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Open letter to Daniel Yergin on optimism and addressing Peak Oil seriously

In the interview of Daniel Yergin by Tom Ashbrook, on Point Radio, one of the giants of the opposition to the Peak Oil theory stood forward.

Only after listening to the interview, I got the feeling that not only did he not understand the theory, it's premises, or even its full assertions and facts, but that he hadn't really given it enough gravity to even study it. Perhaps he “wiki'd” it. Further, I got the feeling that he was run on high octane optimism mixed with a small amount of BS.

Yergin, Chairman of Cambridge Energy Research Associates, an energy consulting and research firm, is also a Pulitzer Prize-winning author of "The Prize: The Epic Quest for Oil, Money and Power." (who, by the way, spent seven years researching that book—that's impressive)

In the interview I found him to be mostly confident, pleasant, and knowledgeable, but at other times fumbling, ignorant of some vital basic information, presenting of overly simplistic justifications of evidence for things such as optimism over technology, and disingenuous. There were at least 4 main red flags in this interview which revealed a less than balanced approach. I believe Yergin's position rests on this scenario. In the early 90s, the price of oil was low leading to slowing exploration. Now demand has increased way beyond forecasts leaving the oil industry with its pants down, so to speak, hence the tightness in the market. He then puts tremendous faith in technology, efficiency, conservation, and the market forces of supply and demand to correct this problem. In particular, he is putting faith in the unconventional sources, especially the tar sands of Canada. He believes he has seen these forces working in history throughout time and sees no reason to doubt them today. I believe his overall argument has merit, if he is an honest unbiased researcher. Unfortunately, I found too many cues that this was not always the case. There are a few red flags which are enumerated below.

Red flag number one.
He was COMPLETELY ignorant of the Dept of Energies' commissioned mitigation study in March of this year. The author of the study, Dr. Robert L Hirsch, the coordinator of this study, well, let's just say his energy and technology credentials are stronger than the historian Yergin, ESPECIALLY when it comes to the promise of technology, the fine work in his Pulitzer not withstanding.

Dr. Robert L. Hirsch is a Senior Energy Program Advisor at SAIC. His past positions include Senior Energy Analyst at RAND; Executive Advisor to the President of Advanced Power Technologies, Inc.; Vice President, Washington Office, Electric Power Research Institute; Vice President and Manager of Research, ARCO Oil and Gas Company; Chief Executive Officer of ARCO Power Technologies, a company that he founded; Manager, Baytown Research and Development Division and General Manager, Exploratory Research, Exxon Research and Engineering Company; Assistant Administrator for Solar, Geothermal, and Advanced Energy Systems (Presidential Appointment), and Director, Division of Magnetic Fusion Energy Research, U.S. Energy Research and Development Administration. During the 1970s, he ran the US fusion energy program, including initiation of the Tokamak fusion test reactor.

This oversight is, in my book, in the kindest terms, a major one. Tom Ashbrook brings forth a question positioning the DOE's study as “in direct opposition to CERA's study” and then quotes a portion of the study from Hirsch: “If recent trends hold, there is little reason to expect that the discovery trend will improve”. Someone so “in touch” with the energy industry should not have missed this, especially since the study itself is a direct challenge. Yergin's response, “I wonder what...I'm not sure what report that is, but I expect there to be a few reports coming out from the U.S. Government, from the geological side, that I think are more confident about the resources.” Does that mean that perhaps he only looks at best case scenarios? Yergin twice said during the interview that he was unfamiliar with it, until Tom Ashbrook brought him up to speed. At that point, I got nervous. He clearly had no idea. This study is one of the most disturbing and authoritative accounts, commissioned by our own DOE no less, to come about.

It must be noted that there has been no attention to the report in the mainstream media. But, then I hope that Yergin doesn't just get his energy news from CNN or the NY Times or ABC. After all, he is widely touted as an expert. I'd wager that 90% of those studying the Peak Oil situation are familiar with it. Why wasn't he? The ready answer: he hasn't taken it seriously enough to research it.

Red flag two.
He puts a grand faith in technology. He begins by reminding us to consider, “would anyone have believed that we'd be walking around with cell phones 10 years ago?” He mentions the advances in the PC and a computer on so many desks. I'm no expert in technology, but aren't grand, “wowie,” tech advances rather random events rather than necessarily pointed? So that's a meaningless tack. I'm more interested in the technological advances in energy.

He does mention one advance, and that is the depths we are drilling today compared to 20 years ago which are impressive. I think also that, we are all familiar with at least some of the technological improvements in energy, and there have been some great ones. At that point, he mentions the tar sands of Canada, as being one of the main areas of growth. Which is true. But, from what I've seen, the expectation from there is 3 mbpd by 2020 that will hardly make up the difference. This is not pie in the sky gushing over technology, but what appears to be the consensus on what to expect at this point. THAT is what we should be basing our assessments on, not the random selection of advancements that we are amazed with.

Most people following the problems of peak oil have educated themselves quite well. They know that even with technological and infrastructural changes there is a lag time toward implementation, if those changes in fact do come at all (re: above mitigation study for that issue). They know, for example, that the much touted synfuels (coming from extra heavy oil, tar sands, or oil shale) are expected to be quite slow in their growth. And these are not just technological issues as mentioned above. Infrastructure, capital, the environment, and political will can be a great impediment. The tar sands of Alberta, Canada are expected to produce only 3 mbpd by 2020. Hardly enough to make up the shortfall from decline and increase in projected demand even if you assumed 10 mbpd by 2020 with all synfuels combined.

Perhaps Mr Yergin was just using an off the cuff remark, and does have better evidence. Mr Yergin, if you're listening, please use it, though you appear to be confident, there are many of us out here who do not share your optimism. Perhaps we are ignorant.. I believe it is your duty, with this serious manner, to bring forth your best. Cell phones and PCs were NOT it.

We in the Peak Oil mindset, see oil slight differently. We see “cell phones” and “PCs” as in a somewhat different category than “natural” resources. Sure technology can extract more, the price will encourage development, etc. But at some point the “energy in energy out” ratio will make the era of cheap oil, well, history. Most of us in the Peak Oil crowd are nervous that technology gets to a sort of diminishing return situation, when technology itself peaks and produces ever diminishing returns. In that, we are expert. Mr Yergin should address just what he sees on the horizon of tech improvements, rather than illustrating advances in other fields. I think that was a blatant attempt to bolster his position that technology was a major mitigating factor. That made me nervous as well.

Third red flag.
He uses what appear to be ready made and fashioned arguments to calm the public down. The greatest example is his noting that “This is about the 5th time the world was about to run out of oil, and each time that time, technology, the markets changed things.” My first reaction is that he's misrepresenting the argument of Peak Oil theorists. The world is not going to run out. The first false prediction was in 1890. Yes, as I recall, I believe we traveled by foot back then. Certainly an apple to an orange. Yergin mentions the second case in 1920. Why? Most were still traveling by foot (by the way, I'm just suggesting technologically, that we were nowhere near where we are now in 2005). I think we still have an apple to an orange.

Today, we pretty much have our cards on the table, we've mapped quite well, and today's exploration technology is not comparable. This is a group of possible, but not necessarily probable related events separated by great expanses of time. Further, past behavior is not always a great predictor of present or future performance. And lastly, who was crying wolf in the past compared to who is crying wolf today. The number and qualifications of the authorities today are far greater. Yes, we have an apple and and orange and another instance of a possible imbalance in his approach.

If the variables are similar and certain things remain constant, then yes, you have a better argument. But the variables have changed dramatically as have the constants. Red flag number three, shows an unfortunate streak of disingenuousness. Or, it could be that he is locked into a grand faith of some sort of flow from historical events, being a historian himself. Because this happened, history will repeat itself. Well, very often, history changes and does not obey patterned formulas. In any event, he seems to show a bias toward not taking another interpretation into account.

And the fourth red flag.
He notes reserves grew from 600 billion in reserves in the 1970s to today where we have 1.2 trillion, all from technology. We in the peak oil world are trained to be skeptical of the proven reserves since we know that these are very often a fiction. Is that being reported correctly? I doubt it, given Yergin's propensity to overstate and show the rosy side. From 1980 to 1990 proven reserves jumped from 650 to 1000 billion barrels. Probably greatest jump in the history of oil. To represent that as due to technology is really the height of disingenuousness.

In the late 1980s, the Middle eastern countries bumped up their reserves to bump up their quotas to the tune of 250 billion barrels. And there is your technological advancement. Is he, like so many others who like to tout proven reserve stats and growth, suggesting that the Middle Eastern tripling of proven reserves in the early 80s overnight was real? No serious examination that I have seen has been done in that way so far. Measuring non existent oil, that is. This undermines his credibility overall, and his credibility as concerns is faith in technology. Two strikes in one flag.

As the DoE's commissioned report warns, a timely and all out effort is imperative to mitigate severe consequences. This is what market disciples don't get. The market is a reactive mechanism based on the populations' behavior to things in the present which forces the hands of corporations. When we start sliding, and the market begins reacting, it will be too late to avoid disaster. Can we please get someone to take this seriously, stop relying on stats they know are fictitious to prop up their positions, stop ignoring flaws in using the market as the only way to make change, look at every accusation from the Peak Oil crowd and answer our concerns honestly and completely?

Yergin's unsubstantiated optimism in this interview simply underscores the glue that appears to be holding his report together. When in doubt, chin up, smile, and report the rosy. After all, many of us just want to hear positive soothing news from our experts. In the interview, Ashbrook notes how calm Yergin seems with stakes so high, and wonders if it wouldn't be more prudent to hedge our bets in the event the 'pessimists' are not pessimists, and are just solid reasoners. Yergin replies that he is simply driven by the numbers and nothing else. Unfortunately, it looks like that is not the case. It seems clear that his optimism is based, at least to a small degree, on another facet as well: optimism, bias, or even something less innocent, such as corporate subsidies, which steers him toward positive evidence and interpretations and away from the negative.

What do you think? Leave a comment below.

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