’s forecast for 2030 of $122 oil (in 2007 dollars). But today’s oil glut gives us an opportunity to prepare alternative supplies in an inexpensive and orderly manner, not only reducing the risk of energy price shocks but also reducing pollution and the risk of unpleasant anthropogenic climate change. Let’s make use of the gift.

Equally important is that we learn from this experience with the peak oil movement. Activists and enthusiasts have terrible track records at long-range forecasting, despite their confidently loud predictions of doom — echoed by clickbait-seeking journalists . That does not imply that we should blindly trust major institutions (as the scandal about Flint’s water supply shows), but skepticism pays large dividends and allows more rational preparing for the future.

For More Information

For a deep look at these issues see Exxon’s new report “The Outlook for Energy: A View to 2040“. Also see these…

  1. Important: Recovering lost knowledge about exhaustion of the Earth’s resources (such as Peak Oil).
  2. When will global oil production peak? Here is the answer!
  3. The three forms of Peak Oil (let’s hope for the benign form).
  4. Peak Oil Doomsters debunked, end of civilization called off!
  5. Prepare now, for oil prices will rise again.

To learn about the minerals that power our world, and will for many years more, I recommend reading the IEA report Resources to Reserves 2013. Here is a brief slidedeck of its contents. For a deeper look, see the IIASA’s Global Energy Assessment (a widely cited source document, including by the IPCC’s AR%). Here is a 113 page summary.

389 thoughts on “Lessons from the hysteria about peak oil (2005-2013)

  1. The first reference to “Peak Oil” I ever came across came from the mid-19th century, when the shale oil industry made Scotland the World’s biggest petroleum producer and exporter.

    http://www.scottishshale.co.uk/index.html

    I have a WWII engineering textbook which asserts that the World’s oil would run out by the 1960s.

    Some things never change.

    • There is Hubbert’s theory form 1956, and even older predictions:

      “The idea that the rate of oil production would peak and irreversibly decline is an old one. In 1919, David White, chief geologist of the United States Geological Survey, wrote of US petroleum: “… the peak of production will soon be passed, possibly within 3 years.””

      This is for US oil production though, not worldwide.

      https://en.wikipedia.org/wiki/Peak_oil

      • Unfortunately what is true for one well does not extend effectively for an entire region, let alone the globe, especially when there are decades of improving technology and price incentives involved. This is not unlike people trying to build macro-economic models from micro theory … the system is simply too complex to model effectively. Too many unknowns, or poorly knowns, leads to a highly unstable and unrealistic model. I remember venturing to The Oil Drum a couple times to debunk some of their silliest comments but it was a feral echo chamber. Not unlike some warmist sites that spring to mind.

        Substitutes for much of oil’s markets will arise long before depletion becomes a significant issue. It has always been thus and this time is no different. The onus is on the doomsayer to disprove the null hypothesis. So far, from Malthus to IPCC, they have all failed, at least in scientific terms. The latter has had some political success …

      • Likewise, the real experts have been proving them wrong since the early 20th century.

        http://archives.datapages.com/data/bulletns/1949-52/data/pg/0036/0012/2200/2231.htm?doi=10.1306%2F5CEADBD8-16BB-11D7-8645000102C1865D

        There is enough petroleum in the Green River Formation alone to make peak oil nothing but an economic issue. However, it is an economic issue. These cheap energy prices won’t last forever and when they do increase it could be ugly.

        The US oil industry simply won’t be a very good swing producer. OPEC as the swing producer works (when they cooperate) because they have the ability to flip a switch and increase/decrease production. Operators in the US, however: receive capital, plan where to invest it, plan how to do it, ask the government permission, wait, drill, wait, complete, then hope the investment pays off soon.

        Increasing oil production in the US, once the price starts to correct, will take longer than OPEC flipping a switch. It will be interesting to see how eager the nervous investors are to get back to drilling. I think it will need to look like it did while everyone was drilling, $80+/bbl. How far above the price correction will determine how fast the rigs get back to drilling.

        I could see U.S. production dropping to 7.5 M/day sometime in 2017 and that is more than enough to turn the surplus into a deficit.

      • When oil does start to run out, it will do so gradually. We won’t go from $30/brl oil one year to $300/brl oil the next. We are pumping the cheap sources first, as those run out, we switch to more expensive sources. As the mix of sources gradually shifts from cheap to expensive, prices to will gradually rise.
        As a result, we will adapt.

      • That ignores the history of the price of oil. It’s been volatile in the past, but as the U.S. acting as the swing producer, it will be more so.

      • @MarkW
        Actually, while the literal text of your statement is correct, I don’t agree with the notion of “$300 oil” or “$30 oil”.
        The price of oil, much as with real estate and many other assets, is priced at the margins. $147 oil occurred because emerging market oil consumption grew faster than oil production capacity; the fall since then is because of reduced demand from same *as well as* increased production.
        The cure for cheap oil is…cheap oil.
        The cure for high oil prices is…demand reduction and production increases.
        This particular downturn in price, IMO, is because of US shale producers and Saudi Arabia both locked in respective junk bond and social spending traps – which prevent either from production cuts. Only if you posit that the Saudis are stupid would they be attempting a price war vs. a shale industry which *has* to pump to survive – it is far from clear that Saudi Arabia’s reserves can outlast the junk bond covenants of enough of the US shale industry to matter. Unlike Russia, Saudi Arabia cannot cut its imports to match export earnings due to its vast repressed majority. I’ve noted elsewhere that Saudi Arabia’s GDP per person and population have both increased 50% since 2000 – this gives Saudi Arabia a cost profile which is more than double what it was even 15 years ago.
        The possibility of stupidity is non-zero – however – since Saudi Arabia’s historical gambits did work to affect oil major production and drilling.

      • One factor undermining the credibility of Hubbert’s ideas – one can scarcely dignify his views with the word “hypothesis” – is that among his many predictions he had exactly one success. U.S. oil production.

        Of course with that single, successful prediction he needed no others but pointing out that Hubbert had no other successful predictions didn’t make me an especially popular fellow with Peak Oil adherents.

        Since there wasn’t any substantive response to that shortcoming I was inevitably treated to a blizzard of invective each time I brought the subject up. At the time I didn’t see the response as a tacit admission of defeat but I do now.

      • While the price of oil is volatile, it always swings above and below it’s true price. The true price will change gradually meaning the next absurd high will be a little higher and the next absurd low will likewise be a little higher.

      • allen: And even that one “success” was only true for awhile. The current increases in production negates even that one “success”.

  2. the US oil industry brought us to within a stone’s throw of achieving the nation’s longstanding stated goal of energy independence, only to be thrown under the bus and vilified when foreign interests undermined the industry.

      • I’ve advocated for a “Flexible Tariff” to prevent such predatory pricing.

        The notion is to put a price floor under imported oil, but leave domestic prices open.

        So you pick a price that prevents predation, call it $50/bbl. The Flex Tariff is set at:

        ( $50 – import market quote ).

        Say Opec oil is trading at $40, the tariff would be $10/bbl.
        Say Opec oil us trading at $80, since 50-80 is a negative number, the tarrif is zero.

        That is, the tariff does nothing until a price war happens, then it protects the domestic producers from ruinous price wars and predatory pricing.

        I’d either apply it to OPEC production since they are the cartel that does the predation, or alternatively, have it be NAFTA wide on all outside producers (protecting Canadian and Mexican producers too).

        Fairly easy stabilization method, IMHO.

    • US oil production peaked in the mid 1970s, and has never recovered compared to the demand requirements of the US. The US doesnt have any super giant fields left to give it energy independence.

      • “The US doesnt have any super giant fields left to give it energy independence”.
        -not true, unless you limit your thinking to conventional production.

      • Steve R, you need to read up on the USGS and EIA estimates of TRR from all unconventional US oil. TRR is technically recoverable reserves, AT ANY PRICE. Guess what. Only about 15-18Bbbl. It has nothing to do with political will. Its simple petroleum geophysics, which anyone should be able to comprehend if not calculate. If only they would bother to. You apparently have not. See more details downthread. Or read my two ebooks on this. Illustrated, like for elementary school.

      • This could be said of any resource with a narrow definition of what constitutes the resource. Sulphide nickel will eventually give way to laterite (oxide) nickel deposits, but not so much at current prices. There are a few laterite producers on the brink right now, but nothing a price hike won’t fix. So it is with crude oil … heck convert coal to liquid fuel if the price is right and there is enough coal to do that for a long, long time. But there is not much point in doing this for the foreseeable future. Besides fusion can’t be that hard, right? Got to crack it eventually.

        BTW as an aside, reps for Saudi and Russian are meeting shortly. They are probably going to discuss how to avert the crippling race to the bottom of the barrel.

        http://www.wsj.com/articles/saudi-russian-oil-ministers-head-to-qatar-to-discuss-production-1455566388

        Apologies for the awful pun…

      • Define field. The entire Bakken shale could be called a field, and it is certainly super giant. We have not even tapped numerous other good frackable source layers. At $80 we can swim in oil a long time.

      • It costs money to prove up reserves. This is a point that the academics missed when I was a senior in Chemical Engineering and was advised to avoid the oil industry as there was only fifty years of proven reserves. That was back in 1952. Who would spend money to prove up reserves more than fifty years in advance?

        Similarly, TRR relies on studies that cost money to carry out. My guess is that the estimates fall far short of actuality.

      • Doug. Let me give you two fairly precise definitions for different circumstances, so that you might learn. A ‘field’ within a basin is a stratigraphic overlying trap where oil ( or gas) might migrate and be trapped over geologic time. Big, small, tall, short, wide, narrow, fractured or faulted…usually identified by seismics based on ‘hollow’ echoes.
        A basin is a source rock ‘pan’. North Slope, North Sea, Bazhenov, Permian in Texas. You would benefit by learning the oil production differences.

      • Daily U.S. oil production set the record in 2015, however, the low price of oil will have a negative impact in 2016.

      • “heck convert coal to liquid fuel if the price is right and there is enough coal to do that for a long, long time. But there is not much point in doing this for the foreseeable future.”

        Negative ERoEI. Interesting how so many people ignore this basic concept of physics because they dont understand it.

        ” Besides fusion can’t be that hard, right? Got to crack it eventually.”

        Fifty years and counting, still no solution. Thorium Reactors is our best hope, yet completely ignored for political reasons.

      • “Define field. The entire Bakken shale could be called a field, and it is certainly super giant. We have not even tapped numerous other good frackable source layers. At $80 we can swim in oil a long time.”

        Bakken will give up less than 3% of it’s in-situ oil. Plus the rate of extraction is pathetic. Unlike a conventional deposit, production from a tight shale well doesnt follow a bell curve. It follows a decay curve. That means you have to drill exponentially more wells just to keep the flow rate constant.

      • You are incorrect, the development of unconventional oil has produced a resurgence in us oil production with production levels matching those of the 1970’s and current US oil consumption is LOWER than in 1970.

    • Off topic but of relevance to the Ocean climate and perhaps a few readers here:

      According to the ‘Voice of Russia’:

      “Radiation levels in Albacore tuna have tripled post-Fukushima, according to Oregon State University (OSU) researchers. The scientists came to that conclusion after conducting a study on fish caught off the coast of Oregon.

      According to Delvin Neville, a graduate research assistant at OSU, these trace levels are too small to be a realistic concern. “A year of eating albacore with these cesium traces is about the same dose of radiation as you get from spending 23 seconds in a stuffy basement from radon gas, or sleeping next to your spouse for 40 nights from the natural potassium-40 in their body,” said Mr. Neville.
      However, researchers with the National Oceanic and Atmospheric Administration (NOAA) and the GEOMAR Research Center for Marine Geosciences say the worst is yet to come and that the most highly radioactive water hasn’t reached US shores yet.
      Regardless, all scientists apparently agree that the radioactive contamination is still traveling in ocean currents, the long-term effects of which remain to be seen.”

      • the radioactive contamination is still traveling in ocean currents, the long-term effects of which remain to be seen.

        Yadda yadda. The long term effects of Hirosohima, Nagasaki and Chernobyl and decades of atmospheric testing have been seen. Or rather they haven’t.

        Like the dog that barked in the night, the interesting fact is that there are no long term effects.

      • Tripled, but from what level.
        You seem to be one of those people who actually believes that any increase in radiation is by definition bad and will kill people.

        Only a complete idiot would label those waters highly radioactive, even while they were off Japan, and they have been diluted by many orders of magnitude since then. Not to mention the effect of half-life decay.

      • This is just my opinion, but spread the rumour/news about “radioactive Tuna” far and wide. Maybe people will stop eating Tuna and other ocean fish and they will have a chance to increase their populations. I believe we are overfishing the oceans. (It makes Global Warming a non-issue.) A moratorium would be a good thing. Like turtles, we need to start farming fish and let the ocean recover. (I hope that doesn’t label me as a left wing econut – if it does, read some of my other posts. (I am a centrist) I think we need more protection of the oceans. End rant.

      • Three times miniscule is still miniscule. Fact is natural levels of radioactivity are very variable. In the UK there are areas where the old Central Electricity Generating Board realized they could never build nuclear power stations because the natural background radiation level exceeded the max level allowed for their nuclear workers.

      • @Leo Smith

        You can say ‘Yadda, yadda’ all you want. It is still a relevant issue. To me, the issue carries some very personal relevance. In 1942 my grandparents moved from Minnesota to Tonopah, Nevada, where within a hundred miles, during the1950s and 1960s the U.S. Military and the Atomic Energy Commission conducted very many above ground atomic tests. This was prior to a full understanding of fallout and all the damage the various radioactive isotopes had on living organisms.

        Both of my grandparents died of cancers, my grandpa at 47 and my grandmother first got uterine and bladder cancer in the 60s and died of it 15 years later. My uncle died of problems associated with thyroid cancer, my aunt has severe, unusual nerve problems now. Countless young kids died of leukemias and many ranchers in the area who weren’t themselves suffering from their own or their family members problems with various, sometimes mysterious illnesses had to deal with cattle, horses and sheep with all of the same, including burns from radioactive fallout on their backs… Milk tainted with radioactivity, etc, etc. There are stories of children who were simply just playing outside in their yards for a few minutes and who came inside with severe burns, like sunburn, on their backs or where any fine film of dust settled.

        St. George, Utah, a place which was hit with fallout on a regular basis, was the site where a famous John Wayne movie was filmed and a very many of the cast and crew were exposed to the dust in the area by the winds and all the dust kicked up by the horses in the filming and all the wrestling in the dirt they did for the filming. Over a few years after the film was released, a very many of that cast and crew died from various forms of cancer and other unusual illnesses. Including, later, the man himself, John Wayne.

        So, ‘yadda, yadda, Leo. I am a proponent of Nuclear energy as a wonderful source of power for us and believe it should be our main source of clean power here in the U.S. As long as all the safeties are in place. But I do have a good reason to be concerned about the consequences of accidental releases of radioactive isotopes traveling around in our food chain, and closer to our fishing grounds here on the Pacific coast.

        And as far as your bonehead statement that exposures to radioactivity have no long term effects, that is just, simply ignorant. Go live in a house in an area where Radon is a problem and just laugh it off as a no consequence situation for as long as you can and then tell me it has no effects.

        D

      • Dahquist:

        You do realize you are comparing exploding dozens of fission bombs in the atmosphere with generating electricity with fission power and the few leakages that have happened? There is a difference.

    • “the US oil industry brought us to within a stone’s throw of achieving the nation’s longstanding stated goal of energy independence,..”

      Really? If that were true, why would the pure shale producers be showing large negative free cash flows even when prices were over $90? And note that when the North Slope production came on-line it was just a blip on the American production curve. Shale is exactly the same. A lot of scam artists made money by selling equities in money-losing operations and in the end the taxpayers will have to bail out the financial institutions that made loans that should never have been made. What gets to me is the fact that shale company managers were honest about the funding gaps all along the way but investors and analysts ignored them because production was going up and prices of the shares were doing well. Now that the balance sheets are impaired and restatements are on the way shareholders are about to get wiped out and bondholders will get pennies on the dollar of investment.

  3. “As many of us predicted during the peak oil hysteria, high oil prices had three great effects — all predictable…”

    Great post. Thanks.

    If I had to guess, I would wager the author understands the Austrian School of Economics. Heck, he may even have read Mises and Rothbard. (just a guess)

      • We are nowhere near the ‘peak debt” that equals a peak reduction of CO2 emissions.

        Look at Greece. This country will be the new ‘peak debt’ normal. Who in that country can now afford to buy the same amount of petrol for instance as they did before the crippling austerity measures were introduced.

        We need to start talking about “peak debt” which is governed by ‘peak stupid’. :)

        From http://finance.yahoo.com/news/us-rig-count-falls-both-190007032.html
        “Analysis of the Data

        Weekly Summary: Rigs engaged in exploration and production in the U.S. totaled 541 in the week ended Feb 12, 2016. This was down by 30 units from the previous week.

        The current nationwide rig count is still less than half the prior-year level of 1,358. Notably, the count had risen to a 22-year high in 2008, peaking at 2,031 in the weeks ended Aug 29 and Sep 12.

        From: https://mises.org/library/our-money-based-debt

        ” Marriner Eccles was the Governor of the Federal Reserve System in 1941. On September 30 of that year, Eccles was asked to give testimony before the House Committee on Banking and Currency. The purpose of the hearing was to obtain information regarding the role of the Federal Reserve in creating conditions that led to the depression of the 1930s. Congressman Wright Patman, who was Chairman of that committee, asked how the Fed got the money to purchase two billion dollars worth of government bonds in 1933. This is the exchange that followed.

        ECCLES: We created it.

        PATMAN: Out of what?

        ECCLES: Out of the right to issue credit money.

        PATMAN: And there is nothing behind it, is there, except our government’s credit?

        ECCLES: That is what our money system is. If there were no debts in our money system, there wouldn’t be any money.2″

      • Peak oil is governed by peak debt.
        Money is created out of debt.

        Whilst everything is funded by money printing with more than enough to go around, ‘peak oil’ demand is approached and thus ‘peak oil’ supply cannot match demand.

        If the central banks stop supplying cheap debt/money, or are not able to print the debt/money fast enough, then the movement is ‘away’ from ‘peak oil’ and the supply increases outstripping demand.

        And therefore, economic crisis equals a reduction in CO2 emissions. An economic boom equals an increase in CO2 emissions.

        Peak oil demand is governed by the rate of money/debt printing. In turn, this governs anthropogenic CO2 production.

        When the printing presses are turned on, CO2 emissions increase, and conversely, when the debt money printing presses are turned off, the CO2 emissions decrease.

      • Let’s get back to economic reality. Money is debt when you can trade it for something of intrinsic value, like gold or silver, or oil, though it’s a bit slippery to put into your pocket. Money stuck out there with nothing backing it will eventually crash when people lose confidence in it. And Eccles was the village idiot on the Goon Show, the great British radio comedy in the 1950’s.

    • Rothbard never said that we would have unlimited amounts of whale oil. He just said that if the demand were there, investors looking to make a buck would figure out a way to come up with alternatives.

      But that is the problem that you guys miss; Rothbard assumed a relatively unhampered market, not one that would starve investors of capital because a huge credit bubble created by the Fed sucked all of the available funds into malinvestments. The marginal producers need oil to be well over $100 and most producers can’t make an economic profit under $50. And if you know your Rothbard you would know that he did not think very highly of aggregate data. A barrel of light sweet produces a great deal more gasoline and jet fuel than a barrel of heavy oil, which is better at producing bunker oil and asphalt. Looking at the aggregates gives you a very different picture and muddies the waters. Looking at the SEC filings tells you a very different picture because it showed that shale was not profitable even when oil was over $90 a barrel. If you have a well in the core areas of the better shale formations you can make a lot of money. But those areas are a tiny percentage of those formations; when the rest of the formation is developed capital is destroyed.

      The Austrians would benefit a great deal if they paid a bit more attention to the points that Strauss made about the nature of politics and the ruling class. It actually fits beautifully with Mises’ praxeology but for some reason the Austrians want no part. I guess that they have yet to figure out that Lebron James showed that Rothbard was wrong when he published his letter to Cleveland fans announcing that he was coming back.

  4. Rewind to 1986 when ALL the experts (CEO’s, geologists, geophysicists, etc) told us that the world’s gas resources would be TOTALLY EXHAUSTED by 1995.

    • Too Right, Mate,

      “to 1986 when ALL the experts (CEO’s, geologists, geophysicists, etc) told us that the world’s gas resources would be TOTALLY EXHAUSTED by 1995.”

      Can you give us some supporting citations for that? That’s an odd date for such a thing. In 1985 the Saudi’s opening the spigot and began the 1980s oil glut: https://en.wikipedia.org/wiki/1980s_oil_glut

      More broadly, geologists have known for many generations that there is an inverse relationship between ore quality and quantity, so that once the world is fully explored costs will rise over time — offset by better tech that lowers the cost of extraction and refining (details here).

      At some unknowable point in the future either the balance will tip so that rising prices force lower production (aka peak oil and demand destruction) — or new forms of energy replace oil. The EIA and IEA put that data at beyond 2030 — that is, beyond our visible horizon.

    • Editor of FM.
      , I can not recall the publications, but I was a senior executive with ARCO at that time (retired soon after). Internally we found it amusing as Prudhoe Bay was going great guns and we knew the Ruskie territory was ripe, BUT that’s what the “EXPERTS” (and the press) were saying.
      If you do a press search, they will give the names of the relevant “experts”.

  5. But isn’t “peak oil” the underlying basis for “Global Warming/Climate Change” and the IPCC ?
    If “Global Warming/Climate Change” were truly about the atmosphere mix of greenhouse gases, why would any body ever consider bio-mass/ethanol/bio-fuels ?

    It’s about sustainability and “peak oil”.

    • That was then, this is now. But it does illustrate the modus operandi in situations like this: Hype the fear, publicize it endlessly, get political programs pushed through based on the fear, and then, when it all falls apart – change the subject and say “oh that’s old news, nobody wants to talk about that anymore.”

      And ridicule anyone who does try to talk about it for “dwelling in the past”. The “Peak Oil” scare served exactly the purpose it was meant to serve, and now that its over the people who pushed it will just go on to a new scare.

      We cannot say this enough – ALL of these scares, at their core, are about nothing but power, and those who seek to use them to seize power for their own purposes.

      • Started by The Club Of Rome in the 70s via Limits To Growth by Meadows et al and continued by them into the UN IPCC and the Agenda 21 crowd (also UN driven).

        It is an organized effort over generations to gain economic control, and has been succeding.

    • Definitely most at The Oil Drum were AGW catastrophists that didn’t see or understand the revolution of fracking. They lost the argument and went home.

      • I was always amused by the number of people I met on the Internet who were simultaneously “Peak Oilers” and “Global Warmers” and didn’t even see how one contradicted the other.

      • Odd, because the ones who were not AGW catastrophists are the ones still publishing.

        Beware of bigotry – just because warmists are wrong about AGW, doesn’t make them wrong about everything.

        I am sure even Mann can tell left from right. Mostly.

      • Being wrong about AGW shows that your judgment is at best questionable. Which in turn puts any other pronouncements in doubt.

    • If finally just occurred to me what to do about ethanol- The EPA must require that any ethanol produced from edible crops only be produced without using fossil fuels. That would put a cork in it!

      • Leo Smith,

        Thanks for that. Nothing is worse than meeting someone who stuffs a manifesto in your mouth after hearing you voice one opinion.

        If I said something about rescue cats, it wouldn’t mean I’m against hunting.
        If I were against hunting, it wouldn’t mean I’m against the second amendment.
        If I were against the second amendment, it wouldn’t mean I voted for Obama.
        If I voted for Obama, it wouldn’t mean I supported his plan for health care reform.
        If I supported his plan for health care reform, it wouldn’t mean I’m a socialist.

        People hop right over this s–t and assume that if I say something about rescue cats I have nude photos of Joseph Stalin in my wallet. Don’t assume! (or I won’t let you see the photos)

      • If you support a socialist solution to a major problem, you might not be a socialist. You might just be an idiot.

    • Yes, the sooner we stop spending on ‘unreliables’ such as solar and bird mincers the sooner we can concentrate on really feasible solutions such as in-situ coal gasification, molten salt, fusion, and more efficient extraction methods for the really huge quantities of methane hydrates that carpet the floor of the oceans.

      • catweazle666:

        If you think in-situ coal gasification will become technically feasible in any foreseeable future then please contact me because I know a bridge you may want to buy.

        Richard

      • The Macondo blowout and subsequent efforts to cap the well provided a very public and well known example of what industry insiders have known for a log time…methane hydrates are a nightmare to work with…they tend to be sticky and clog pipes and other devices.
        Anyone have any update on recent progress in the Japanese effort to extract methane hydrates from the sea floor sediments?
        Mining comets and asteroids may be easy compared to getting some stuff out of sea floor sediments that are under miles of very cold water.

  6. I might add to this collection of peaksters one Jeff Rubin. Amazon describes Mr. Rubin, “Jeff Rubin is the chief economist and chief strategist at CIBC World Markets. He was one of the first economists to accurately predict soaring oil prices back in 2000 and is now one of the world’s most sought-after energy experts. He lives in Toronto.”

    His book was published in 2009, and the partial description on Amazon says:

    “What do subprime mortgages, Atlantic salmon dinners, SUVs and globalization have in common?
    They all depend on cheap oil. And in a world of dwindling oil supplies and steadily mounting demand around the world, there is no such thing as cheap oil. Oil might be less expensive in the middle of a recession, but it will never be cheap again.
    Take away cheap oil, and the global economy is getting the shock of its life.”

    Oops.

    http://www.amazon.com/Your-World-About-Whole-Smaller-ebook/dp/B0031TZ9QW/ref=sr_1_3?s=books

    • incorrect:
      The thing all those items have in common is private central bank money printing.
      Central bank money printing controls everything including its price in printed money terms.

  7. Thank you Eric for highlighting Gail Tverberg’s nefarious rubbish.

    Gail Tverberg’s prediction:

    https://gailtheactuary.files.wordpress.com/2014/01/tverberg-estimate-of-future-energy-production.png?w=640&h=385

    Nuttier than a scorched peanut bar.

    But people sucked in by her were always going to sucked-in by someone like her. She just feeds them the extremist doom sludge they’re addicted to and amps the confirmation-bias feedback.

    It’s evident from her record of postings, over years, that she promotes a twisted anti modernity agenda and is not the slightest bit interested in accurate oil production forecasting. Just a deplorable crank that gets off repeatedly screaming “Fire!” in a crowded theater, and acting-out histrionically to see if she can whip-up a stampede, specifically to cause as much needless harm for others as possible.

  8. Even the boy who cried wolf was eventually right. This article, though correct on the production side, failed to include issues of oil production, such as Energy Returned on Energy Invested. Simply, the net energy of a field. That has been dropping considerably since 2005. For example, the Alberta oil sands production is in the range of 1:8. That is, it takes one joule of energy to get eight back. (Natural gas consumption to make the oil from the bitumen is more than all heating requirements in all of Canada, homes and businesses). That’s one of the worst paybacks on the planet. A far cry from the 1:100 return in the 1960s. This is crucial as once a field drops below 1:4 you are no longer getting any return from the oil you extract.

    Current oil prices is a geopolitical issue, coupled with a drop in world demand. The over production is only about a million barrels per day, compared to the 95 million barrels consumed. That can turn on a dime. What’s happening with production is a political game of chicken, waiting for someone to blink. Then watch the price swing entirely in the other direction.

    • J. Richard,

      “failed to include issues of oil production…”

      Is this weird rebuttal day at WUWT? The world’s greatest energy expert could write ten thousand words — or a hundred thousand — and get that rebuttal. This is a thousand word post about one specific subject — not the Britannica’s entry on petroleum.

      “The over production is only about a million barrels per day”

      What is this “over production”, and where is it stored? World storage has not risen at anything close to a million barrels/day. US storage has increased 61 million barrels over the past 8 months (there are no reliable totals for world commercial storage). https://www.eia.gov/dnav/pet/pet_stoc_wstk_dcu_nus_w.htm

      Spare capacity (the oil taps throttled below full) is unusually low, probably 1 – 2 m/b day.

      This is the first financial world war. Bet on the Saudi Princes to win. Before this is over, Alaska and Texas will be begging to join OPEC (exaggeration for effect).A revitalized OPEC could push spare capacity back up to 3 or 4 million b/d. That would jack the price up fast. To $80? $100? The Saudi princes need $100 to pay the bills, so that’s probably their goal.

      Details here: http://fabiusmaximus.com/2015/12/08/saudi-arabia-oil-war-91758/

      • They claim $80 as a stable price target. Above that price they have increasing competition from non-conventional sources.

      • Good Point. I only meant to note they have mentioned this price consistently for many years now.
        If one believes what is said about peak oil, a good strategy would be for anyone with money to be buying up oil hand over fist and thee prices and pumping it into underground reservoirs.
        I doubt it will stay cheap like it is now for very long…the problem is that in the investment world, one can never be certain just how long “very long” really is.
        Many people who have accurately called trend reversals went broke because they erred in the timing.

      • $80 also seems to have been the most often quoted price at which many sources become profitable to produce, Athabasca tar sands for one.
        An awful lot of people have lost their shirt in the current price decline, due to their believing that this factoid (if it even is one…I do not really know) meant that the price could never get much below this price unless demand dropped sharply.

    • For example, the Alberta oil sands production is in the range of 1:8. That is, it takes one joule of energy to get eight back. (Natural gas consumption to make the oil from the bitumen is more than all heating requirements in all of Canada, homes and businesses).

      what’s the world average? You compare an anecdote (one of the worst cases) to a 1960s average. What’s 2015 average compared to 1960s average?

    • J. Richard Wakefield says:
      February 15, 2016 at 3:43 pm

      … The over production is only about a million barrels per day, compared to the 95 million barrels consumed. That can turn on a dime. What’s happening with production is a political game of chicken, waiting for someone to blink. Then watch the price swing entirely in the other direction.

      A couple of years ago I thought the lower limit was about $40/bbl because that was the cost of production for fracking. Indeed, with the lower price we’re seeing widespread bankruptcy of frackers. So, a bunch of oil and gas isn’t being fracked until the price goes over $40 again. A bunch more will come on stream at $50. And so forth …

      IMHO it will be a very long time until oil approaches $100/bbl again, if ever. I note that the Chinese have made great progress in fusion. The stone age didn’t end because we ran out of stones and that may also be true for oil.

      • Commie Bob,

        “So, a bunch of oil and gas isn’t being fracked until the price goes over $40 again. A bunch more will come on stream at $50.”

        That’s a natural opinion, since it’s often said in the news. It’s almost certainly wrong, for several reasons.

        “I thought the lower limit was about $40/bbl because that was the cost of production for fracking.”

        Articles about oil economics routinely cite as “costs” what are in fact “project operating costs” — ignoring other costs: capital costs (capex to develop the field), overhead (got to run the company) and the cost of capital.

        Companies relying on fracking produced little free cash flow even with natural gas (Henry Hub) at $3.50 – $4.00 and WTI oil at $90 – $100 — as they were for most of 2013 – 2014. And that was with an absurdly low cost of capital provided by lenders (too low, as will be proven by the bankruptcies that are just starting).

        Once the well is completed, they need only produce enough cash to cover its operating costs (shutting down the well often voids the lease) — so production continues at prices far below that needed to justify new wells. As well production declines (fracked wells have fast decline rates), then field production drops.

        When prices rise again, exploration & production will increase — but requiring higher price points than during the past boom.

        (a) Company CFO’s will write checks only for projects that will produce profits at current prices with conservative assumptions — no more “field of dreams” capex.

        (b) Lenders will demand higher interest rates, as the memories of the coming defaults will last a long time. The coal bankruptcies, now starting to become serious, will further entrench the reputation of energy lending as high-risk.

        Second, natural gas prices are more significant than oil for fracking — and for overall US hydrocarbon (in layman’s term, petroleum) production. See this EIA graph for 2014.

      • Editor of the Fabius Maximus website says:
        February 15, 2016 at 7:17 pm

        … Once the well is completed, they need only produce enough cash to cover its operating costs (shutting down the well often voids the lease) — so production continues at prices far below that needed to justify new wells.

        Indeed. If oil were $100/bbl some of the Bakken wells might be economical for as much as thirty years. As it stands, many of them are good for less than one year because of high LOE (lease operating expense). In other words, even if you can get a bankrupt well for free, you still might not be able to economically run it.

        So, production continues but maybe not for long. Here’s a link to a story that was written 133 weeks ago when they were still talking about $100/bbl. Here’s a link to a recent story where they are talking about $1.50/bbl for North Dakota sour.

    • EROI: the notion than one BTU is economically equivalent to every other BTU, regardless of its source. In other words, crackpot-ism on par with obsessing about the Federal Reserve being “privately” owned.

  9. I’ve been hearing about Peak Oil all of my life. You are right, though, that the hysteria really started ramping at the turn of this century when the BRICs embraced free enterprise to lift their people out of poverty. I remember reading at article about a decade ago in which Darla Moore talked about how her husband, Richard Rainwater, woke up every day and the first thing he did was see what had been published at the Oil Drum website. So some sophisticated people bought into it at the time. Matt Simmons used to come on CNBC all the time pushing how markets had always failed to properly price oil given its apparent scarcity.

    One of the things you fail to mention, though, is that our estimates of reserves keep improving. The Atlantic article I link to below is mostly about the potential of methane hydrate, but one interesting tidbit the author mentions is about the Kern River an oil field 100 miles from Los Angeles that has been pumping oil for over 115 years. In 1949, after they’d been pumping oil from the field for over 50 years, analysts estimated the remaining reserves at 47 million barrels. That was wildly off. Over the next 40 years they pumped 945 million barrels from it and the new estimate in 1989 was that 697 million barrels remained in the ground. Well, over the next 20 years, from 1989-2009, the field produced an additional 1.3 billion barrels. And now with the best technology and knowledge available, they estimate there are still 600 million barrels remaining.

    And that is just one field.

    http://www.theatlantic.com/magazine/archive/2013/05/what-if-we-never-run-out-of-oil/309294/

  10. Editor LK, you confuse many things about peak oil PRODUCTION.
    First, did you know that you have to subtract NGLs (natural gas liquids like butane and propane), which are useful for petrochem and barbicues but mostly useless for gasoline, diesel, and jet kerosine transport fuels, which is whatmis made of about 75% of crude oil?. Minus about 10% now; all liquids are not equal.
    Second, did you know that Prof. Defyesse et. al. were calling peak conventional oil? Now, I have seen posts here saying oil is,oil, so lets be precise since the ratemof,production matters greatly,on the oil type. Conventional oil is sourced from some underlying source rock and resides in some overlying capped.porous reservoir (usually a sandstone or a fossiliferous carbonate). It has a viscosity >API 10 (higher API is lower viscosity), in a reservoir with porosity > 6% and permeability > 10 darcies. According to IEA, conventional oil production peaked in 2008 and is now declining at least 5.1% from existing fields. Roughly what was predicted by many. Essay IEA Facts and Fictions goes through the excruciating details. Oh, and creaming curves by basin (or, if you prefer, probit transforms) both say that about 75% of all the oil of all types that will ever be discovered already has been. Never confuse a price war with future production rates of a finite fossil fuel.

    Now, unconventional oil is of four types not meeting the conventional oil criteria. 1. Orinoco belt tar. API<10. Largest part of Venezuela OPEC reserves. Except slow (steam flood) and very expensive to produce. So almost none is yet. 2. Athabasca bitumen, API<10. The 'tar sands' that are not even tar, just asphaltic remains of the world's largest natural oil spill. Slow (strip mining, SAGD) and expensive (ditto) to produce. Value after hydrocracking 2/3 of conventional oil for transportation fuels. So very costly to extract on the margin. 3. Source rock shale oil. Very light high API oil (a separate transport problem as Bakken trains unfortunately proved. But from rock with porosity <1%, and permeabilty in millidarcies. (A brick has water permability <10 millidarcies, for rhose who want a tactile sense). From which, after fracking long horizontals, we are lucky to recover over all time 1.5% of the oil in place. Darned low porosity and permeability.
    The fourth unconventional source is called oil shale, a confusion since the shale contains no oil at all, only marine kerogen not yet into the catagenesis oil window. The Green River formation of Northern Colorado, southern Wyoming and Utah comprises about 60% of the worlds deposits. There is a small problem. Mining (or in situ extraction) plus retorting (to put the kerogen through artifical catagenesis) requires between 3 to 5 barrels of water per barrel of syncrude. In case you have not noticed, there is already water scarcity along the region fed by the Colorado River. So unless you want to wipe out Vegas, LA, Phoenix, and San Diego, doubt any,of themGreennRicer formation will ever produce any oil
    Now, compound the amount of tar, bitumen, and shale oil to be extracted ever at anynprice, times the slowing rate at which it might be (at any price, TRR) then get back. Ignorance is no legal defense.
    I wrote about this in two ebooks. Extensively. Illustrated for laymen. References for the technically imclined. Read them. What your peak oil (annual production only) post teaches is how imprecise and ill informed most public policy dialog is.

    • ristvan,

      Congrats on one of the oddest comments I’ve seen to one of my posts. That’s impressive given the stiff competition. Especially noteworthy are the rebuttals to things I didn’t say. You’ve learned much from the climate alarmists (it’s their favorite form of debate)!

      Your 600 word (!) comment looks like a rant (half the length of my post, 1% of the evidence). Too much coffee today? Perhaps you should follow WIllis Eschenbach’s advice (from memory) and give rebuttal to quotes.

      I know lots of stuff about energy, but don’t try to put all of it in a thousand word post. Most of the issues you raise are discussed in my 80 other posts about energy. See them here: http://fabiusmaximus.com/peak-oil/

      • LK, you rant, not I. I posted a longish summary of basic petroleum geophysics for laymen, and conclusions therefrom. With lots of specifics. And backed by hundreds of pages of analysis (referenced elsewhere). Refute any specific therein with counterfacts? Please try.

        Simple examples. Did, or did not, IEA call the conventional peak in 2008. Did or did not its head, Dr. Faith Birol, call the overall peak by about 2020? Google can be your friend if you dont want to read my stuff with footnotes. Like, what is the current EIA TRR estimate for the Monterey shale, the US largest?

        Your claiming 80 posts reflecting fundamental lack of knowledge of petroleum geophysics is like Mann saying, ‘read all my paleoclimate reconstructions’. He has yet to deal with McIntyre, faulty centered PCS, and upside down varves. You have to deal with the reality of geophysics as laid out for you in my ‘rant’. As the late Justice Scalia siad re Gore v. Bush, “Deal with it”.

      • There is a simpler rebuttal to your ‘oddest comment’ Mann like toss off of my questioning your knowledge of geophysics. Just occured to me. LK, what is the capacity of the US Strategic Petroleum Reserve, in days of 2015 consumption? Is it still strategic? If not, what do you propose?

      • Larry, if you want to continue replying, at least get my name right. Rud Istvan, hiding in plain sight at both Amazon and LinkedIn. Three ebooks on iBooks and Kindle plus more, according to my publisher.Do get back with some counterfacts. I am rather boored by nonfactual counter opinions.

      • Ristvan,

        My apologies about misspelling your name. My ipad substitutes what it thinks the text should be without notice to me. Sometimes it’s judgement is good, sometimes not so good.

        Re: your questions

        If you give a quote from the post plus question or rebuttal, I’ll reply (that’s foolish of me, but I’m weak). I provide consulting services for your other questions, if you are willing to pay.

      • ristvan,

        If a doctor spoke like you, he’d tell a patient to “Shut up you know nothing about medicine, read a book before you come here and talk about your symptoms”. See how that doesn’t work?
        We might go read your books, if you gave us a reference to them?

    • Ristvan,
      I have had the title of “Petroleum Geophysicist” for 35 years. Worked and consulted all over the world. Nothing in your rant falls under the field of “petroleum geophysics”. I see some confused petroleum geochemistry, some reservoir engineering, a bit of economics, but very little geophysics. Please stop abusing the term.

  11. Larry
    Thanks for the helpful collected links.
    I still find your evaluation overly optimistic by the logical fallacy of “moving the goalposts”. per my comment.) The models for conventional “crude and condensate” were not that far off. It is the alternative fossil resource development that was not accurately forseen. The date of a “peak” is insignificant compared to the generation long trends in crude oil vs other fuel production.
    Outlook from Optimistic to Pessimistic
    ExxonMobil’s 2016 Outlook for Energy Fig. 62 projects “crude + condensate” declining from a peak about 2006 to 2040. That after previously strenuously denying such predictions lest such admission harm its stock price.) Contrast as recently as 2010, ExxonMobil’e equivalent shows major growth in crude + condensate expected from OPEC while showing flat Non-OPEC.
    Exxon shows the average strong decline in conventional fields that it does not expect new discoveries of “crude+condensate” to overcome. Even adding in “Deepwater production” and discoveries still does not bring future production up to a plateau or “no decline.”
    All projected growth is from other resources – bitumen (aka “oil sands”), tight oil (from fracking shale), natural gas liquids (NGLs again from fracking), with small increases from “other” and “biofuels”. Yet the higher costs, especially conventional, deep water, bitumen, and tight oil, are dampening the economy and hindering growth in developing countries.
    90% decline in growth
    Actuary Gail Tverberg at OurFiniteWorld.com shows 7.8%/year demand growth for 1965-74, but only 0.8%/year growth for the last decade.
    Evidence for State by State Peaking
    In “Oil Prices, Exhaustible Resources, and Economic Growth,* Economist James D. Hamilton (UCSD) graphs the production of the US States. He shows almost ALL have already peaked and declined for their region. Geology-area still rules for the same type of resource and recovery technology.
    Technology takes a LONG time to develop. Oil “Fracking” development began in 1862! Yet it was not until about 1990 that commercial oil fracking took off in the USA!
    Potential CO2-EOR
    Note that Tertiary and “Quaternary” production (from residual oil zones) via Carbon Dioxide Enhanced Oil Recovery (CO2-EOR) could nominally equal the production of conventional crude oil with secondary water/gas recovery – IF/When we capture/develop the CO2 resources.
    To quantitatively understand hydrocarbons, we need to use “multi-Hubbert” modeling – where each resource-region and technology is separately modeled with its own growth, max, and decline. That will give a much better grasp on future production and challenges.
    Short term oil price is a very POOR predictor especially in the global poker/chess game between Saudi Arabia, Iran, Russia and the USA. Even a 1% excess/lack in global oil availability sends prices skyrocketing/plummeting. e.g. from $147/bbl to $33/bbl to $110/bbl to $26/bbl. Focus instead on the long term geological constraints on each type of fossil fuel and the very long time it takes to develop and deploy new technology.

    • David,

      Odd rebuttal day continues at WUWT! Your 500-word comment discusses lots of stuff — supposedly rebuttals — without showing any relevance to what I said.

      Lesson learned! In the future I will follow Willis example and request that people reply to quotes.

  12. Along with my interest in CAGW, I also bought into fears concerning “peak oil”.
    I now accept that I was mugged by fools. And that I myself was also a fool to attend to such WRONG predictions. Wrong is the kindest of words. Inaccurate does not describe the degree of divergence from what consequently happened.
    And governments also attended to the prediction of future energy shortages and rising market prices. Especially the U.K. government, which has now committed to expensive energy prices long into the future, via expensive nuclear (9p/kwh) and expensive solar and wind (43p/kwh inflation adjusted and guaranteed until 2030).
    The ongoing cost of this debacle is going to look like an extraordinarily poor deal for the British people IF oil and gas stay cheap and cheerful.
    Now that oil is cheap, support for an expensive future for all seems to be evaporating:
    http://www.fitariffs.co.uk/FITs/reviews/2015/
    “Oil experts, economists, and government officials who have attempted in recent years to predict the future demand and prices of oil have had only marginally better success than those who foretell the advent of earthquakes or the second coming of the Messiah.”
    Akins was speaking in 1973.
    http://reason.com/blog/2015/02/10/oil-to-surge-to-200-per-barrel-or-maybe

    • Frog,
      You would be well advised to pay attention to Rud Istvan. He laid out the basics of oils, fields and peaks. Conventional oil from older field has peaked. More volatile crudes and condensates have pushed world “crude oil” production up a couple of million barrels per day over the last decade. Most of the rest of the increase of liquids produced have been natural gas liquids that are not primary transportation fuels. Over the last decade, the U.S. horizontal drillers pushed the U.S. oil production up from about 5 million barrels per day to about 10 million/day. in a time of reduced demand. That oversupplied the oil market and destabilized it and also led the Saudis to decide to kill their competition. They went through this previously in 1985. They had allowed themselves to be swing producers for OPEC to keep the oil price high, but when their production had been cut back from 10 million/day to 2.5 million/day, they pulled the plug on their cheating OPEC friends. This is just the second verse of a familiar song for them. How long it will last this time depends on the economic growth rate, but eventually the world economy will outgrow the present supply of cheap oil. After the carnage of the ’86 price crash, it was a long time before lenders provided the capital for more oil field development. I would guess that oil prices will have to get back over $100/barrel before they would get back in the game. That might take a good while in a stagnant world economy. So the issue isn’t “peak oil” it’s peak cheap oil.

      • I’m not so sure that the Saudis run the show any more in the way that they used to.
        Of course, I too can now look back and see who could be trusted to provide a good analysis and who turned out to be talking bull. But back in 2005, when I first took note of serious concerns and read widely on this topic, I backed the wrong predictions.
        By about 2008/09 the world was paying $140/barrel (by recollection) and all the earlier concerns looked justified. But then look what happened.
        I recall mention at the time of investors buying $200/barrel futures.
        Luckily that wasn’t me.
        Anyone betting on demand exceeding supply by 2016, lost that bet.
        It’s easy to say who was right or wrong with the benefit of hindsight.
        But seemingly solid analysis from the past seems to have lead to some very wrong predictions.
        Do the Saudis still have control over the market? To some extent they can over-supply and lower prices.
        But when they stop dumping then where will the new price settle?
        If anyone could say exactly where we will be in 2026 – then I’m sure that they could make that bet and make a load of money.
        That won’t be me – because I don’t know!!

      • Natural gas liquids can be put through a reformer and made into gasoline and diesel fuel and jet fuel and… The cost to do this is low, but bottle propane has a nice fat markup…

        While I prefer to use it in the BBQ, it is near trivial to use it for motor fuel and I have driven propane powered vehicles.

        LPG is just a red herring argument in oil fuels costs.

  13. The root of the error is the belief that we live in a “Finite World”.
    It assumes that nothing comes into the world (except a few insignificant meteorites). That non-physical things don’t exist.
    It’s materialism run wild.

    Ideas are new. Ideas change productivity. Ideas create new resources. Ideas reach existing resources cost effectively.

    Who cares if Ancient Rome had uranium? They couldn’t use it.
    Who cares if shale oil exists if we can’t reach it… but then invent fracking and…?

    We have lots of new ideas. And we have lots of new people to have more ideas.

    It is not a Finite World

  14. I thought peak oil had more to do about the price of extraction and if this is so, will we have to depend on middle east oil in North America?

    • Ron,

      Exactly! Price is what links supply and demand. As i said upstream, there is an inverse relationship between ore quality and quantity, so that once the world is fully explored (all deposits known) costs will rise over time — offset by better tech that lowers the cost of extraction and refining (details here).

      At some unknowable point either the balance will tip so that rising prices force lower production (aka peaking production and demand destruction) — or new forms of energy replace it.

      As for US imports of oil, successfully modeling for decades in the future that involves many factors of economics, technology, and geology. The record suggests that doing so lies beyond the state of the art.

      My guess (emphasis on guess) is that new tech will produce cheap electricity and relatively inexpensive electric vehicles — slowly replacing use of liquid fuels for ground transportation — producing a demand-driven peak oil.

      • It might as well be infinite.
        I have calculated the volume of all of the oil ever produced anywhere in the world. This volume compares in size to a largish mountain. But a large mountain compares to the Earth as a bacterium compares to a cue ball.
        Considering the volume of all of the sedimentary rock on the earth, and throw in the volume of all of the worlds oceanic sediments, we have barely begun to scratch the surface of what the world holds.
        Future technological improvements should be considered nearly infinite, considering how quickly new technologies and techniques can be invented and evolve.
        The biggest dangers we face, IMO, is crippling our ability to innovate by dismantling or crippling our economic and energy infrastructures, and discrediting our scientific institutions (or more accurately perhaps, allowing them to discredit themselves) so that progress slows to a crawl or becomes impossible.
        Our political leaders and regulatory agencies are leading us rapidly astray.

      • “My guess (emphasis on guess) is that new tech will produce cheap electricity and relatively inexpensive electric vehicles”

        Electricity can, and will be cheaply produced by nuclear reactors 4th and later generation fission machines, and fusion machines. But, the battery problem will make electric cars forever out of reach. The problem is driven by inorganic chemistry, which is a mature science, and the inherent engineering problems of electricity.

        I wouldn’t worry. If you have have enough cheap electricity, you can make liquid fuel out of air and water.

      • “But, the battery problem will make electric cars forever out of reach.”

        An electric car which can travel hundreds of miles and be recharged in minutes will be out of reach, but transport is going to decline dramatically over the next few decades. When you can make most of the things you need locally with the descendants of today’s 3D printers, and you can ‘travel’ anywhere you want by renting a VR drone at your destination, the demand for long-distance transport will collapse.

        That doesn’t mean we won’t need oil, but it will be primarily a source of raw materials for manufacturing, not a fuel for transporting manufactured products.

    • Ron M,

      Peak oil refers to the point of maximum rate of extraction, followed by a decline. Hubbert’s 1956 prediction for the US lower 48 was quite good …

      … until shale oil production began to pick up due to market forces. According to the Wiki article containing the above graphic:

      In 1956, Hubbert confined his peak oil prediction to that crude oil “producible by methods now in use.”[16] By 1962, however, his analyses included future improvements in exploration and production.[44] All of Hubbert’s analyses of peak oil specifically excluded oil manufactured from oil shale or mined from oil sands.

      The same article notes that his worldwide forecasts called the peak around the year 2000, which has not happened.

      This document from the USEIA contains information releavant to US import/export/domestic production:

      https://www.eia.gov/totalenergy/data/monthly/pdf/sec3_6.pdf

      Parent page with other statistics here: https://www.eia.gov/totalenergy/data/monthly/#petroleum

  15. Peak anything is an economic argument.

    Peak conventionally extracted oil occurred…but 10 years of high prices produced an abundance of alternative inexpensive extraction methods and alternative fuels and substantial improvements in efficiency.

    • I thought he was talking statically. That is, conventional is defined as what is conventional at the time of the statement.

  16. Most Peak Oil projections assumed oil was a finite resource and one could calculate the date of Peak Oil by determining how much oil is in the ground or under water. I took a different approach. For me, the question has never been how much oil is potentially available, but rather how much affordable oil can we humans produce? It is important to understand the definition of “accessible” reserves: “Accessible reserves are those reserves of oil, coal or natural gas that can actually be found, produced, transported, refined, and distributed without disruption at a price the consumer can afford to pay.” Our fossil fuel resources are useful only if they can be produced and consumed, without disruption, at a price the consumer can afford to pay. We almost had an oil crisis in 2008 when there was a temporary lag in new oil production and there is ample evidence the production of conventional oil has already peaked. Hence, new oil production must come from resources that are largely more expensive to produce. Shale oil liberated by fracking is a good example, as are the cost of oil derived from sands, deep sea wells, and the arctic. Someone has mentioned EROEI – energy returned on energy invested. When that calculation approaches 1 for 4, as is happening, oil will become too expensive to use as resource for gasoline, diesel, and jet fuels, and – as shown in 2008 – will be too expensive to use as an agricultural liquid.

  17. Probably opening up Alaska to unlimited oil production (and not just ANWR) as Texas had many years ago, would provide many years of oil reserves and production if not for the USA, probably the world.

    And many of the western US states have land owned by the government which will not allow oil production.

  18. Peak oil was always about oil availability. Now it is about type, sub-type, price. Fact is, in 2016 there is a lot of oil. The world is swimming in oil. And it’s cheap. No one predicted that.

    • Steve,

      That’s an important point! Long-term predictions about energy — and commodities — have a poor record of success. History shows large swings, which are often mysterious at the time.

      I suspect this bear market cycle in commodities (it’s not just oil) is driven by a rising dollar and slowing global growth. On top of that the Saudi Princes started a price war to regain discipline among oil producers — just as they did in 1985.

      As usual, all these factors produce grand claims about geology. Noise.

      • My feeling is the Americans reopened Pandora’s box with the advent of tight shale fracking. Look at US oil & gas production since 2007. The nice thing about oil is the box is periodically reopened and that confuses a lot of people.

      • Steve,

        Nicely said! The history of oil has been one of milestones of tech and discovery since the Drake well in 1859.

        Eventually the entire world will have been explored, starting a new era of oil — in which the relationship of price, tech, and deposit quality-quantity play themselves out.

  19. We should be investing in thorium and possibly fusion, because eventually we’ll have a problem. But we have time. I’ll be dead, and maybe even my kids before this is a problem. South America has barely been tapped. Venezeuala has a ton of crude sitting there due to politics. Colombia has vast reserves, but the commie rebels do cause a problem. Exxon just hit a huge field off Guyana. Argentina has vast shale reserves. We’re in good shape, but we do need to get going on thorium. Also, let us not forget about coal, which can be converted into diesel. Already being done, but shutdown by politics in the US.

    • 200 years of oil and 600 years of coal. Your children’s great-grandchildren will be dead. In the meantime, live long and prosper!

      • 200 years of oil, 600 years of coal, but at what rate? If we assume a world average economic growth of 3%, with a doubling period of 25 years, 200 years has 8 doubling periods. That means the world economic activity will be 256 times today. We can extract 256 times the oil we are now today???

        You are actually incorrect. Oil will last us for ever, because in 200 years society will be much lower than today. Horse and buggies dont need gasoline.

      • Steve,

        “200 years of oil and 600 years of coal.”

        First, that’s almost certainly wrong in any meaningful sense. Second, given the inverse relationship of ore quality and quantity, that coal in a hundred years will have the BTU content of Kitty Litter (that was a comment to me by one of EIA’s coal experts when I asked him about America’s vast coal reserves). Ditto for “oil” — we’re already mining bitumen (“oil sands”) and even small amounts of kerogen.(“oil shale”), that are barely oil.

        Third, I find it difficult to imagine a future in which we’re burning large quantities of fossil fuels for energy 100 years from now. That’s unknowable, of course.

      • Editor of the Fabius Maximus.

        Regarding the EIA experts comment “coal in a hundred years will have the BTU content of Kitty Litter” .

        I can think of at least one Mississippi coal plant already burning a lignite that is essentially dirt (although it’d have to be shut down with Obama’s Clean Air Plan). And, given that the current cost incentive to simply take a derate and burn PRB. you’d think were already there.

        However, I would be interested seeing in any projected heat content data the EIA might have? Have you seen any?

    • Thorium can already be used in present light water reactors (rods in burn testing now) and in CANDU designs. Yeah, molten salt would be nice to have in production, but it does not limit the use of thorium today.

  20. My Dad, who was a chemical engineer (ScDChE from MIT), had an engineering textbook (I forget which) from 1936 that stated we shouldn’t develop an economy based on fossil fuels (in particular oil) as we only had 10 years worth of reserves. Proving that the professorate has long had problems with distinguishing the difference and significance of ‘proven reserves’ and actual oil in the ground and what and how it is accessible.

  21. The author seems to have left out the really interesting predictions of President Jimmy Carter from the late 1970’s who was a peak oil believer. He gave lots of speeches to urge conservation, and a switch to massive coal and nuclear usage in order to save petroleum.
    He was just as deluded then as Obama is now. Is it the office you think that makes them silly? Or were they that way when they moved in?

    • Mike,

      “The author seems to have left out the really interesting predictions of …”

      It was not a list of everyone who ever gassed a date for peak oil. It was a list of some predictions by some well-known experts about oil.

      “Is it the office you think that makes them silly? Is it the office you think that makes them silly?”

      My guess is that they sound silly because we expect them to have answers to every question. I plan to vote for the first guy or gal who frequently answers “I’ll get back to you on that” to the more inane or trivial questions in the debates and press conferences.

  22. Steve
    It is highly unlikely your grandchildren will consume oil based products in the quantities we do now. There is a race to control the world’s remaining coal, oil and natural gas resources. Why? The political future of most nations depends on having enough accessible fuel.

    • For an amusing look at what the future may hold, give a read to Joe Haldeman’s “The Accidental Time Machine”.

    • IFF we were at Peak Oil now, and that is very unlikely, Hubberts theory says production fades roughly as it rose. The downside of the bell curve looks much like the entry.

      The conclusion from that is just that with about 150 years of oil since Drake’s Well, we have about 150 years to last well, minimum.

      As I have a new grandson, that means he will be driving in about 17 years. We will still be very near present oil production in 17 years (a bit over 1/10th the time to end, but at the flatter top area) even IF now were peak oil, which it isn’t.

      So I am very comfortable saying my grandkids will live in an oil age much like I have.

    • Poor Nick. He comments but seldom seems to read the post, and so gives consistently weird “rebuttals”.

      This was about the predictions of peaking, which I listed. It was self-explanatory (with a link to the source for more info), at least to people who read the newspapers.

      • Editor,
        You mainly listed a set of dates and names from a 2005 report of Hirsch et al. Their conclusion:

        “Our analysis leads to the following conclusions and final thoughts.
        1. World Oil Peaking is Going to Happen
        World production of conventional oil will reach a maximum and decline thereafter. That maximum is called the peak. A number of competent forecasters project peaking within a decade; others contend it will occur later. Prediction of the peaking is extremely difficult because of geological complexities, measurement problems, pricing variations, demand elasticity, and political influences. Peaking will happen, but the timing is uncertain.”

        Doesn’t sound so hysterical. But the key thing is, they are talking about conventional oil. That’s why it is important to quote what people actually say.

      • Nick,

        You are advancing — from ignoring to misrepresenting what I said. A true troll.

        “Their conclusion … Doesn’t sound so hysterical.”

        As any child reading this would see, by “hysteria” I referred to the list of failed peak oil predictions — not to the Hirsch report listing them (which is, imo, among the best analysis done to date about energy policy).

        Also making this clear I said “Note that the forecasts of major energy agencies’ look good a decade later.” The Hirsch report was done for the DoE.

        “they are talking about conventional oil.”

        False, They were referring to different definitions from “conventional oil” (a term whose meaning has changed over time, and is seldom used by energy experts these days) to liquid fuels. Which is why I showed the table of production of both over time (i.e., narrow and broad definitions) — both have risen.

        The peak oil people most often referred to the peaking of liquid fuels, hence the severe economic effects they predicted when that peaked. Not to a scenario with ample liquid fuels but peaked conventional oil — which would have had far milder effects.

      • “Which is why I showed the table of production of both over time (i.e., narrow and broad definitions) — both have risen.”

        No, you have listed “Crude Oil”. The EIA full title is ” Crude Oil including Lease Condensate” and they make an explicit note that it also includes Canada Tar Sands. That isn’t “narrow”.

        ” not to the Hirsch report listing them”
        A subtle distinction. But that’s the problem. You don’t make clear who you are talking about or cite what they said.

      • Nick,

        “No, you have listed “Crude Oil”. The EIA full title is ” Crude Oil including Lease Condensate” …. That isn’t “narrow”.”

        Yes it is. The EIA does not collect information in any narrower form. The monthly report submitted by US oil producers, EIA-914, has them report “Crude Oil including Lease Condensate” (question 3.1). The EIA does not collect information on crude oil production without lease condensate, or on lease condensates as a separate category.

        http://www.eia.gov/survey/form/eia_914/form.pdf

        I don’t mind your criticism, misinformed as it usually is. What makes you a troll is that you seldom (ever?) acknowledge your errors, but come back confidently with still more ill-informed rebuttals.

      • ristvan,

        “but don’t tell us what they said.”

        Since you are agreeing to something obviously false, I see why your long comment didn’t cite — or even pertain — to what I wrote.

        It’s the long tradition of climate almarists to give bold rebuttals without any contact with the content. Interesting to see that you join Nick in this.

        I’m off to work. I’ll leave you and Nick to chat about “cheap shots”. Listen to him; he’s an expert.

      • MarkW,

        I do not consider Rritvan a troll. He often makes insightful comments to my posts, although we often disagree.

        I agree with you, his agreement with Nick Stokes’ typically trollish comments here is odd. Especially as he makes no specific criticisms of my post, just bold smears.

        Perhaps he just had a bad day.

  23. Those people predicting peak oil may have been wrong, but the money that a lot of people made and lost was vast and very real.
    And it extended way beyond energy to commodities such as copper. People who knew, at the time, when the commodity supercycle ended did well…and those who failed to get the memo and continued to invest did not.
    I put the start of the turnaround and reversal as the completion of the Three Gorges dam and the end of the build-out for the Beijing Olympiad.

    • Menicholas,

      Thanks for the reminder! I’ve been in finance for 38 years, and seen people lose fortunes betting on commodity cycles — usually betting that the current move will continue. That works until it fails, usually hard.

      The cure for high commodity prices is high prices is high prices. The cure for low prices is low prices. The long-term trends are difficult to see, nor do we know that they’ll continue.

  24. There are many who believe the current excessive production is a strategy to stop fracking, particularly in the United States. I am not so sure. The Kingdom of Saudi Arabia is in a fight for its political life against Iran, backed by Russia and China. Low oil prices reduce the ability of Saudi Arabia’s opponents to fund war.

    Just a thought.

  25. As some wag once noted: the world will never run out of oil – it’s just that .nobody will be able to afford the last barrel

  26. These are something to watch. The tone of certainty and all.

    The End of Suburbia – 52 minute documentary on peak oil

    and then Escape from Suburbia

  27. This is very tangentially related to this post, but I’m looking for some help. I’m arguing on FB against CAGW. Someone put up a graph of CMIP5 versus observations. It looks great and that the models have been correct.. But I think CMIP5 up until it was released 2011, 2012, 2013?) is a hindcast. Right? Does CMIP5 show any predictive value or does it show that we’re really good at fitting models to historical data? Can someone help me? Thanks.

  28. Two years ago we had our oil heater replaced by a new very efficient burner, our oil consumption was ( gratefully) cut over halve! I see technology in the coming years make the same if not better advances. To me all this talk is not relevant. i compare it to the advances in computer teck, astronomical and satellite advances, who would have seen those coming?

  29. The Peak Oil story is still correct because the math has not changed. Yes, we can produce more oil by destroying capital for a while but that is a fool’s game that has to end. The bottom line is that light sweet crude production peaked a few years back. Yes, we did spend hundreds of billions of dollars to develop expensive tar sands and totally uneconomic shale; we invested in water drive systems that would produce more oil now but at a cost later on as some of the recoverable gets left behind.

    The only way to see what is happening is to look at the balance sheets and cash flow statements of the marginal producers and they are toast. The SEC filings for the pure shale producers show negative cash flows even when prices were near a barrel. And given the heterogeneous nature of shale formations, the rapid depletion rates, and very small core areas where production is very profitable but limited, we are looking at a small amount of economic production that is dwarfed by the credit induced levels of uneconomic production that we see today.

    If we look at the latest report from the Bakken we see that in November 2015 there were 10,314 operating wells producing 109 barrels per day of oil. That compares to the November 2012 report when there were 4,918 operating wells producing 136 barrels per day. All those new wells provide us with the greatest flow rates but even doubling the number of older wells was not sufficient to offset the production decline from existing wells. That seems very strange given the assumption of hyperbolic decline curves where production stabilizes and stays somewhat constant for many years in the future. The peak for aggregate Bakken production was July 2015 even though the number of wells had increased by around 3% (270) over the four months from July 2015 to November 2015.

    The shale story was made possible by a credit induced bubble that was created by the Fed to mitigate the effects of the economic contraction created by the popping of the housing bubble, which was created by the credit bubble created by the Fed to mitigate the effects of the popping of the tech bubble, which was created by the Fed’s creation of a credit bubble to offset the damage done by the Asian Flu and the Russian bond crisis. The Fed permitted billions in negative cash flows to be papered over as massive amounts of capital were ‘invested’ into unproductive shale production.

    Note that in 2012, WTI averaged $94.05 per barrel while Brent was near $111. Yet, a supposedly great producer like Continental managed to report negative cash flow of $1.86 billion. If the supposedly ‘best’ producer in the shale space was unable to generate positive cash flows when prices were $94 what do you think is happening at $30?

    What has been remarkable was the honesty of the CEOs of the shale companies. Every presentation that I can remember hearing has made it clear that there were funding gaps that needed to be closed by new borrowing, selling assets, or issuing new shares. The managers doing the presentations were clear that their reported earnings depended on certain assumptions about the depreciation rates, the shape of the decline curves, and the ultimate recoveries that were based on calculated on the basis of those assumptions. Analysts were taken in by the very profitable wells in the core areas and assumed that the rest of the formations would yield similar results. But that is not how the geology works and the actual production data shows very different results.

    Before I end this I have to mention the problem with aggregating the production data. What we use as consumers is not the oil but the products that are made from that oil. And how much product is made depends on the type of oil that is produced. A barrel of heavy oil, the production of which has increased substantially thanks to massive investments in capital, produces a lot more asphalt and a lot less gasoline and kerosene than a barrel of light sweet crude. We can actually produce more oil and get a lot less high-value product. If we want to see what is going on we need a breakdown of production by oil type and that won’t happen because it does not fit the narrative being told by the authorities and Wall Street.

    What I find most harmful is the dislocation that the credit bubble has created. It has allowed politicians and investors to pursue fantasy with one betting on inefficient alternative energy schemes like solar and wind energy and the other on a scam like shale-oil. In the meantime, we have seen natural decline rates of around 4% per year in the conventional fields and an increase of capital destroying marginal producing assets. If we took the uneconomic marginal producers off-line, global production would fall by several million barrels that would more than offset the decline in demand due to the collapsing economic activity in the EU, US, and even the developing world. The problem is that the malinvestments have prevented rational research into realistic solutions to our production problems.

    Even worse is the status of the US dollar, which was supported by a myth of energy independence that will never happen. Once investors in American treasuries figure out that the shale miracle was yet another scam we could see a very sudden increase in poverty as purchasing power declines and jobs in industries that should never have developed are shed. You can choose to believe the mythology but I prefer to look at the real world data.

    By the way, it is easy to prove me wrong. All any of you have to do is to show that the SEC filing for primary producers show positive cash flows during the periods of high oil prices. While you are searching through the 10-Ks I suggest that you do a word search for the phrase ‘funding gap’.

  30. Seeing as the number of words used is important on this thread is important, I will keep this short.

    At peak oil, USD 150 per barrel Discovery channel did a detailed program on the oil sands development. They followed the building of two complete oil sands processing trains each 250,000 barrels per day capacity. One for Shell and one for Sun Oil ( I think). They expressed awe at the cost, USD 18 billion.

    What they overlooked was at the then current oil price that was recovered in 66 days.

    In the same way the BBC did a detailed report on the latest mega Saudi oilfield and waxed lyrical about its USD 10 billion cost. Looking at their cost figures this was repaid in 42 days and at an ongoing cost of USD 1.00 per barrel.

    That is point one.

    Next.’

    there have been two technology breakthroughs, fracking and directional drilling. Oil shale is the subject of discussion but it has a very low oil density, that is yield per cubic metres of rock. Existing oilfields have a much higher yield even at forecast total production possible.

    But if you apply those two technologies to existing proven and producing fields you unlock a massive global new supply of supply at virtually no cost. Apache demonstrated this in the Forties oilfield that they bought “dead” from BP.

    So at current realistic Oil prices of USD 25, you dont spend billions on capital expenditure but you rework existing fields or just do nothing.

    Its not rocket science.

    The scam is not current prices but the stupid high prices humanity was forced to suffer. That the Saudis overspent their windfall profits concerns me not one iota.

    • Mr. Lensman,

      You are confusing the various kinds of costs: capital, operating, overhead, and cost of capital.

      Building the infrastructure to mine bitumen does not mean that it produces “a massive global new supply of supply at virtually no cost.” In fact the operating costs are roughly similar to other mines, plus the cost of running the refinery to turn bitumen into synthetic crude oil (among the costs is the considerable amount of energy required). Plus the ongoing cost for the equipment (mining equipment does not last forever).

      Over a longer period of time, fields are exhausted and need to be replaced. Most of the available new fields require $80+ oil to be worth developing (including bitumen in Alberta, deepwater, arctic, etc). It’s not clear yet what price is needed to develop new tight rock fields (which are both oil and nat gas), but for most it is probably at least that of 2012-2014 (several times today’s prices) — since few companies were showing much free cash flow then — even with insanely low cost of capital.

      • No i dont. If it costs ten billion to build a new oilfield with all its infrastructure and process facilities. That is the capital expenditure. If they then produce at 1.5 million barrels per day, the maths is very simple.

        How they depreciate it and otherwise does not change the basic calculation.

        And i am not talking about new, I am talking about existing proven fields with all facilities in place.

      • I have said in both cases what the capital cost is and that is what i wrote off in the required periods. Its just simple maths.

        Operating costs, take usd 100,000 per day, at 1,5 million barrels per day that is only seven cents per barrel. How long does steel pipe last? How much maintenance does a gas separator need? or an oil tank?

        For your peace of mind, i built two offshore production systems, on time and on budget and both operated way beyond their design specification.

  31. ‘As many of us predicted during the peak oil hysteria, high oil prices had three great effects — all predictable… “.
    ==============================
    None of the author’s predictions are mentioned in Peaking of World Oil Production: Recent Forecasts (Hirsch 2007) where Larry Kummer is acknowledged as a contributor:
    http://www.netl.doe.gov/energy-analyses/pubs/Peaking%20of%20World%20Oil%20Production%20-%20Recent%20Forecasts%20-%20NETL%20Re.pdf
    In fact the author, presumably with Mr Kummer’s concurrence, was advocating “taking decisive action well before the [enormity of the] problem is obvious”.
    This vapid post is just another attempt to attract traffic to the Fabius Maximus website.

    • Chris,

      It sounds like you are calling me a liar. Let’s examine your claims. They are all quite specious.

      (1) “None of the author’s predictions are mentioned in Peaking of World Oil Production: Recent Forecasts (Hirsch 2007)”

      Why would they be mentioned in that report, which was a list of oil production forecasts? I suggest you look in Hirsch’s 2005 “Mitigations” report. It does not discusses how price boosts supply, since it focuses on the post-peak world. It does discuss the other two predictions: improved efficiency and alt liquid fuels.

      “the key to mitigation of world oil production peaking will be the construction a large number of substitute fuel production facilities, coupled to significant increases in transportation fuel efficiency…”

      “a higher oil price outlook often means that more oil can be produced, but geology places an upper limit on price-dependent reserves growth”

      (2) I wrote extensively about these three effects in 2008 — during the peak of the peak oil hysteria (as oil prices hit all-time record highs).

      I suggest starting with “Peak Oil Doomsters debunked, end of civilization called off” from May 2008; it discusses the role of efficiency and new fuels in the post-peak world. Here’s one of many posts describing the development of new liquid fuels: “A snapshot of our engines of innovation, as they develop new energy sources“, May 2008.

      Also see this about prices driving efficiency from “More good news about Peak Oil, on the demand side“, Jan 2008:

      ‘Higher oil prices will then work their magic in these countries as it has in the developed world, driving behavioral changes and capital expenditures which reduce oil consumption (i.e., conservation and increased efficiency). Price elasticity of demand — the “law” of higher prices forcing less demand — often catches even experts by surprise. Just as Newton’s laws of motion often seem counter-intuitive, both nonetheless work inexorability. The resulting change in demand might astonish us.”

      To learn why high prices affect mineral production (for the foreseeable future, but not forever) see “Recovering lost knowledge about exhaustion of the Earth’s resources (such as Peak Oil)” from Jan 2011 — about the inverse relationship of ore quality and quantity. Higher prices allows exploitation of the larger supply of lower-quality ore.

      There are many others, but this should give you someplace to start.

      (3) “{I} was advocating “taking decisive action well before the [enormity of the] problem is obvious”.”

      My posts all worked a consistent theme: the major energy institutions forecast peaking several decades from now. The Hirsch report showed that preparation will take 20 years on a crash basis. If we start now, efficiently and gradually, we can make an easy transition to a post-oil world — one with less pollution.

      Persistent slower global GDP growth after the 2008 crash (which almost nobody predicted) has pushed out the time of peaking — and contributed to the crash in prices (more supply, but less than anticipated demand) — but that also makes us less able to pay for the necessary investments to prepare.

      So nothing has changed the wisdom of my view imo. Certainly not yet another swing of commodity prices, one that will end with higher energy prices (as with every cycle since US production peak in ~1972.

      (4) “In fact the author, presumably with Mr Kummer’s concurrence,”

      That’s a bizarrely false claim. I did some research for Hirsch, hence the mention. I was not a co-author — so there was no “concurrence” of me with the text..

      • “It sounds like you are calling me a liar …”.
        =====================================
        Certainly not Larry, simply as you say “memories have faded, but a decade ago the predictions of end of oil were hot news”.
        I guess an investment advisor must develop an aptitude for Delphic prognostications.

  32. Two of the major hoaxes presented by globalists today are mutually exclusive.

    If the Peak Oil hoax were true, then it would cancel out the Global Warming hoax because there wouldn’t be enough of the stuff to cause runaway warming.

  33. I dunno. The world uses 36 billion barrels of oil a year, but does not find 36 billion in reserves to replace it. Doesn’t that suggest a peak?

    • rokshox
      That’s not exactly right. Each year of discovery can be a variation on previous years given the time needed to find and explore new fields. In 2004 they found about 80 billion new barrels, some 60 billion in 2010 and about 10 billion in 2014, according to energy info. It jumps around.
      However, huge fields like the oil sands (in various countries) have hundreds of years worth now, so the annual discovery rate is not as useful as the current reserves/resources info.

    • Malthusians have always been wrong. The carrying capacity of the Earth is mind-bogglingly higher than they claim.

      It’s their Luddite mindset that endangers health by endangering the engines of prosperity, Liberty and free-market Capitalism.

  34. Very poor and biased article.

    Peak oil is not about there being more oil left, or about there being new technologies to get it. Ultimately its about EROEI – that it takes too much energy to extract it (compared to some other source of fuel).

    And that is the issue. WE dont use oil in power stations because its too expensive. We use gas. Peak oil for electricity generation has come and gone, as has peak oil for many many regions where oil is drilled. It hasn’t happened globally yet, but in a finite world, it is against common sense to say that it never will.

    This article of the cornucopian persuasion reminds me of:

    Yes, we are okay so far…

    Things that have peaked and declined
    Slavery – we didn’t run out of slaves
    Wood burning – we didn’t run out of wood
    Ice age – we didn’t run out of ice
    Horse drawn transport – we didn’t run out of horses
    The Mayan civilisation – we didn’t run out of Mayans (to sacrifice)
    The Roman Empire – we didn’t run out of Romans
    The Islamic Caliphate. We didn’t run out of Muslims
    The stone age. We didn’t run out of flints..

    What is the issue with all these things is that at a given point a rising cost-benefit curve exceeds the cost-benefit of something else.

    It has only been the massive use of government legislation that has basically piled cost on – say – nuclear, and piled negative cost on renewables, that has disguised the fundamental issue that in the case of power generation, ex of regulatory burdens nuclear power is probably the cheapest and most reliable way to generate power.

    Gail Tverberg, who you pour ridicule upon, may not be right, but she makes a good case that today’s debt crisis and what amounts to the cessation of Western growth over the last 15 years or so is in fact linked to the rising cost of energy – the very energy that allowed us to expand from a rural economy to a post industrial one.

    Evidence of the past is no guarantee of the future. I am not dead yet. That does not mean I never will be.

    • Leo

      “Peak oil is not about there being more oil left, or about there being new technologies to get it. ”

      It’s nice that you have an opinion what “peak oil” means. I was benchmarking what well-known experts were saying during the peak oil days. This was not intended as the next Britannica entry on the oil industry, just a look at one facet of it.

      • Larry Kummer is trying to HIDE THE DECLINE in crude oil reserves.
        Lol, sounds like a warmist hiding the decline in global temperature.

      • Its not an ‘opinion’. Peak oil is when global production starts to decline permanently, for whatever reason.

      • Leo,

        Yes, that is correct. Unlike your previous incorrect statement that “Ultimately its about EROEI.”

        There are many factors which might force a peak in oil production. The balance of geology & technology yielding an uneconomic EROEI is one possible cause. Or, as Robert Hirsch explained in a 2007 presentation, production might peak due to political decisions by producers. It might peak because superior substitutes are created. It might peak due to political decisions by consumers, such as regulations limiting CO2 emissions.

        Energy dynamics are complex, with their interplay of geology, technology, politics, and economics.

      • Has no one heard of Synthetic oil?

        If you have a late model car you’ll find your engine is already full of synthesized oil.

        Don’t hold you breath waiting for it to run out, or become super expensive, it’s price-competitive right now, has been for years.

      • Unmentionable,

        Synthetic Oil — made by the Fischer-Tropsch process usually from natural gas, CO, and CO2 — is in most ways better for your car than conventional motor oil. It is, however, more expensive.

        Natural gas is much cheaper than oil per BTU in the US. If the F-T process was more efficient then this gas to liquid (GTL) process would replace crude very quickly! But it is not, so natural gas has not replaced oil on a large scale.

        When oil was spiking over $100/b there was talk of large-scale use of GTL. Natural gas is expensive to transport except by pipe (not always feasible), so GTL would allow much more nat gas to be sold. — by converting it to an easily shipped liquid. But oil prices collapsed before GTL could get rolled out on a large scale.

        Note: coal can also be converted to oil using F-T. The NAZI’s did so on a modest scale during WWII.

      • TO: Editor of the Fabius Maximus website February 16, 2016 at 6:03 pm

        Thank you “Ed”, I’m reasonably well read on most of those processes, and others related.

        I think the bottom line to highlight, is that there are multiple paths available to mitigate the “peak sludge”, sorry, I meant the peak oil boogie-man.

        Maybe you could consider condensing some of those paths, to illustrate how they mitigate various doom scenarios, and the alleged debt-cycle collapse havoc to come (yet to transition, no to end of world lol), and post them back in here also when done, including economic change making new economic technical pathways viable, and how they interact.

        I intend to give your links a proper read, haven’t digested them, only grazed through so far.

        At a baseline I’d say the only prior possible hydrocarbons ‘problem’ we’ve faced, until recently that is, was the inability to provide sufficient heavy lubricants and for engines and grease, if oil production declined fast, but synthetics and present copious long-chain feed stock has negated all that, as well.

        As for actual energy release, so many (economic and technical) options exist, we’re spoilt for choice, actually. Coal to liquid, Coal to Gas, and nat-gas driving auto engines, all INEVITABLY viable, depending on demand level and price level.

        We’re good for both mechanical lubricant and energy for a very long time, I’d say it’ll turn out to be an indefinite supply of both from here. And that’s before you also take into account that electric vehicles will be taking over, the newer hydrogen battery technology is already well past lithium technology, that are presently used in hybrid drive trains.

        Electric engines don’t use lubricant past production point. NONE!

        If your batteries are energy-dense enough and rechargeable fast enough, then say goodbye to inefficient reciprocating combustion engines, and their issues as well. Suddenly the entire picture is transformed. Frankly, it’s an intriguing time we’re in, the options and possibilities are much more impressive now, than in 1916.

        Given the relative situation, it’s appropriate to be confident of our technologies, present and future, from here.

        Thank you for posting here.

      • Unmentionable,

        I don’t see believe the energy situation is unusually complex to describe. It’s just impossible to predict. Note the comments here show that it’s not well understood, with much of people’s knowledge consisting of myths. That is the real problem

        There is an inverse relationship between ore quality and quantity. So we’ll never “run out” of hydrocarbons. Once the world if fully explored (i.e., no new discoveries) than prices will rise as we tap ever lower quality resources. This trend is offset by improving tech, which lowers the cost of production.

        For details see: Recovering lost knowledge about exhaustion of the Earth’s resources (such as Peak Oil).

        This takes place in a larger context: the speed of this process (i.e., burning through Earth’s resources) depends on the rate of economic growth and the development of new tech to boost efficiency and provide new sources of energy. Price shows the interplay at any moment of these factors, and influences how they develop.

        Over shorter time horizons we will have the usual boom-bust commodity price cycles, driven by the interplay of demand changes and capital investment cycles — plus efforts to create cartels.

        Looking far ahead, our descendants (in 2100? 2150?) will regard the burning of coal and oil like we regard the burning of cow as for fuel. The goal is to get there with a minimum of trouble.

        All this is easy to describe this but impossible to make reliable predictions. Given the importance of energy, imo it is prudent to prepare for future problems rather than trust to luck. We could easily have a decade of recession in the 2020s. Cheap energy afterwards would not erase that suffering.

        In my 80 posts about this I try to help people see through specific myths. As we see in the comments here, people love their misinformation — and tend to react by closing their eyes and screaming. Just as we see in the climate wars.

        If you have any specific questions, I can provide cites to more information.

      • I think that you are just trying to generate interest by misrepresenting what was said and what the real argument is. Peak Oil is about peak daily production and nothing else. It is not about how much oil is in the ground because that has not changed. It actually isn’t even about reported reserves because those have more to do with accounting rules than they do with discovery. The increased reserves that many of the naive optimists try to use to divert attention from what really matters are mostly a fiction. Most of the ‘new’ oil that was reported was not new at all. It was found many decades ago but due to reporting requirements was never reported properly. If we move the reserve charts back to the time that those reserves were discovered we will find that there is a serious problem with the discovery process.

        If we look at the figure in the link below we see a huge jump in reported reserves for the Middle East during the 1980s. That was not due to drilling or new recoveries. It was done with the stroke of the pen as OPEC members decided to ration production based on reported reserves. Two of the countries that reported a large increase in reserves were Iran and Iraq. They certainly were not drilling at the time because they were busy fighting each other in a war.

        Worse are the SEC rules that allow producers to assume that the formation between productive wells contains as much oil as the areas where the wells are. But we know that is not to be true. Shale is not homogeneous and porosity, permeability, and organic content varies greatly. While it is possible to make a profit in shale, that is only true for the tiny core areas that are close to being tapped out. The massive write-downs of resources and reserves should be coming in the next few years as the curtains are pulled on the shale myth and most of the players wind up in bankruptcy.

        Peak Oil is about one thing. Peak Production. Not just of barrels but of total petroleum products. The most recent data muddies the waters because it includes natural gas plant liquids (NGPL) together with the production of crude, which is an aggregate number that is made up of several different grades of oil, each with a different yield of high-value petroleum products. The numbers are not very clear and nobody seems interested in presenting a clear picture, mostly because the Western oil companies can no longer replace reserves and because the data shows that the production of economic light sweet crude peaked more than a decade in our past. I suggest that you will seem more credible if you deal with the specific points being brought up. You might want to start by showing us how we can continue to produce al of that shale and tar sands oil at a loss for much longer. Note that I have not even mentioned that many of the marginal fields even in countries like Saudi Arabia are unable to generate a profit even at $50 oil.

        How many shale gas and oil companies do you expect to go bankrupt in the next six quarters? And how many of the drillers. Surely the Editor of the Fabius Maximus website should be able to answer such a question.

        ************************************

        [Reply: Please identify to whom your replies are directed. -mod]

      • Editor of the Fabius Maximus website February 17, 2016 at 6:38 am

        Thanks again ‘Ed’, familiar with the issues you replied with, geology being profession, but thanks again, appreciated. Agree re potential for stagnation and relative depressions, declines, in many states, due govt refusal all over western world to close broke bank’s and write down bad loans and stop pouring public taxes and retirement funds into crooked pockets. Another story. How the doomers like to conflate that with peak oil non-issue is quite devious and misanthropic of them (oh dear, that word again). Cheers.

      • Vangel,

        (1) It would be helpful to tell us to whom you are speaking, or give a quote. There are 358 comment here. Who are you arguing with? For example…

        Leo said: ‘Peak oil is when global production starts to decline permanently, for whatever reason.”
        https://wattsupwiththat.com/2016/02/15/lessons-from-the-hysteria-about-peak-oil-2005-2013/#comment-2147791

        I replied: “Yes, that is correct.”
        https://wattsupwiththat.com/2016/02/15/lessons-from-the-hysteria-about-peak-oil-2005-2013/#comment-2146774

        You said: ” Peak Oil is about peak daily production and nothing else.”

        (2) A small correction to your comment.

        “The most recent data muddies the waters because it includes natural gas plant liquids (NGPL) together with the production of crude,”

        The EIA does not include NGPL as “crude oil”. It is included with “Liquid Fuels”. See the table I provide, or click through to the EIA website and see the notes.

    • “… to a post industrial one.”

      Dream on Leo, Gail Taverberg is not only not right, she’s beyond wrong. If you’re defending her you’re in a world of delusion, or a fellow traveler with that ideological slime she pours into her posts.

      I don’t know where you lot get the nerve to still want to be taken seriously when you go on about a “post-industrial earth” coming this century. It’s not coming this century, or any other. Sorry, you were badly misled. Please be more careful.

      De-Industrialization is and will continue to be another epic no-show.

      Take that devil-device you’re reading this on and destroy it, right now, for the greater good. And don’t ever buy another! Do away with all modern technology, every bit of it. Anything with plastic, get rid of it, ban it completely from you life. Avoid touching plastic ever again, as a rule. It’s made out of evil oil. Do it for the children! No driving in cars either, not even taxis. No combustion engines at all, no watch, no evil solar panel industrial technology and demon batteries! And no more evil telephones or radios.

      That might snap you out of la-la land long enough to notice that your lifestyle really blows.

      But you wont do that, because when all is said and done, Leo, guys like you are really just boutique pretenders, acting-out a crock of warped ideology, as overwrought boutique prophets of doom (Like Miss Taverberg) and typically calling people who reject the thoroughly unrealistic doom message, as “cornucopian”.

      You must get a lot of that.

    • EROEI

      It doesn’t matter how much energy it takes to extract, refine and transport fossil fuels. EROEI (Energy Returned on Energy Invested) is even dopier than AGW and Peak Oil. I don’t spend energy to fill my tank. I don’t give energy back to the gas & electric companies in exchange for them being nice enough to heat and light my home. My company doesn’t drill for oil & gas to make energy.

      I spend money to fill my tank. My company drills wells for oil & gas to make money. My gas & electric bills are paid for with money. My pay check, ExxonMobil & Shell credit card statements and checks to the gas & electric companies aren’t denominated in joules, kilowatts or btu – They are denominated in $.

      I don’t give a rat’s @$$ if 1 barrel of amoeba farts uses less energy to produce than 1 barrel of crude oil… Because the barrel of amoeba farts costs $1,100 and can’t be produced in sufficient quantities to be waiting for me at the Exxon or Shell station when I need it.

      If oil companies (or any businesses) used EROEI to guide their investment decisions, they would go out of business (unless the gov’t was footing the bill).

      And, for that matter, most fossil fuels actually have better EROEI than most alternative sources do.

      https://i0.wp.com/images.rcp.realclearpolitics.com/112306_5_.gif?zoom=2

      Oil, natural gas and coal are concentrated biofuels. They represent thousands to millions of years of condensed solar energy.

      • First of all EROEI reflects the point at which its not worth extracting oil for use as an energy source at any price.

        And what it costs represents how much human activity is involved in it.,

        They are different things., In general one is not an exact analogue of the other, but they tend to have some relationship.

      • “And, for that matter, most fossil fuels actually have better EROEI than most alternative sources do.”

        A massively under-appreciated fact, thanks for putting it in those straight, easy to understand terms.

        What’s the EROEI on synthetic grease, synthetic oil, syn-gas or synthetic gasoline?

        It’s completely irrelevant, if its both economic and the feed-stocks are virtually unlimited, which it is, and they are – and the technology and processes are mature, proven, and already industrialized and reliable – which they are.

        The peak oil plus EROEI ideology, like the hysteria of pending ‘post-industrialization’, are all rendered irrelevant.

        It really just amounts to obnoxious trolling of humanity by some very dull people.

      • David:

        You may find this POV useful in the EROEI discussions.

        We use oil for transportation fuels because it works very well for that purpose. Oil is just the feed stock.

        EVERY refinery has negative EROEI, yet we refine oil to fuels. EROEI is simply irrelevent to the topic of FUEL production. The form of the fuel matters, a lot.

        Long after lift cost exceeds oil BTUs we will be lifting oil to make convenient energy dense fuels, right up to the point wher some other synthetic path becomes more efficient.

        Right now we have wells in California with electric pumps lifting oil. Some of that electricity from nuclear plants. Since there is a functionally infinite supply of uranium from sea water at acceptable prices, we never run out of energy to do the lifting, so EROEI is a red herring. What matters is cost of nuclear (or wind or solar) electricity to do the lift vs cost of alternative paths to transportation fuels.

        The FORM of the energy matters more than the energy in it for transportation fuels. That is the lesson of the negative EROEI refineries.

        https://chiefio.wordpress.com/2009/05/29/ulum-ultra-large-uranium-miner-ship/

        As long as oil gives cheaper transport fuels than the alternative paths, it will be lifted, even at negative EROEI via using electric lift pumps. Effectively turning nuclear energy into motor fuel.

    • “Wood burning – we didn’t run out of wood”

      Actually, that happened several times in human history in several places. One of the causes of the Roman Empire is contributed to running out of wood locally. Taking too much energy and time to import it. It happened in England when they ran out of oak trees for ship building. Easter Island another example.

      The “OK, so far” is exactly what the CEO of the Deutsches Bank sent to their employees last week. They are the largest bank in the EU and are sitting on some 25% of non-performing or under performing loans.

      Our biggest threat to our way of life isnt peak oil, it’s peak credit. Socialist government borrowing is going to come to an abrupt end. Have a look at Venezuela today. Notice it’s deliberately being kept out of the news.

    • Regarding your comment “ex of regulatory burdens nuclear power is probably the cheapest most reliable way to generate power”

      Well… not quite. Nuclear is inexpensive source of base load power, but, it can’t handle the swings associated with daily load variation. So, from a practical point of view, nuclear is only good from producing power up to the daily low at max. The rest is made up from fossil assets.

      Adding to this problem, is the fact that you can’t simply shut down all the fossil plants at the daily system low – for technical and economic reasons. Specifically, the cycling would destroy the plant equipment and, to pay for the plant, the fossil pant has to be operated at least 80% capacity factor until fully depreciated.

      Solving that problem is one of the reasons nuclear technologies like the small modular reactor are being perused. But that technology is 20-30 years away.

      • Nuclear is inexpensive source of base load power, but, it can’t handle the swings associated with daily load variation.

        Actually, it largely can.

        Especially if designed for it.

        http://www.templar.co.uk/downloads/0203_Pouret_Nuttall.pdf

        Its not currently economic. Operated at low capacity factors the high capital cost of nuclear power renders it pretty expensive in load following mode, but technically it can, and France at least does.

        France is in fact a good example, where nearly all the baseload and a lot more is covered by nuclear, with some load following,. and then they use a lot of hydro for peaks and most of the load following and some pumped storage, with a very little thermal fossil plant to cover extreme demand.

        The decision to not have dispatchable nuclear is not a technical one, its an economic one. At about 70% capacity factor gas becomes cheaper.

      • Oh, for Pete’s sake. If you have baseload nuclear power, it can be used to synthesize hydrocarbon fuels from water and any carbonaceous feedstock. These fuels can be used for the powerplants needed for the diurnal load variation. There is no better battery, joule per kilogram, than a long-chain hydrocarbon. Nothing new need be invented.

      • Leo Smith,

        Regarding your statement “Actually, it largely can” – in reference to nuclear’s capability to load follow.

        Your U.K. literature source points to a theoretical capacity for nuclear to load follow.

        I originally pointed out the theoretical capacity for nuclear to load follow using the Small Modular Reactor design – other designs are possible. But… as I said, actual load-following nuclear capacity is roughly 20-30 years away.

        To quote Yogi Berra (also attributed to Albert Einstein).

        “In theory here is no difference between theory and practice. In practice there is”.

    • Leo,

      “Gail Tverberg … may not be right, but she makes a good case that today’s debt crisis and what amounts to the cessation of Western growth over the last 15 years or so is in fact linked to the rising cost of energy ”

      Only if you know little about economics. She was wrong about oil consumption, and her economics are just making stuff up. To give one of many examples, in her oft-quoted July 2014 post she says…

      “The reason why the price of oil has stayed as high as it has in the last several years is because of the effects of quantitative easing and ultra low interest rates. If it weren’t for these, oil prices would fall, because consumers would need to pay much more for goods bought on credit, leaving less for the purchase of oil products. … Because of the expectation that Quantitative Easing will end by October 2014 and the pressure to tighten credit conditions, my expectation is that the affordable price of oil will start dropping in late 2014,”

      That is almost entirely wrong. To mention just a few things …

      Neither the start or end of QE3 had much effect on Treasury interest rates, and no visible effect on the rates charged to consumers (the riskless rate plus a credit spread). Determining the “tightness” of lenders’ is complex (there’s no single metric), but there is little evidence of tightening in consumer credit since QE3 was phased out.

      The bottom line: the rate of growth of consumer credit increased as QE3 was phased out (Sept 2013 to October 2014) — and remained stable (and rapid) after QE3 ended. Outstanding consumer credit grew at 6.1% in 2012, 6.0% in 2013, 7.0% in 2014, and 6.9% in 2015.
      http://www.federalreserve.gov/releases/g19/current/default.htm

      So her prediction about credit was wrong. Prices fell for other reasons – fairly obvious ones to people not wearing “peak oil” blinders.

      Also, there is little evidence that the price of oil has much effect on inflation (it’s “always and everywhere a monetary phenomenon”, more or less), let alone for “goods bought on credit”.

  35. Când ştii că eşti acasă?

    // event.2parale.ro/events/click?ad_type=product_store&aff_code=036a3f65e&campaign_unique=ca8f8ce30&unique=070afad5f

    2016-02-16 0:37 GMT+02:00 Watts Up With That? :

    > Guest Blogger posted: “By Larry Kummer, from the Fabius Maximus website > Summary: The peak oil hysteria provides rich lessons for us today about > learning from activists and the value of listening to our major > professional institutions. Easy cynicism led people to believe outl” >

  36. We had best hope that ristvan @ 4:38 is off by a couple of orders of magnitude. Not taking any position here, but merely pointing out the math. 18 billion bbls of reserves, if fully extracted would provide the USA, at it’s current consumption of 18 million bbls per day, with 1000 days of supply- something less than three years. What’s wrong with this picture?

    • Just look at the long long history of such estimates. We always seem to have had no more than about twenty years worth of oil in the world, despite increasing production and depletion of existing reserves.

      • Menicholas:

        Yes. Oil producers pay for more reserves to be found when they have less reserves than their planning horizon. Oil producers don’t pay for more oil to be found when they have sufficient reserves to fulfill their needs within their planning horizon.

        Richard

  37. We had “peak flint” and the end of the Stone Age, but not because we ran out of stones.
    We had the Bronze Age which ended but not because we ran out of tin and copper.
    We had the Iron Age which ended but not because we ran out of iron ore.
    We are now in the Steel, Oil, Neodymium, Aluminium, Silicon (take your pick) Age and when this epoch ends it will not be because we run out of the stuff, but because something better has come along.

    • Exactly. OIl/gas up at $200 a barrel would not be competitive with nuclear: at $600 synthetic fuel made with nuclear power becomes competitive (wet finger estimates).

      Oil is already uncompetitive with coal and gas in power stations.

      • And oil is uncompetitive with gas for making “petro” chemicals. Oh, and they were first made from coal… Eastman Chemical still does use coal. There are also folks making chemicals from garbage. I doubt we will ever run out of garbage.

        The notion that we need to save the oil to make plastics is just daft and ignorant of chemistry and history both.

  38. Peak oil has passed in terms of energy put in to energy got out.

    We just have more finds and more types of oil. We have kept exploration up and up to keep the rate of oil production up.

    We are not running out, not for another 100 years and as it runs out the price goes up and up so, maybe twice that time actually.

    And that’s without massive new finds, of which there are some I am pretty sure.

    For all the talk of the arctic, and Antarctica, and Greenland, if big reserves are found they WILL be drilled, end of story. Civilisation is built on oil and there is nothing to replace it. Biofuels HA Solar HA wind and tide HA.

    Can’t make toothpaste or fertiliser with biofuel, cant make types and plastics, and the billion other pretro chemical products.

    Green militants are mentally ill, no oil no cities.

    The only way solar could work, is to shove everyone into huge cities designed to run on solar, literally the only way as things stand. I hear the UN are planning just that

    • Again with the mistake of understanding what peak oil means. It DOES NOT mean we run out of oil. It means world production will start to slow at some point, and never recover. It doesnt have to be a geological reason for slowing the world’s oil production. It could be economic reasons, or geopolitical reasons. It could also be because of net energy returned drops significantly. That slowing of production will force a slowing of consumption. But some will be able to out bid others for that lower production of oil, that in turn means someone who needs that oil will have to do without. Those who will have the hardest time trying to out bid others will be those who are most in debt.

    • Virtually all organic chemicals can be made starting from synthesis gas (CO and H2) regardless of its source, whether it be natural gas or biomass. Now we could argue whether there is enough biomass certainly.

      • Also coal and garbage are currently being used too.

        There are tons of “waste” biomass per person per year. There is way more than needed for plastics and other synthetics. A couple of examples:

        Roughly 10% of US gasoline is ethanol from corn. Turn that into plastics instead, you get a few gallons of plastic per person per week. We don’t need anywhere near that much… There is greater mass in the stalks and husks and cobs, but we don’t need it either. BTW, there are folks making bioplastics today from corn.

        Henry Ford with George Washington Carver made plastic parts for cars out of soybeans decades ago. We throw out tons of “waste vegetable oil” every year since it is cheaper to use natural gas as feed stock. Still, if desired, we can grow plastics via corn, soy, or even trees. (Rayon is made from cellulose, as is your ‘viscous sponge’ at the kitchen sink… )

        Look at the piles of “yard waste” hauled away from suburban homes. No way we can use that much plastic, so we dump it in landfills to rot, or compost it.

        There is no feedstock limit. Only a cheapest cost choice.

  39. Larry Kummer:

    You title your essay Lessons from the hysteria about peak oil (2005-2013).

    “Hysteria”? No, that is pure hyperbole.

    A few self-agrandising ‘experts’ self-publicised by publishing twaddle about ‘peak oil’, and a few ‘useful idiots’ responded by posting rubbish on the web. Meanwhile, the public ignored ‘peak oil’ while the oil industry glanced at the evidence for ‘peak oil’ and decided it was not worth bothering about.

    Eugenics, ‘acid rain’, and anthropogenic (i.e. man-made) global warming (AGW) did cause hysteria. Only AGW remains a problem and it, too, is fading away.

    Richard

    • Richard,

      ““Hysteria”? No, that is pure hyperbole. ”

      Not correct. Presentations at conferences at the American Society for Study of Peak Oil (ASPO) routinely predicted decades of depression and hyperinflation — plus “resource wars” — following peak oil — coming quite soon. And those were the more professional of the peak oil community.

      Apocalyptic predictions were commonplace. Here are a few of the thousands available from a brief google search.

      Olduvai theory
      “The Olduvai theory claims that exponential growth of energy production ended in 1979, that energy use per capita will show no growth through 2008, and that after 2008 energy growth will become sharply negative, culminating, after a Malthusian catastrophe, in a world population of 2 billion circa 2050.”
      https://en.wikipedia.org/wiki/Olduvai_theory

      Matt Savinar‘s Life After the Oil Crash — “wholly shatter an oil-dependent economy and reduce its citizenry to poverty. …”
      http://www.lifeaftertheoilcrash.net/Index.html

      Peak Oil explains the lack of UFOs, Salon (6 May 2008) — Civilizations all die.
      http://www.salon.com/tech/htww/2008/05/06/peak_oil_and_ufos/index.html

    • Richards Courtney,

      My reply has not appeared, so I’ll reenter — taking a different perspective.

      ““Hysteria”? No, that is pure hyperbole. ”

      Not so. Apocalyptic predictions were common in the peak oil community. Which was the subject of this article. It was more than “a few” people. The Oil Drum and ASPO has large followings, and were quoted as expert sources in the major media — which gave lavish coverage to the doomsters.

      This had an affect on the general public: “Gallup surveys conducted in 2007 and 2008, for example, indicated at the time that 53% (2007) and 62% (2008) of Americans believed that the United States would face a severe energy shortage in the next 5 years and that 43% (2007) and 47% (2008) of Americans worried “a great deal” about the availability and affordability of energy”
      http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3154229/

      As I said, the major climate agencies (and, as you note, the oil companies) provided sober analysis throughout this period. The contrast between the two is the relevant point of my post.

      • Richards Courtney,

        To learn more about the Peak Oil movement — the large number of people who were extremely worried about what they saw as an imminent doom — I recommend reading Peak Oil: Apocalyptic Environmentalism and Libertarian Political Culture by Matthew Schneider-Mayerson (University of Chicago Press, 2015). He is an assistant professor at Yale-NUS (a joint project of Yale and the National University of Singapore).

        The interviews with these deluded people are quite sad. Some of them restructured their lives to prepare for the End.

      • Editor of the Fabius Maximus website:

        I repeat, a few self-agrandising ‘experts’ self-publicised by publishing twaddle about ‘peak oil’, and a few ‘useful idiots’ responded by posting rubbish on the web. Meanwhile, the public ignored ‘peak oil’ while the oil industry glanced at the evidence for ‘peak oil’ and decided it was not worth bothering about.

        But you stand by your assertion of ‘peak oil’ “hysteria” which you support by
        (a) you cite that an Assistant Professor wrote a book (yawn)
        and
        (b) several people were worried such that you say

        The interviews with these deluded people are quite sad. Some of them restructured their lives to prepare for the End.

        There are always people worried that ‘The End Is Nigh’. This is a report of five different reasons why the world will end this year. The minority who fear such things are hysterical and always exist, but their fears mean nothing.

        I see no evidence that society has been hysterical about ‘peak oil’.

        Richard

      • Courtney,

        OK, so you’re indifferent to the evidence about the peak oil conferences, the websites, the books– and the public opinion polls that showed their influence. Esp got to love your “so an assistant professor wrote a book” (it’s called “research”).

        “I see no evidence that society has been hysterical about ‘peak oil’.”

        I never said that society became hysterical. In fact I said the opposite by pointing to the sober analysis by the “major energy agencies”. This was about a hysterical minority that for several years had a disproportionate influence in the US — an all-too-common phenomenon in recent US history.

      • Kummer:

        You say

        I never said that society became hysterical. In fact I said the opposite by pointing to the sober analysis by the “major energy agencies”. This was about a hysterical minority that for several years had a disproportionate influence in the US — an all-too-common phenomenon in recent US history.

        There was a “hysterical minority” that “had a disproportionate influence in the US”?

        But you admit that minority had NO “influence in the US”: the “major energy agencies” rejected the minority’s attempt to generate a scare. The most the minority achieved was to raise awareness of a need for energy security.

        As I pointed out, there are always insignificant minorities who are hysterical about something, and – as illustration – I linked to five different reasons why the world will end this year. They affect nothing and – as supporters of ‘peak oil’ demonstrate in this thread – they don’t understand the issues which cause their panic.

        Richard

  40. The problem with Hubbert’s “Peak Oil” hypothesis was his vast underestimation of the original oil in place (OOIP).

      • The peak oil calculation is dependent on the OOIP and economic recovery factor. All reservoirs have a “peak oil” point. “Peak oil” generally occurs early in a well’s production life…

        morgan-kovar-1-rate-vs-cum-lg

        Decline curves are generally plotted as rate vs cumulative production. A decline curve is dependent on original oil in place and the recovery factor. Hubbert simply calculated a hypothetical decline curve for the world.

        Hubbert’s “Peak Oil” prediction was based on the assumption that the total recoverable reserves in the US and our OCS (offshore) were only 150-200 billion barrels. The current DOE estimate is 400 billion barrels – And that estimate was before 2006 and the shale boom and it didn’t include unconventional resource potential (which dwarfs the conventional potential). Shale oil like the Bakken and Eagle Ford is not unconventional oil. It is plain old crude oil. The recovery is unconventional because it’s different than the prior norm; hence they are described as unconventional resources. Oil shale (Green River) and tar sands (Athabasca oil sands) are unconventional oils because they are bitumous kerogens – essentially incompletely formed crude oil.

        Here’s a link to Hubbert’s 1956 paper… http://www.hubbertpeak.com/hubbert/1956/1956.pdf

      • “Oil shale (Green River) and tar sands (Athabasca oil sands) are unconventional oils because they are bitumous kerogens – essentially incompletely formed crude oil.”

        Wow, you really have no clue. Kerogen is the precursor for oil. It’s what oil is made from once cooked long enough. Bitumen is the opposite. It’s what’s left of oil after it has been cooked too long and all the light molecules have been boiled off. Do yourself a favour before you post too much more and read Oil 101.

        Unconventional oil is vast, but difficult to extract, hence a low flow rate, and have a low ERoEI. Which makes their net enery output lower. That means more energy has to be diverted from society to get that oil. It’s called the Energy Trap. Google it.

      • J. Richard Wakefield February 16, 2016 at 10:47 am

        “Oil shale (Green River) and tar sands (Athabasca oil sands) are unconventional oils because they are bitumous kerogens – essentially incompletely formed crude oil.”

        Wow, you really have no clue. Kerogen is the precursor for oil. It’s what oil is made from once cooked long enough. Bitumen is the opposite. It’s what’s left of oil after it has been cooked too long and all the light molecules have been boiled off. Do yourself a favour before you post too much more and read Oil 101.

        From Wikipedia

        General composition of oil shales constitutes inorganic matrix, bitumens, and kerogen.

         

        Bituminous” means contains bitumen.

        Most of the organic matter in oil shales is derived from various types of marine and lacustrine algae. It may also include varied admixtures of biologically higher forms of plant debris that depend on the depositional environment and geographic position. Bacterial remains can be volumetrically important in many oil shales, but they are difficult to identify.

        Most of the organic matter in oil shale is insoluble in ordinary organic solvents, whereas some is bitumen that is soluble in certain organic solvents. Solid hydrocarbons, including gilsonite, wurtzilite, grahamite, ozokerite, and albertite, are present as veins or pods in some oil shales.

        http://pubs.usgs.gov/sir/2005/5294/pdf/sir5294_508.pdf

        The “oils” (technically high-grade refinery feedstocks) in oil shales are generally bitumous kerogens or kerigenous bitumens.

        Unconventional oil is vast, but difficult to extract, hence a low flow rate, and have a low ERoEI. Which makes their net enery output lower. That means more energy has to be diverted from society to get that oil. It’s called the Energy Trap. Google it.General composition of oil shales constitutes inorganic matrix, bitumens, and kerogen.

        EROEI is a meaningless phrase. It has no bearing on resource economics. It doesn’t matter how much energy it takes to extract, refine and transport fossil fuels. EROEI (Energy Returned on Energy Invested) is even dopier than AGW and Peak Oil. I don’t spend energy to fill my tank. I don’t give energy back to the gas & electric companies in exchange for them being nice enough to heat and light my home. My company doesn’t drill for oil & gas to make energy.

        I spend money to fill my tank. My company drills wells for oil & gas to make money. My gas & electric bills are paid for with money. My pay check, ExxonMobil & Shell credit card statements and checks to the gas & electric companies aren’t denominated in joules, kilowatts or btu – They are denominated in $.

        I don’t give a rat’s @$$ if 1 barrel of amoeba farts uses less energy to produce than 1 barrel of crude oil… Because the barrel of amoeba farts costs $1,100 and can’t be produced in sufficient quantities to be waiting for me at the Exxon or Shell station when I need it.

        If oil companies (or any businesses) used EROEI to guide their investment decisions, they would go out of business (unless the gov’t was footing the bill).

  41. What an odd timing for this article, Larry Kummer.

    If there is something worse than to predict a Peak Oil that doesn’t take place is to miss a Peak Oil that has already taken place.

    As some people have explained to you, conventional oil has been on an undulating plateau since 2005. This is easily seen by anybody because all the growth in oil production since then has come from US and Canada. The rest of the world together has been flat producing to this date.
    See for example Matt Mushalik’s “World outside US and Canada doesn’t produce more crude oil than in 2005“.

    The best comment in this page is from Vangel Vesovski. He has explained to you why the unsustainability of unconventional oil cannot continue, but you have nothing to answer to him.

    Peak Oil has taken place in the summer of 2015. Since then oil production is going down and will continue going down in 2016. The lack of investments in E&P due to the oil price crisis means than projects delayed or cancelled are going to significantly affect future production and we are going to have a gap by 2020 projected at 3 million barrels per day. Weak economic conditions or outright global recession will do the rest by crashing demand. Since the world less US and Canada has been unable to increase production for 10 years despite billions invested in capex, what comes next is decline.

    You are at the uncomfortable situation of calling hysteric to Peak Oil prognosticators right after Peak Oil has taken place. Well done.

    • The Bakken, Eagle Ford and other shale oil plays are not “unconventional oil,” They are regular crude oil. The recovery method is unconventional.

      Hubbert underestimated the volume of crude oil in place and could not have accounted for recovery methods not even imagined in 1956.

      • Hubbert is irrelevant nowadays. The decline of Light Tight oil is like nothing Hubbert ever saw. The decline in US oil production over the next two years is going to be spectacular. The decline in the rest of the world is going to add up to that. Peak Oil was always a physical inevitability and the scene was set up when consumption overcome discoveries decades ago. The 2014 oil price crisis has brought it forward, but less not forget that we had Peak Conventional Oil in 2005, and Peak Oil Exports in 2007, so it is not as if this should have caught up by surprise. Peak Oil is already in the rear mirror, yet most people still don’t see it nor understand why.

      • dbstealey February 16, 2016 at 8:54 am Edit
        The decline in US oil production over the next two years is going to be spectacular.

        What else would you expect, with the price under $30/bbl?

        Proved reserves will also decline… Even though the oil will still be there.

      • dbstealey on February 16, 2016 at 4:05 pm
        David Middleton,

        So much for proof, eh?

        Proved reserves vary with product prices, independently of resource volume.

    • Javier,

      Oil production is limited by cartels to maximize profit, not limited by ability to produce. Lately one producer, Saudi, got pissy at Russia and Iran having a war in their back yard. The result? They opened the taps a bit and crashed oil prices to $25 / bbl. The collateral damage to the USA is shutdown of our exploration, that isn’t a technical issue, but a geopolitical economic war issue.

      Don’t confuse deliberate control with technical limits.

      Note, too, that China is hitting an economic wall and slowing fast, while Europe is very slow. Oil demand does not grow in slack economies. USA wages have been flat to down for a decade. Folks don’t buy more gas when they have less money.

      https://chiefio.wordpress.com/2016/02/13/why-us-voters-are-angry-and-why-the-economy-is-stagnant/

      Don’t confuse economic slowdown with limited oil avaiability.

      The whole world population growth is slowed, especially in advanced economies that drive cars. Fewer drivers driving less (millennials especially drive less).

      Don’t confuse less demand (slow or no growth) with inability to produce.

      Companies do not produce inventory in excess of demand, that costs a lot of money. The markets are just reflecting prudence in supply creation in the face of a flattened global economic growth. Similarly you do not see GM building millions of cars to sit in lots unwanted.

      Oil is a product, subject to all the usual rules of making products and inventory management.

      • E.M.Smith,

        I do not confuse those things.
        You have a nice narrative about oil price wars and aggressors and victims, that the press has been pushing and a lot of people have bought. The evidence however shows that oil supply increased faster than oil demand, and oil price followed the demand/supply ratio as it usually does.


        Occam razor says it was the demand/supply ratio not a conspiracy. But people like a good conspiracy even if imaginary.

        As oil supply is no longer growing, if demand is able to keep growing prices will stabilize and start increasing. But the damage to future production has already been done:

        27 Billion Barrels Worth Of Oil Projects Now Cancelled
        Oil price rout forces companies to slash $170 billion in projects from 2016-2020
        TPH: Canceled projects could draw down 19 million daily oil barrels

        We have reached the end of cheap to produce oil. Every increase in oil production is from expensive to produce oil. As we are in debt saturation and demand crisis that manifests as a deflationary crisis, we are not able to afford expensive oil. If oil is expensive, demand will go down and production will follow down. If oil is cheap expensive production will be shut down.

        We have reached this point through decades long trends:
        – Preferential consumption of cheap to produce oil in increasing amounts, until all giant fields are old and nearly depleted.
        – Increase in debt to pay for consumption and growth when the economy was not able to grow enough, expending future wealth in the past. Now that future from where we took the wealth has arrived.
        – A reduction in labor compensation due to population excess including globalization and outsourcing, that has increased capital compensation and promoted inequality. Now consumers cannot afford much and they are no longer credit worthy. A consumer or demand crisis manifests as a deflationary crisis.

        Oil is not a product is a source of energy used to leverage work. We do not currently have a good substitute for it and we have reached peak production. The manifestations of this liquid fuel crisis are so far reaching that we might observe the symptoms (poor economic performance) without understanding the cause.

      • Javier says:

        We have reached the end of cheap to produce oil.

        That’s what Mike Smith said, in different words. And:

        Peak Oil is already in the rear mirror, yet most people still don’t see it nor understand why.

        You know things that people still don’t see or understand? So in addition to being an expert on the ‘climate’ (which correctly applies to regions, not to the globe), you’re a petroleum expert, too? I’m impressed.

        In what other fields are you an expert? No need for all these different points of view, we can just rely on your comments. That will save lots of time reading.

        BTW, ‘peak oil’ has been predicted repeatedly, since at least the 1920’s. Now you have it pegged to a single year. That couldn’t have anything to do with the global economy, could it? Nah. Because then your argument would be wrong.

      • Javier,

        Saudi is the swing producer. They control that demand supply ratio. You show the graph of the result of their actions as ‘proof’ that their action doesn’t matter. Strange, that.

        It is no grand conspiracy theory to describe the religion war truth of 1000 years. Sunni Shia conflict is well documented and the war with Iran fighting in Syria and Russia bombing Sunni is visible on most news channels. Russia Today has nice video, as does Al Jazeera America.

        Then there is the oil shock history of the last time Saudi did this as clear precident.

        The only speculative bit is motivation. It is remotely possible Saudi is ONLY acting from pecuniary motive and dosen’t care at all that this damages their chief rival and the Russian backers who are killing and bombing their fellow Sunni Arabs. But the much more likely motive is a “two fer” of both motives. Discipline OPEC cheaters and damage rivals.

        BTW, we’ve seen this movie a few times already. The 70s Arab Oil Embargo, the 80s oil glut, wash and repeat.

        It is simply not possible to say anything about production costs based on oil prices. Price is determined by the swing produce in OPEC. That might change, if Saudi runs out of cash before the frackers do. If not, Saudi continues to set prices for a couple of more decades.

        BTW, the present $1.30 / gallon price of gasoline in Ok. pretty much proves there is no shortage of oil production, nor can there be until Saudi closes their taps.

        We have LOTS of alternatives to oil as motor fuel (it is almost entirely used for transport fuel). From biodiesel to ethanol (already 10% substituted for gasoline here) to natural gas (many large trucks already use it and Love’s truck stops have CNG pumps – checked them out on a recent road trip) to GTL plants to CTL as done for decades in South Africa by Sasol company. And that doesn’t even start to scratch the surface. There are dozens more, from bacterial produced butanol drop in replacement for gasoline to DME injected diesel busses (in partial use / testing) and, back in the 70s Arab Oil Embargo, V.W. did an analysis design showing coal to methanol and methanol engines at about $4 / gallon of gasoline equivalent in todays dollars if nuclear process heat were used. Very livable.

        Oh, and IIRC, Syntroleum corp had / has a trash to diesel facility running in California so LAX could be carbon PC.

        We just don’t have any CHEAPER than dirt cheap oil. But they do put a lid on price at about $3 – $4 /gal.

        You then wander off to some odd economic theories with cheap oil somehow causing an economic crisis.. We’ve had higher and lower fuel prices in real inflation adjusted prices in the past, so ‘existance proof’ kind of makes that point moot.

        BTW, I’m an economist by degree and computer project manager for a living. I know a bit about economics and business and such. Your econ thesis ‘needs work’. The real causes of the global malaise are largely too much government regulation, too much taxation, too much crony socialism crony capitalism, and profligate debt (mostly by governments buying votes). Seasoned with a too fast attempt to move both India and China into modernity in less than one generation (screwing the developed economies with too rapid globalization). Oh, and a bit too much funny money pushing by central banks based on ‘Modern Monetary Theory’, which is wrong.

        Get the stupids in governments out of the way and the economy would be fine.

        https://chiefio.wordpress.com/2016/02/13/why-us-voters-are-angry-and-why-the-economy-is-stagnant/

        In short, too much socialism / 3rd Way Economics , not enough free markets, and a severe lack of financial discipline. Oil just not relevant to the problem.

      • E.M.Smith,

        Saudi Arabia “was” the swing producer. When Libya came off line in 2011 it became clear that Saudi Arabia no longer had the capability of acting as swing producer. Saudi Arabia has been pumping oil as much as possible, increasing tremendously its number of rigs for the past years, yet since January 2012 it has only increased peak production by 0.35 mbpd.

        Looking at past oil prices and economic conditions tells you little about present capacity of the economy to withstand high oil prices. When the economy is growing strong is capable of withstanding much higher oil prices than when it is weak and barely not growing despite low oil prices.

        Every economist has a recipe to cure the economy. Few are capable of recognizing that we are reaching the limits, and that means the end of economic growth. Free markets cannot solve a problem of limits.

        We will certainly have to do with oil substitutives. That doesn’t mean that we are going to do well with them. Some are more expensive, some have less energy, some cannot be scaled enough, and some have all those problems.

    • “Peak Oil has taken place in the summer of 2015. ”

      As much as I agree with you, I think that you are being fooled by the aggregate number that is being reported. We don’t really use much crude in our daily lives. We use petroleum products. And as you know, a barrel of heavy oil does not produce as many of the high-value products as does a barrel of light sweet. The aggregate also includes refinery gains and condensates that were not really reported accurately in years where there was no concern about peak production. As such, we are ignoring the fact that economic light sweet production is in our past and has been for almost a decade.

      In his great book, Human Action, Ludwig von Mises has a section where he discusses the error made by the Classical Liberals, who assumed that people would not choose a system that did not work over the system that they created. It is ironic that the very people who can understand how the Fed’s easy money policies the best have fallen for the shale story and disregarded the actual evidence or the theory. I understand that Julian Simon is held in high regard because I hold him in high regard as well. But the Straussians are also right about this. They point out that when we pull back the veil on all societies we find people in the background manipulating the game. And that is what is happening today. Had we lived in a system where people were able to pursue their interests in a free market there is no way that a capital destroying industry like shale would have attracted as much investment for as long as it did. We would have seen more investment in drilling for natural gas in locations that should have plenty of it but never received much attention and even in something like the recovery of methane hydrate crystals from known deposits. We would have a lot less alternative energy and more clean coal and nuclear.

      Even worse are supposedly skeptical blogs like this one, which ignore the evidence. As I wrote before, it is easy to prove me wrong. All these guys have to do is to find evidence that the shale companies can generate positive cash flows by looking through the SEC filings. The fact that they can’t should tell us all that we need to know.

      • Correct Vagel. Shale oil in the US has always been a scam. It was all based on debt and never produced any profits. A new bubble that is now popping.

      • Riiight… I’m sure Shell Oil Corp just ran out and squandered $ Billions on a scam when they could have made money somewhere else… /sarc. (IIRC their play was in Canada)

        No, I’m not going to waste weeks of my time digging through SEC filings to make you happy. I’m quite happy with my present understanding of oil economics (based on study of it since the 70s Arab Oil Embargo to today).

        Shale makes money (and net energy) at prices over about $50 to $80 per bbl depending on particulars of the play. The biggest risks to profit are dirt cheap natural gas (substitution as in all those big rigs filling up on CNG at Love’s Truck Stops) and Saudi machinations in OPEC. Not the technology and not the financing.

      • E.M.Smith,

        Shale oil was supposed to make money, but almost all producing companies have large in excess debts well above any money they have made. Therefore shale oil production so far has made no money.

      • Vangel Vesovski,

        In 7 out of 7 comments you’ve attacked shale oil companies. I’ll admit to not knowing much about them. But it seems you have an axe to grind.

        However, I agree with your comments re: Rothbard and von Mises, both of whom I’ve read.

  42. ” Then as now, the names least often consulted proved to have the more accurate forecasts.”

    Thanks. The aggregation of predictions with sources is valuable. I’d love to see more of this sort of thing. We should not expect good predictions to always be spot on, and sometimes “bad” predictions can hit the mark. Having estimates that are systematically biased is a concern. The doom and gloom crowd (in my opinion over-represented in academia) has done that in a number of areas and they seem to be the go to guys for mainstream media.

    A big concern is that often the “biased” forecasts are hidden deeper in some another analysis. For example: Electric cars, renewables, efficiency are shown to be economic in the long run, but the assumed escalation costs for fossil fuels are near incredible. Forecasts tend to show us reaching cliffs of catastrophe but the real world generally changes more incrementally.

  43. Boone Pickens is a loudmouth promoter and should never be trusted.

    Having said that, I will credit him as the author of this succinct restatement of economic truth:
    “The solution to high prices is high prices.”

  44. Sigh

    Javier said

    Quote

    As some people have explained to you, conventional oil has been on an undulating plateau since 2005.

    Unquote

    it will always be a plateau as price balances demand. Fact is we have several hundred years supply. Conventional or not, matters not. What matters is “does it work”

    Simple

    • Yes, we do have several hundreds of years supply, but at what rate of extraction????? Another person who doesnt understand what peak oil means. It’s not about what’s in the ground, it’s about how fast we can get it from the ground.

      • huh, we get it out as fast as we like. Several hundred years supply is several hundred years supply. Who are you fooling, yourself?

      • So you think we can defy the laws of physics? No we cannot extract it as fast as we can. Conventional wells follow a bell curve. Tight shale wells follow a decay curve. Those are the facts. Ignoring those facts doesnt make it happen in our favour.

      • It’s not a matter of “how fast we can get it from the ground.” It’s a matter of how much is in place (OOIP) and what percentage of it we can economically recover (RF). As long as OOIP and RF keep going up “peak oil” will continue to move forward in time.

      • How fast we can get it out of the ground is at least in part dependent upon the technology used for extraction.
        Technology is not stagnant.

      • J. Richard Wakefield February 16, 2016 at 7:17 am Edit
        “It’s not a matter of “how fast we can get it from the ground.””

        I see, so when the world production stops meeting world demand, that’s not going to matter?????

        Meeting world demand has nothing to do with “peak oil.”

        Peak oil is simply a global application of a decline curve. A decline curve is based on OOIP and RF. Field production rates are generally set by drilling and recompletion tempos. The more wells you drill and recomplete, the faster you get the oil out of the ground.

      • No David Middleton,
        Peak oil is the point in time of maximal oil production, so that before oil production was always lower and afterwards oil production is always lower. Whether this is the consequence of geology, technology, economy or debt, or a combination of them is irrelevant for the definition of Peak Oil. Obviously Richard Wakefield is correct that it is about the rate of extraction. When the derivative of the oil extraction versus time (or rate of oil extraction) while going from positive to negative reaches zero, at the highest value of oil extraction, that is the mathematical definition of Peak Oil.

      • “The more wells you drill and recomplete, the faster you get the oil out of the ground.”

        Yet with all the drilling done at Hybernia, North Sea, Cantarell, etc, they continue to decline in production.

      • It’s pretty clear that some commenters here don’t understand basic econ. It matters not whether there is ‘peak oil’. If there is, that’s just the ‘peak’. So what?

        What happens is this: as it becomes more difficult to extract oil, the price point moves. Oil products get more expensive. The markets will take care of that very efficiently.

        (Also, the recent weakness in the price of oil argues that we are not at ‘peak oil’.)

        If oil gradually rises to $200/bbl, for example, and gasoline costs $8 a gallon as a result, the markets will adjust. New cars will begin to get higher mileage. More R&D will be invested to drill deeper wells, improve fracking, etc.

        But the impression some folks leave is that ‘peak oil’ means we’ll run out.

        That. Will. Not. Happen.

        What will happen is that the cost of petroleum products will rise. There is no crisis. New technologies will take the place of those that heavily depend on oil products.

        The whole ‘peak oil’ argument is a tempest in a teapot. The markets will easily handle whatever comes along. The real problem is the growing bureaucracy. Big government. That is the problem, not ‘peak oil’.

      • The rate of extraction is the rate of demand at that price.

        It is NOT the maximum technical ability to pump.

        Basic economics.

        NOBODY produces product in excess of demand for long. You go broke that way.

    • Javier February 16, 2016 at 8:57 am
      No David Middleton,
      Peak oil is the point in time of maximal oil production, so that before oil production was always lower and afterwards oil production is always lower. Whether this is the consequence of geology, technology, economy or debt, or a combination of them is irrelevant for the definition of Peak Oil. Obviously Richard Wakefield is correct that it is about the rate of extraction. When the derivative of the oil extraction versus time (or rate of oil extraction) while going from positive to negative reaches zero, at the highest value of oil extraction, that is the mathematical definition of Peak Oil.

      Educate yourself…

      http://www.hubbertpeak.com/hubbert/1956/1956.pdf

  45. I have observed odd prejudices and bizarre behavior on all sides on this issue. Oil companies have kept the knowledge of tap-able reserves under wraps while helping feed Peak Oil hysteria with a few calculated “we can neither confirm nor deny” remarks. This served to drive a wedge between those seeking to determine an assessment of short-term economic effects and others who were trying to start open public debate to explore options for post-petroleum survival.

    In the early 70s the mere fact that ‘oil will run out’ was generally understood and could be debated easily without one being pressed on exactly when as people do now, AS IF not knowing or stating ‘exactly when’ makes your whole argument moot.

    Now the future of oil has become a polarized issue. You either have to side with the oil companies who project hundreds of years of production (despite steeply declining EROEI of methods), fall in with wind and solar advocates who are crypto-advocating complete reliance on natural gas (either they haven’t figured it out yet or choose to leave the topic un-discussed, the silence is deafening), or jump in with the doom crowd who insist that Big Oil has been ‘hiding the decline’ and disaster is already under way. Or just for novelty’s sake talk a walk on the wild side of abiotic oil, which pretends that oil is inexhaustible (though not guaranteed to be accessible)

    I sometimes long for the 70s, a time before the political noise rose up to shout down the simple message.

  46. The latest world oil production and consumption chart from the US Energy Information Agency.

    One can see why prices are falling because production has been as much as 2 million barrels per day higher than consumption. Stocks have been rising since 2014 and they are literally starting to run out of places to store it. More than a year out before production and consumption balance out again.

    https://www.eia.gov/forecasts/steo/report/global_oil.cfm

  47. Simple and wrong. Conventional oil production was not in a plateau prior to 2005, it was growing, and will not continue in a plateau when the exponentially increasing capex needed to sustain that plateau is not there, like now. Decline is already baked in the cake. Peak Oil is not about how much oil is in the ground, but about how much oil we produce. Non conventional oil from US is already declining since April 2015 and likely to decline even more in 2016 even if the oil price raises. Looks like the fracking bubble has popped.

    • Yes Javier, I agree that your comment is simple and wrong…,

      USA production is falling due to Saudi Arabia producing excess oil for a year or two as an economic weapon against their bitter enemy, Iran, and their enabler, Russia.

      Low and falling prices, not any technical limit on ability to produce.

      You seem to think oil produces will always pump at maximum abilty. That is just wrong. Demand and price drive production in non OPEC nations. Politics and monopoly strategy drive production in OPEC and especially in Saudi. Note the complete absence of technical max ability to pump driving output increases. OPEC exists precisely for the purpose of preventing production at max abilty to pump.

      • E.M.Smith,

        “USA production is falling due to Saudi Arabia producing excess oil for a year or two as an economic weapon against their bitter enemy, Iran, and their enabler, Russia.”

        You haven’t even looked at oil production charts, have you?
        Saudi Arabia produces more oil during the summer due to their strong consumption of electricity those months.

        Saudi Arabia
        Summer of 2012: 9,900 mbpd
        Summer of 2013: 10,100 mbpd
        Summer of 2014: 9,900 mbpd
        So at the time the oil price crisis started Saudi Arabia was producing less oil (0.2 mbpd) than the previous year and the same amount than two years before.

        US
        Summer of 2012: 6,000 mbpd
        Summer of 2013: 7,400 mbpd
        Summer of 2014: 8,500 mbpd
        So at the time the oil price crisis started US was producing a lot more oil (1.1 mbpd) than the previous year and a lot more oil (2.5 mbpd) than two years before.

        I am afraid your narrative is not supported by the data. US produced the excess of oil that provoked the oil price crisis.

      • Saudi is the swing producer. “more” is relative to stability price point.

        Yes, I probably ought to have said OPEC was over producing via cheating and the US unconventional was squeezing too driving Saudi into reduction from their personal goals, and yet they chose to let price drop to discipline the cartel and damage Iran / Russia, perhaps with consultation with US Agencies and…

        wasting even more hours of my time on irrelevat detail unlikely to be of benefit.

        The key points remain: Saudi is THE swing producer. Their production rate determines global prices. They chose lower prices by keeping output higher than needed.

        Yes, other suppliers raised output too much. At that point, the swing producer can reduce, to restablish prices, or let increased total production discipline the cartel. Saudi chose discipline and hurt Iran / Russia.

        Happy now?

        Note that Saudi has met with Russia and Iran now to discuss how well their leverage is working.

        There is a small chance that unconventioal non-OPEC oil can become the swing producer, but that is not proven yet, and it is unlikely they would join the cartel anyway as their home countries want low prices and a broken OPEC. It can be forced into swing production cuts via price wars, happening now…

        So we get to see who runs out of cash first. With Saudi controlling the swing and prices.

      • E.M.Smith,

        Saudi Arabia stopped being the swing producer in 2005, and it was demonstrated during the Libyan crisis of 2011. Look at what happened. Arabia Saudi wasn’t able to increase production enough to compensate for Libyan loss, and about half of what incremented was direct burn (internal consumption). It was US who responded several years later to the Libyan loss of production.

        “I probably ought to have said OPEC was over producing via cheating and the US unconventional was squeezing too driving Saudi into reduction from their personal goals, and yet they chose to let price drop to discipline the cartel and damage Iran / Russia, perhaps with consultation with US Agencies and…”

        You produce a narrative. It is good for writing fiction, but it is devoid of any actual fact. It also assumes that you have direct knowledge of other people’s intentions, which is obviously impossible.

        “Happy now?”

        Why should I be happy? You produce narrative that contradicts facts, and when I point it to you, you produce more narrative this time devoid of any fact and thus unfalsifiable. But if it makes you happy to believe all those tales, fine with me.

      • Javier: “You produce narrative that contradicts facts”

        I am not persuaded you would recognise a ‘fact’ in this context if it bit you on the backside.

  48. Sigh, Peak Oil is simply not relevant, we have plenty of all kinds, its cheap and at current consumption, several hundred years supply.

    End of whining

    • Except I have posted links showing your logic is completely flawed. Peak oil happens, has happened to individual fields. It’s pie in the sky thinking that such reductions in production cannot happen globally. That some how we can defy the laws of physics.

      • There’s still too much oil in the ground and too much capacity for technological advancement to even begin to predict when a true “peak oil” point will be reached.

      • True, we dont know when precisely it will happen, but that does not mean it fundamentally cannot happen. All technological advancements do is kick the can down the road a bit. It’s buys us some time.

      • It will buy us a lot of time because there’s a hell of a lot of undiscovered and currently unrecoverable oil remaining in the ground.

      • “there’s a hell of a lot of undiscovered.”

        Wow, you know how much is in the ground that has yet to be discovered???? Amazing! You put money into those companies who have yet to find those fields?

      • There’s still too much oil in the ground and too much capacity for technological advancement to even begin to predict when a true “peak oil” point will be reached.

        It doesn’t matter how much oil there is in the ground. What matters is how much we can get out and at what cost. There is no need to predict anything. Peak Oil has taken place in the summer of 2015.

      • J. Richard Wakefield:

        For all practical purposes every resource – including crude oil – can be considered to be infinite.
        This is a matter of basic economics that because you say you don’t understand the matter – I will again explain.

        ‘Peak oil’ is part of the fear of overpopulation.

        The fallacy of overpopulation derives from the disproved Malthusian idea which wrongly assumes that humans are constrained like bacteria in a Petri dish: i.e. population expands until available resources are consumed when population collapses. The assumption is wrong because humans do not suffer such constraint: humans find and/or create new and alternative resources when existing resources become scarce.

        The obvious example is food.
        In the 1970s the Club of Rome predicted that human population would have collapsed from starvation by now. But human population has continued to rise and there are fewer starving people now than in the 1970s; n.b. there are less starving people in total and not merely fewer in percentage.

        Now, the most common Malthusian assertion is ‘peak oil’. But humans need energy supply and oil is only one source of energy supply. Adoption of natural gas displaces some requirement for oil, fracking increases available oil supply at acceptable cost; etc..

        In the real world, for all practical purposes there are no “physical” limits to natural resources so every natural resource can be considered to be infinite; i.e. the human ‘Petri dish’ can be considered as being unbounded. This a matter of basic economics which I explain as follows.

        Humans do not run out of anything although they can suffer local and/or temporary shortages of anything. The usage of a resource may “peak” then decline, but the usage does not peak because of exhaustion of the resource (e.g. flint, antler bone and bronze each “peaked” long ago but still exist in large amounts).

        A resource is cheap (in time, money and effort) to obtain when it is in abundant supply. But “low-hanging fruit are picked first”, so the cost of obtaining the resource increases with time. Nobody bothers to seek an alternative to a resource when it is cheap.

        But the cost of obtaining an adequate supply of a resource increases with time and, eventually, it becomes worthwhile to look for
        (a) alternative sources of the resource
        and
        (b) alternatives to the resource.

        And alternatives to the resource often prove to have advantages.

        For example, both (a) and (b) apply in the case of crude oil.

        Many alternative sources have been found. These include opening of new oil fields by use of new technologies (e.g. to obtain oil from beneath sea bed) and synthesising crude oil from other substances (e.g. tar sands, natural gas and coal). Indeed, since 1994 it has been possible to provide synthetic crude oil from coal at competitive cost with natural crude oil and this constrains the maximum true cost of crude.

        Alternatives to oil as a transport fuel are possible. Oil was the transport fuel of military submarines for decades but uranium is now their fuel of choice.

        There is sufficient coal to provide synthetic crude oil for at least the next 300 years. Hay to feed horses was the major transport fuel 300 years ago and ‘peak hay’ was feared in the nineteenth century, but availability of hay is not a significant consideration for transportation today. Nobody can know what – if any – demand for crude oil will exist 300 years in the future.

        Indeed, coal also demonstrates an ‘expanding Petri dish’.
        Spoil heaps from old coal mines contain much coal that could not be usefully extracted from the spoil when the mines were operational. Now, modern technology enables the extraction from the spoil at a cost which is economic now and would have been economic if it had been available when the spoil was dumped.

        These principles not only enable growing human population: they also increase human well-being.
        The ingenuity which increases availability of resources also provides additional usefulness to the resources. For example, abundant energy supply and technologies to use it have freed people from the constraints of ‘renewable’ energy and the need for the power of muscles provided by slaves and animals. Malthusians are blind to the obvious truth that human ingenuity has freed humans from the need for slaves to operate treadmills, the oars of galleys, etc..

        And these benefits also act to prevent overpopulation because population growth declines with affluence.
        There are several reasons for this. Of most importance is that poor people need large families as ‘insurance’ to care for them at times of illness and old age. Affluent people can pay for that ‘insurance’ so do not need the costs of large families.

        The result is that the indigenous populations of rich countries decline. But rich countries need to sustain population growth for economic growth so they need to import – and are importing – people from poor countries. Increased affluence in poor countries can be expected to reduce their population growth with resulting lack of people for import by rich countries.

        Hence, the real foreseeable problem is population decrease; n.b. not population increase.
        All projections and predictions indicate that human population will peak around the middle of this century and decline after that. So, we are confronted by the probability of ‘peak population’ resulting from growth of affluence around the world.

        The Malthusian idea is wrong because it ignores basic economics and applies a wrong model; human population is NOT constrained by resources like the population of bacteria in a Petri dish. There is no existing or probable problem of lack of resources or of overpopulation of the world by humans.

        Richard

      • Javier, you’re still missing the big picture. You say:

        It doesn’t matter how much oil there is in the ground. What matters is how much we can get out and at what cost.

        Of course it matters how much oil is still in the ground. The markets will price it at the cost of extraction. The markets will take care of it. If it’s there, it will be extracted when the price is right.

        And:

        Peak Oil has taken place in the summer of 2015.

        Umm-m… that’s a prediction, no? You’re predicting that no new supplies will be discovered. But that’s what happened with the fracking boom. Before fracking took off, ‘peak oil’ was routinely predicted. They were wrong then. What makes you so sure you’re right now?

        Currently oil is selling for under $30/bbl. That isn’t consistent with ‘peak oil’, is it? If oil is getting scarce, the price should be rising.

        Low prices will force marginal producers out of business, or force them to curtail production until prices rise. It is low prices — not ‘peak oil’ — that will cure low prices.

      • J. Richard Wakefield February 16, 2016 at 8:56 am
        “there’s a hell of a lot of undiscovered.”

        Wow, you know how much is in the ground that has yet to be discovered???? Amazing! You put money into those companies who have yet to find those fields?

        I work for one of those companies. No one knows exactly how much oil remains to be discovered and recovered. However, we know that it is a staggeringly large volume.

        Past history shows us that gov’t agencies always grossly underestimate what the oil industry will find and produce. Alaska’s North Slope has already produced 16 billion barrels of petroleum liquids. Currently developed areas will ultimately produce a total of about 30 billion barrels. The government’s original forecast for the North Slope’s total production was 10 billion barrels. The current USGS estimate for undiscovered oil in the Bakken play of Montana & North Dakota is 25 times larger than the same agency’s 1995 estimate. In 1987, the MMS undiscovered resource estimate for the Gulf of Mexico was 9 billion barrels. Today it is 48 billion barrels ( SOURCE pp 11).

        The MMS increased the estimate of undiscovered oil in the Gulf of Mexico from 9 billion barrels in 1987 to the current 45 billion barrels because we discovered a helluva a lot more than 9 billion barrels in the Gulf over the last 20 years. Almost all of the large US fields discovered since 1988 were discovered in the deepwater of the Gulf of Mexico. In 1988, it was unclear whether or not the deepwater plays would prove to be economic.

        Based on the gov’t’s track record, the estimated 116 billion barrels of undiscovered oil under Federal lands is more likely to be 680 billion barrels. That’s close to 100 years worth of current US consumption – And that’s just the undiscovered oil under Federal mineral leases.

        When you factor in truly unconventional oil plays like the Green River Oil Shale, the numbers become staggering. “Peak Oil,” won’t be reached for hundreds of years if the gov’t would just get the Hell out of the way.

        It’s just a matter of economics and technology. There will be periods of economic expansion in which demand out-paces supply and there will be periods of supply out-pacing demand… Like right now.

        Technology improves economics. Smaller and smaller oil accumulations can be found and economically recovered even in an environment of stable inflation-adjusted prices because technology is continuously improving… And large discoveries continue to be made in plays that weren’t envisioned just a few years ago. Eventually, we will reach a point where the diminishing returns of technology can’t keep up with oil-related energy demand. But a properly functioning free market will already be delivering economical alternatives as oil begins to price itself out of the market.

        Going back to the Gulf of Mexico, three of the ten largest discoveries in the Gulf’s history (since 1947) have been made since 1985. Two of the top five (#1 and #5) were discovered in 1998 and 1999. There have been several potentially huge discoveries made in the last 5-10 years in the ultra-deepwater Lower Tertiary play. We won’t know how large these are until they can be fully evaluated by appraisal drilling.

        The 9th largest field in the Gulf, Shell’s Mars Field, was discovered in 1989. Prior to the Mars discovery, no one seriously believed that Miocene-aged and older reservoirs existed that far away from the established Miocene plays in shallow waters. Decades of drilling results indicated that Miocene sandstones gradually “petered out” long before reaching the continental shelf. Since, the Mars discovery, many very large Miocene discoveries have been made in deepwater. The recent discoveries of even older, Lower Tertiary reservoirs in even deeper water was a huge surprise. Oligocene reservoirs were thought to have “petered out” even closer to shore than the Miocene reservoirs. No one knows how these sandstones got out that far into the Gulf while bypassing the shelf.

        If we’re still finding giant-like fields in the Gulf of Mexico now in plays that we couldn’t even imagine 30 years ago… What will we find in the 85% of the US Outer Continental Shelf that has never been explored? The handful of discoveries offshore California were made long before modern technology was available. The very few exploratory wells that were allowed in the 1970’s in the Atlantic’s Baltimore Canyon were drilled long before 3d seismic reflection data were available.

        Technology also enables us to steadily improve the efficiency of oil recovery from reservoirs. The Bakken formation is thought to have over 40 billion barrels of oil in place. The trick is in recovery techniques. The USGS assumes that 10% is the maximum recovery factor. Twenty years ago, few people thought that Bakken recovery factors could exceed 1%.

        As you can see from the following chart, individual Bakken oil wells now produce 7 times as much oil as they did in 1991…


        SOURCE

        Over the past twenty years, drilling, completion and enhanced recovery methods have led to nearly a ten-fold improvement in Bakken oil recovery. There’s no reason to doubt that those recoveries will continue to improve… It’s just a matter of technology and economics.

      • “No one knows exactly how much oil remains to be discovered and recovered. However, we know that it is a staggeringly large volume.”

        Kind of a contradictory comment, dont you think? We dont know, but we do know? Last time I looked oil in the ground is around 2 trillion barrels, of which we have consumed around a trillion. So we have used 1.3 of the bounty. The problem is, as with anything humans consume, we go after the easy and cheap stuff first.

      • “Peak oil’ is part of the fear of overpopulation.”

        Egypt:

        — 50% of the population is under 25 years of age.
        — 80 million people, birth rate 3.5, twice Western Countries.
        — imports 85-90% of their food requirements.
        — oil production and export of that oil ended in 2005.
        — borrows money to buy food on the open market.

        Egypt is typical of most middle east countries. Now Saudi Arabia has joined the list as they have tapped out water reserves for crop production. They reached peak water.

        So much for infinite resources…

      • J. Richard Wakefield February 16, 2016 at 1:55
        “No one knows exactly how much oil remains to be discovered and recovered. However, we know that it is a staggeringly large volume.”

        Kind of a contradictory comment, dont you think? We dont know, but we do know? Last time I looked oil in the ground is around 2 trillion barrels, of which we have consumed around a trillion. So we have used 1.3 of the bounty. The problem is, as with anything humans consume, we go after the easy and cheap stuff first.

        It’s no more contradictory than not knowing exactly how many grains of sand are on a beach, yet knowing that it is a staggeringly large number.

      • “Peak Oil has taken place in the summer of 2015.”

        Is that the 23 or the 24th time Peak Oil has been predicted?

        PS, why the capitalization? Does it make the ridiculous look less so?

      • J. Richard, you don’t seem to know what the word “exactly” means.
        Saying we don’t know exactly how much oil is out there, but we know there is lots of it is not contradictory.
        Please, stop embarrassing yourself.

      • J. Richard, your numbers are bit out of date.
        Regardless, the birth rate in Egypt has been plummeting in recent decades, the same as it has been for the rest of the world.
        As to peak water, there’s always de-salination.

      • J. Richard Wakefield:

        Congratulations! You have managed to post the daftest comment in the thread!

        In response to my writing and explaining the true and accurate statement

        “For all practical purposes every resource – including crude oil – can be considered to be infinite.”

        You have replied saying in total

        I’ll remember that the next time I open a can of Coke when it empties.

        So, you don’t intend to buy another can of Coke to replace the empty one? That is the same as not intending to drill another oil well to replace an exhausted one.

        Clearly, you failed to read the explanation I provided for you, so I will provide a different one.

        Everything is finite in absolute terms: the world and everything in it will end will be consumed when the Sun expands to become a Red Giant. But that is not a reason for anybody to be concerned that the end of the world is imminent: for all practical purposes the world and everything in it can be considered to be infinite.

        Richard

      • “So, you don’t intend to buy another can of Coke to replace the empty one? That is the same as not intending to drill another oil well to replace an exhausted one.”

        Well, you missed the analogy then. Let’s be clear on the facts. We have been consuming oil faster than we have been finding new oil to consume. That’s been the case since the 1980s. Peak discovery was in the 1960s.

        That means, I had found several cases of Coke decades ago, which I’m still drinking from, but new discoveries of Coke have not been keeping up with my consumption rate. There is only one outcome from that, and it’s that I run out of Coke one day to keep up with my current consumption rate. I’m forced to consume less because there is less to consume. I have to ration what I have left.

        You are correct in a sense that we never run out. But, as we have been saying from the beginning, Peak Oil isnt about running out, never has been. It’s about how fast we can extract it. At some point, if we already are not there, we will not be able to extract oil fast enough to meet demand. That means someone will have to do without the oil they need.

        That said, I dont think we will reach that point. I think we are going to hit the debt brick wall. When that happens, demand for energy will plummet. Things will reset in 20-30 years, and then we will hit the energy brick wall. But we are talking about the future, which is notorious for not being predictable. Hell, the entire planet could be in civil war with Islam by then.

      • “J. Richard, your numbers are bit out of date.”

        No, that’s as of 2014. 2015 numbers are not available yet.

        “Regardless, the birth rate in Egypt has been plummeting in recent decades, the same as it has been for the rest of the world.”

        False. In most Muslim states, the birth rate has been rising. In Europe for example, even though the birth rate has below replacement, the Muslim community’s birth rate has been increasing, dramatically. As much as 8 children per family.

        “As to peak water, there’s always de-salination.”

        Horrendously expensive.

      • dbstealey,

        Currently oil is selling for under $30/bbl. That isn’t consistent with ‘peak oil’, is it? If oil is getting scarce, the price should be rising.

        You have a very simple understanding of economics. Peak oil takes place when oil is very cheap (selling price), not expensive, as expensive oil promotes an increase in oil production, while cheap oil actually promotes a decrease in oil production, which is what we are seeing.

        Peak oil is a combination of economics, debt and geology. An increase in the cost of production due to geology and depletion is met with a decrease in purchasing power by consumers due to excessive debt and lack of increase in labor compensation. As the consumer cannot pay the increasing costs of production those fall on the producer due to cheap prices leading to a reduction in oil production. When this reduction leads to higher prices the consumer cannot pay them leading to demand destruction and excess supply even at reduced output. This feedback cycle repeats leading to a terminal decline in oil production paired with economic destruction. Technology cannot reduce costs of production fast enough to affect the process.

        Peak Oil has taken place in the summer of 2015.
        Umm-m… that’s a prediction, no?

        Not really. It is the recognition of a past event. It carries the assumption that conditions are not going to allow a higher peak. The same could be said about peak fish consumption per capita, that was reached in 1988. It also carries the assumption that no more fish per capita will be captured in the future, but it is the recognition of a past event.

        You are the one missing the big picture. All sort of peaks are coming and will take place in the next decades, because we live in a limited planet and we have undergone explosive growth. So close your eyes as you are not one able to face the consequences. You won’t be alone, a lot of people is refusing to accept the evidence.

      • Javier says:

        So close your eyes as you are not one able to face the consequences.

        The consequences will be a higher price per barrel. I think I’m able to face that.

      • @J.Richard:

        Saudi has a Very large desal plant and uses hydroponic farming.

        They have NO “peak water” and will never have one as long as oceans exist.

        Using that water, they now have no “peak food” for any foreseeable future.

        Egypt is in trouble due to bad government, not any technical limit. Using solar greenhouses they could grow functionally unlimited food IF they had a peaceful rule of law, no corrupt government, and a capitalist system to enable wealth to grow and investment to happen.

        http://www.seawatergreenhouse.com/

        The technology exists to make the entire Sahara food productive.
        The Will and governance are missing…

      • E.M.Smith

        They have NO “peak water” and will never have one as long as oceans exist.

        Using that water, they now have no “peak food” for any foreseeable future.

        They have NO “peak water” and will never have one as long as oceans exist – but only as long as affordable energy is locally available for use.

        Using that water, they now have no “peak food” for any foreseeable future – but only as long as energy is available and the people AND government remain moral and corruption free. (See Zimbabwe, Haiti, The Congo, the USSR, China, and the former governments all across the lower rim of the Eastern Block.)

      • Oh Dear…

        Just saw the Peak Fish Panic Graph…

        Note that graph is only for wildcaught fish..

        The reality in the marketplace is that fish farming has brought many more tons of farmed fish to market and total fish production continues to grow. There is NO shortage of fish.

        You might have to console yourself with salmon, trout, abalone, tilapia, catfish, shrimp, oysters, and a dozen other species though…

        Trout were once exotic and expensive in stores. I remember about $10/lb in the 1960 era when a $ was worth about 10x more than now. By the 1990s they were $2/lb at COSTCO and the cheapest fish they had. Nobody would bother with wild caught trout selling other than to the super rich food nut niche as there is no money in it. Shrimping and catfish and to some extent salmon are under similar price pressures

        Peak Fish never happened, due to technological change. That is a Clue Stick moment if you think about it.

      • E.M.Smith,

        “Just saw the Peak Fish Panic Graph… There is NO shortage of fish.”

        Should have read the comment before answering. I was using it as an example that pointing to a peak in the past is not a prediction even if there is an assumption that conditions in the future will not allow for a higher peak.

        Anyway you will agree with me that global fish consumption per capita, whatever its origin, is going down despite fish farming. So that is another fish peak.

        And as far as I know oil cannot be farmed.

      • Javier: “And as far as I know oil cannot be farmed.”

        You know wrong.

        I run my old Mercedes on vegetable oil and have done for years.

      • Javier says:

        dbstealey,

        You have a very simple understanding of economics.

        I suppose you could say that, since I only minored in Econ (but made the Dean’s List). However, some commenters here exceed your knowledge of economics, particularly WRT petroleum.

        And ‘peak oil’ predictions have made lots of folks look foolish over the past century…

        OIL RESERVES:

        – 1885, U.S. Geological Survey: “Little or no chance for oil in California.”
        – 1891, U.S. Geological Survey: “Little or no chance for oil in Kansas and Texas”
        – 1914, U.S. Bureau of Mines: Total future production limit of 5.7 billion barrels of oil, at most a 10-year supply remaining.
        – 1939, Department of the Interior: Oil reserves in the United States to be exhausted in 13 years.
        – 1951, Department of the Interior, Oil and Gas Division: Oil reserves in the United States to be exhausted in 13 years.

        Proven Reserves (these figures may be out of date by now):

        – 1.3 Trillion barrels of ‘proven’ oil reserves exist worldwide (EIA)
        – 1.8 to 6 Trillion barrels of oil are estimated in the U.S. Oil-Shale Reserves (DOE)
        – 986 Billion barrels of oil are estimated using Coal-to-liquids (CTL) conversion of U.S. Coal Reserves (DOE)
        – 173 to 315 Billion (1.7-2.5 Trillion potential) barrels of oil are estimated in the Oil Sands of Alberta, Canada (Alberta Department of Energy)
        – 100 Billion barrels of heavy oil are estimated in the U.S. (DOE)
        – 90 Billion barrels of oil are estimated in the Arctic (USGS)
        – 89 Billion barrels of immobile oil are estimated recoverable using CO2 injection in the U.S. (DOE)
        – 86 Billion barrels of oil are estimated in the U.S. Outer Continental Shelf (MMS)
        – 60 to 80 Billion barrels of oil are estimated in U.S. Tar Sands (DOE)
        – 32 Billion barrels of oil are estimated in ANWR, NPRA and the Central North Slope in Alaska (USGS)
        – 31.4 Billion barrels of oil are estimated in the East Greenland Rift Basins Province (USGS)
        – 7.3 Billion barrels of oil are estimated in the West Greenland–East Canada Province (USGS)
        – 4.3 Billion (167 Billion potential) barrels of oil are estimated in the U.S. Bakken shale formation in North Dakota and Montana (USGS)
        – 3.65 Billion barrels of oil are estimated in the U.S. Devonian-Mississippian Bakken Formation (USGS)
        – 1.6 Billion barrels of oil are estimated in the U.S. Eastern Great Basin Province (USGS)
        – 1.3 Billion barrels of oil are estimated in the U.S. Permian Basin Province (USGS)
        – 1.1 Billion barrels of oil are estimated in the U.S. Powder River Basin Province (USGS)
        – 990 Million barrels of oil are estimated in the U.S. Portion of the Michigan Basin (USGS)
        – 393 Million barrels of oil are estimated in the U.S. San Joaquin Basin Province of California (USGS)
        – 214 Million barrels of oil are estimated in the U.S. Illinois Basin (USGS)
        – 172 Million barrels of oil are estimated in the U.S. Yukon Flats of East-Central Alaska (USGS)
        – 131 Million barrels of oil are estimated in the U.S. Southwestern Wyoming Province (USGS)
        – 109 Million barrels of oil are estimated in the U.S. Montana Thrust Belt Province (USGS)
        – 104 Million barrels of oil are estimated in the U.S. Denver Basin Province (USGS)
        – 98.5 Million barrels of oil are estimated in the U.S. Bend Arch-Fort Worth Basin Province (USGS)
        – 94 Million barrels of oil are estimated in the U.S. Hanna, Laramie, Shirley Basins Province (USGS)

        For Comparison:

        – 260 Billion barrels of oil are estimated in Saudi Arabia (EIA)
        – 80 Billion barrels of oil are estimated in Venezuela (EIA)

      • dbstealey, with all those numbers of reserves, how does that have anything to do with peak oil? It doesnt. Because, ever after many posts trying to explain it, you are making the same mistake as others who do not accept peak oil. It’s because you people do not understand what peak oil is. So one more time, maybe it will finally get through. Peak oil is not about how much oil is still in the ground. It is, and always has been, about extraction rates. You can have a trillion barrels of oil in the rock below your feet, but if it only produces a trickle, then it’s not going to meet demand. That doesnt even include the ERoEI aspect. If it costs more energy to extract that trillion barrels, then what’s the point?

      • J. Richard says:

        …you people do not understand what peak oil is.

        Well, one guy thinks he does:

        “Peak Oil has taken place in the summer of 2015.”

        Javier’s got it down to the season of the year!

        And:

        …how does that have anything to do with peak oil? It doesnt.

        Well, it does, but since you didn’t get it I guess I’ll have to explain. If you look at the dates, you will see that ‘peak oil’ has been predicted incessantly, beginning in the 1800’s. But they were wrong. Every time. And as everyone knows, ‘peak oil’ is the top of the mountain; from that point on, there will be less oil available.

        So now you think they’re right – ‘peak oil’ happened last summer. That sounds silly, doesn’t it, J? Because it will take a few years before we know if that’s right or not. Me? I think it’s gonna be another failed prediction.

      • dbstealey,

        You talk about oil reserves, that is why you miss the point. You don’t understand that is the economy that does the extraction, and if the economy can’t do the extraction then it is the same how much oil is underground.

        This graph contains all the info you need to know about why Peak Oil has already taken place. After 2005 the world had to expend every year tens of billions dollars more than the previous year to keep production flat. Only North America was capable of increase production but also at great and increasing expense.

        Since between 2005 and 2010 oil did not increase while demand was increasing, high oil prices caused an economic crisis from a highly indebted economy. High oil prices between 2010 and 2014 caused highly indebted oil importing countries all sorts of problems as they were outbid by China and India for the limited oil available.

        The current price crisis is wrecking havoc between producers so the investments needed to keep production are not available. The oil decline is going to be significant and future production is going to be reduced for years even if prices recover.

        With less oil the economy is going to do badly exacerbating the problem and entering a vicious circle. Bad economy -> reduced demand -> reduced production -> bad economy.

        The economy won’t be able to do the extraction so those reserves are going to stay exactly where they are.

      • Javier: “The economy won’t be able to do the extraction so those reserves are going to stay exactly where they are.”

        No they aren’t.

        You can take that to the bank.

      • @Javier:

        I read the comment first. I was making my own point from the same graph / critical of the selection bias.

        Fish cosumption rises now as desire for it manifests,

        @RACook:

        But there will always be plentiful energy from this point forward, as long as governments don’t block nuclear power.

        About 10, 000 years of land uranium, about 3x that thorium on land, and functionally unlimited from seawater at acceptable prices

        https://chiefio.wordpress.com/2009/05/29/ulum-ultra-large-uranium-miner-ship/

        Plus you don’t need nuclear for seawater greenhouses if you have a hot desert, which they do

        http://www.seawatergreenhouse.com/

        So no real limit for Saudi ever (other than goverment stupidity and wars, but I repeat myself…)

    • Grey,

      Concur. As any chemical engineer knows, once you can produced the methanol you can pretty much produce any hydrocarbon.

      We don’t need crude oil per say. As a feedstock, for producing transportation fuels and plastics, coal’s the next best feedstock followed by bio-mass. When you produce using these alternate feedstock’s, the resulting commodity prices for these products are higher but not significantly higher than they when produced using the highest oil prices we’ve seen.

      And, respectfully, for those your that are going reply with the “Energy Returned on Energy Invested” argument… well I simply don’t agree. Roughly thirty years ago I realized the transportation fuels market is about the convenience of using a high energy density fuel in LIQUID form…. not about the heat content of the originating feedstock. In the worst case scenario, I can “buy” heat content by using bio-mass. It’s not optimal… but it can be done somewhat economically – its just not worth doing today.

  49. Origin of Oil, The Myth of Fossil Fuels

    Peak oil and peak natural gas is based on a urban legend, the assertion that the origin of liquid oil, black coal, and ‘natural’ gas is from the conversion of plants is an Urban legend. (i.e. Observations and analysis does not support that assertion.)

    The entire scientific basis of the cult of CAGW is incorrect. We are never going to run out of natural gas. Many of the new super deep natural gas fields refill as do many of the Middle East oil fields and natural gas fields.

    http://www.amazon.com/The-Deep-Hot-Biosphere-Fossil/dp/0387952535

    Thomas Gold’s book The Deep Hot Biosphere – The Myth of Fossil Fuels provides more than 50 observations that support the assertion that the origin of liquid oil, black coal, and natural gas is the CH4 that is extruded from the liquid core of the planet as it solidifies. The deep earth CH4 theory is not a new theory and is the standard theory in Russia and the Ukraine. The Ukraine Institute of Science threaten Gold with a law suit as there are hundreds of Ukraine and Russian scientific papers published 50 years ago support that theory.

    A key logical pillar for that supports the deep CH4 theory is the helium in oil fields and natural gas fields Paradox

    The fact that helium is found with natural gas and oil fields is one of the observations that can only be explained by the deep CH4 theory. Helium is formed from the radioactive decay of Uranium and Thorium. Metals dissolve in the super high pressure CH4 and then drop out as at specific pressures which occurs as specific depths as the CH4 moves to the surface of the earth. This phenomena is the reason why certain metals are concentrated up to a million times in the mantle. This same phenomena explains why there is heavy metals in oil and black coal.

    As helium is a gas at all pressures in the earth, the helium that is produced by radioactive decay would remain in the vicinity of the Uranium and Thorium. The CH4 continues to flow up to surface of the earth and hence breaks the mantel which provides a path way for the helium that is produce by radioactive decay of concentrated Uranium and Thorium that is located by below the oil and natural gas fields, to move up to and accumulate in the natural gas and oil reserves.

    I have researched this subject in depth (deep CH4 theory vs Late thin veneer theory/fossil fuel theory) and can provide dozens of observations in addition to Thomas Gold’s to support the assertion that the reason why the earth is 70% covered with water and why there are super large natural gas and oil fields is due to the fact that CH4 is extruded from the liquid core as it solidifies. As the core solidifies the liquid CH4 is extruded. The super high pressure CH4 moves the surface of the planet causing plate tectonics. The continents float on liquid CH4. The super high pressure CH4 that is pushed up from the core is the reason why the oldest ocean floor on the earth is 200 million years. A portion of the CH4 that is carried by the ocean floor remains at the edge of the continents where the ocean floor is pushed back into the mantel which explains why there are bands of mountains at the coast of continents.

    While researching this subject I found, a very interesting set of papers published in the 1970’s by the API (American Petroleum Institute) on the formation of oil. (A better title of the collection of papers would be “the unexplained problems with the conventional formation of oil from plants and marine animals”, rather than “the formation of oil”). An example of the unanswered problems in the collection is how to explain the finding of massive oil reserves at the continental shelf. What is the source of the hydrocarbons? Marine environments are very efficient. There is very little plant or animal residue that is deposited on the ocean’s surface. A second primary issue is pressure does not convert long chain plant or animal hydrocarbons into shorter chain light oil molecules. The solution proposed in the API paper has the word “time” in quotations, however chemical reactions do not proceed from a lower state to a higher state due to ‘time’ just as water does not flow uphill regardless of the amount of time that passes. A chemical reaction that does not take place is at the conditions where the oil is found is a show stopper for the biological source hypothesis.
    A third is why are there heavy elements in the oil? Think of the competing hypothesis for the formation of oil where the hydrocarbon comes from deep in the earth and hence picks up the sulfur and heavy metals as it migrates through the crust.

    The deep earth CH4 hypothesis explains why unconnected oil fields across vast geological regions have similar amounts of heavy metals and sulfur. The source of the oil field is from CH4 that is extruded from the core as it solidifies. The liquid CH4 carries and picks up metals as it moves through the earth.

    Raise the question to a higher level. What is source of hydrocarbons on this planet’s surface? Roughly 70% of the earth’s surface is covered by water. Where and when did that water come from? As almost no one is aware the solar wind strips water from the atmosphere. If there was no new source of hydrogen this planet would be dry and lifeless.

    There are a number of commercial changes concerning the amount of oil and gas in recent years.
    For those who have not noticed Canada is now constructing a LNG (Liquefied natural gas) export terminal at its West Coast to export natural gas. A few years ago Canada was planning to construct a port at the same location on its West coast to import LNG. What has changed? The discovery of massive reserves of deep earth CH4. North America suddenly has a massive surplus of “natural gas”. Why?

    Saudi Arabia has 25% of the planet’s oil reserves half of which is contained in only eight fields. Half of Saudi Arabia production comes from a single field the Ghawar. Again why?

    As most are aware a large mars sized object struck the earth roughly 500 million years after the formation of the solar system. The impact formed the moon and stripped the planet’s mantel of most of the volatile lighter elements. As 70% of the planet’s surface is covered by water a natural question to ask is: Where did the water come from, as the earth’s mantle contains almost no water or hydro carbon?

    There are two theories to explain how water and hydrocarbons came onto the earth: the late veneer theory and the deep CH4 theory. The late veneer theory hypothesis: Comets struck the early earth after the big splat event covering the very hot earth with hydrocarbons. The late veneer hypothesis requires that the earth had a Venus like atmosphere (atmospheric pressure of say 60 atmospheres) for the early earth, except with methane.

    There are multiple problems with that hypothesis (See Thomas Gold’s Book Deep Hot Biosphere for details. One of the key problems is the observation that the percentage of heavy gaseous elements in the earth’s current atmosphere does not match that of comets (Comets are residues of the early solar systems. The comet elemental composition does match that of the sun). The late veneer theory’s explanation for the miss match of isotopes in the earth’s atmosphere to that of comets is that the early solar system had a close encounter with another solar system which temporary provided a limited source of comets to cover the earth but not significantly change the element composition of the sun.

    The second hypothesis is the deep earth hydrocarbon theory. This theory hypothesizes that massive amounts of hydrocarbons (5% of the total core mass) are located in the earth’s core. As the core cools these hydrocarbon (CH4) are released. At very high pressures the CH4 forms longer chain molecules.
    The release of CH4 is still occurring as the upper surface of the ocean is saturated with CH4 which indicates that CH4 is being released from some source.

    See Carnegie Institute of Sciences Deep Carbon Workshop presentations if you interested in this subject.
    https://www.gl.ciw.edu/workshops/sloan_deep_carbon_workshop_may_2008
    and…
    http://www.sciencedaily.com/releases/2009/09/090910084259.htm
    http://www.nature.com/ngeo/journal/v2/n8/abs/ngeo591.html

    • Yet every oil field has a chemical signature which can be traced to the origin sediments, which prove to be marine ecosystems. I suggest you read Oil 101. The abiotic theory of oil creation has been proven false.

      • Abiotic, abiogenic or otherwise inorganically sourced oil is physically possible… The chemical equations can actually be balanced. So, the hypothesis hasn’t been proven to be false. It’s just never been confirmed.

        However, there simply is no evidence that significant volumes of it have ever existed on earth. All of the actual evidence supports the current paradigm. Marine and lacustrine ecosystems are the source of just about every drop of oil ever produced on Earth.

        People tend to confuse methane, which is easily sourced from inorganic material with heavier hydrocarbon chains.

      • “People tend to confuse methane, which is easily sourced from inorganic material with heavier hydrocarbon chains.”

        What happens when you subject methane to heat and pressure, particularly in the presence of a metal with catalytic properties?

      • catweazle666 February 16, 2016 at 10:44 am
        “People tend to confuse methane, which is easily sourced from inorganic material with heavier hydrocarbon chains.”

        What happens when you subject methane to heat and pressure, particularly in the presence of a metal with catalytic properties?

        As I stated, the chemical equations can be balanced. Inorganically sourced heavy hydrocarbons aren’t impossible.

        There’s just no evidence of any significant volumes of inorganically sourced oil anywhere on Earth.

      • “metal with catalytic properties”

        Therein lies your problem.
        Not much of that to be found in a metallic form in the crust.

      • Zeolite catalysts are also used to make petroleum products from methane, Zeolites are syntheticly made now, but originally were found in natural rock.

        There is plenty of catalytic material available in the crust, and more in the core, Iron is one of the FT catalysts, along with various mixes of Ni and or Co. I.e just what the core is presumed to be made of…

    • A lot of the basic information you are presenting is incorrect. Helium goes into solution like all gases but almost is as diffusive as H2. It becomes trapped in reservoirs if the geology is right.

    • yeah- nothing like a dense ball of molten iron to extrude the really low mass gasses like hydrogen that somehow filtered down in there when they were younger and knew no better.
      gas extrusion is a challenge, too- the filaments are as fine as frog fur and could produce sinclair chains that slice organic matter into multicutured ribbons.
      more study is obviously needed to prove the connection to zika virus, but we can’t wait till a country song is written to immortalize the travesty.

  50. From David Middleton above:

    “There’s still too much oil in the ground and too much capacity for technological advancement to even begin to predict when a true “peak oil” point will be reached.”

    This really the crux of the “Peak Oil” debate. Oil resources should be viewed as a pyramid ; At the the top of the pyramid, there are a few extremely prolific, economic at any price / with any technology resources. As you move down the resource pyramid, there becomes an increasing amount of progressively lower grade resources, which need better technology / higher prices to be produced. The cross sectional area is proportionate to the volume of the resources – i.e. the lower the grade of the resource, the greater the total volume is & vice versa – the higher quality the resource, the less total volume of these resources exist.

    Hubert basically didn’t recognize or think the bottom of the pyramid would ever be economic. Think about a pyramid in terms of area. If you sliced the pyramid 1/2 way up it’s height, the vast majority of the volume is still in the lower half of the pyramid. So it is with resources.

    If you looked at the “upper half ” of the resource pyramid, those resources have peaked …. so Hubbert wasn’t entire wrong for the part of the resource pyramid he was looking at but where he was wrong was understanding where the base of the resource pyramid was. We still can’t say where the base of the pyramid ultimately will be because that will be driven by technology & price, neither of which is predictable in the future.

    So, similarly, as David points out, there is still much oil in the ground (the lower part of the pyramid) and the real question will be is how far will technology and increasing prices allow us to push into the base of the pyramid , with ever decreasing resource quality but also with increasing resource volume. At this point, we don’t seem to be anywhere near that point, as technology & costs reduction to employ that technology continue to march forward.

    The logical path of what will happen is that at some point the price of oil will become too high & other fuel sources will out compete it so the question of “peak oil” is really somewhat academic. As other commenters have noted, we won’t run out of oil, we will just transition into other fuels which will, at some unknown time, but probably far in the future, become more economic.

    • Hubbert simply didn’t know what he couldn’t have known in 1956… Otherwise, his math was sound.

      • His math may have been sound, but only an idiot would ignore the fact that technology improves and that increasing prices make previously uneconomical deposits economical.
        His math may have been sound, but his assumptions were so bad that they would have failed a first year econ student.

  51. Wakefield said

    Quote

    Conventional wells follow a bell curve. Tight shale wells follow a decay curve.

    Unquote

    Yawn, sorry, technology knows no such bounds, it can be used in any oil field. oh my god, its fracking, you cannot do that its not shale. Nobody is disregarding physics, its just that it is nothing to do with directional drilling introduced into a mature field.

    Same as simple maths tells you that if you spent 10 billion to produce a million and a half barrels a day, it takes just so many days at usd 150 per barrel to recover that sum. I t is what it is.

    Same as two hundred years supply of proven producible oil, is just that. matters not about peak oil, what somebody had for breakfast. its there.

  52. If we ever figure out how to drill in the deep sea we will have more fossil fuels then we can ever use. Im not sure that is a good idea, but I expect we might try and possibly even pull it off anyway.

    • The deep sea wont have any oil. Too young. Plate tectonics. The oil we extract from the ocean come from specific shallow marine environments. Nigeria and Brazil deposits are actually the same deposit. I’ll let you figure out how that can be.

      Just on the Canada’s Business News Network, 48 oil companies in North America have filed for bankruptcy this year alone due to the low oil price, up from 45 last year.

      • Exploration and Production !! …high-risk, high-reward segment ! Only 1% of market !

        ” Companies in exploration and production — the industry’s high-risk, high-reward segment — have seen even higher numbers of bankruptcy filings and debt loads than oil field service firms. Among E&P firms, 42 filed for bankruptcy protection in 2015, together involving around $17 billion in cumulative debt, Haynes and Boone found in a Jan. 6 report. That’s still less than 1 percent of the estimated 6,000 independent oil and natural gas producers in the U.S “

      • The problem with the “deep sea” is a lack of sedimentary column, not age. Most of the sedimentary column of the Gulf of Mexico is very young (Pleistocene, Pliocene and Miocene).

        oceanicsedimentthickness

      • Um, J. Richard, try again…

        There have already been found deep asphalt in the Gulf Of Mexico, and there iare very deep methane seeps all over the place
        http://www.deepseanews.com/2009/07/seeps-lophelia-carbonate-2/
        long enough in duration for life to evolve to exploit it…

        Not to mention that Japan has started extraction of methane clathrates ( more hydrocarbon than all other sources combined…) from the deep shelf.

        I’ve got a link in one of my articles to deep oil identified near the middle ocean. Yes, unexplainable by current theory, yet it exists.

        https://chiefio.wordpress.com/2012/09/16/theres-oil-on-that-ocean-bottom/

        You might want to do just a small web search before leaping to conclusions about what exists and what is impossible.

      • Still with the same mistake of what peak oil. I never said these are not sources of petroleum. Again, peak oil is about extraction rates. So will those sources have high rates of extraction and be done at low cost and high ERoEI? Potential means nothing, ramping up to meaningful production means everything.

      • ” A spot in the south of England near Gatwick airport could hold a massive amount of oil even larger than that found at the North Sea oil fields. Investigations at the site in Horse Hill by UK Oil and Gas Investments (UKOG), have discovered the site could hold up to 100bn barrels of the black stuff – dwarfing the 45bn barrels produced by the North Sea in the last 40 years “…..Gatwick !

      • Yeah, I’ll wait for the official science on the deposit, not what someone thinks is there. Heard stories like this before only to be found to be significantly smaller than claimed (i.e. Brazil).

  53. J. Richard Wakefield wrote above,
    “True, we dont know when precisely it will happen, but that does not mean it fundamentally cannot happen. All technological advancements do is kick the can down the road a bit. It’s buys us some time.”

    That is nothing but a lazy and lame excuse to avoid admitting how thoroughly wrong Peak Oil claims have been and are.
    One can indefinitely cling to any assertion with the use of “fundamentally” possible.
    Adding the layer of “we just don’t know when” is even more fantasizing.

    What we certainly do know is that the vast known capacities are far in excess of amounts needed to push off any peak oil scenarios so far off into the distant future the concept is moot.

    Anyone using continued ya buts to say, “Oh yeah, well it could happen” is placing their thumb, hand, leg and butt on the scales of rational measurement.
    Find another hobby.
    Peak Oil is a fools chant.

    • Still with the incorrect claim that peak oil is about running out of oil, I see. Why is it so difficult to understand that peak oil is about the rate of extraction, not about what’s in the ground?

  54. “Then as now, the names least often consulted proved to have the more accurate forecasts.”

    Tends to be the case. The “Experts” aren’t. They’re just the ones providing the latest panic the media wants to sell.

  55. New report by Deloitte: “The crude downturn for exploration & production companies”
    http://www2.deloitte.com/us/en/pages/energy-and-resources/articles/the-crude-downturn-for-exploration-and-production-companies.html

    Excerpts:

    “In the United States, 35 E&Ps with a cumulative debt of under $18 billion filed for bankruptcy protection (liquidation and debt restructuring) between July 1, 2014, and December 31, 2015. It is not just new and small companies that took this course. Companies that have been in the business for more than 10 years (before the shale boom), or survived the 2008–2009 economic downturn, had revenues greater than $500 million (or production greater than 25,000 BOE/d), and even those owned and run by large private equity firms ran out of better options.

    “Although the US E&P industry has so far shown great resilience, the increase in bankruptcies in the second half of 2015 and the even lower oil prices at the start of the new year point to a challenging 2016 for many E&P companies.”

    Although in a marginally better position than the insolvent companies, nearly 35 percent of pure-play E&Ps listed worldwide, or about 175 companies, are high risk, as defined by the combination of high leverage and low debt service coverage ratios.

    “The situation is precarious for 50 out of these 175 companies due to negative equity or leverage ratio of above 100; stock price of some of these has already dipped below $5, making them penny stocks. The probability of these companies slipping into bankruptcy is high in 2016, unless oil prices recover sharply or a large part of their debt is converted into equity or big investors infuse liquidity into these companies.”

    E&P companies are slashing capex, which in turn slashes their future production. History shows that the memories of these downturns lingers in the minds of E&P executives and their lenders, so that prices recover much faster than capex — and production.

    If this price war continues long enough, Texas and Alaska will beg to join OPEC (of course, it will not last that long).

  56. Peak Oil had its uses for advocating bad public policy episodically. It worked in many occasions and venues, including courtrooms, utility commission hearings, and oval offices. Count this as another contrived truth praying on resource ignorance and the disbelief in the efficiency of choice and adaptation. Forcing the market to respond in inappropriate ways leads to such oddities as Solyndra bailouts and the automobile relics of Havana.

  57. Minor quibble, you left out the Iran nuclear and their stored oil.

    I think the fed has reached a limit on how long they can ease. US interest rates likely to go up, and with easing abroad there is likely to be flight to security in US. Lot of downward pressure for US oil price.

    However, without new production coming on line in the US, supply is likely to taper off as wells mature (long term production rate reached after 4th year is substantially lower than first two years). I would think Iranian stores would too. We could see higher prices by the end of the year.

  58. My eyes have glassed over. The discussion is moot, since we will live to see how the story plays out. What I find continually amazing in the discussion of Peak Oil, is that there is no contemplation of a necessary implication of the biotic oil hypothesis: All of the subterranean carbonaceous fuels must have derived from carbon that was originally in the atmosphere as carbon dioxide. Right? What must the original CO2 concentration been at that time? And where did that CO2 come from? –And if it came from somewhere other than the biosphere, who is to say it isn’t still coming? Inquiring minds want to know…

      • Mr. Wakefield, thanks. That is an interesting point of departure. There are apparently two carbon cycles, one involving the biosphere and one involving only the geosphere, hydrosphere, and atmosphere. I presume the primordial situation was the latter case. This involves vulcanism to produce atmospheric CO2, which reacts with rainwater to form carbonic acid, erodes silaceous rock into carbonates and silicates, which are washed out to sea, form seabed deposits, and are recycled into the volcanic magma by plate subduction.

        But I notice a fair number of presumptions in this picture. It has to start with vulcanism, for example. And there must be a mechanism of plate subduction that brings it all back to volcanoes. I have my doubts about this model, but no point in taking them up here.

        That aside, it then becomes true, as I said, that all the carbonaceous fuel on Earth must have derived from atmospheric CO2, which would have been an immense quantity (at least over time). Early atmospheric composition must have been very high in CO2, which I think is the case, but I am happy to turn this over to the experts.

        One implication would be, given development of nuclear power for mobile applications, the prospect of mining carbonate rock for the sake of extracting the carbon, wherewith to make hydrocarbon fuels. (Or scooping it up from the seafloor.)

        Generally speaking, it seems that there should be plentiful carbon in the general environment from which to make hydrocarbon fuels, so long as we recognize that our fission energy resources are phenomenally huge (over a thousand metric tons of uranium in a cubic kilometer of sea water). The elbow room this gives us is easily several thousand years. We have more than enough time to invent technology that will allow us to extract energy from matter in even more resourceful ways (my favorite is boron-10…so much for thorium!).

        Fusion power? Feh. Someday, someday… Not needed for any serious or urgent purposes.

      • “But I notice a fair number of presumptions in this picture. It has to start with vulcanism, for example. And there must be a mechanism of plate subduction that brings it all back to volcanoes. I have my doubts about this model, but no point in taking them up here.”

        Under plate tectonic theory, 4 billion years ago there were far more active plate boundaries than today. Over the last 4 billion years the number of plates has been reduced as they get consolidated. That means the early earth would have had far more volcanoes than today, than even a billion years ago.

        As for separating the two cycles, not true. It’s actually one cycle with many branches. Life started at spreading ridges (hydrothermal vents, black smokers) so the carbon required for that life would have come from that volcanic activity.

      • “Generally speaking, it seems that there should be plentiful carbon in the general environment from which to make hydrocarbon fuels,”

        The energy of fossil fuels doesnt come from the carbon atoms, but the bonds between them. So to get energy from carbonate rock wont work. To make hydrocarbons from carbonate rock would take more energy than you get back. This is the ERoEI (net energy) issue. Seems few people take this concept seriously. Yet it is fundamental of the Laws of Thermodynamics.

      • Me: “Generally speaking, it seems that there should be plentiful carbon in the general environment from which to make hydrocarbon fuels,”

        Mr. Wakefield: “The energy of fossil fuels doesn’t come from the carbon atoms, but the bonds between them. So to get energy from carbonate rock wont work. To make hydrocarbons from carbonate rock would take more energy than you get back. This is the ERoEI (net energy) issue. Seems few people take this concept seriously. Yet it is fundamental of the Laws of Thermodynamics.”

        Yup, that’s right. You misread me completely. I was not talking about burning carbonate rock (which itself is essentially a combustion product) but was referring to carbon sources as sources of raw materials from which to synthesize hydrocarbons by combination with water, in any number of currently-existing chemical processes, with the use of heat provided by nuclear power. I think this should have been evident, considering the portion of my sentence you failed to quote involved a reference to our fission energy resources. Hydrocarbons are useful as transportation fuels (among other purposes) and we would be synthesizing them even if all natural sources dried up.

        My father was once employed to operate the fractional distillation columns that are the heart of modern petroleum refineries. My academic background was in energy conversion thermodynamics, propulsion thermodynamics, combustion chemistry, fission and fusion physics, and magnetohydrodynamics. It is a sad fact that the commentary in WUWT is marked by people beating each over the head with the 1st and/or 2nd Law, when it is not clear that the beater knows much more than the beatee.

        (Thought experiment: I’m sure it is possible to arrive at a conversion ratio for the kilowatt-hours produced for the death of a bald eagle going through a wind turbine, since we know roughly the kill rate for hours and speeds of operation. One could also come up with an estimate of the amount of hydrocarbons that could be produced from recycling of all the carbon in an eagle’s body–and thus also the thermal kW per eagle from combustion of those hydrocarbons. Then it would be an interesting comparison to determine whether it is better to kill eagles in order to obtain wind power–or kill eagles to render them into synfuels. I don’t know what the answer is, but it seems that the exercise might freak out the environmental types.)

      • Most of the carbon on Earth is in the mantle, not as carbonates. It shows up in lava from the mantle boundary in mid ocean volcanism.

        http://www.livescience.com/29326-lava-linked-deep-carbon-cycle.html

        http://students.washington.edu/kpoinar/Class_projects_files/CCinMantle.pdf

        Oh, and for the folks doubting carbon could be in the core, steel is made from an iron carbon solution (though on cooling separation can happen into grains)

        https://en.m.wikipedia.org/wiki/Austenite

        Carbonates came later after carbon sources oxidized in air, dissolved in water, and precipitated.

        Some estimates have 75% ranges of Earth carbon in the mantle. We get bits of it as diamonds from very deep magma hardening, then lots of erosion…

        There is no shortage of carbon… but most of it is way too deep ;-)

      • ” was referring to carbon sources as sources of raw materials from which to synthesize hydrocarbons by combination with water, in any number of currently-existing chemical processes, with the use of heat provided by nuclear power”

        Negative ERoEI. But we dont need to do that. Build thorium reactors. Those reactors emit lots of protons (Hydrogen), which when mixed with steam and powered coal, you get diesel fuel.

  59. A major factor in the drop of US oil production in past decades is the result of the govt placing many of the most promising sites off limits to development.

  60. The Editor said

    Quote

    Estimates for the operating costs for the process of mining and refining Alberta’s bitumen into synthetic crude were $25 to $30 per barrel in 2008.

    Unquote

    Thank you, you have completed my point nicely. If the capital cost of the vastly expensive process equipment was covered in 66 days at oil price max, then the ongoing cost is?

    Your input seems to answer that. That is where Oil Sands are expensive, relatively speaking.

      • Wakefield,

        Lensman’s comments show the common confusion about oil production costs. Nobody will invest in Alberta’s oil fields unless their mean forecast for oil prices is far over their breakeven costs for the duration of the project (>$80). That includes the funds for replacement equipment and new mines (as the old ones deplete) — i.e., depreciation is a real cost.

        First, they need to cover costs of running the company. Second, they need to earn a profit.Considering the boom-bust nature of the E&P biz, they have a high cost of capital — and need substantial expected profits.

        Third and most important: if the mean of the probability curve for their forecast is $80 — then the left tail is the area in which the company loses lots of money (and they risk losing their jobs). Most of the left tail must be above the point at which they cover all costs and earn a profit.

      • It’s a moving target. Large-scale mining has some of the highest productivity rates of any goods-producing sector.

  61. Yes, conflating costs, hugely increases the real costs, which are surprisingly low.

    Pity guys like Wakefield cannot read, two hundred years supply plus means no shortage. Simple.No need to go on about definitions and terms and blah blah. Yes some players will go broke, who would have thought that nobody goes broke, nobody makes a wrong investment decision.

    Larry, a truly great thread, I hope we get a lot more informative posts. Dave Middleton has contributed immensely.

      • So you really think demand, supply, and technology for adjustment on both sides of the equation are static relationships over the path to 200 years?

      • Over the last 150 years oil consumption growth has been 3% per year. That’s a doubling every 25 years. Can that change? Of course. In 200 years we could very well be back to horse a buggy days with a much lower population. Or at the other end, we could be into a Star Trekian society. We’re will we be for sure? Somewhere in between. But assume for a moment that we stay flat, with no reduction and no growth. In the last 150 years we consumed 1/3 of the fossil fuels, the easiest stuff. Thus one can claim that in the next 200 we would consume the hardest next 1/3. Hardest being most expensive, slower extraction rate, with the lowest ERoEI.

  62. Peak Oil is an advocacy lever that is turned on sometimes and off at other times. The question is, Is it right even when you’re not looking at?

  63. Moderator
    I have a graph to post.
    How do I do that?

    [Reply: Cut and paste the URL. If it ends in .jpg, .gif, or .png it will appear. Others may require a click. -mod]

  64. This is also a good teaching moment to call out the supposed “scarcity” and high value of metals as targets for space mining ventures. It’s another cyclical ploy for attention in the space-time fabric of resource ignorance. The noise makers will have to stick with self driving cars and flying cars during the cyclical downswing of commodity prices.

  65. “E.M.Smith February 17, 2016 at 5:30 pm
    Riiight… I’m sure Shell Oil Corp just ran out and squandered $ Billions on a scam when they could have made money somewhere else… /sarc. (IIRC their play was in Canada”

    Shell wrote off billions of its investments in shale. Note that it is possible to invest in shale knowing that will take a loss under the right circumstances. If I were a conventional producer who cannot replace reserves I would think hard about adding shale areas so that I can inflate my reserve numbers until the party ends. In the meantime, I can use my inflated paper to buy cheap reserves using the equity markets.

    Note that you admitted that you have never actually bothered looking at the SEC filings. You simply appeal to authority and assume that companies would not risk their money by buying worthless assets. The problem is twofold. First, it is easy to find that even the supposed great shale companies like Chesapeake and Continental could not generate positive cash flows during periods of high prices. Second, you have failed to note that most of the larger integrated companies that entered the shale space have written off most of their investments already. Why don’t you trust the companies when they told you that shale was not profitable and their assets had little value?

    Do you just want to believe?

  66. To understand the peak oil mechanism, rather than embracing the whole planet, it is useful to consider carefully production case histories. A well known one is of course the US 48 case history, with its peak of conventional crude in 1970. Since then, neither technical progress, nor high prices succeeded in reversing the trend of crude. The North Sea case history is exactly the same. Crude peaked in 2000, and the trend never reversed, just stopped in 2013 for a while. There are plenty of examples, not only for oil, but also for gas and for coal. For each one of these cases the peak was not a theory, but an observation.
    What I mean is that discussing peak oil without knowing all over the world production histories and dynamics of production of all the products making up a barrel of the so called total liquids, is leading to uncertain grounds. Only a few people have been able to do the maths with a fair accuracy, because it is so difficult to get meaningful data.
    At the world scale, the peak of crude, which makes up roughly 75 % of the total liquids supply, was observed in 2005-2006. And without the US shale oil boom, the total liquid production would have been slightly decreasing since 2011. This is not a theory, just an observation.
    Now that we see a decrease in US shale oil production, due to too low prices, and that Capex have been cut by 2, I don’t see how the world total liquids production could be substantially growing in the next 2 or 3 years.
    This is a pragmatic approach, and given the enormous importance of fossil fuels in our economies, it would be better to hurry up in gathering carefully good data with as many people as possible, rather than discussing on the angels sex.

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