Top 10 Pieces of the Peak Oil Puzzle during the 2000s
(Note: Commentaries do not necessarily represent ASPO-USA’s positions; they are personal statements and observations by informed commentators.)
Here’s one take on key events that impacted the peak oil story during the decade of the 2000s. If you have a favorite factor that isn’t listed below, send it along; we may run a follow-up.
1. USGS World Oil Study released during summer of 2000. The USGS study was a continuation of efforts that Chuck Masters headed up every four or five years between the early 1980s and 1994. [Note: no USGS world oil report has been issued since the 2000 version—a notable break from tradition.] Life-long oil man Jean LaHerrere’s voice was probably the loudest among the early critics of the year 2000 report; he flogged the conclusions early and often, focusing on what he saw as a glaring methodological departure from previous studies (taking the mean of very high- and very low-probabilities for the amount of future oil discoveries). Despite the critics, the USGS’s numbers from the 2000 study still retain their status as the official US government view.
This is shaping up as an instant replay of the USGS’s position back in 1962, when they denied a 1956 warning by M. King Hubbert that U.S. oil production would peak between 1965 and 1970. The USGS told then-Interior-Secretary Stewart Udall that the USA probably wouldn’t hit peak production until near the turn of the century. They were very wrong. Back in 2000, the US Energy Information Administration (EIA), using the optimistic USGS data, plotted their first “reference case” that showed peak production in 2016; since then, using only-in-Hollywood assumptions, they’ve replotted the curve to show a peak delayed until 2043. Dream on…
2. The oil production plateau. Using EIA data, world oil production grew 14% between January 2000 and year-end 2008—from 74.8 million barrels a day to 85.4 mbd. Production dropped last year by an estimated 1.2 million b/d, due in large part to OPEC cuts that matched declining worldwide demand. But nearly all of the decade’s production growth—9.8 out of 10.6 million b/d—occurred by year-end 2005. Despite one of the longest and steepest oil price run-ups (mid-2002 through mid-2008) in modern times, world oil production started slowing in mid-2004, and then nearly flattened. Several OPEC nations—mostly Saudi Arabia—have enough idle production capacity to increase production and maybe break the plateau, though demand may not call for it soon. Total SA’s CEO Christophe de Margerie says that increasing world oil production to 90 million b/d would be “optimistic.”
3. Several important oil-producing nations in decline. The 21 largest producers—the million-barrel-a-day club, oil’s Dream Team—supply about 85 percent of the world’s daily oil consumption. They are the big dogs; as they go, so goes world oil production. During the 2000s, three more of these dream teamers—first the UK, then Norway, then Mexico—slipped into long-term decline. They join the USA, Indonesia and Venezuela among Top 21 producers that are likely past their oil production peaks and where production is either flat or in long-term decline. As a group, during the decade these six nations lost over 4 million b/d of production (BP data).
Increases from several non-OPEC countries more than offset the above declines. Most notable was the 5 million b/d oil production comeback by the nations that comprised the Former Soviet Union. Other non-OPEC nations among the Top 21 with a total increase of 3 million b/d were Brazil, China, Canada and Angola (which recently became a member of OPEC). But the bad news is that Russia’s production growth spurt has ended; both Russia and China, two of the world’s top five producers, will see their production plateau and decline during the coming decade, and probably fairly soon.
4. Formation of ASPO in Europe in 2001, under the leadership of lifetime oil man Colin Campbell and physics professor Kjell Aleklett. Their first conference was held in 2002 in Uppsala, Sweden, with subsequent annual conferences in Paris, Berlin, Lisbon, Pisa, Cork, Barcelona and Denver. In 2004, Campbell encouraged nations to form their own ASPO-like organizations; over 25 such educational organizations now exist, from the UK to China.
5. An avalanche of books and videos released and websites established. While several books broke trail back in the 1980s (Beyond Oil) and 1990s (The Golden Century of Oil; The Oil Coming Crisis; Geodestinies), the dam broke during the 2000s. Early books by Kenneth Deffeyes (Hubbert’s Peak; 2001) and Richard Heinberg (The Party’s Over; 2003) led the way for some 30+ book titles on the topic. The documentary “The End of Suburbia” (2004) featured warnings from Heinberg, Jim Kunstler, Matt Simmons and a host of other commentators. More followed. These have helped inject the word “peak” into numerous uses in the English language: peak growth, peak debt, peak water, peak food, etc. But despite the exposure, “peak oil” remains controversial.
6. Some key papers and reports published. These efforts contributed in ways both narrow and broad to the small but growing dialogue. In 2001, Matt Simmons published “The World’s Giant Oil Fields”—which helped launch a growing focus on analyzing oil flows, not just oil reserves, as a key to understanding peak oil. In 2005, a report funded by the US Dept. of Energy—“The Peaking of World Oil Production: Risks, Impacts & Mitigation Strategies”, aka the Hirsch Report—introduced a paradigm-shifting notion: be aware of how long it will take to adapt to the reality of declining world oil production. A PhD dissertation on peak oil came from Sweden. And many more.
7. Breakthrough coverage by mainstream media. It didn’t last long, but the spike in savvy coverage seemed to start during the fall of 2007; consider the kick-off a November 19th piece in the Wall Street Journal—“Oil Officials See Limit Looming on Production”—by Russell Gold and Ann Davis, with a slew of WSJ articles during the first half of 2008 by Neil King and others. But the flurry died off after the price crash, when the financial system nearly collapsed and the economy shifted to deep recession. Thereafter, coverage reverted to the “What peak? Isn’t technology great?” angle that we heard during most of the decade. Most media have lost interest in following the story.
8. The corn ethanol boondoggle. US energy policy rolled the dice on dead-end corn ethanol way back in 1978, giving it a $0.51/gallon tax credit. Then we doubled down on corn ethanol with our “new” energy policy of August 2005, finally putting corn and non-corn ethanol on steroids in late 2007. This only showed the bankruptcy of how challenged we are to respond intelligently to our long-term liquid fuels problems. It also highlights the danger of government “picking winners.”
9. Voices in the mist: The peak oil concept has engendered sustained push-back, lead by organizations like Cambridge Energy Research Associates, EIA, ExxonMobil, British Petroleum, and individuals like energy economist Michael Lynch. But this club has been losing adherents faster than it has been picking them up. As industry CEOs start to speak out in 2007, the dialogue gained beef on Team Peak Oil’s side. In 2008, even the International Energy Agency (IEA) started sending at least mixed messages that our oil future no longer included cheap and plentiful oil.
10. The IEA Whistleblowers of November 2009, as reported in the Guardian (November 2009). That was probably the first major public revelation of under-the-rug numbers that the IEA doesn’t want to talk about in mixed company but which show their understanding that world oil production isn’t going to come close to the 105 mb/d production they currently forecast for 2030.
Honorable mention? How about:
A) the shale gas revolution…but it probably won’t replace substantial amounts of US liquids for a decade or more, if ever; or
B) deepwater production developments…but are they more desperation than inspiration?; or
C) development of unconventional oil shows problems (time frame for scaling up; high costs; large environmental footprint, poor energy return on energy invested); or
D) the messes in Nigeria and Venezuela; or
E) since late 2007 the slowdown in energy investments due first to skyrocketing costs for industry services, and second to demand destruction caused by the incredible shrinking economy; or
F) the extensive moves by the Chinese to secure long-term oil supplies; or
G) the second Gulf war was started, acknowledged by some to have been fought primarily for oil; or
H) Dr. Al Bartlett delivers another 500 of his 1780 presentations on the forgotten fundamentals of our energy crisis?
Steve Andrews began following the slowly emerging peak oil story during the late 1970s. Send your favorite item or two that didn’t make the list above to email@example.com.
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