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My Thoughts on the GAO Report on Peak Oil

Robert Rapier, R-Squared Energy Blog
…Let’s start with Results in Brief:

Most studies estimate that oil production will peak sometime between now and 2040, although many of these projections cover a wide range of time, including two studies for which the range extends into the next century.

That is obviously a very wide range. If you don’t believe that oil production will peak until the latter part of that range, then you may not be at all concerned about the issue. (More in a bit on why you should be anyway). After all, 2040 is over 30 years in the future, and technology could come up with a lot of neat tricks in that amount of time. After all, some believe we will have transcended biologyby then. Perhaps very cheap solar energy will satisfy the bulk of our power needs. Those who tend toward the optimistic viewpoint that science will solve the problem will probably take great comfort in a 2040 estimate.

On the other end of the scale are some of the hysterical reactions that I read yesterday. Some believe that not only is peak NOT 30+ years away, but they believe that it has already happened. After reading some reactions following the release of the report, I had to look outside to make sure there wasn’t rioting in the streets and missiles flying overhead. That was literally the tenor of some of the more hysterical reactions. (For the record, I believe there is a 90% chance of a production peak by 2015, and maybe a 10% chance that production has already peaked).

While I certainly don’t tend toward the apocalyptic viewpoint, I do consider this a very serious challenge and something that needs to be addressed immediately. If oil production peaks in the next few years, and is followed by a 4-8% annual production decline, things could get very bad indeed. The U.S. is simply not prepared to have its oil supply disrupted.
(30 March 2007)

The not-so-final word on peak oil

Andrew Leonard, Salon (“How the World Works”)
Channeling Harpers Index:

Total count for variants of the word “uncertain” used in the Government Accountability Office’s newly released report on peak oil: 87.

That tells you most of what you need to know about the GAO’s evaluation. While the GAO supports the basic principle of peak oil — at some point, the world will reach maximum production and thenceforth decline, it is uncertain whether that moment is now, 2040, or the next century. There is also great uncertainty over how much oil is still in the ground, how much can be recovered using new technology, and whether alternate transportation technologies can significantly mitigate demand.

Why all this uncertainty? Simple: “Expert sources disagree.”

The closest the GAO will commit to a definitive statement: “Most studies estimate that oil production will peak sometime between now and 2040.”

Members of the peak oil community lusting after a more apocalyptic pronouncement will likely be disappointed by such hedging. But they need not hang their heads too far. The GAO expresses itself reasonably forcefully on the potential consequences of the arrival of peak oil, depending on its timing. After throwing ice-cold water on the possibility that biofuels, hybrid technologies, or hydrogen fuel cells will offer any kind of get-out-of-peak-oil-free-card in the short term, the report makes clear the implications of its pessimism.

If the peak and decline in oil production occur before these technologies are advanced enough to substantially offset the decline, the consequences could be severe. If the peak occurs in the more distant future, however, alternative technologies have a greater potential to mitigate the consequences.

Severe = massive worldwide recession, oil resource wars, and a likely curtailment of your average American’s summer vacation plans.
(29 March 2007)
Do we detect a touch of Kunstlerian dark humor? -BA

Grinzo on the GAO Report

Lou Grinzo, The Cost of Energy
Peak oil could be poised to leap onto the stage of mainstream awareness, possibly to an even greater degree than global warming did in 2006. This will be spurred by the GAO report…

My take on the GAO report:

  • I’m very happy to see a report directly addressing this topic from the GAO. Few things short of “OUT OF GAS” signs on pumps at gas stations would trigger a mainstream conversation the way this report will. Having said that, I have a few objections with the report itself, detailed below.

  • In very general terms, I think the report does a good job of surveying the field and talking about the complexities of the situation. This effort was clearly approached with a “big picture” mentality, which I have always contended is essential when dealing with something as pervasive in our economic life as oil.
  • The report’s primary recommendation makes so much sense that it’s an embarrassment that it hadn’t been done years ago:

    To better prepare for a peak in oil production, GAO recommends that the Secretary of Energy work with other agencies to establish a strategy to coordinate and prioritize federal agency efforts to reduce uncertainty about the likely timing of a peak and to advise Congress on how best to mitigate consequences. In commenting on a draft of the report, the Departments of Energy and the Interior generally agreed with the report and recommendations.

(30 March 2007)

In the Zone

James Howard Kunstler, Clusterf*ck Nation
…last week, the General Accounting Office came out with a report last week that acknowledges some problems ahead on the world energy scene — oil in particular — with possible adverse implications for the US. It’s the first time that any responsible party in the executive branch has acknowledged the situation, but the tenor of the report was — how shall I say — fucking unbelievably stupid and craven — insofar as it suggested global oil could top out somewhere around the year 2030 (possibly sooner!). The poor grinds in the GAO didn’t want to stick their necks out too far on that one.

Independent researchers studying the global oil situation — including retired geologists for major oil companies — have established a pretty firm consensus that we are already in the zone of the global oil production peak — meaning that whether we are just past, passing now, or passing imminently, the effects are already thundering through the complex systems we depend on to maintain advanced industrial societies. For instance, the crashing of Mexico’s Cantarell oil field (60 percent of Mexico’s production) means that inside of five years the US will receive no more imports from what has been its third leading source. Being in the zone means that the world’s oil exporters in the aggregate will see their exports drop seven to eight percent this year — because nations like Saudi Arabia, Iran, Venezuela, and even Norway are using more of their own oil and have less to send out. Being in the zone means that new pricing arrangements will be made, taking the power away from the spot futures markets in New York and London, and shifting that power to long-term deals made by nationalized producers like Russia and Iran, who may decide to embargo consuming nations who don’t dance to their tune. Being in the zone means that people in poorer nations will starve because so much of the corn grown in North America will go to ethanol distilleries instead of the dirt-floor kitchens in the Third World.

The more interesting point in all this, for the moment, is that the media has still not put together the collapse of the housing bubble and the permanent oil crisis.
(31 March 2007)