Fossil Fuels

Peak oil – now or later? a response to Daniel Yergin

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Over the years there has been significant convergence between the peak oil and business-as-usual camps, each hopefully learning from the other. Yergin, whilst attempting to debunk peak oil, appears to have been converted to a late peakist. I can certainly relate to many of the concepts described by Yergin – price influencing supply and demand, technology, innovation and new plays etc – but wonder when these are going to result in new production capacity (supply) that exceeds annual declines?

The stakes are high. Should policy makers listen to Pulitzer Prize winning historians? Or should they listen to geologists and a growing band of economists who can see the dependency of economic growth upon increasing supplies of cheap energy that quite simply do not appear to exist? Most important of all, will the WSJ publish a modified view of the oil world than that presented by Daniel Yergin?

Peak oil as a thermostat

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Here’s a metaphor that may help in explaining why high oil prices are choking off economic growth for the U.S., and to a lesser extent the rest of the world as well. Think of the oil price as the mercury in a thermostat. As the economy heats up, the mercury expands (oil prices go up). This shuts off the furnace (the factors of production and consumption in the economy that make it grow). As the economy cools, demand for oil contracts and oil prices decline. But with oil now cheap, the factors of production kick in again; this causes oil prices to be bid up, and high prices once again choke off growth.

IEO 2011: a misleadingly optimistic energy forecast by the EIA

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The EIA published International Energy Outlook 2011 (IEO 2011) on September 19, showing energy projections to 2035. One summary stated, “Global Energy Use to Jump 53%, largely driven by strong demand from places like India and China.” It seems to me that this estimate is misleadingly high. The EIA is placing too much emphasis on what demand would be, if the price were low enough. In fact, oil, natural gas, and coal are all getting more difficult (and expensive) to extract.

Clarke’s fallacy

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In an epoch when financial pundits insist that manipulating the arcane symbols we call “money” can materialize petroleum in the bowels of the Earth, and a sizable fraction of Americans seem to think that chanting “Drill baby drill” as a mantra can accomplish the same improbable feat, it’s probably past time to discuss the interface between magic and peak oil. The Archdruid plunges in where rationalists fear to tread, with one word of caution–that word “magic” may not mean what you think it means.

There will be peak oil

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In his article in the Wall Street Journal, Daniel Yergin contradicted his own “There Will Be Oil” mantra by stating that discovery of new fields will be lower in future. With detailed knowledge of the world’s oil production one can actually show that part of Yergin’s discussion supports the fact that we are living in the era of Peak Oil. … The false image of the future that Daniel Yergin described can be compared to trying to steer a supertanker on a journey by only looking in the rearview mirror.

“The Quest” questioned: Yergin wrong on peak oil

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Daniel Yergin, a Pulitzer Prize-winning historian and energy analyst, is one of the world’s greatest optimists about oil supplies. In “There Will Be Oil“—his article in the Wall Street Journal to plug his new book, The Quest—Yergin sums up a chapter of his book, the one about fears that the world will soon reach its peak of oil production. Yergin argues, however, that “on a global view, Hubbert’s Peak is still not in sight.”

But the arguments in his article—and in his 800-page book—are full of gaping holes, so I’m going to dedicate a number of blog posts to sticking my head into a number of them. (First two parts in a series)

Book review: Daniel Yergin’s “The Quest”

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“The Quest” lacks the magisterial quality of Yergin’s earlier book,”The Prize,”, a meticulously researched, groundbreaking history that chronicled how the major events of the 20th century — both world wars, for instance — pivoted on oil, and delivered deeply etched personality portraits of those who counted. “The Quest” by comparison is a primer, based largely on other people’s books and articles, and does not attempt to tackle history on a similar scale, nor to introduce the actors in three dimensions.

Yergin is half-right about oil, but other half is what matters

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In “There Will Be Oil” (September 17, WSJ, Page C1), Daniel Yergin concludes that a peak in global oil production is “nowhere in sight.” By focusing on the timing of such a peak, however, he dangerously distracts attention from the monumental challenges facing the oil and gas industry today, and the new energy and economic reality the world has entered. With demand for oil and all forms of energy continuing to rise exponentially—including rapid growth in China, India, and other developing countries—and huge uncertainty whether fossil fuels can keep pace—the most foolish course of action would be business as usual.