In the past five years of writing about energy one of my favorite observations has been that people get into trouble because they “confuse Peak Oil and the Peak Oil Debate.” In other words, they confuse what Peak Oil IS and what Peak Oil MEANS. Because the honest truth is that most people, even energy professionals, don’t actually know the proper definition of Peak Oil. And when they think about the “Peak Oil Debate,” they mistakenly believe that it refers only to those extreme pessimistic predictions of energy doom. The debate actually represents  a wide spectrum of discussions, beliefs, and positions related to oil depletion. In short, your view of Peak Oil is far too narrow if you only see it as a discussion with only two sides (energy doom vs. extreme abundance).

I wrote about this in a January tweetstorm copied below for your review. Feel free to read through the tweets in order first, and then return to view the additional comments I’ve included for each.

Ed Crooks, energy editor at the Financial Times, also penned a great response thread on Peak Oil Supply and Peak Oil Demand. You should also read his thread as well.


Whenever ANYONE asks you to define Peak Oil Supply, the simple answer is ALWAYS the “maximum rate of oil production.” It’s also useful at times to add the world “global” as well – and if you’ve seen the recent reports of near record U.S. oil production then you know why. In their euphoria, many journalists quickly forget that U.S. oil production is less than 15% of global oil production. To really understand the true implications of recent U.S. growth, you really need to talk about it in the context of production increases/declines of that other 85% of global oil production.


When speaking on Peak Oil, I often start with one simple question: “Is oil finite?” All of us believe that, as does our modern understanding of geology. Once oil is finite, then by extension, a max rate of production is certain. In one stroke you’ve established that Peak Oil = real. Everything else (timing, max rate, etc) is still up for discussion. But the legitimacy of Peak Oil itself, is not.

For further reference, one of the biggest pushers of the abiotic oil theory is the conspiracy theorist Dr. Jerome Corsi and his book “The Great Oil Conspiracy.” Yes, this is the person that the Trump administration deemed appropriate to award a White House press pass.

Richard Heinberg, a noted Peak Oil educator, has a fairly thorough take on this issue on his website. It’s worth your time.

As long as oil is finite, Peak Oil Supply will remain an issue worthy of study and consideration.


“Running out” is both the most common, and laziest, strawman used in the Peak Oil Debate. You’ll constantly run into oil articles that begin with “Remember Peak Oil…” before mentioning “those people” that claimed that oil would soon run out. Of course, that’s not what they said at all. They were talking about the maximum rate of oil production, a point on a production graph very far from running out. The former is certain in a finite world, the latter will likely never happen. But it’s easy to understand why Peak Oil critics push the “running out” strawman so forcefully – it turns the debate into one that’s very easy to win. If the question is “Do we have oil” vs. “oil is gone” one side is always going to win that contest. By correctly focusing on the “max rate” the discussion becomes more difficult, more relevant, and more useful to our future energy economy.


I’ll say more about this later and in future pieces, but this area right here has been fascinating to me over the past couple of years. Many energy analysts seem to have the ability to perfectly understand both Peak Demand (the maximum rate of oil consumption) and the Peak Demand Debate. But their understanding in this area doesn’t always extend back to Peak Oil Supply, the related cousin of Peak Demand.


All of these (and many more) are fascinating and interesting questions about our future energy economy. But these discussions may not take place without a proper understanding of Peak Oil Supply. Think about it, if someone has misrepresented Peak Oil and convinced their audience that it doesn’t matter AT ALL – why waste time even discussing timing, or production profiles, etc. Also, again consider the Peak Demand Debate, where everyone has no problem discussing potential timing, factors of demand growth/decline, electric vehicle growth, petrochemical use, etc. Those same types of discussions don’t occur as much on the supply side, partially because of the stigma attached to those discussions – fueled by a misunderstanding of oil depletion itself as an issue.


In his article, Robert Rapier writes: “…there are also people who believe peak oil will inevitably lead to cleaner environments, closer communities, and healthier food. Then there are those who believe that peak oil will lead to a dirtier environment as we become more desperate for energy and turn to more oil sands and coal to replace declining oil supplies. There are people who believe peak oil will be a minor inconvenience because there are plenty of sources capable of replacing oil. And there are those who believe certain elements of all of the above.”

The future isn’t just one thing. Nor is it a binary competition between two things. It’s an infinite arrangement of permutations and possibilities. There are lots of different ways that Peak Oil Supply/Demand could play out – and the truth is that we don’t know what future we’ll end up with. It’s imperative that we guide our energy debates away from “certainty” thinking to “probabilistic scenario thinking.”


One of my favorite stories from my time with ASPO-USA was related to the annual conferences. Someone would hire a group of people to dress in chicken suits (i.e. Chicken Littles) and stand outside the conference venue while they distributed fliers to each passersby. The fliers would discuss “those people” claiming that the sky was falling. To those forces, it never mattered WHAT exactly was being said inside the conference – only that one could work to convince the public that everyone inside was part of a fringe “other” that should be quickly dismissed and ignored.


Quick tip: The quickest way to get a Peak Oil Supply discussion back on track is to relentlessly focus on the one true metric of Peak Oil – the rate of oil production. Ask yourself if a critic is ACTUALLY talking about production rates in their piece. If not, ask them why. Always take whatever they are saying and ask them how it relates back to the rate of oil production.


Steve Andrews, co-founder of ASPO-USA, poses with kids who were hired by someone in the oil industry to stand outside the ASPO 2009 conference in chicken suits and hand out anti-peak oil propaganda calling the attendees “Chicken Littles.” (source: Chris Nelder)


Note that I don’t necessarily disagree with optimistic positions in the Peak Oil Debate. I disagree when those optimistic positions are based on poor foundations and unrelated to the rate of oil production. For reference, there are really only four ways to have an optimistic position in the debate – where one generally believes that oil production will continue to rise long-term or at worst plateau. 1) U.S. conventional oil production will cease declining and begin to rise. 2) U.S. shale/tight oil production will continue to increase strongly and not peak in the short term. 3) Global shale/tight oil will come online to bolster supply gains and mitigate any U.S. declines. 4) Global peak demand will reduce the need for sustained production increases.

An optimistic position in the Peak Oil Debate requires the author to hold at least one (if not multiple) of those views. If you believe that Peak Oil is nonsense, then you also need to also forcefully advocate for one of those four points.


Shell made headlines in 2016 with a bold claim of near-term peak demand. BP is in the currently in the news for the same reason. RethinkX is a new think tank. Their view is that the convergence of electric vehicles, autonomous vehicles, and ride-sharing will lead to a new business model called transport-as-a-service or TaaS. In other words, once the cost of transportation drops below the cost of owning vehicles – transportation oil demand will be forever disrupted, much in the way smartphones disrupted telecommunications.


In general, the Peak Demand debate really comes down to how quickly you foresee electric/autonomous vehicle implementation and how deeply you believe electric vehicles can penetrate into overall oil demand. Peak demand optimists believe that the electric vehicle will quickly change everything. Pessimists like the IEA, among others, predict that oil demand growth in other areas such as freight, aviation, and petrochemicals will more than offset demand reductions from EVs – pushing peak oil demand even further into the future.


When predicting the future, we can be sure of one thing – over a long enough time frame, we’ll all turn out to be wrong. In the energy space, even five year old commentary is horribly outdated. Peak Oil Supply critics frequently spend an inordinate amount of time revisiting M. King Hubbert’s math from 50-60 years ago! Their hope is always to show an audience that “those Peak Oil people” were wrong; therefore, no one should listen to their views today.” But our energy debates don’t take place 50, or 30, or 20 years ago. They take place today, with our modern knowledge of geopolitics, technology, and geology. The optimists and pessimists were each correct on some things and incorrect in others. We should study all positions and integrate lessons learned into our modern thinking. The question isn’t “Were people wrong in the past?” The only true question asked in the Peak Oil Debate – the simple question so many work tirelessly to avoid answering is this: What’s the future rate of oil production?


Notice when analysts can properly discuss peak demand and in the next sentence show a complete lack of understanding of peak supply. Notice how they accurately debate demand concerns in terms of the rate of consumption, but then incorrectly refer to peak supply as “running out.” Notice how the peak demand debate is spoken of as a wide spectrum of possibilities from near-term to far-term, but peak supply is pigeonholed only as the nearest and most extreme pessimistic positions. Notice how every energy conference has a spirited panel on the threats to oil demand that could lead to peak demand, but next to no discussion on natural declines, under-investment, and the threats that could lead to peak supply. The story of oil production is the story of the production gains and the production declines – soberly examining both the good and the bad, the popular and the unpopular, the comfortable and the uncomfortable.


Here take note of how often Campbell/Laharrere are making a point to talk about “conventional oil.” This is one of those strong debates within these circles. What exactly is the proper definition of “oil?” What liquids count, and what liquids do not? Do natural gas liquids count? How about biofuels? When the definition of peak oil is the “maximum rate of oil production,” it really helps to have a solid definition of oil in order to properly keep score. The reality is that the definition of oil is all over the place and has changed over time. EIA, IEA, BP, and others ALL have varying definitions of what they consider oil. When you hear some peakists claim that oil production has already peaked in 2005-2010, it’s because they are using a very specific (and some consider overly limiting) view of conventional crude. Even Dr. Fatih Birol, now the leader of the IEA, made such a peak claim in 2011. I guarantee that he wouldn’t make that statement today, and it shows that between 2011 and now their views on the proper definition of oil have changed.


Bob Hirsch’s overview, “Peak Oil Knowns & Unknowns” remains a wonderful introduction to these issues for the uninitiated. Among all the topics, Hirsch also touches on the “proper definition of oil” issue. Five years later, Bob McNally (author of the new book, Crude Volatility) dedicated his entire presentation at the 2017 EIA Conference to “The Critical Importance of Improving Oil Data.”


Ask yourself, how many “Peak Oil people” do you really know? Peak Oil discussions in the media often resemble a game of telephone – where the things people know about the Peak Oil Supply Debate are often heard from someone, who heard it from someone else, who read about it in the Wall Street Journal or Financial Times. Take the time to cut out the middlemen. Listen to this interview with Chris Nelder and Mason Inman. Revisit old ASPO-USA conference videos. Review some of the old papers and documents. Hear and read thoughts directly from them, rather than settle for what someone claims the Peak Oil people said or didn’t say.

The GAO report famously begins, “Most studies estimate that oil production will peak sometime between now and 2040.”

The report was written in 2007. Some would say that if peak supply didn’t happen between 2007 and 2020, then the report isn’t worth the paper it’s written on. Others would say that 2040 is a long way away and that even a peak at 2039 would still justify the report’s views and conclusions.

Where do you stand? Where do our policymakers stand? As Charles Duhigg once wrote, “The future isn’t one thing. Rather, it is a multitude of possibilities that often contradict one another until one of them comes true.” Until we’re certain of that truth, it’s imperative that keep both eyes open and examine the full spectrum of our possible energy futures.

 

Teaser photo credit: By Antandrus at English Wikipedia, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=16373401