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The ‘Peak Oil’ Theory: Will Oil Reserves Run Dry?

Kenneth Stier, CNBC
Oil’s recent slide and the slackening demand that an economic slowdown’s expected to bring have stimulated hopes that crude could soon safely stabilize below the $100 range.

But beneath seesawing supply and demand lies the deeper question of just how much oil the planet has in the first place – and how much it will have in the future.

The answer to that question supports – or undermines – the theory that we are in the midst of an ever-tightening supply that will lock prices into a permanent, rising arc. That, in nutshell, is what’s meant by the term “peak oil”.

It’s an issue that matters, especially to major energy players who are in a race to disprove the theory and trying to bring on-stream more oil fields than are currently being depleted.

John Hofmeister, president of Royal Dutch Shell’s US operations, shared his thoughts on the supply issue on CNBC’s Squawk Box on Thursday. He took aim at the peak oil theory as popularized by Matthew Simmons …

“The peak oil theory has really swamped the world – God bless Matt Simmons,” Hofmeister told CNBC.

Simmons is mistaken, said Hofmeister, because he is overly focused on a single country: Saudi Arabia, the world’s largest exporter and OPEC swing producer.

… Given all that, we asked Simmons, who is chairman of Simmons & Co. International, a specialized energy investment-banking firm based in Houston, to respond to Hofmeister’s comments and explain how his peak oil scenario can be avoided.

CNBC: What’s your response to critics like Hofmeister?

Simmons: There is a kind of schizophrenia within the likes of Shell where the chairman basically says, “We think by 2012 global demand will exceed conventional supply” and yet Hofmeister basically says the idea that we are ever going to have peak oil is ridiculous.

CNBC: But he’s suggesting you are leaving out unconventional sources of energy in your calculations.

Simmons: They make the distinction [between conventional and unconventional], but they don’t seem to make the connection about the vast difference of flow.
(20 March 2008)
Even if Hofmeister’s points were all granted, all that would change would be that the date of the peak would move out a few years, and the shape of the depletion curve would be somewhat different. A peak would still be reached, prices will continue to rise, and we will have to make a transition.

Original has a video of the Hofmeister interview. Good for CNBC to have included Simmons as a pro-peak spokesperson (at least in the article). In a comment at TOD, Undertow points out:

Simmons appears on CNBC and Bloomberg suprisingly frequently these days. For example:


The Oil Drum Turns Three Today

Prof. Goose, The Oil Drum
Yeesh, three years. 9.7-plus million unique visits to the main site (5.4 million in the past year alone) and 23.6-plus million unique page views, and many more at the continental sites. 2.3-plus million absolute unique visitors (according to google analytics and sitemeter) to TOD:Main. A 501c3 in gestation. A lot of smart people just trying to get smarter. There’s a lot going on around here.

… At TOD, we try to be the bridge between the doomers, the technopians and the cornucopians, to present as many sides of the myriad arguments as we can, so that we do not become too rooted in any mode of thought. This allows us to test raw ideas through your eyes and critical thinking in a way that doesn’t happen most places. We don’t tell you what to think, we just ask that you think critically and empirically. Most days, it feels like we are walking an ever-narrowing knife-edge with icy gusting winds blowing across a shrinking and very loosely anchored tightrope (nice Goosey, way to mix a few metaphors there…). Anyway, you get the point: this is not easy.

… Somebody I think a lot of, Jerry Michalski, shared a concept with me a while back, which he learned from Quaker meeting: “Speak only if it will improve upon the silence.”
(22 March 2008)
Happy Birthday, TOD! -BA

No oil? Cities in ruins? Welcome to Kunstler’s `World’

Paul Grondahl, Albany Times Union (NY)
Jim Kunstler is fiddling his way to the apocalypse, one jig at a time.

When all hell breaks loose after the oil runs out and the military-industrial complex grinds to a halt, Kunstler will be the one rosining up the bow, cracking jokes, grinning broadly and intoning his signature phrase: “It’s all good!”

You can forgive Kunstler the temptation to rub an I-told-you-so fistful of salt into the wounds of a crippled republic.

“I don’t consider myself a prophet of doom-and-gloom, because anyone with half a brain could have seen this mess coming from a million miles away,” Kunstler was saying the other day as headlines trumpeted a Wall Street meltdown, a deepening subprime mortgage morass and $100-a-barrel oil.

“A lot of people have unfairly called me a doomsayer, but I reject that. I’m a cheerful person. I’m simply describing what’s going on. Apparently, my observations were fairly accurate,” he says, arching an eyebrow and stifling a smirk.
(16 March 2008)