Back when economist Alfred Kahn worked for the Carter administration he suggested that the high inflation of that period could end in a recession or even a depression.
The administration moved immediately to distance itself from Kahn’s words and admonished him for his bluntness. He promised he would not use the words in public again.
Instead, Kahn, known for his cheeky sense of humor, began telling audiences that because he had been prohibited from using the words “recession” or “depression,” he would substitute the word “banana” in their place.
When a banana company complained, he started using “kumquat” figuring that the kumquat lobby was too small to complain.
Of late we have been getting a similar (but less amusing) displacement of words from officials in the oil industry regarding the idea of peak oil. Very few are willing even to utter the words “peak oil,” and when they do, they insist that the world is not near peak as construed by a misguided peak oil movement. Instead, they substitute words such as “plateau.” A Chevron vice president has used that word to describe our oil future. And, it is fitting that he used the word at a Cambridge Energy Research Associates-sponsored confab since CERA was the first to coin the phrase. CERA, however, believes a plateau–which they further qualify as an “undulating plateau”–won’t occur until the 2030s and then will go on for 20 to 30 years. Any constraints before then, they say, will be due to “above-ground factors.”
On the other hand, Chevron’s CEO, Dave O’Reilly, says, “The era of easy oil is over.” Given O’Reilly’s view perhaps we can assume that the Chevron vice president cited above believes that the plateau will be starting a lot sooner than 2030. And as for O’Reilly, he does use the word “peak”, but makes clear he doesn’t consider nearby peaking some kind of doomsday scenario.
Others speak of “limits” on production as detailed in a recent front-page article in The Wall Street Journal. The limits include lack of access to Middle Eastern oil fields (where much of the additional oil lies), lack of available manpower, and lack of oil service infrastructure such as rigs and pipelines. Another limit is that state-controlled oil companies lack incentives to develop additional production capacity since at current prices these companies are already producing all the revenue their government owners desire. All this adds up to a “ceiling” on production, but not peak oil as the authors of the article are at pains to point out. They say this even though some of their sources point to major constraints in newly discovered oil reservoirs and the expectation that these constraints will grow.
Beyond O’Reilly, only a few other oil company officials aren’t afraid to say the word “peak.” Thierry Desmarest, chairman and CEO of the French oil giant Total, has stated flatly, “If demand continues to grow at this pace, global production will peak sooner, not later, for geological reasons.” He pegs the peak at between 2020 and 2025. He has called for steps to curb demand to move the peak back and allow more time for a transition to a post-oil economy. A former Shell chairman believes oil could peak within 20 years. One understands why the majority of oil executives shy away from the term since it implies that oil companies as a group are now decaying assets without much of a future.
Limits, plateaus, the end of easy oil, above-ground factors, or constraints on exploration, infrastructure and personnel–call it what you like, but it all adds up to the same thing, namely, a peaking of daily world oil production. As everyone truly familiar with peak oil understands, it is the maximum rate of production which will determine the peak, not the total available resource in the ground. Whether the peak occurs for a variety of reasons–which now seems likely–or whether it occurs due solely to geologic constraints, peak still produces the same problem: There is not enough oil to go around at prices that people can afford. This is, of course, due to falling daily production.
One could argue that responses to any peak would depend on the precise nature of that peak. For instance, if people believe a peak is due to infrastructure constraints, more money could surely be spent on oil infrastructure to increase our daily production capacity. But what company will spend this money if it doesn’t believe future oil volumes will justify it? One could also argue for forcibly opening oil fields in the Middle East to rapid development. I have often wondered whether those who say that above-ground factors are limiting our daily production tacitly advocate a military response to peak. If so–apart from any moral or philosophical objections–would such a response actually help? The current experiment in Iraq suggests it won’t.
Perhaps the public would be better served if all those who are now under orders to use euphemisms when referring to peak oil were to follow Alfred Kahn’s lead and use the word “banana” in their place. At least people would then know that the various terms really all amount to the same thing. They all really mean peak oil–oh, excuse me, I mean banana, or rather to be absolutely clear, peak banana.