Peak oil - May 24
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Peak oil attacked from the right (Free Market News)
Original head: "Peak Oil Fears and Hype"
Lewis J. Walker, Free Market News
In the early 1980s, I was privileged to converse at length with Austin Kiplinger, a speaker at a luncheon meeting in Washington, DC. Editor of the Kiplinger Washington Letter, Mr. Kiplinger long has been respected as a keen observer of political and socio-economic trends.
While I cannot remember the crises that had everyone worried at the time, what is recalled is a pearl of wisdom offered by the sophical Mr. Kiplinger. His counsel has proven to be an insight powerful in its simplicity, invaluable in framing problems, useful in soothing “What if?” fears, and in bringing rationality to the evaluation of investment and planning strategies.
His message is as valid today as it was then: Whenever there is maximum media focus on, and rising public concern over, a problem, trends toward a solution already are in play. The high level of anxiety is part of the solution, spurring creative minds, capitalists, entrepreneurs, and inventors to seek answers.
... As to fears engendered by concerns over finite resources and the extrapolation of trends, we have been here before. Long before Peak Oil, in 18th century England, economist and demographer Thomas Malthus offered a “Peak Food” theory. Viewing the population boom supported by the Industrial Revolution, and exponential projections of consumption rates, Malthus theorized that humans would be unable to feed themselves unless population growth was checked by moral restraints, war, famine, and disease. Not seeing the role of technological progress as a counterweight to theories of finite resources, his name will be forever associated with “Malthusian pessimism.”
(23 May 2006)
Walker mentions Hubbert, Deffeyes, Daniel Yergin, the Hirsch Report and other big names. The problem is that this isn't analysis -- it's free-market crackerbarrel wisdom, interspersed with quotes and anecdotes. Crackerbarrel wisdom works well in stable periods of little change, but not at historical inflection points. For business people and investors, Peter Tertzakian's recent book "A Thousand Barrels a Second" is a much better guide to the issues. Byron King who publishes in Energy Bulletin is also an excellent source. -BA
Peak oil attacked from the left (Greg Palast)
Original head: "No Peaking: The Hubbert Humbug
Is everything you thought you knew about Peak Oil wrong?"
Greg Palast, Guerrilla News Network (GNN)
...In his 1956 paper, Hubbert wrote:
On the basis of the present estimates of the ultimate reserves of world petroleum and natural gas, it appears that the culmination of world production of these products should occur within a half a century [i.e., by 2006].
So get in your Hummer and take your last drive, Clive. Sometime during 2006, we will have used up every last drop of crude oil on the planet. We’re not talking “decline” in oil from a production “peak,” we’re talking “culmination,” completely gone, kaput, dead out of crude—and not enough natural gas left to roast a weenie.
...In all fairness to the Hubbert Heads, there’s a more sophisticated, updated version of Hubbert’s theory. This is where the “peak” concept comes in. In this version of the Hubbert scripture, we ignore his dead wrong prediction of total crude available and look only at the up and down shape of his curve, the “peak.” The amount of oil discovered each year, Hubbert posited, will stop rising by 2000, then will crash rapidly toward zero when we will have used up our allotted 1.25 trillion barrels. We haven’t crashed or even peaked. Oil production has risen year after year after year and discoveries have more than kept pace.
...Every once in a while the landlords of the planet have to remind us to be grateful for their services. In 1956 it was Shell Oil’s turn and Hubbert was their man for the job. It was not a happy time for the oilmen of Texas. Shell and the other Seven Sisters, as Big Oil was then known, faced a heck of a problem: crude was cheaper than dirt-$2.77 a barrel, that is, a nickel a gallon-and sinking. Worse, they were finding more of the stuff all over the planet, meaning prices would fall further. In March of that year, Hubbert presented the solution to his fellow oilmen at the API in Houston.
...Have we peaked? Worldwide oil reserves continue to rise even faster than America and China can burn it. Since 1980, reserves, despite our binge-guzzling, have risen from 648 billion to 1.2 trillion barrels. Yet, weirdly, despite the rising flood of discovered crude, its price quadrupled between 2001 and 2005. Supply choked, yet there’s no peak in sight
...So please don’t slander Mother Earth and say she’s run out of oil when it’s man-made mischief to blame. Evil, not geology, has a chokehold on energy; nature is ready to give us crude at $12 a barrel where it was just a few short years ago.
(22 May 2006)
Palast gets an A+ for rhetorical flourish (his talent is matched only in the Peak Oil camp by James Howard Kunstler). However Palast receives "Needs to improve" for misunderstandings and factual errors. Others may want to dissect the piece in more detail, but here are a few notes.
1. In his dramatic opening, Palast misunderstands Hubbert's phrase "culmination of world production" to mean that the world would run out of oil and natural gas in about 2006. As we know, "culmination of world production" = peak production = peak oil. NOT "running out of oil."
2. In contrast to Palast's conspiracy theory, oil companies are not at all thrilled by the idea of Peak Oil. Although some companies are making accomodations to the possibility, we run across speeches from oil execs who deny or downplay the idea. Exxon is actively attacking peak oil, for example with their ad in the NY Times and other papers.
3. The idea that Hubbert was a stooge for the oil companies is laughable. From all accounts he was a crusty genius with a fierce sense of integrity. His 1956 speech to the API was not warmly received:
As he listened to the Mayor of San Antonio’s welcome address, ready to give his speech, Hubbert received a signal to leave the platform. In a desperate last-minute phone call, a public relations representative of his employer Shell Oil implored Hubbert to “tone down” the “sensational parts” of his speech. Hubbert declined...
Hubbert’s forecast caused shock, consternation, and denial in various parts of the petroleum industry. He would later say “that caused a jolt instead of palming off the shortage on our grandchildren, we found ourselves staring it right in the face. The first reaction was honest incredulity. Then the industry split. One side refused to accept the situation and starting changing the figures. The other side, people like Shell, found they could not change the figures.”
4. Submitter WT adds:
Apparently Greg didn't look into the issue of reported reserves and is therefore convinced that there is a "rising flood of discovered crude":
Since 1980, reserves, despite our binge-guzzling, have risen from 648 billion to 1.2 trillion barrels. Yet, weirdly, despite the rising flood of discovered crude, its price quadrupled between 2001 and 2005.
Apparently he has never seen this chart (which is almost everywhere in the Peak Oil literature)...
... nor does know about this December 2005 statement from Kjell Aleklett: "Today we consume 30 billion barrels per year and the discovery rate is dropping toward 4 billion barrels per year."
UPDATE: Another piece by Greg Palast has appeared on GNN: Why Palast Is Wrong: And why the oil companies don't want you to know it, in which he comes to the same conclusions as many Peak Oilers:
Now that I’ve convinced you that the Peak Oil crowd is crackers, let me disagree with myself. We can’t understand the new class war unless we understand why oil, a certain kind at least, has in fact “peaked.”
...But Hubbert was also deadly right. We are indeed running out of oil....a certain kind of oil ...cheap oil. That is, we are coming to the end of the stuff we can pump at a low cost, the easy oil that practically jumps out of the ground. When we bring price into the equation, Hubbert was correct—technically. Oil production [in the US presumably] did peak in the 1970s—for a certain type of oil.
...A closing note of caution: I fear that some may take my noting the super-abundance of oil remaining on the planet as approval for our using it. Far from it—getting off the oil habit is an urgent working- class issue. First, because cheap, good air and water are in limited supply. We can’t keep pooping combustion contaminants into the sky unless expect we expect our children to grow gills that will metabolize sulfur. There’s lots of arsenic on the planet. Don’t eat it. There’s lots of oil. Don’t burn it.
Pass the Bread
Bill Moyers speaks to graduates about peak oil, catastrophes and confusion
Bill Moyers, Common Dreams
Text of Baccalaureate Address
Hamilton College, Clinton, NY
So I have been thinking seriously about what I might say to you in this Baccalaureate service. Frankly, I'm not sure anyone from my generation should be saying anything to your generation except, "We're sorry. We're really sorry for the mess you're inheriting. We are sorry for the war in Iraq. For the huge debts you will have to pay for without getting a new social infrastructure in return. We're sorry for the polarized country. The corporate scandals. The corrupt politics. Our imperiled democracy. We're sorry for the sprawl and our addiction to oil and for all those toxins in the environment. Sorry about all this, class of 2006. Good luck cleaning it up."
You're going to have your hands full, frankly. I don't need to tell you of the gloomy scenarios being written for your time. Three books on my desk right now question whether human beings will even survive the 21st century. Just listen to their titles: The Long Emergency: Surviving the Convergence Catastrophe; Collapse: How Societies Choose to Fail or Succeed; The Winds of Change: Weather and the Destruction of Civilizations.
These are just three of the recent books that make the apocalypse prophesied in the Bible...the Revelations of St. John...look like child's play. I won't summarize them for you except to say that they spell out Doomsday scenarios for global catastrophe. There's another recent book called The Revenge of Gaia that could well have been subtitled, "The Earth Strikes Back," because the author, James Lovelock, says human consumption, our obsession with technology, and our habit of "playing God" are stripping bare nature's assets until the Earth's only consolation will be to take us down with her. Before this century is over, he writes, "Billions of us will die and the few breeding pairs of people that survive will be kept in the Arctic where the climate remains tolerable." So there you have it: The future of the race, to be joined in a final and fatal march of the penguins.
Of course that's not the only scenario. You can Google your way to a lot of optimistic possibilities. For one, the digital revolution that will transform how we do business and live our lives, including active intelligent wireless devices that in just a short time could link every aspect of our physical world and even human brains, creating hundreds of thousands of small-scale business opportunities. There are medical breakthroughs that will conquer many ills and extend longevity. Economic changes will lift hundreds of millions of people out of absolute poverty in the next 25 years, dwarfing anything that's come along in the previous 100 years. These are possible scenarios, too. But I'm a journalist, not a prophet. I can't say which of these scenarios will prove true. You won't be bored, that's for sure. I just wish I were going to be around to see what you do with the peril and the promise.
Since I won't be around, I want to take this opportunity to say a thing or two that have nothing to do with my professional work as a journalist. What I have to say today is very personal. Here it is:
If the world confuses you a little, it confuses me a lot. When I graduated fifty years ago I thought I had the answers. But life is where you get your answers questioned, and the odds are that you can look forward to being even more perplexed fifty years from now than you are at this very moment.
(20 May 2006)
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