Peak oil: the last skeptics
The energy world is busy discussing the most recent study provided by CERA, the energy consultancy headed by Daniel Yergin, the author of "the Prize", the acclaimed book (and TV series) on the history of oil. Titled Why the "Peak Oil" Theory Falls Down -- Myths, Legends, and the Future of Oil Resources, it claims to thoroughly debunk the theory of peak oil, that people like me and others have peddled in recent times.
Except that the press release for the report includes the following graph:
Kinda looks peaky, doesn't it?
CERA is one of the best known names and the industry, and they are well -respected. In the past few years, they have struck a perpetually defiant note against the growing chorus promoting the peak oil theory, and this new publication appears to be their definitive reply on the topic.
And their introduction does include fighting words:
CAMBRIDGE, Mass., November 14, 2006 - In contrast to a widely discussed theory that world oil production will soon reach a peak and go into sharp decline, a new analysis of the subject by Cambridge Energy Research Associates (CERA) finds that the remaining global oil resource base is actually 3.74 trillion barrels -- three times as large as the 1.2 trillion barrels estimated by the theory's proponents -- and that the "peak oil" argument is based on faulty analysis which could, if accepted, distort critical policy and investment decisions and cloud the debate over the energy future.
"The `peak oil' theory causes confusion and can lead to inappropriate actions and turn attention away from the real issues," Jackson observes. "Oil is too critical to the global economy to allow fear to replace careful analysis about the very real challenges with delivering liquid fuels to meet the needs of growing economies. This is a very important debate, and as such it deserves a rational and measured discourse."
"This is the fifth time that the world is said to be running out of oil," says CERA Chairman Daniel Yergin. "Each time -- whether it was the `gasoline famine' at the end of WWI or the `permanent shortage' of the 1970s -- technology and the opening of new frontier areas has banished the specter of decline. There's no reason to think that technology is finished this time."
Their arguments are not, on the face of it, unreasonable: we'll squeeze more oil from existing fields thanks to better technology, and we'll start exploiting new, "unconventional" reserves like ultra-deep offshore, extra heavy bitumens (in Venezuela), oil sands (more conveniently in Canada) and oil shales (even better, in the USA).
Additionally, there will not be a "peak", but rather a "plateau", as decline will be much slower, overall, than announced by peak oil theorists.
Their full report is not public (you can get it for $1,000 at the first link above), but their basic thinking is clear from the above press release.
There have been several high profile reactions to that report, including from the Oil Drum (here and here), from the Association for the Study of Peak oil (here, via the Energy Bulletin, the best place to find all related stories), and even from the US Congress, via a joint press release by Roscoe G. Bartlett (R-MD) and Tom Udall (D-NM), cofounders and cochairmen of the Congressional Peak Oil Caucus (here).
They all have excellent arguments that I encourage you to read in full if you're interested in the topic (especially the ASPO one, with its quite explicit title: Peddling PetroProzac: CERA ignores 10 warning signposts of peak oil), but i'd like to focus on just one argument.
Do you seriously find that the above graph disproves the idea that oil production will peak and then decline? This is meant to be the optimistic version, and all it says is that (i) the peak will be in 2030, not 2010, and (ii) the decline after that will be slow, not fast.
But it does say pretty damn explicitly that in the best case, oil production will reach a maximum in less thna 25 years.
Now that sounds to me like a full fledged confirmation of peak oil, not a rebuttal of it.
In 25 years, many of us will (hopefully) still be alive. In 25 years, we'll be living, for the most part, with infrastructure built or planned today or in the next few years.
So the question of how to adapt to a decreasing oil production is, in the best scenario, something that we need to worry about right now (as pointed out in the links above, all serious studies on how to transition from our current oil-dominated economy, including the Hirsch report (pdf!) from the US Department of Energy) say that it is likely to require 10-20 years if a sustained effort is put into it).
And yet, these optimistic scenarios, with their aggressive titles, point in the exact opposite direction, i.e. that no effort is necessary and that markets will provide all the oil that we (the wide 'we' which includes China and the rest of the emerging world alongside the West) demand.
How insane is that?
We know the problem is there. Even its official deniers put it barely 25 years away.
WHAT ARE WE WAITING FOR TO ACT?
Earlier "Countdown Diaries":
Countdown to $100 oil (34) - Oil major CEO calls for demand reduction
Countdown to $100 oil (33) - Below zero
Countdown to $100 oil (32) - peak oil is, like, so over. Not!
Countdown to $100 oil (31) - $15 oil? The cornucopians are fighting back
Countdown to $100 oil (30) - senior politico fears looming oil wars
Countdown to $100 oil (29) - Alaska joins axis of evil (unreliable oil suppliers)
Countdown to $100 oil (28) - New records suggest more to come
Countdown to $100 oil (27) - 'Mission Accomplished' - High oil prices are here to stay
Countdown to $100 oil (26) - Time to bet again (eurotrib)
Countdown to $100 oil (26) - Time to bet again (dKos)
Countdown to $100 oil (25) - Iran vows that oil prices will not go down
Countdown to $100 oil (24) - What markets are telling us about future energy prices
Countdown to $100 oil (23) - Running out of natural gas in North America
Countdown to 100$ oil (22) - gas shortages in the UK - 240$/boe
Countdown to $100 oil (21A) - The 4 biggest oil fields in the world are in decline *
Countdown to 100$ oil (21bis) - long term vs short term worries (dKos)
Countdown to 100$ oil (21) - 8-page extravaganza in the Independent: 'we're doomed'
Countdown to 100$ oil (20) - Meteor Blades is Da Man in 2005
Countdown to 100$ oil (19) - Your bets for 2006 (Eurotrib)
Countdown to 100$ oil (19) - Your bets for 2006 (DailyKos)
Countdown to 100$ oil (18) - OPEC happy with oil above 50$
Countdown to 100$ oil (17) - Does it matter politically? A naked appeal for your support
Countdown to 100$ oil (16) - We'll know on Monday
Countdown to 100$ oil (15) - the impact on your electricity bill
Countdown to 100$ oil (14) - Greenspan acknoweldges peak oil
Countdown to 100$ oil (13) - Katrina strikes / refinery crisis
Countdown to 100$ oil (12) - Al-Qaeda, oil and Asian financial centers
Countdown to 100$ oil (11) - it's Greenspan's fault!
Countdown to 100$ oil (10) - Simmons says 300$ soon - and more
Countdown to 100$ oil (9) - I am taking bets (eurotrib)
Countdown to 100$ oil (9) - I am taking bets (dKos)
Countdown to 100$ oil (8) - just raw data
Countdown to 100$ oil (7) - a smart solution: the bike
Countdown to 100$ oil (6) - and the loser is ... Africa
Countdown to 100$ oil (5) - OPEC inexorably raises floor price
Countdown to 100$ oil (4) - WSJ wingnuts vs China
Countdown to 100$ oil (3) - industry is beginning to suffer
Countdown to 100$ oil (2) - the views of the elites on peak oil
Countdown to 100$ oil (1) (eurotrib)
Countdown to 100$ oil (1) (dKos)
What do you think? Leave a comment below.
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