The peak oil issue - a progress report
Go, go, go, said the bird: human kind
Cannot bear very much reality.
Time past and time future
What might have been and what has been
Point to one end, which is always present
— T. S. Eliot, from Four Quartets (Burnt Norton)
Note: The ASPO-USA presentation slides are available here.
ASPO-USA's 3rd annual World Oil Conference has now come and gone. The gathering was an unqualified success, so our thanks go to the organizers and volunteers who made the conference possible. About 525 people attended, probably the highest total so far for any peak oil conference held to date anywhere in the world. Any detailed post-mortem is necessarily incomplete. Perhaps it is more important to explore the significance of the conference in its larger context. Is there greater clarification of the peak oil issues? How is the world reacting to those issues?
In its narrow sense, the phrase "peak oil" refers to the zenith of global oil production, but the term now often refers to more general resource constraints on "business as usual" going forward. There are issues about coal, natural gas and other commodities. The connection between anthropogenic climate change and future resource availability is now being explored in greater depth as new data-driven analysis comes to light.
Pessimism was in the air concerning future oil production. Writing for Platts, John Kingston was accurate in his conclusion that "all in all, [it was] a terrific conference. But don't attend unless you've taken your Prozac." Most speakers, including industry veterans like Henry Groppe, believe that the peak is upon us now, or at best only a few years away. Richard Nehring, an "optimist" who participated in the conference's peak oil dialogue panel, told Steve Andrews that "I have a hard time seeing us get to 90 million barrels a day by 2020" (ASPO-USA interview, October 8th). With the world in a plateau of about 85 million barrels per day in 2007, it's not much of a stretch to say the world's in trouble. Downcast views are not unexpected at a peak oil conference, but are now strengthened because uncertainties that existed only a few years ago are more and more being resolved in favor of detrimental outcomes. Mexico is a good case in point.
At the first ASPO-USA conference in Denver in October of 2005, PEMEX was struggling to maintain production at Cantarell but the giant field had not tipped over into rapid exponential decline yet (graph left, from Mexico Tries to Save a Big, Fading Oil Field). George Baker confirmed the bad news about the giant offshore field, further stating that policies which preclude opening up Mexico's deepwater areas in the Gulf effectively seal the country's fate. Even if the undiscovered resource turns out to be very large and were opened up to outside investment, it would still take "8 to 10 years" for Mexico to see the fruits of that labor (personal communication). In the meantime, production at Ku-Maloob-Zapp or Chicontepec will not stem Mexico's decline. Watching the tragedy unfold is depressing for peak oil observers, many of whom hold private views that are even more pessimistic than their public statements. They know that time is running out.
On the broader question of future natural resource abundance, it seems like the bad news keeps pouring in. In the context of soaring Asian demand, Colorado state geologist Vince Matthews presented slide after slide showing rising spot prices for base metals and other commodities, an indicator of increasing scarcity. Consider Soaring metal prices hurting tech firms, where we learn that—
... soaring prices of metals are threatening the profits of electronics manufacturers.
The metals suffering from high prices are nickel (Ni), cobalt (Co) and indium (In), the [nikkei.net] report said.
These metals are important because they are used in lithium-ion batteries, although some manufacturers are now experimenting with using manganese (Mn) instead.
The Prius hybrid currently uses nickel-metal hydride batteries. Toyota's next generation of plug-in hybrid vehicles (PHEV) is supposed to use lithium cobalt oxide technology, but implementation has been delayed. (See also Toyota denies battery woes delay next prius from MSNBC, September 28, 2007.) The battery issues are complex, but it is fair to say that skyrocketing prices for metals used to power electric vehicles will not make these cars more available and affordable as substitutes for standard internal-combustion engines in the future. Comprehensive resource scarcity issues affect all aspects of the peak oil problem. Toyota's Justin Ward gave ASPO-USA's conference an update on PHEV technology.
Caltech's David Rutledge presented his results on the total fossil fuel reserves (oil, natural gas, coal) available to humankind in the context of global warming. Rutledge was joined by Pushker Kharecha, a climate scientist at NASA's Goddard Institute for Space Studies (GISS) and co-author, with James Hansen, of Implications of "Peak Oil" for atmospheric CO2 and climate. This sparsely attended debate—it was late on Friday evening and attendees were exhausted—was certainly among the most important events at the conference.
The argument between the climate community and those studying constraints on fossil fuel resources is simple: Rutledge believes the IPCC's 2001 Special Report on Emissions Scenarios (SRES, also used for the 4th report in 2007) are too aggressive by a wide margin. The IPCC projections for carbon emissions, especially in the mid-high range, seem to depend on recoverable volumes of oil, coal and gas that do not exist. The lowest line in the graph (left, from Rutledge's report at The Oil Drum, June 25, 2007) is Rutledge's estimate of possible emissions by 2100. The 540 gigatons shown is well below all but the most conservative IPCC cases. Future columns will discuss this issue in greater detail, but two important conclusions can be drawn now.
- The peak oil and climate communities share a common goal. Both groups believe that reducing fossil fuels consumption is necessary to mitigate the worst economic affects of future scarcity and warming.
- Peak oil (or gas or coal) does not obviate the threat of dangerous human-made interference with the Earth's climate system insofar as incompletely understood feedback loops in the climate system, the oceans, the large ice sheets, and the carbon cycle still exist. However, resource constraints will necessarily force adjustments that substantially reduce the likelihood of all the worst case climate change scenarios.
Has the mainstream media finally acknowledged the peak oil problem? Has ASPO-USA got the ear of policy-makers? Is the public clamoring for solutions? The news is better than it used to be—both the New York Times and the Wall Street Journal sent representatives to the conference. Unfortunately, there's always a "but" that dampens our optimism about these questions. Veteran peak oil observer and ASPO-USA volunteer Tom Whipple presented his take on the issues on Thursday evening.
Whipple took his example from the New York Times' Record Price of Oil Raises New Fears by Jad Mouawad on October 17, 2007. The article listed many reasons for oil prices near $90/barrel, including "refinery bottlenecks in the United States, a weak dollar, geopolitical threats in the Middle East, the war in Iraq, violence in oil-producing Nigeria, and resource nationalism in Venezuela and Russia that is driving away foreign oil investment." That's not all. There is also the recent tension between Turkey and Kurdish separatists in addition to "strong growth in demand from China and the Middle East, where fuel prices are kept artificially low through government subsidies."
The Times article never mentioned peak oil. T. Boone Pickens, who received most of the media coverage at APSO-USA's conference, reiterated his views that the oil supply will likely never exceed current levels and prices are rising because demand is up while supply is flat. In a new twist, Pickens also predicted that prices would reach $100/barrel before visiting $80 again.
Oil prices have been going up for 8 years but for the Times and other mainstream media representatives, each new rise in the price is a fresh event, disconnected from all that has come before. Mouawad, who apparently wanted to squash the peak oil notion that longer term market fundamentals might be in play here, made sure to quote PFC Energy's Roger Diwan, who said "there is a perception that fundamentals are more bullish than they actually are." Even as we grant that shorter term considerations affect the oil price, myopia—and hence denial—pervades such reporting.
Looking on the bright side, peak oil is not so much a fringe idea as it once was, and the internet is full of good writing on the subject. Major reports like those issued by the GAO and the NPC—who acknowledged the peak oil problem mostly by avoiding it, choosing instead to talk about poorly articulated "hard truths"—have addressed peak oil directly. Unfortunately, these reports also did not get nearly the attention they deserved, just as they did not fairly characterize the state of our knowledge about peak oil. On the other hand, the AAPG's Hedberg Research Conference headed up by Nehring was held primarily to clarify our knowledge about the future oil supply and predict the peak or plateau of world production.
So there is some progress to report in the 4th quarter of 2007, even if it does not warrant much optimism that most people are finally coming to grips with reality. Like many observers, Tom Whipple believes it will take a traumatic event to awaken the public to peak oil. On second thought, even the typical human response to crisis has attendant problems. A geopolitical upheaval will spawn explanations about the event itself, explanations that have nothing to do with our peak oil vulnerability. Similar explanations would be offered in the case of a severe economic downturn, mutatis mutandis. The upside is that both events would force us to consume less oil. The downside is that a severe interruption in oil production will engender great human suffering while the peak oil problem will remain unseen in the background.
Thus we understand the basic reasons that explain the underlying pessimism evident at ASPO-USA's conference. The news is mostly bad but few are acknowledging these warning signs. It's never easy to be the bearer of bad tidings. So we do the best we can at ASPO-USA, as exemplified by this year's excellent conference. And we will try harder in the future. The rest of our fate is in God's hands, or if you prefer, in the ineluctable workings of a Universe over which we ultimately have little control. Nature—including Human Nature—will win in the end, it always does. If it helps, take the Prozac.
Contact the author at [the original article at the ASPO-USA website]