Insight and inspiration in turbulent times.
Last year a draft of a German army study, which went into great detail in analyzing the consequences of peaking world oil production, was leaked to the press. The German study which was released recently is unique for the frankness with which it explores the dire consequences which may be in store for us.
A weekly update of peak oil news, including:
– Developments this week
– EIA’s International Energy Outlook 2011
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.
In Saturday’s Wall Street Journal, Daniel Yergin, chairman of IHS Cambridge Energy Research Associates, gave his explanation of what’s wrong with peak oil. Here’s why I don’t find his analysis altogether convincing. … I submit that meeting the growing global demand for crude oil over the last five years has posed significant challenges for the world economy. And those who worry that the next 5-10 years might be like the last should not be dismissed as crackpots.
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?
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.
– New Fields May Propel Americas to Top of Oil Companies’ Lists (NY Times cornucopia)
– Peak Oil and Faith Based Energy Debates
– Chevron loses latest stage of Amazon pollution battle
– The coming German energy turnaround
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.
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.
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)
Reviews of Daniel Yergin’s new book on energy, “The Quest,”
– New York Times
– Oil Price
– Wall Street Journal
– NPR
– USA Today.
– McClatchy Newspaper
In some areas, Yergin is not that far apart from the peak oil community.
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.
