Is This What Peak Oil Feels Like?

The oil price has surged above $US100 per barrel. Is this what Peak Oil feels like?

By Mike Jonas

Over time, I have written a few articles for WUWT on Peak Oil, the last being I think in April 2019 …

To Peak or Not to Peak? That is the question.

 … when I ended with:

As I said above, Peak Oil is not necessarily a bad thing. It could be something to celebrate. By that I mean that if oil demand stops increasing because something better and cheaper comes along to replace it, or some of it, then that would be truly positive.

If, on the other hand, some nutcase tries to force the end of oil usage, or to replace it with wind, say, then … Venezuela, here we come.

Well, it looks like the world in general, and Joe Biden’s USA in particular, are going for the second option. What a shame. Or rather, what a disaster.

But first, perhaps I should recap a bit so that we all understand just what I’m talking about when I talk about “Peak Oil”.

From the 2019 article:

I defined “Peak Oil” as When the rate of oil production reaches its maximum. With this definition, Peak Oil is not when we run out of oil, and it is not when we can’t increase the rate of oil production. If you want to use one of those other definitions then different rules apply. And I’m only talking about oil, not about oil and gas, and not about fossil fuels generally.

The point is that there are other possible reasons for oil production reaching its maximum, such as something better and cheaper coming along to replace it.

We are in a strange and rather alarming situation right now, in which major political forces are at work trying to prevent oil exploration, development and production in western nations. Not just oil, though, the attack is on all fossil fuels so it includes coal and gas. Even if the attack was on just oil it would be bad enough. The oil price (both WTI and Brent) is already above $US100 per barrel, reflecting the fact that oil demand is relatively inflexible so price reacts quickly to variations in supply. (Russia’s attack on Ukraine is playing a part, too, though the fate of Ukraine is a lot more important than oil).

This article is titled “Is this what Peak Oil feels like?“, because an inability of oil producers to increase the rate of supply, no matter whether the reason was political or geological, would produce just such a high oil price. What the attack on fossil fuels has done is to bring forward the date on which the inability to keep increasing the rate of supply of oil pushes up the price of oil. The high oil price and the consequent stress on global economies is just what one would expect to happen eventually if ‘something better and cheaper‘ does not start replacing oil.

So, is the answer necessarily “Yes” to the question “Is this what Peak Oil feels like?“. Well, no, not necessarily. If we work on growing alternative sources of energy so that oil becomes less necessary for energy, then we can go through a benign “Peak Oil” when the time comes, with falling demand leading to falling production, and also leading to a stable or falling oil price.

The Shah of Iran is reputed to have said in the 1970s “Oil is too valuable to burn”. (I think the original statement was actually by a Saudi oil minister in the 1960s, but I haven’t been able to find it). The message is clear, and one that we in the west have avoided hearing. The fact is that oil and gas are a vital source of chemical feedstock for a massive range of products, including all plastics. We can use other sources for energy, but it is a lot more difficult to find alternative sources for the chemical feedstock.

The greens’ war on fossil fuels is showing us today what the pain will be like tomorrow if we don’t start seeing Peak Oil as inevitable, and if we don’t start working towards the benign option (the first of the two options I mentioned early in this article).

In order to achieve the benign option, I believe that we need to increase our use of nuclear energy, and to replace oil use with nuclear energy where possible (wind and solar have failed already). We have done it for military ships and submarines, now we need to do it for other transport and for heating. That doesn’t necessarily mean having a nuclear reactor in every car – we can power electric vehicles using nuclear-generated electricity (see my WUWT article In Defence of Plug-in Hybrids). We don’t need to get to 100% EVs, and we don’t need to get to 100% nuclear, we just need to reduce oil demand for transport and heating so that more of our oil can be used as chemical feedstock, and so that we can keep going comfortably even if oil production plateaus – as it inevitably must do at some time.

In summary, we have created an artificial and destructive “Peak Oil”, and we can learn from the pain that it causes how to avoid a painful “Peak Oil” in future.