The Recurring Myth of Peak Oil

October 1, 2008



by Ismael Hossein-zadeh

The Peak Oil theory maintains that world production of conventional oil will soon reach a maximum, or peak, and decline thereafter, with grave socio-economic consequences. Some proponents of the theory argue that world oil production has already peaked, and is now in a terminal decline [1].

Although, on the face of it, this sounds like a fairly reasonable proposition, it has been challenged on both theoretical and empirical grounds. While some critics have called it a myth, others have branded it as a money-making scam promoted by the business interests that are vested in the fossil fuel industry, in the business of war and militarism, and in the Wall Street financial giants that are engaged in manipulative oil speculation.

Regardless of its validity (or lack thereof), the fact is that Peak Oil has had significant policy and political implications. It has also generated considerable reactions among various interest groups and political activists.

While environmental and similar activists have used Peak Oil to promote more vigorous conservation and more energetic pursuit of alternative fuels, the oil industry and its representatives in and out of the government have taken advantage of Peak Oil to argue in support of unrestrained extraction of oil and expanded drilling in the offshore or wildlife regions.

Because of its simple logic and facile appeal, Peak Oil has also led many ordinary citizens, burdened by high fuel bills during periods of energy crisis, to support unrestrained or expanded drilling. According to a recent Rasmussen poll, 57 percent of Americans favor more offshore drilling. Misled and misplaced popular perceptions, in turn, play into the hands of the oil industry and their representatives to lobby for the lifting of the Federal ban on oil production in hitherto restricted regions.

Citing voter anger over soaring energy prices, Senator John McCain of Arizona, the Republican presidential nominee, recently argued that opening vast stretches of the country’s coastline to oil exploration would help America eliminate the dependence on foreign oil. "We have untapped oil reserves of at least 21 billion barrels in the United States. But a broad federal moratorium stands in the way of energy exploration and production," he said. "It is time for the federal government to lift these restrictions" [2].

Perhaps the financial giants of New York and London have benefited the most from the misleading implications of Peak Oil: “As much as 60% of today’s crude oil price is pure speculation driven by large trader banks and hedge funds. It has nothing to do with the convenient myths of Peak Oil. It has to do with control of oil and its price. . . . Since the advent of oil futures trading and the two major London and New York oil futures contracts, control of oil prices has left OPEC and gone to Wall Street. It is a classic case of the tail that wags the dog,” points out William Engdahl, a top expert on energy and financial markets [3].

Just as Peak Oil plays into the hands of manipulative speculators and beneficiaries of fossil fuel, so too can it be used by the champions of unilateral wars and military adventures, as it implies that war power and military strength are key to access or control of the “shrinking” or “soon-to-be-shrinking” oil. It thus provides fodder for the cannons of war profiteering militarists who are constantly on the look out to invent new enemies and find new pretexts for continued war and escalation of military spending—that is, for the looting of the national treasury, or public money.

By the same token that Peak Oil can serve as a pretext for war and military adventures, it can also serve as a disarming or pacifying factor for many citizens who accept the Peak Oil thesis and, therefore, internalize responsibility for U.S. foreign policy every time they fill their gas tank. In a vicarious way, they may feel that they own the war!

Thus, Peak Oil serves as a powerful trap and a clever manipulation that lets the real forces of war and militarism (the military-industrial complex and the pro-Israel lobby), and the main culprits behind the soaring energy prices (the Wall Street financial giants engaged in manipulative commodity speculation) off the hook; it is a fabulous distraction. All evils are blamed on a commodity upon which we are all utterly dependent.

Not only millions of lay-citizens, but also many scholars and academics have taken the bait and fallen right into this trap by arguing that recent U.S. wars of choice are driven primarily by oil and other “scarce” resources. More broadly, they argue that most wars of the future, like the recent and/or present ones, will be driven by conflicts over natural resources, especially energy and water—hence, for example, the title of Michael T. Klare’s popular book, Resource Wars [4].

As a number of critics have pointed out, this is reminiscent of Thomas R. Malthus’s theory of “scarcity” and “overpopulation.” Malthus (1766-1834), a self-styled British economist, argued that the woes and vagaries of capitalism such as poverty, inequality and unemployment are largely to be blamed on the poor and the unemployed, since they produce too many mouths to be fed, or too many hands to be employed.

In a similar fashion, Peak Oil implies that current crisis in energy (and other commodities) markets is to be blamed, in part, on less-developed or relatively poorer nations such as India and China for growing “too fast” and creating “too much” demand on “scarce” resources. (Similarities between the Peak Oil theory and the Malthusian theory of scarcity are further discussed below.)

Peak Oil Thesis Is Not New: Geology vs. Geopolitics

Peak Oil theory is not altogether new. M. King Hubbert, a well-known geologist, provided a dramatic discussion of the theory in 1956. A year later, Admiral Rickover discussed the end of the fossil fuel era even more emphatically—at the time, he gave oil about fifty more years to run out. Thirty years ago, the Club of Rome predicted an end of oil long before the present day.

Indeed, there is evidence that projections of oil peaking, then declining and running out, have been floated around ever since oil was discovered in the second half of 19th century. For example, the chief geologist of Pennsylvania predicted in 1874 that we would run out of oil in four years—just using it for kerosene [5].

While Peak Oil theory has been around for a long time, it has usually been dormant during “normal” economic times, or “reasonable” oil prices, but has gained heightened currency during periods of energy crisis and high oil prices. For example, Peak Oil became quite popular during (and immediately after) all of the three recent oil crises: the early 1970s crisis, the late 1970s and early 1980s crisis, and the early 1990s crisis.

The obvious reason for the rise in the Peak Oil popularity in the context of those periods of energy crisis was the perception that oil shortage must have played a major role in the respective oil price hikes. It is not surprising, then, that as recent geopolitical convulsions in the Middle East have triggered a new round of oil price hikes, Peak Oil theory has once again become fashionable.

It turns out, however, that oil price shocks of all the previous periods of energy crisis were precipitated not by oil shortages, or any real prospects of oil “peaking and running out,” but by international political convulsions, revolutions and wars: the Arab-Israeli war of 1973, the 1979 Revolution in Iran, and the 1990-91 invasion of Kuwait by Saddam Hussein’s armed forces. Each time, as the turbulent period of war or revolutionary atmosphere ended, higher oil prices of the respective crisis situation subsided accordingly [6].

The current oil price hike too is precipitated not by an oil shortage, as popularly perceived, but by manipulative speculation in energy futures markets—which are, in turn, prompted largely by the unstable atmosphere of war and geopolitical turbulence in the Middle East.

Evidence is therefore unambiguous that, so far, almost all oil price shocks can be explained not by geology, or the so-called Peak Oil, but by geopolitics.


The Paradoxical Reasonableness of Peak Oil: Return of Thomas Malthus

Peak Oil has a prima facie reasonableness that makes it readily acceptable to most people: since oil is a finite natural resource, it is subject to depletion.

But while the rationale behind Peak Oil seems reasonable, it is also seriously flawed and misleading.

One of the major defects of Peak Oil is its facile extrapolation or transition from micro to macro level, that is, an unwarranted generalization or extention of what is true in the case of an existing oil well or oil field to the entire world oil production. It is true that every operating or producing oil well or field increases in production rate until it reaches a maximum or peak flow rate, after which the rate of production enters a terminal decline. It does not follow, however, that global world oil production as a whole must soon reach a maximum and begin to run out afterward—some Peak Oil champions claim that this has already taken place.

Proponents of Peak Oil are quick to point to oil wells or fields that have actually peaked and declined, such as those correctly predicted by geologist M. King Hubbert. They fail, however, to point out the ever newer discoveries of new oil fields and/or other sources of energy that tend to more than offset the depleted ones.

The Peak Oil debate boils down, essentially, to natural versus social limits, or naturally-determined versus socially-determined limits. A similar debate erupted more than 200 hundred years ago over the limits of population growth, on the one hand, and the growth of food supplies, on the other. The debate was prompted largely by a 1798 essay written by the British economist Thomas R. Malthus, titled “An Essay on the Principle of Population.”

Malthus projected an alarming specter of food shortages, hardship, and even starvation “because of faster population growth than food supply.” According to his theory, poverty and distress are unavoidable because, if unchecked, population increases at a geometrical rate (i.e. 1, 2, 4, 8, 16, etc.), whereas the means of subsistence grow at an arithmetical rate (i.e. 1, 2, 3, 4, 5, etc.), thereby leading to inevitable shortages of foodstuff.

As Malthus thus blamed misery and poverty on the poor and the miserable (for giving birth to too many mouths to be fed), he also concluded (logically) that poverty alleviation depended on selective restriction of population growth, that is, curbing the number of the poor and working people.

As checks on population growth, Malthus accepted war, famine, and disease. He also recommended “moral restraint” (marrying late or not at all, coupled with sexual abstinence prior to, and outside of, marriage) as additional checks on the growth of population. His hostility toward the poor was expressed most vividly when he openly argued in favor of dismantling social safety net programs, called “poverty laws”: “We cannot, in the nature of things, assist the poor, in any way, without enabling them to rear up to manhood a greater number of their children.”

By blaming social ills and economic calamities on the poor and working people, Malthus’s views tended, willy-nilly, to exonerate the underlying socio-economic structure, and to prove the inevitability of privation and misery under any social system.

What Malthus failed to see is the fact that growth rates of population and food supplies are not determined purely by nature as fixed, innate, or immutable rates. Instead, they are dynamic categories that can change drastically, depending on the level of economic development, social structure of production, and the state of technology.

Although not identical, the Peak Oil theory is similar to the Malthusian theory in that it too is based on natural, innate, or fixed and immutable limits. There are, of course, limits to everything—energy, food, water, population. But those limits are not absolute or pre-determined, as implied by the Peak Oil thesis. They are perhaps more social than natural limits.

This is why although the Peak Oil theory is not false in saying that there are limits to oil production, it does not explain much. In a real sense, it is a truism. It explains neither the current energy crisis nor any of the past ones. Nor can, therefore, its dire predictions about future global oil production be trustworthy.


More Oil Found than Used Up

Peak Oil misconceptions have many times led to alarmist predictions and dire warnings of an end of global oil production before the current day. Time and again, those forecasts turned out wrong because oil reserves, including proven or cost-efficient reserves, have continued to grow, and more oil wells or fields have been brought under utilization than those peaked and declined. The following is a partial list, as collected by Jason Schwarz, Options Strategist for Lone Peak Asset Management, Westlake Village, CA:

1. An offshore find by Brazilian state oil company Petrobras (PBR) in partnership with BG Group (BRGYY.PK) and Repsol-YPF may be the world's biggest discovery in 30 years, the head of the National Petroleum Agency said. A deep-water exploration area could contain as much as 33 billion barrels of oil, an amount that would nearly triple Brazil's reserves and make the offshore bloc the world's third-largest known oil reserve. "This would lay to rest some of the peak oil pronouncements that we were out of oil, that we weren't going to find any more and that we have to change our way of life," said Roger Read, an energy analyst and managing director at New York-based investment bank Natixis Bleichroeder Inc.

2. A trio of oil companies led by Chevron Corp. (CVX) has tapped a petroleum pool deep beneath the Gulf of Mexico that could boost U.S. reserves by more than 50 percent. A test well indicates it could be the biggest new domestic oil discovery since Alaska's Prudhoe Bay a generation ago. Chevron estimated the 300-square-mile region where its test well sits could hold up to 15 billion barrels of oil and natural gas.

3. Kosmos Energy says its oil field at West Cape Three Points is the largest discovery in deep water West Africa and potentially the largest single field discovery in the region.

4. A new oil discovery has been made by Statoil (STO) in the Ragnarrock prospect near the Sleipner area in the North Sea. "It is encouraging that Statoil has made an oil discovery in a little-explored exploration model that is close to our North Sea infrastructure," says Frode Fasteland, acting exploration manager for the North Sea.

5. Shell (RDS.A) is currently analyzing and evaluating the well data of their own find in the Gulf of Mexico to determine next steps. This find is rumored to be capable of producing 100 billion barrels. Operating in ultra-deep waters of the Gulf of Mexico, the Perdido spar will float on the surface in nearly 8,000 ft of water and is capable of producing as much as 130,000 barrels of oil equivalent per day.

6. In Iraq, excavators have struck three oil fields with reserves estimated at about 2 billion barrels, Kurdish region's Oil Minister Ashti Horami said.

7. Iran has discovered an oil field within its southwest Jofeir oilfield that is expected to boost Jofeir's oil output to 33,000 barrels per day. Iran's new discovery is estimated to have reserves of 750 million barrels, according to Iran's Oil Minister, Gholamhossein Nozari.

8. The United States holds significant oil shale resources underlying a total area of 16,000 square miles. This represents the largest known concentration of oil shale in the world and holds an estimated 1.5 trillion barrels of oil with 800 billion recoverable barrels—enough to meet U.S. demand for oil at current levels for 110 years. More than 70 percent of American oil shale is on Federal land, primarily in Colorado, Utah, and Wyoming.

9. In western North Dakota there is a formation known as the Bakken Shale. The formation extends into Montana and Canada. Geologists have estimated the area holds hundreds of billions of barrels of oil. In an interview provided by USGS, scientist Brenda Pierce put the North Dakota oil in context: "Of the current USGS estimates, this is the largest oil accumulation in the lower 48. . . . It is also the largest continuous type of oil accumulation that we have ever assessed." The USGS study says with today’s technology, about 4 billion barrels of oil can be pumped from the Bakken formation [7].

In the face of such overwhelming evidence, which seriously undermines the Peak Oil theory, proponents of the theory argue that their thesis is based on “proven,” not all, reserves. Proven reserves are reserves that, given a certain level of technology and a certain amount of investment, are proven or estimated to be economical, or cost efficient. Let us briefly examine this “proven vs. total reserves” argument of the Peak Oil champions.


Proven Reserves Are not a Measure of Future Oil Production: Short-Term Market Imperatives vs. Long-Term Public Policy/Interests

That oil companies would want to invest only in the narrow category of proven, or cost efficient, reserves is understandable; it is a simple business principle. But to base future oil supplies on the currently proven reserves, as Peak Oil theory does, is problematic. It represents a short-term, static view of future oil supplies that implicitly ignores the critical role of new investments and technological innovations that can make profitable, or cost efficient, what is currently considered unprofitable, or cost inefficient.

M.A. Adelman points out that “in 1944 a special expert mission estimated Persian Gulf reserves at 16 billion proved and 5 billion probable. By 1975, those same fields had produced 42 billion barrels and had 74 billion remaining. In 1984, geologists estimated a five percent probability of another 199 billion barrels remaining to be added in the Gulf region. In five years those reserves had already been added” [8].

Market imperatives and short-term profitability measures, thus severely limit oil reserve estimates because they effectively exclude not only huge reserves of unconventional oil, but also vast reservoirs of conventional oil that are not currently profitable. This is obviously a major flaw of the Peak Oil theory, as it judges future supplies of oil by the narrowest definition of oil production: currently proven reserves.

However, just as proven reserves determine the current level of oil production, and therefore of investment, the amount of current investment also plays a crucial role in the determination of the amount of proven reserves in the future. Peak Oil views this mutual relationship as a one-way street, or causality—going from the amount of currently proven reserves to the level of the necessary (or cost efficient) investment, and the global production of oil.

Furthermore, reserves that may be considered unprofitable from the viewpoint of private oil companies may well be economical from the viewpoint of state- or publically-owned companies. For example, while a private oil company, may find an estimated profit rate of below x or y percent cost inefficient, a publicly-owned oil company might invest in reserves as long as estimated profit rate is not negative.

Indeed, as the experiences of state-owned oil companies in Russia, China, Venezuela, and many other countries show, publicly-owned oil companies often take large short-term losses in pursuit of long-term returns or rewards. Free from short-term market imperative, Russia, for example, has invested heavily in long-term oil projects, with fantastic results that have more than offset the enormous short-term costs of those projects. Here is how Joe Vialls, an expert with first-hand experience in “ultra-deep drilling,” explains it:

“In 1970, the Russians started drilling Kola SG-3, an exploration well which finally reached a staggering world record depth of 40,230 feet. Since then, Russian oil majors including Yukos have quietly drilled more than 310 successful super-deep oil wells, and put them into production. Last Year Russia overtook Saudi Arabia as the world's biggest single oil producer, and is now set to completely dominate global oil production and sales for the next century. . . . With no shareholders holding out their grubby little hands for a wad of pocket money every month, the Russian oil industry managed to surge ahead, under-reaming thousands of its older existing onshore wells in less than ten years” [9].


The Role of Technology: a Dynamic, not Static, Process

A major flaw of Peak Oil, as already pointed out, is that it discounts the fact that energy-saving technologies have drastically improved (and will continue to further improve) not only the efficiency of oil production but also of oil consumption. Evidence shows that, for example, “over a period of five years (1994-99), U.S. GDP expanded over 20 percent while oil usage rose by only nine percent. Before the 1973 oil shock, the ratio was about one to one” [10].

Cars, airplanes and other means of transportation have become more fuel-efficient than ever before—though not as much as they could, or should. Both businesses and consumers are also doing a better job of trimming their energy costs. Obviously, this means that our demand for energy does not grow as fast as the growth of our economy. For example, According to the Energy Information Administration, in 1981 the United States devoted nearly 14 percent of its overall gross domestic product to energy; by 2006 that number had fallen to about 9 percent.

One of the results of the more efficient means of research and development has been a far higher success rate in finding new oil fields. The success rate has risen in twenty years from less than 70 percent to over 80 percent. Computers have helped to reduce the number of dry holes. Horizontal drilling has boosted extraction. Another important development has been deep-water offshore drilling, which the new technologies now permit. Good examples are the North Sea, the Gulf of Mexico, and more recently, the promising offshore oil fields of West Africa [11].

The following are some of the recent technological advances that (as described by Red Cavaney, a top oil expert) have dramatically increased the ability not only to find and extract new oil, but perhaps more importantly, to recover more or additional oil from existing reserves that were formerly considered “peaked and dried” under old technologies.

* Directional Drilling. It used to be that wellbores were basically vertical holes. This made it necessary to drill virtually on top of a potential oil deposit. However, the advent of miniaturized computers and advanced sensors that can be attached to the drill bit now allows companies to drill directional holes with great accuracy because they can get real-time information on the subsurface location throughout the drilling process.

* Horizontal Drilling. Horizontal drilling is similar to directional drilling, but the well is designed to cut horizontally through the middle of the oil or natural gas deposit. Early horizontal wells penetrated only 500 to 800 feet of reservoir laterally, but technology advances recently allowed a North Slope operator to penetrate 8,000 feet of reservoir horizontally. Moreover, horizontal wells can operate up to 10 times more productively than conventional wells.

* 3-D Seismic Technology. Substantial enhancements in computing power during the past two decades have allowed the industry to gain a much clearer picture of what lies beneath the surface. The ability to process huge amounts of data to produce three-dimensional seismic images has significantly improved the drilling success rate of the industry [12].

“Primarily due to these advances,” Cavaney further points out, “the U.S. Geological Survey (USGS), in its 2000 World Petroleum Assessment, increased by 20 percent its estimate of undiscovered, technically recoverable oil. USGS noted that, since oil became a major energy source about 100 years ago, 539 billion barrels of oil have been produced outside the United States. USGS estimates there are 649 billion barrels of undiscovered, technically recoverable oil outside the United States. But, importantly, USGS also estimates that there will be an additional 612 billion barrels from reserve growth—nearly equaling the undiscovered resources. Reserve growth results from a variety of sources, including technological advancement in exploration and production, increases over initially conservative estimates of reserves, and economic changes” [13].


Thanks to new technologies, additional oil can now be recovered from the apparently exhausted reserves. Specifically, the peaking and declining of oil from an existing well is not the same as the peaking and declining of oil from the respective oil field or reservoir. While oil production from an existing well is bound to peak and then slow down, “offset wells” can be drilled later into the same field or reservoir to produce more oil. Here is how Vialls explains it:

“Now we come to the completely false [or deliberately misleading] claim by Peak Oil shills that production from existing oil wells is ‘slowing down,’ thereby proving that the oil fields are ‘running dry.’ This is so wrong that it is almost breathtaking. Think of this slowing down process in the same way you might think of the engine oil in your automobile. The longer you run the engine, the higher the level of contaminates that get into the oil. The higher the level of contaminates, the higher the level of friction. Sooner or later you have something closely akin to glue coating your piston rings, and the performance of your engine declines accordingly. This is an inevitable mechanical process well known to all automobile owners.

“Henry Ford and others managed to slow down the rate of contamination in engine oils by inventing the oil filter, through which the oil has to circulate each time it passes around inside the engine. A high percentage of the contaminates stick to the filter element, thereby allowing extra miles between oil changes, though heaven help the careless motorist who thinks he can get away without ever changing his clogged oil filter when recommended.

“When oil is extracted from a producing formation underground, it flows out through pores in the reservoir rock, and then into the open borehole, from where it is transported to surface by the production tubing string. So by the very nature of the beast, the bottom section of the well is ‘open hole’ which allows the oil to flow out in the first place, but because it is comprised of exposed and sometimes unstable rock, this open hole section is also continually subject to all manner of turbulence and various contaminates. For example, tiny quantities of super fine silt may exit through the pores but not continue to the surface with the oil, tumbling around in the turbulence instead, until the silt very slowly starts to block off the oil-producing pore throats. Yes, of course there are a variety of liners that can be used to slow down the contamination, but there is no such thing as a Henry Ford oil filter 10,000 feet underground.

“The inevitable result of this is that over time, the initial production rate of the well will slowly decline, a hard fact known to every exploration oilman in the business. However, this is certainly not an indication that the oil field itself is becoming depleted, proved thousands of times by ‘offset wells’ drilled later into the same reservoir. Any new well comes on stream at the original production rate of its older cousins, because it has not yet had time to build up a thin layer of contaminates across the open hole. Though as we shall see it is possible to ‘do an oil change’ on a producing well and bring it back to full production, this is extremely expensive, and rarely used in the west” [14].


Substitutes or Alternative Sources of Energy

Peak Oil is also subject to criticism because it pays insufficient attention to substitutes or alternative sources of energy, both actual and potential. These include solar, wind, non-food bio-fuel, and nuclear energies. They also include natural gas. Natural gas is now about 25 percent of energy demand worldwide. It is estimated that by 2050 it will be the main source of energy in the world. A number of American, European, and Japanese firms have and are investing heavily in developing fuel cells for cars and other vehicles that would significantly reduce gasoline consumption [15].

Peak Oil also pays short shrift to what is sometimes called “unconventional” oil. These include Tar Sands, Heavy Oils, and Oil Shale.

Tar Sands can be recovered via surface mining or in-situ collection techniques. Canada's Athabasca Tar Sands is the best known example of this kind of unconventional reserve—estimated at 1.8 trillion barrels. Although this was originally considered cost inefficient, experts working in this area now claim that they have brought down the cost from over $20 a barrel to $8 per barrel.

Heavy Oils can be pumped and refined just like conventional petroleum except that they are thicker and have more sulfur and heavy metal contamination, necessitating more extensive refining. Venezuela's Orinoco heavy oil belt is the best known example of this kind of unconventional reserve—estimated at1.2 trillion barrels.

Oil Shale requires extensive processing and consumes large amounts of water. Still, reserves far exceed supplies of conventional oil, and costs are bound to decline as newer and more efficient processing techniques become available [16].

A rarely mentioned but potentially very important substitute for conventional oil “is an even bigger hydrocarbon resource that can be developed to provide nearly endless amounts of energy: methane hydrates (methane frozen in ice crystals). The deposits of methane hydrates are so vast that when we develop the technology to bring them to market, we will have clean-burning energy for 2,000 years. It's just one of the exciting scenarios we may see in the far-off future” [17].

Except for natural gas and nuclear energy, most of these alternative sources of energy are still highly costly, and are therefore used in only insignificant quantities. But, considering the ever evolving newer and more efficient technologies, they are bound to rise in significance. This means that the prospects of reaching a day in our search for energy sources when conventional oil is no longer the world’s dominant source of energy are quite realistic. Humans did not invent motor vehicles because they ran out of horses or horse-driven carriages; nor did they invent electricity because they ran out of candles.


Concluding Remarks

Predictions of global oil production peaking, and then running out, have been around almost since the time oil was discovered in the second half of the 19th century. Time and again, such dire predictions turned out to be false, largely because of the Peak Oil’s apparently sound but actually deceitful logic: while it is true that, as Peak Oil maintains, oil is a finite natural resource that is bound to run out some day, it does not follow, again as Peak Oil argues, that therefore oil is or must be running out soon.

A major flaw of Peak Oil is that it is based on a static, or technology-neutral, assumption: it implicitly assumes that limits to oil are set as natural, innate, and immutable. Yet, limits to oil, like those to most other resources, are determined as much (if not more) socially as they are naturally. Research, development, and technological advances have made (and will continue to make) both the amounts of oil reserves and of oil production much more fluid or elastic than perceived by the champions of Peak Oil.

Another equally-flawed proposition of Peak Oil is that it implicitly views the limits of oil supply independent of substitutes or alternative sources of energy. These include solar, wind, non-food bio-fuel, and nuclear energies. They also include natural gas. Further, they include “unconventional” oil: Tar Sands, Heavy Oils, and Oil Shale. Although, with the exception of natural gas and nuclear technology, the use of these substitutes is still quite expensive, and therefore, limited, technological advances are bound to reduce their cost and increase their use.

Viewed in conjunction with the vast pool of substitutes, both actual and potential, oil limits would seem less dire than when they are considered in isolation from such energy alternatives. The constantly evolving newer and more efficient technologies are bound to further expand those limits far beyond the narrow, “natural” limits set by the Peak Oil theory.
_______________________________



References

[1] Robert L. Hirsch, Roger Bezdek, and Robert Wendling, “Peaking of World Oil Production: Impacts, Mitigation, and Risk Management,” Testimony on Peak Oil before the House Subcommittee on Energy and Industry (7 December 2005), http://www.netl.doe.gov/publications/others/pdf/Oil_Peaking_NETL.pdf

[2] Matthew Mosk, “Industry Gushed Money After Reversal on Drilling,” Washington Post (27 July 2008), http://www.washingtonpost.com/wp-dyn/content/article/2008/07/26/AR2008072601891.html

[3] F. William Engdahl, “Perhaps 60% of Today’s Oil Price Is Pure Speculation,” financialsense.com (2 May 2008), http://www.financialsense.com/editorials/engdahl/2008/0502.html

[4] Michael T. Klare, Resource Wars: The New Landscape of Global Conflict (Holt Paperbacks, 2002).

[5] Red Cavaney, “Global Oil Production about to Peak? A Recurring Myth,” World Watch (01 January 2006), http://goliath.ecnext.com/coms2/gi_0199-5142950/Global-oil-production-about-to.html

[6] Eliyahu Kanovsky, “Oil: Who's Really Over a Barrel?” Middle East Quarterly (Spring 2003), http://www.meforum.org/article/527

[7] Jason Schwarz, The Peak Oil Myth: New Oil is Plentiful,” Seeking Alpha (22 June 2008), http://seekingalpha.com/article/82236-the-peak-oil-myth-new-oil-is-plentiful

[8] M.A. Adelman, The Genie out of the Bottle: World Oil since 1970, (Cambridge: MIT Press, 1995); cited in Bill Kovarik, “The Oil Reserve Fallacy: Proven reserves are not a measure of future supply,” http://www.radford.edu/~wkovarik/oil/

[9] Joe Vialls, “Russia Proves ‘Peak Oil’ Is A Misleading Zionist Scam,” rense.com (25 August 2004), http://www.rense.com/general75/zoil.htm

[10] Eliyahu Kanovsky, “Oil: Who's Really Over a Barrel?” Middle East Quarterly (Spring 2003), http://www.meforum.org/article/527

[11] Ibid.

[12] Red Cavaney, “Global Oil Production about to Peak? A Recurring Myth,” World Watch (01 January 2006), http://goliath.ecnext.com/coms2/gi_0199-5142950/Global-oil-production-about-to.html

[13] Ibid.

[14] Joe Vialls, “Russia Proves ‘Peak Oil’ Is A Misleading Zionist Scam,” rense.com (25 August 2004), http://www.rense.com/general75/zoil.htm

[15] The Wall Street Journal (10 March 1998); cited in Eliyahu Kantovsky, “Oil: Who's Really Over a Barrel?” Middle East Quarterly (Spring 2003), http://www.meforum.org/article/527

[16] For an informative discussion of unconventional oil reserves, and a scathing critique of Peak Oil see Bill Kovarik, “The Oil Reserve Fallacy: Proven reserves are not a measure of future supply,” http://www.radford.edu/~wkovarik/oil/

[17] Red Cavaney, “Global Oil Production about to Peak? A Recurring Myth,” World Watch (01 January 2006), http://goliath.ecnext.com/coms2/gi_0199-5142950/Global-oil-production-about-to.html


Ismael Hossein-zadeh, author of the recently published The Political Economy of U.S. Militarism (Palgrave-Macmillan 2007), teaches economics at Drake University, Des Moines, Iowa.

Peak oil has to happen. It takes nature a million years to produce what is consumed in 1 year. It has to peak sometime and we see major fields in Mexico in decline and Indonesia too. Sure there is tar sand, but that is not oil and it requires a price level to recover processing. At some point oil production has to reach a peak and the most relevant information to calling the inevitable a myth is recent conventional oil production and the projection for next year. They sure are tearing up tar sand in Canada. How do we know that production has not already peaked? It has got scarce enough that alcohol is an alternative, so that is one level of scarcity already passed.

The argument against peak oil is that production can increase forever which is an absurdity. Now maybe you can argue over the definition of peak oil, but there is no arguement that can support oil production will go up forever.

I will address your points one by one:

"Peak oil has to happen."

The Earth will end one day too.



"It takes nature a million years to produce what is consumed in 1 year."

If we have faith in a 200+ year old untested theory.



"we see major fields in Mexico in decline and Indonesia too"

This certainly does NOT challenge the authors thesis.



"It has got scarce enough that alcohol is an alternative"

With massive subsidies.



"there is no arguement that can support oil production will go up forever."

Read the article all the way through, the author contends that it doesn't need to. The eventual transition to newer fuels entails no "crisis".

I will admit that at first blush, I was ready to dismiss this as a crank. But just digging across the surface failed to produce your usual red flags, connections to front diploma mills or funds from oil industries for example. In fact he seems to have a lot of progressive credential based on his positions with the war. And he is no right-wing crank, as he has authored any number of articles regarding the bombing of Iran.

And his essay here is right about several things regarding recent events and tracks with known data. Most importantly, the resent rise in oil prices for example can not be attributed too peak oil, and is in fact the consequents of political and far more sinister forces that have more to do with economic policy than any thing else.

For example, current peak oil data sets do not predict the recent rise in oil prices. The current projected peeks are still 10 to 50 years off, depending on consumption curves. He might be able to argue they are too pessimistic, but little else.

Even more telling, I took a quick trip to several other sights I have managed to collect over the years who are about peak-oil data. One of the most notable on my is the Oil Drum, ( theoildrum.com ), any much of their data dose indeed seem to be guilty of the flaws Ismael accuses them of. Of the other blogs, their responses seem to fall under the category of “the man is a cook” and dismiss his arguments out of hand without addressing any of his points. The only retort I could find is that Ismael is an economics attempting to explore a geologic issue; meaning he is out of his element.

Never the less, a closer examination of Ismael’s essay here has turned up a number of examples of faulty logic which greatly undercuts his root claim.

The Peak Oil theory maintains that world production of conventional oil will soon reach a maximum, or peak, and decline thereafter, with grave socio-economic consequences. Some proponents of the theory argue that world oil production has already peaked, and is now in a terminal decline.

Although, on the face of it, this sounds like a fairly reasonable proposition, it has been challenged on both theoretical and empirical grounds. While some critics have called it a myth, others have branded it as a money-making scam promoted by the business interests that are vested in the fossil fuel industry, in the business of war and militarism, and in the Wall Street financial giants that are engaged in manipulative oil speculation.

The debate with peak oil actually rests with two major questions. #1. Is the supply of oil on the planet finite or renewable? #2. If the geo-oil supply is finite, than what is the estimated volume of oil on the planet vs. the amount of oil already consumed. Or if the supply of oil is renewable, what rate of consumption will exceed the rate of its production?

Believe it or not, as I understand the subject, geologists have not actually answered #1, which as you can see has a tremendous bearing one question #2. Oil is actually the product of biomass undergoing chemical changes (not decomposition) under extreme pressure and temperatures. As life is a near constant on the planet, so too should the production of new sources of oil.

Unfortunately, this debate doesn’t actually help Ismael’s argument. First, the debate takes place over a geologic time scale, not on a human scale. Geologists are talking about the production of oil over millions of years. From the perspective of our economy, even if oil is a “renewable” resource, its natural production is so slow in our time scale that it may as well be finite.

Another problem is that if oil is a renewable resource (from a geologic standpoint), then where are the fields with biomass in the process of transitioning to oil? Where are the pre-oil oil fields that are not ready to be developed now, but will be in the next ten thousand years? Their aren’t any, leading geologist to believe that future oil production can only be laid down in the wake of a catastrophic geo-event, such as a meteor strike that doomed the dinosaurs or massive volcanic explosion. Sense there hasn’t been such an event inside the time it takes for biomass to transform to oil repositories, one would not expect to find pre-oil oil.

The simple fact is that earth’s oil IS finite. (Or even the solar system for that mater. I do recall one crank article speculating on oil deposits on Mars, thus justifying Mars exploration. Why rape just one planet when you can rape two? But given that we have yet to discover life on Mars, the possibly of discovering oil on Mars seems, eh, a little unlikely.)

Ismael’s can not argue that earth’s oil supply is infinite any more than he can argue that mater/energy can be created from out of nothing. While physics argues that mater can be converted to energy, and vice versa, it is a physical impossibility for mater/energy to be created nor destroyed. Unfortunately, I have encountered several economists who have made exactly this claim. I submit to you this axiom; economics can not violate the laws of physics.

This essay suffers from logical flaws where ever Ismael attempts to defend this point.

Ismael’s second point, one exactly where this peak happens to be, is a bit more salient. He can argue that most peak

While environmental and similar activists have used Peak Oil to promote more vigorous conservation and more energetic pursuit of alternative fuels, the oil industry and its representatives in and out of the government have taken advantage of Peak Oil to argue in support of unrestrained extraction of oil and expanded drilling in the offshore or wildlife regions.

Because of its simple logic and facile appeal, Peak Oil has also led many ordinary citizens, burdened by high fuel bills during periods of energy crisis, to support unrestrained or expanded drilling. According to a recent Rasmussen poll, 57 percent of Americans favor more offshore drilling. Misled and misplaced popular perceptions, in turn, play into the hands of the oil industry and their representatives to lobby for the lifting of the Federal ban on oil production in hitherto restricted regions.

This is largely false. True that peak oil is frequently used when it comes to promoting the green revolution, it is not the only foundation for this argument, nor is it even the strongest argument.

The primary issues used to argue for alternative energies are much more dependent on global warming, pollution and toxicity, geo-political independence, and social-capital independence.

Nor is it true that neo-conservative ideologies are attempting to exploit peak-oil in order to push a geo-political agenda. For the most part, neo-conservatives as well as neo-liberals actively reject arguments of finite oil supplies using economics’ unique ability to defy the laws of physics as its foundation. But for the most part they use geo-political arguments, as well as nationalistic arguments to push their agenda.

Americans support unrestrained oil drilling, not because they understand there is a finite supply of oil, but because they don’t like the notion of dirty thieving towel-heads having all the oil because stinking bleeding-heart pinko-commie won’t let the noble and patriotic oil corporations drill on US soil.

As a number of critics have pointed out, this is reminiscent of Thomas R. Malthus’s theory of “scarcity” and “overpopulation.” Malthus (1766-1834), a self-styled British economist, argued that the woes and vagaries of capitalism such as poverty, inequality and unemployment are largely to be blamed on the poor and the unemployed, since they produce too many mouths to be fed, or too many hands to be employed.

Just because you won a game of Russian Roulette five times in a row, doesn’t mean you are invincible. I respond with the fact that economic doom-sayers have been dismissed as being cranks, predicting that the economy would come to a crashing halt, because it hasn’t happened yet. Well, it just happened, proving the doom-sayers not only correct, but salient.

Then again it’s the doom-sayers intention not to destroy the economy, but to point out the existing flaws, so that they might be address, so that the dooms-day scenario DOESN’T happen.

On the other hand, if Malthus got it wrong, then how come there are so many starving poor people in the world? Global Warming theory is actually quite alarming that Malthus has it right. A radical change in geo-environmental conditions will undoubtedly stress human populations. And if these changes are radical enough, will lead to mass famine. To argue that Malthus has been wrong up to this point is to miss the point Malthus tried to make. Malthus may have been wrong about the mechanisms behind food shortages, but I don’t think he is wrong in predicting food shortages can still happen.

And it might be argued that Malthus research might have prevented the very calamity he predicted.

In a similar fashion, Peak Oil implies that current crisis in energy (and other commodities) markets is to be blamed, in part, on less-developed or relatively poorer nations such as India and China for growing “too fast” and creating “too much” demand on “scarce” resources.

I am not aware of peak oil having made this argument. I am aware that the Bush administration has made this argument.

The obvious reason for the rise in the Peak Oil popularity in the context of those periods of energy crisis was the perception that oil shortage must have played a major role in the respective oil price hikes. It is not surprising, then, that as recent geopolitical convulsions in the Middle East have triggered a new round of oil price hikes, Peak Oil theory has once again become fashionable.

Going after popular conceptions is not a legitimate foundation for debate. Most Americans believe in creationism. But evolution is not necessarily false because most American’s don’t believe in it.

He is right to accuse some of attempting used current difficulties at the pump with projecting a political agenda, including those on the left. However, these are still popular misconceptions, not arguments made by advocates of the theory itself.

One of the major defects of Peak Oil is its facile extrapolation or transition from micro to macro level, that is, an unwarranted generalization or extention of what is true in the case of an existing oil well or oil field to the entire world oil production. It is true that every operating or producing oil well or field increases in production rate until it reaches a maximum or peak flow rate, after which the rate of production enters a terminal decline. It does not follow, however, that global world oil production as a whole must soon reach a maximum and begin to run out afterward—some Peak Oil champions claim that this has already taken place.

His logic here is flawed. Give his acceptance of the first point (underlined), this point indeed demands that global production shall indeed peek at some point.

If all current oil wells and fields in the past and present have peeked and been exhausted, then it stands to reason that all oil wells and fields in the future will also exhibit the same behavior. Their for, unless Ismael is prepared to argue that their will be an infinite number of oil wells and fields to be discovered, than at some point, a finite number of oil fields and wells WILL be exhausted.

As I said, he can argue that current projections are too pessimistic, or that they under-estimate the grand total volume of oil on the planet. He can not argue that there is an infinite amount of oil on the planet without first violating the laws of physics.

The Peak Oil debate boils down, essentially, to natural versus social limits, or naturally-determined versus socially-determined limits. A similar debate erupted more than 200 hundred years ago over the limits of population growth, on the one hand, and the growth of food supplies, on the other. The debate was prompted largely by a 1798 essay written by the British economist Thomas R. Malthus, titled “An Essay on the Principle of Population.”

Malthus projected an alarming specter of food shortages, hardship, and even starvation “because of faster population growth than food supply.” According to his theory, poverty and distress are unavoidable because, if unchecked, population increases at a geometrical rate (i.e. 1, 2, 4, 8, 16, etc.), whereas the means of subsistence grow at an arithmetical rate (i.e. 1, 2, 3, 4, 5, etc.), thereby leading to inevitable shortages of foodstuff.

As Malthus thus blamed misery and poverty on the poor and the miserable (for giving birth to too many mouths to be fed), he also concluded (logically) that poverty alleviation depended on selective restriction of population growth, that is, curbing the number of the poor and working people.

As checks on population growth, Malthus accepted war, famine, and disease. He also recommended “moral restraint” (marrying late or not at all, coupled with sexual abstinence prior to, and outside of, marriage) as additional checks on the growth of population. His hostility toward the poor was expressed most vividly when he openly argued in favor of dismantling social safety net programs, called “poverty laws”: “We cannot, in the nature of things, assist the poor, in any way, without enabling them to rear up to manhood a greater number of their children.”

Ismael has placed a great deal of weight attacking Malthus’ research. Having looked into his marital, I can tell you that most economists do not regard Malthus as being wrong. His research as based on valid assumptions at the time based on continued development of an Aquarian society, with food production limited by human and animal labor, and the capacity to store grains and produce. His computations were simple. For each man or beast of burden, you need X amount of crop land to support. At some point, population overcomes available land that can be cultivated.

He did not, indeed could not have foreseen nor predicted the industrial revolution, or the mechanization of food production, processing, and transport. Nor did he predict advancements in refrigeration, better storage techniques, pest control, or the preventing contamination of food storage. Modern irrigation greatly expanded cultivatable land that Malthus would have excluded. Genetic hybrids have expanded production per bushel.

Given these factors, yes, Malthus was extremely pessimistic in projections. But his basic thesis’s is still regarded as true. Mechanization has greatly expanded food production. But using a combine suddenly doesn’t produce a limitless supply of wheat, meaning that limitations on food production still exist.

And given that modern food production is now so heavily dependent on oil consumption, this makes the peak oil debate rather important. If Ismael is wrong, we may find out the hard way that Malthus was indeed correct.

What Malthus failed to see is the fact that growth rates of population and food supplies are not determined purely by nature as fixed, innate, or immutable rates. Instead, they are dynamic categories that can change drastically, depending on the level of economic development, social structure of production, and the state of technology.

Although not identical, the Peak Oil theory is similar to the Malthusian theory in that it too is based on natural, innate, or fixed and immutable limits. There are, of course, limits to everything—energy, food, water, population. But those limits are not absolute or pre-determined, as implied by the Peak Oil thesis. They are perhaps more social than natural limits.

Oh, I can’t wait to see what these social imitations are.

2. A trio of oil companies led by Chevron Corp. (CVX) has tapped a petroleum pool deep beneath the Gulf of Mexico that could boost U.S. reserves by more than 50 percent. A test well indicates it could be the biggest new domestic oil discovery since Alaska's Prudhoe Bay a generation ago. Chevron estimated the 300-square-mile region where its test well sits could hold up to 15 billion barrels of oil and natural gas.

Unfortunately, the methodologies by which estimates like these are greatly suspect. Oil Geoligists for some time have been warning that oil companies have placed pressure on them to excaudate these estimates, some times widely. This is because oil companies get to show these oil discoveries as fiscal holdings, weather these oil fields are developed or not.

That oil companies would want to invest only in the narrow category of proven, or cost efficient, reserves is understandable; it is a simple business principle. But to base future oil supplies on the currently proven reserves, as Peak Oil theory does, is problematic. It represents a short-term, static view of future oil supplies that implicitly ignores the critical role of new investments and technological innovations that can make profitable, or cost efficient, what is currently considered unprofitable, or cost inefficient.

<snip>

Market imperatives and short-term profitability measures, thus severely limit oil reserve estimates because they effectively exclude not only huge reserves of unconventional oil, but also vast reservoirs of conventional oil that are not currently profitable. This is obviously a major flaw of the Peak Oil theory, as it judges future supplies of oil by the narrowest definition of oil production: currently proven reserves.

This is where we start attempting to violate the basic laws of physics. I’ve seen this before, and it’s an argument that has been eviscerated by real world experience.

Basically, he is arguing that continued investments into new technology and exploration will expand existing oil supplies into infinity, literally arguing that continued investments will create oil from nothing.

Similar economic theories have already been used to manage fisheries with disastrous results, the near total extinction of the resource. Even efforts to “recover” the resource through commercial bans is proving to be problematic as jellyfish move into estuaries and start out competing desirable fish stocks.

Continued investments in fact accelerate the rate at which a resource is depleted, even as it might be argued to extend it, producing “un-economic” growth.

Furthermore, reserves that may be considered unprofitable from the viewpoint of private oil companies may well be economical from the viewpoint of state- or publically-owned companies. For example, while a private oil company, may find an estimated profit rate of below x or y percent cost inefficient, a publicly-owned oil company might invest in reserves as long as estimated profit rate is not negative.

I find this claim to be quite bizarre. As if the availability of oil is some how tied to its probability. I find this argument strikingly similar to positions made by global warming deniers that “it’s too expensive to save the planet, there for we must continue destroying it.” I am also forced to ponder how many privet corporations would continue to profit from “publicly drilled” oil.

Cars, airplanes and other means of transportation have become more fuel-efficient than ever before—though not as much as they could, or should. Both businesses and consumers are also doing a better job of trimming their energy costs. Obviously, this means that our demand for energy does not grow as fast as the growth of our economy. For example, According to the Energy Information Administration, in 1981 the United States devoted nearly 14 percent of its overall gross domestic product to energy; by 2006 that number had fallen to about 9 percent.

As I have already pointed out, the use of more efficient systems only extends the use of existing supplies. It doesn’t produce limitless supplies.

And uh, where are those social limitations to oil production that he mentioned before?

The question is NOT whether or not oil is "finite". In fact that question is rather irrelevant. The question at hand is whether oil is available to meet human energy requirements beyond the era of replacement technologies. Given the centuries worth of proven energy reserves (at current consumption rates) coupled with our knowledge of the human capacity to develop technologies it is obvious that "peak oil" is alarmism.

The days of cheap energy are gone and part of the softening of the economy has to do with energy price levels. Gas at the nearest place to me was $3.79 a gallon which requires no future projections or any kind of analysis. Peak oil. No peak oil. There is unlimited solar energy but so what.

The top of my wish list is a scooter and an electric riding lawn mower and I cannot see that changing. Personally my whole life has undergone a change directly from the price of gas. It is even strange as I worked to acquire a huge fiberglass housing for an industrial light that I could use as a solar cooker and even run pipe through to heat water. I had to use the last of my weekly gas I to first haul trash instead of the light reflector and on my next trip back it was gone. That alone has changed my whole attitude to the world and that is just one thing directly attributable to the price of gas.

There is a big difference between knowing you are okay and pure survival mode and all these people going into survival mode makes this a complete different country than when Bush stole office and oil was $25 a barrel. Twenty percent of the economy revolved around cars, but last week when I went to get a sticker for my car there was not one person in line when I came in or went out. The state is not collecting that 3% sales tax as people are not trading cars. I saw my mechanic in the grocery store about 4 PM when he normally would be fixing cars. I mailed a letter at the contract post office and nobody was in line. Then I went to Taco Bell and enjoyed my own private restaurant. The newspaper ran a story on the flea market at the country fairgrounds that had more dealers than customers on Wednesday. Yesterday the Charlotte Area Transit raised fares from $1.30 to $1.50. Isn't that like 16%?

So I think the disruption of the way things used to be in the old oil based world has come to pass, peak oil or no peak oil. The technology of staying at home is being perfected.

Reading any portion of Ismael’s essay here, it’s hard to argue other wise. In fact, he dedicates an entire segment to the issue.

The Role of Technology: a Dynamic, not Static, Process

The notion that technology produces a “dynamic” supply of oil is dependent on violating basic laws of physics. Such a gross divorce from reality forces one to challenge the entire thesis’s.

As Ismael shows clearly. New technologies have improved extraction by many multiples from the very same "depleted" wells.

Here's Paul Craig Roberts' take:

Why does the Bush Regime want to rule Iraq? Some speculate that it is a matter of “peak oil.” Oil supplies are said to be declining even as demand for oil multiplies from developing countries such as China. According to this argument, the US decided to seize Iraq to insure its own oil supply.

This explanation is problematic. Most US oil comes from Canada, Mexico, and Venezuela. The best way for the US to insure its oil supplies would be to protect the dollar’s role as world reserve currency. Moreover, $3-5 trillion would have purchased a tremendous amount of oil. Prior to the US invasions, the US oil import bill was running less than $100 billion per year. Even in 2006 total US imports from OPEC countries was $145 billion, and the US trade deficit with OPEC totaled $106 billion. Three trillion dollars could have paid for US oil imports for 30 years; five trillion dollars could pay the US oil bill for a half century had the Bush Regime preserved a sound dollar.

The more likely explanation for the US invasion of Iraq is the neoconservative Bush Regime’s commitment to the defense of Israeli territorial expansion. There is no such thing as a neoconservative who is not allied with Israel. Israel hopes to steal all of the West Bank and southern Lebanon for its territorial expansion. An American colonial regime in Iraq not only buttresses Israel from attack, but also can pressure Syria and Iran from giving support to the Palestinians and Lebanese. The Iraqi war is a war for Israeli territorial expansion. Americans are dying and bleeding to death financially for Israel. Bush’s “war on terror” is a hoax that serves to cover US intervention in the Middle East in behalf of “greater Israel.”

Technoligy is in fact “dynamic”, as Ismael shows clearly. New technologies have improved extraction by many multiples from the very same "depleted" wells.

Technology may be dynamic, but the amount of oil in “depleted,” developed or even undiscovered wells is not. At some point, developments in extraction technology produce diminishing returns. Especially when the cost of this technology, and input energy needed for operation are taken into consideration.

Ismael attacks peak oil theory for only using estimates from proven sources. There is a good reason for this – it’s called GOOD SCIENCE. To do other wise would be to relay on the combination of science fiction technologies and imaginary discoveries. That is not to say that there aren’t new fields waiting to be found. But it is peak-oiler’s point that it’s foolish to build energy policy on such assumptions.

there are enormous reserves of Light Sweet Crude in Iraq alone and Russia recently discovered a couple of huge fields. The problem for the US is that they no longer control very much of it and the amount they still do control is shrinking rapidly.

That doesn't mean we should reduce our usage as much as possible but that is an environmental issue, not a supply issue.

there are enormous reserves of Light Sweet Crude in Iraq alone and Russia recently discovered a couple of huge fields. The problem for the US is that they no longer control very much of it and the amount they still do control is shrinking rapidly.

That doesn't mean we shouldn't reduce our usage as much as possible but that is an environmental issue, not a supply issue.

BAKERSFIELD, Calif., March 5 Old oil fields in California and elsewhere are the petroleum industry's version of the fountain of youth thanks to new extraction technology.

The Kern River field at Bakersfield, Calif., has produced oil for 108 years and now kicks out 8 1/2 times the oil it did in the 1960s thanks to high-pressure steam injection systems. In Texas, carbon dioxide will be used to force more oil out of the 1930s-era Means field.

Yes, there are finite resources in the ground, but you never get to that point, Chevron engineer Jeff Hatlen said. That's why peak oil is a moving target. Oil is always a function of price and technology.But some petroleum geologists believe the peak is just about here, The New York Times said Monday. I am very, very seriously worried about the future we are facing, said Kjell Aleklett of the Association for the Study of Peak Oil and Gas. It is clear that oil is in limited supplies.Still, the Cambridge Energy Research Associates recently placed recoverable oil resources at 4.8 trillion barrels, up from the 3.3 trillion barrels estimated by the U.S. Geological Survey in 2000.

Copyright 2007 by UPI

http://www.earthtimes.org/articles/show/36971.html

This technique has been in use since at least the early 80's when i first encountered it. It has been already applied to wells and fields around the world - that's what
halliburton *does* - "oil recovery". The oilfields are on their last dregs;
and they are desperate to the point of world war to get more of their black drug.

Only a desperate culture makes such an oil grab, and that desperation is inexplicable
without peak oil. Otherwise, the arab nations are equal to congo where they've
let 5 million be collatoraled uninterestingly by the coltan thieves.

There is nothing "desperate" about using enhanced extraction technologies which produce oil at under $20/barrel. Niether is it desperation to exploit deep sea (5,000'+) resources or heavy oils which can be produced at almost the same cost and are available in abundance at many multiples of all oil produced to date.
The suggestion that Arabs are "no different from the Congo" seems ignorant of the rich history of the M.E. also.
Control through fear and racism.

The point i was making is that 5 millions have been killed in the congo in the past
recent years - and nobody in power has done a thing because there's no oil there.

Fear racism are indeed factors, but oil is the base. Its why nigeria is a corrupt
place being such a large US foreign supplier, and why where the west sucks out its
oily drug, the worst is on display.

Drill Drill DRill baby, keep that addiction going - there's nothing about the 12 lane
freeway car culture worth preserving. Its a rotter.

You are defending your point by basically repeating your self and quoting oil executives with a vested interest.
:flush:

If watching the world markets spiral down poe's malestrom wasn't enough for today..,
- a giant toilet claw has reached out of your post and given me a swirly.

:hi:

A musical interlude for your metal:
http://www.youtube.com/watch?v=Q5r16oIOfXY

The energy source you seem so hostile towards is what makes life possible for billions of the world's poorest. Absent oil they, not the "freeway car culture" will die. Scarcity rations by ability to pay, whether the scarcity is real or contrived. You have been conditioned with this hostility in order to ease the genocidal agenda of the racists that dominate. Memes such as "energy independence" are being trotted out by both US parties to promote their bipartisan genocidal ethanol policy.

Yes millions have died in the Congo. You don't really think that Western military force is ever exercised in the furtherance of "humanitarianism" do you? Is that just a strawman argument erected to suggest that the occupation of Iraq "must" be about oil? That's awfully simple minded, only two possibilities. Perhaps you should have a look at the recent post about militant Zionism.

If the world were following my policies? We'd already be using electric transit and
have zero-energy housing. They've been talking about that crap in popular science
since the 1960's.. how we'd all have a home-electrolysis machine in the garage which
would give us oxygen and hydrogen overnight in tanks ready to use for the day's fuel.

And all of this fueled by the miracle of nuclear fusion which was just around the
corner, surely to be ready for production by the late 1970's at the latest. Oil is
our ugly rotten addiction, just like crack, it has rotted out all the teeth and the
natural instincts of the society to defend itself from the addiction. All the
attempts to externalise the addiction on to prices, oil companies, arab states or
russia avoid the central problem - that Alcoholics Anyonymous thesis
- "I am a petrocarbon addict." I am not petrocarbon free, i just had 800 litres of
heating fuel delivered for winter.

Check out this interview about the crash of 1873:
http://breakfornews.com/forum/viewtopic.php?p=50029#50029

See how the crash was blamed on "china taking our jobs" of the day, and how
it was ultimately blamed on the jews by the central european countries of the austria
hungary empire (the USA of that time period). And this hatred of the financial
classes for shipping the jobs away morphed in to a sick "militant zionism" over
a century plus of viralogy.

I challenge you to spend some time on google earth looking at the resource footprint
of traditional methods of living - where half the earth's people live with very modest
fuel needs whatsoever. And i would not deny them fuel, not in the least, i wish them
wealth and an electric power grid with rewewables.

But for now, its oil, and the situation is ugly:
“We the undersigned petition the Prime Minister to undertake a reassessment of UK Energy Supplies, in particular evaluate the risk of an imminent peak or plateau in global oil production.”

Details of Petition:

“The Government considers that the world’s oil and gas resources are sufficient to sustain economic growth for the foreseeable future. One question is how long is the forseeable future, but many experts now agree that global oil production is likely to plateau and peak within the next 5 years. Furthermore, a significant number of senior figures in the oil industry anticipate an imminent ceiling on oil production and the International Energy Agency expects a Supply Crunch before 2012. Despite this and unlike several other countries, the UK has published no study into the availability of future oil and gas supplies. Indeed the Energy White Paper still expects UK oil consumption to rise in the medium term. This petition highlights the need for a major reappraisal by UKG given increasing concerns about the reliability of world reserve data and declining production from 64 of the 98 oil-producing countries.”

http://www.energybulletin.net/node/46581

The challenge is to feed the world TODAY or get strung up by your toes.

I challenge YOU to solve the nuclear waste dilema before chanting your anti-oil mantra.

1. An offshore find by Brazilian state oil company Petrobras (PBR) in partnership with BG Group (BRGYY.PK) and Repsol-YPF may be the world's biggest discovery in 30 years, the head of the National Petroleum Agency said. A deep-water exploration area could contain as much as 33 billion barrels of oil, an amount that would nearly triple Brazil's reserves and make the offshore bloc the world's third-largest known oil reserve. "This would lay to rest some of the peak oil pronouncements that we were out of oil, that we weren't going to find any more and that we have to change our way of life," said Roger Read, an energy analyst and managing director at New York-based investment bank Natixis Bleichroeder Inc.

2. A trio of oil companies led by Chevron Corp. (CVX) has tapped a petroleum pool deep beneath the Gulf of Mexico that could boost U.S. reserves by more than 50 percent. A test well indicates it could be the biggest new domestic oil discovery since Alaska's Prudhoe Bay a generation ago. Chevron estimated the 300-square-mile region where its test well sits could hold up to 15 billion barrels of oil and natural gas.

Whoa here, and natural gas? Natural gas is a gas, not a liquid and therefore can not be legitimately included in this number. And given that this is from an industry source, we now have evidence that supports the accusation that industry is inflating there findings.

For the sake of argument however, we will go with Ismael’s numbers.

3. Kosmos Energy says its oil field at West Cape Three Points is the largest discovery in deep water West Africa and potentially the largest single field discovery in the region.

4. A new oil discovery has been made by Statoil (STO) in the Ragnarrock prospect near the Sleipner area in the North Sea. "It is encouraging that Statoil has made an oil discovery in a little-explored exploration model that is close to our North Sea infrastructure," says Frode Fasteland, acting exploration manager for the North Sea.

Why give two examples without figures?

5. Shell (RDS.A) is currently analyzing and evaluating the well data of their own find in the Gulf of Mexico to determine next steps. This find is rumored to be capable of producing 100 billion barrels. Operating in ultra-deep waters of the Gulf of Mexico, the Perdido spar will float on the surface in nearly 8,000 ft of water and is capable of producing as much as 130,000 barrels of oil equivalent per day.

6. In Iraq, excavators have struck three oil fields with reserves estimated at about 2 billion barrels, Kurdish region's Oil Minister Ashti Horami said.

7. Iran has discovered an oil field within its southwest Jofeir oilfield that is expected to boost Jofeir's oil output to 33,000 barrels per day. Iran's new discovery is estimated to have reserves of 750 million barrels, according to Iran's Oil Minister, Gholamhossein Nozari.

8. The United States holds significant oil shale resources underlying a total area of 16,000 square miles. This represents the largest known concentration of oil shale in the world and holds an estimated 1.5 trillion barrels of oil with 800 billion recoverable barrels—enough to meet U.S. demand for oil at current levels for 110 years. More than 70 percent of American oil shale is on Federal land, primarily in Colorado, Utah, and Wyoming.

Ah, here we see Ismael plugging in some fictional numbers that even he can’t stomach. Otherwise, why bother correcting his original number? Doing a little more digging, I came across some very interesting details.

One interesting point is that Ismael is referring to an oil shale deposit found under the Rocky Mountains in Colorado. Ismael’s problem however is that this is NOT a new find. It was discovered in the 1930’s, which sort of shoots a hole through the argument that new sources are being found all the time.

Also, a simple Googal search turned up a range of numbers. I have seen the estimate as high as 4 trillion barrels. A few geologists commenting on the blogs that talk about the fund wonder if there is even a single gallon of extractable oil from this shale, giving question to even Ismael’s 800 billion figure.

Another interesting point is that it takes more energy to extract this oil, than it produces, making extraction infeasible. Technology is subject basic physics (even if economics ala Ismael, isn’t), meaning that the technological means to extract this oil is not possible. No amount of technological development (or economic investment) can overcome the this limitation.

The blogs that I visited did examine the Mahogany Research Project (your typical government funding for the research of lost causes, apparently), and didn’t seemed to be impressed with the result. Technology produced by the project, called thermally conductive in-situ conversion promised to deliver $30 a barrel; less than impressive since typical oil production is at about $20 a barrel, and did NOT claim to have defeated the negative energy output problem.
http://www.abovetopsecret.com/forum/thread206998/pg1

This means that Ismaels assumption that technology will some day be developed that can extract oil from shale is a false assumption, bordering on intentional deception. This blasts a huge hole threw Ismael’s figures.

If course, Ismael postulates that technology has limitless potential, given limitless investments into R&D. Thus, even the basic laws of physics can be overcome to produce a desirable outcome, given sufficient investment (from the tax payer, of course).

9. In western North Dakota there is a formation known as the Bakken Shale. The formation extends into Montana and Canada. Geologists have estimated the area holds hundreds of billions of barrels of oil. In an interview provided by USGS, scientist Brenda Pierce put the North Dakota oil in context: "Of the current USGS estimates, this is the largest oil accumulation in the lower 48. . . . It is also the largest continuous type of oil accumulation that we have ever assessed." The USGS study says with today’s technology, about 4 billion barrels of oil can be pumped from the Bakken formation.

Here we have another oil shale. Note the drastic range in the estimate. Exactly how dose “hundreds of billions” get reduced to 4?

Okay, now we have some numbers to chew on.

1. 33 billion barrels
2. 15 billion barrels
3. (no figure given)
4. (no figure given)
5. 100 billion barrels
6. 2 billion barrels
7. 750 billion barrels
6. 800 billion barrels of “recoverable oil shale” (1,500 billion barrels non-recoverable)
9. 4 billion barrels of “recoverable oil shale”

This gives us three totals to play with,

Total of “new” oil = 900 billion barrels
Total of “new” oil + oil shale = 1,704 billion barrels
Grand total of “new” oil = 2,404 billion barrels

Now those are some rather big numbers. But I can throw around some big numbers of my own here.

Taken from an article written by Jeffery D. Sachs of the Earth Institute at Columbia University, he states that a rough number of US oil demand is about 13 million barrels a day in 2008 (this translates to 4.7 billion barrels pr year). We plug this figure into our totals and get:

Total of “new” oil = 900 billion barrels = 191.4 years of additional supply
Total of “new” oil + oil shale = 1,704 billion barrels = 362.6 years of additional supply
Grand total of “new” oil = 2,404 billion barrels 511.5 years of additional supply

Hmm, okay. But this is only US’s demand. Jeffery also offers global demand for the year of 2008 at 85 million barrels of oil per day (2008 demand figures) This translates into 31.0 billion barrels per year. –gulp-

We plug this in and suddenly Ismael is on some very shaky ground.

Total of “new” oil = 900 billion barrels = 29.0 years of additional supply
Total of “new” oil + oil shale = 1,704 billion barrels = 55.0 years of additional supply
Grand total of “new” oil = 2,404 billion barrels = 77.5 years of additional supply

I might note that these projections are within peek oil curves, so I suspect that peek oil calculations have already take recent oil findings into account. I might note that Ismael doesn’t accuse peek oilers of excluding recent discovers, only of excluding discoveries that have not yet been made. (Gee, when I say it that way, I make it sound so silly, don’t I.)

This puts Ismael’s figures into better perspective. Ismael did say that this was a “partial list” so we can only assume that the other examples are much smaller than 2 billion barrels of oil. Of course he is arguing that the supply of oil is infinite because their will always be new oil discovers and new technologies to extract oil from “dead” wells.

I think we can put the real myth to bed.

"Another interesting point is that it takes more energy to extract this oil, than it produces"

Do you truly believe that? I guess the operational shale oil developments in Jordan and Latvia must be operating deep in the red eh?
You seem to be awfully attached to the doom and gloom alarmism, why do you suppose that is?

Until I see some - its still nonsence.

Got any links for these Jordan or Latvia developments? Or you just spitting out more bull?

It is clear that oil is in limited supplies.Still, the Cambridge Energy Research Associates recently placed recoverable oil resources at 4.8 trillion barrels, up from the 3.3 trillion barrels estimated by the U.S. Geological Survey in 2000.

Copyright 2007 by UPI

http://www.earthtimes.org/articles/show/36971.html


I'll take CERA's figures over your pessimism. CERA is the most highly regarded research association. Dismissing reality doesn't make it go away.
Do your own research on shale.

When it comes to the development of Jordan and Latvia oil shale, all I see are “development agreements” ant the exchanges of mineral rights from domestic hands, to multinational corporations. These agreements are months old, when oil prices were at their highest. Want to bet they are now getting cold feet on developing these resources now that prices are falling? And no point in my research have I seen mention of any new technological developments to facilitate the actually energy productions.

Another interesting little tidbit you overlooked. CERA is a CONSULTING FIRM that serves the oil industry, operating under the direction of IHS Energey (as software firm). Do you know what this means? It’s an industry hack with vested interests with accusations of inflating oil findings. It is NOT a research firm, and it is NOT without conflicts of interest. (You know, I am really getting tired of you trying to pull the wool over my eyes. It only pissis me off.)

Until you show me the technology that can produce oil from shale, CERA’s numbers are still just fiction.

That’s a rather simple request, isn’t it? Produce the technology, not the fantasy.

Simmons and most all of the "peak oil" cranks have just as many links to the oil industry, why do you listen to THEM? I suggest you start by reading the excellent new article I posted at this site's economics section, then read Yergin's The Prize for a basic understanding of the oil industry. Most importantly, take off your blinders.
As far as Jordan's oil shale project, it is based on turning a profit if oil prices exceed $80/barrel. While I doubt that it will be profitable, the Kingdom won't terminate it because it provides employment and reduces capital outflow (some nations have maintained balanced trade).

Simmons and most all of the "peak oil" cranks have just as many links to the oil industry, why do you listen to THEM?

You’re the one that is constantly quoting from industry sources. Not to good at taking your own advice, are ya?

I suggest you start by reading the excellent new article I posted at this site's economics section, then read Yergin's The Prize for a basic understanding of the oil industry. Most importantly, take off your blinders.

What a fiery intellect you have. You have any other insults? Or is the “binders” quip pretty much it?

As far as Jordan's oil shale project, it is based on turning a profit if oil prices exceed $80/barrel. While I doubt that it will be profitable, the Kingdom won't terminate it because it provides employment and reduces capital outflow (some nations have maintained balanced trade).

Oh so this is social welfare for struggling multi-national oil corporations in the name of economic development. I figured as much.

Buy the way; are you going to even TRY to address any of my points? I know you can’t, but you should at least try. I am kind of interested to see how you can enplane away economic theories capacity to violate the known laws of physics. Trying to throw me these curve-balls that can’t seem to reach the plat sure doesn’t seem to be working for ya, that’s for sure.

The fact is that in May and December of 2005 the world produced the most oil to date, about 85 million barrels per day.

The world has not reached that production since.

You can speculate all you want as to why, but those are still the facts.

Your insinuations are too silly to engage. Cyrus Bina and Ismael Hossein-zadeh (the authors I have posted) are the ONLY ones that have no industry connections, unlike the malevolent liars that you cling to (Simmons and Campbell).

The only person I am quoting here is Googal. I have NOT quoted Simmons or Cambell. The only person I DID quote was Jeffrey D. Sachs of the Earth Institute at Columbia.

Try lying again and see if I let you slid a second time.

Your done dude, your just not smart enough to know it.

... cyclicality in commodities always results in that type of occurence. Major producers hold back development as long as prices are rising, once prices COLLAPSE they can pick up the minor upstart's assets for pennies on the dollar. Works every time. This is exactly how we should expect things to go.

It hasn't now for three years. You can spit out all the reasons you want as to why it hasn't, but the fact is it hasn't.

That is peak oil up to this time. If it ever goes past 85 million barrels that will be the peak. But I am not going to hold my breath.

The US hit its peak in the 1970's. Now maybe one might argue that it could have produced more oil in the 80's, 90's or 00's but it didn't. It is no myth then to say the US reached its peak in the 1970's.

"It takes nature a million years to produce what is consumed in 1 year."

Dubious unproven proposition.

"Sure there is tar sand, but that is not oil and it requires a price level to recover processing."

Yes, and that price level is about $25/barrel.

"At some point oil production has to reach a peak"

Yes, and history teaches that that point will come as soon as people develop more economical alternative energy sources.

When did US TV production peak? Is it relevant to much besides jobs and the trade balance?

If you care to you could estimate global oil production once the vast Orinoco heavy oil gets going. This has already been done by CERA:

Table 3: The "O-15": Top Sources of Growth in Net Production Capacity to 2015

(million barrels per day)

Saudi Arabia *
12.7-----2005
14.3----- 2015
1.6------------change 2005-2015




Russia
9.6-----2005
11.5----- 2015
1.9------------change 2005-2015




Iran
4.3----2005
5.7----- 2015
1.4--------change 2005-2015




Iraq
2.6-----2005
5.5------2015
2.9----- --------change 2005-2015




Canada
3.5----2005
5.3----- 2015
1.8--------change 2005-2015




Venezuela
3.0----2005
4.5----- 2015
1.5-------change 2005-2015




UAE
3.1----2005
3.9----- 2015
0.8-----------change 2005-2015




Kuwait *
2.9----2005
3.7----- 2015
0.8---------change 2005-2015




Nigeria
2.9----2005
3.6----- 2015
0.7----------change 2005-2015




Kazakhstan
1.2----2005
3.1----- 2015
1.9---------change 2005-2015




Algeria
2.3-----2005
2.9----- 2015
0.6-----------change 2005-2015




Libya
2.0-----2005
2.8----- 2015
0.8--------change 2005-2015




Brazil
1.8----2005
2.6----- 2015
0.8---------change 2005-2015




Angola
1.2----2005
2.3----- 2015
1.1---------change 2005-2015




Azerbaijan
0.5----2005
1.0----- 2015
0.5---------change 2005-2015




O-15 totals
53.6----2005
72.7----- 2015
19.1----------change 2005-2015




Share of World Liquid Capacity
61%
69%



*Includes 50 percent of the Neutral Zone.

Source: Cambridge Energy Research Associates.

March 2007
http://www.cera.com/aspx/cda/public1/news/articles/newsArticleDetails.aspx?CID=8689#_ftnref2

Of course these figures don't include the recent Tupi field being developed by Petrobras, they just hired 27,000 engineers and technicians investing billions. But I suppose one could say it's just a conspiracy theory or something. They are playing with our minds right?

My bad.

Nevermind that the actual production since 2005 is down not up, we are somehow going to produce more barrels in 2015 than we did in 2005 even with gigantic fields like Ghawar and Cantarell in decline.

Those are projections based on the best research available. Of course the zionazis could impose more sanctions and embargoes, or perhaps bomb some oil fields to take them out of production, but eventually the world will catch on.

Because they haven't been close to right for the first three years.

It is true that there are several technologies already available that is proven to extract oil from oil shale. The problem here is that no one has been able to show that this technology doesn’t work at an energy lose, that is it takes more energy to extract oil from shale than the extracted oil can produce, and it their for uneconomical.

Atheo insist that there are several developments already underway. Corporations would not make such huge investments into developing oil shale resources if it wasn’t economical to do so. So logically speaking, I must be completely full of it.

I obviously disagree, but this is till an excellent teaching opportunity to explore some real basic economics.

First, let’s stop the car for a minute and take a look at something else entirely. Negative energy output is nothing new. In fact, it’s quite common. Marble, grantee, iron ore, copper, diamonds, even water, is just a small list of examples of negative energy output extraction. Mega joules or energy is expended to extract a ton of copper, but not one joule of energy is produced. How are these operations economical?

Easy, this is an example of resource extraction. Copper mines are after the copper ore it self. The copper is then used to make every thing from circuit boards, electrical cables, to art work.

Oil is similar in that it is the raw building block for a whole host of synthetic materials such as plastic.

Copper mines however are economical because one can sell the copper for more money that was required to extract it. The energy output of copper mines becomes irrelevant because it’s not intended to produce energy, just copper.

So right off the bat, we have a possible economic model for oil shale. So long as it produces oil at a profit, then we should have an economically viable model for shale development, right?

Not quite. While oil is a key ingredient for plastics, the issue here isn’t mineral extraction – but energy. Peek oil is about building energy policy on unfounded economic assumptions. Conditions may exist where oil shale development is possible, but the fundamental fact that it has a negative energy output is irrelevant using neo-classical economics, which ignores physics all together, and focuses exclusively on profitability.

Let’s make a detour to El Dorado, Kansas. An oil town if every there was one.
http://angloranil.com/personaluse_2253969~Oil-Pumps-Work-the-Midway-Sunset-Oil-Field-West-of-Taft-Calif-Posters.jpg
Actually, you can see these pumps at work all over Kansas. Or actually you will see these pumps not working all over Kansas. Or at least that was a case about two years ago. A majority of these wells requires about a gallon of diesel fuel for each gallon of oil extracted. There are still a few wells that are still productive, but these become fewer each year.

The problem with many of these wells is simple physics. A combination of depth and viscosity makes this oil marginal at best, requiring nearly as much energy to extract and then lift the oil to the surface as is produced. As so much fuel is needed for each gallon of crude, this ups the cost of extraction beyond what can be made selling the oil. Ergo, many of these wells were turned off.

That is until we started to see the price of a barrel of oil go up. Almost a year ago, the oil industry here in Kansas underwent an explosive boom as many of these wells were turned back on. But the fundamental physics under each well has not changed.

The answer is that the rise in the cost of diesel fuel lags behind the rise in the barrel of oil. This means that for a time, the ratio to the cost of oil to sell, vs diesel to buy, shifted, and many of these older wells became profitable again – but still at a net energy loss. That means that many of the oil fields around El Dorado, Kansas were consuming more energy than they were producing. But because economic policy disregards this fact, these fields are actually encouraged to go back into operation by the government – their by actually contributing to the energy crises.

Once the price of a barrel of oil leveled off, this was no longer the case, and many of the restarted oil wells were shut down again.

Economist (the real ones mind you, not these phonies like Ismael) have a term for this – its called “uneconomical.” And thanks to these loons like Ismael, we have uneconomical activity all over the place. Ethanol is another good example. Ethanol production consumes more energy than it produces. Its only a “profitable” industry because the federal government subsidies its production.

For example, of Uncle Sam was to come up to me and offer to pay for half of each gallon of diesel, this reduces my costs in half, and I can again pump oil for a profit again, which is exactly what Ismael forwards as a “reasonable” solution for “economical” oil extraction.

Furthermore, reserves that may be considered unprofitable from the viewpoint of private oil companies may well be economical from the viewpoint of state- or publically-owned companies. For example, while a private oil company, may find an estimated profit rate of below x or y percent cost inefficient, a publicly-owned oil company might invest in reserves as long as estimated profit rate is not negative.

Indeed, as the experiences of state-owned oil companies in Russia, China, Venezuela, and many other countries show, publicly-owned oil companies often take large short-term losses in pursuit of long-term returns or rewards. Free from short-term market imperative, Russia, for example, has invested heavily in long-term oil projects, with fantastic results that have more than offset the enormous short-term costs of those projects.

Ismael makes the typical supply side economic theory mistake of equating an economic activity strictly from a fiscal standpoint. This despite his concession that states could take a loss, where privet corporations could not. He rates efficiency strictly from a monetary standpoint, and their by ignores any physics at work in the situation at hand. Any thing to keep the oil flowing.

This is the real point peek oil is trying to make. Peek-oilers are not just a bunch of doom sayers trying that we are going to run out of oil tomorrow. They real point they are trying to make is that much of our energy policy is based exclusively on profitability, ignoring more important and basic economic principles, such as net energy production.

Ismael would have us sink billions of dollars into such activates as trying to bring the oil fields of El Dorado back on line. But in doing so, he would actually exacerbate the energy crises by wasting more any than is produced. This produces a situation of economic collapse, as oil fields consume more and more fuel in order to produce energy to meet its own demand.

As we have already seen with other markets, such as global fisheries, this actually leads to a short term boom as the price of the commodity rises, encouraging even more uneconomic growth in the system, and consuming the resources at an even faster pace.

Unlike oil, fisheries were a renewable resource. Had they been managed properly using real economics, these fisheries would still be in service today.

Oil is different, it’s a finite resource, and can not be restored with proper management. But proper management will be much more effective in utilizing the resources we have remaining. Those who deny the reality of peek oil are basically arguing that peaty laws of the universe do not apply to us.

Those who are in the mortgage industry made the exact same argument – and look where it got us?

I can see it now. Left wing Nazis marching oil derricks into the gas chambers.
http://surfaceandsurfacephotography.files.wordpress.com/2008/02/oil-pumps0001.jpg
:redbanana: Die pumps - die! :redbanana:

...the point of US control of oil-producing regions doesn't necessarily have to do with supplying US demand, but denying supply to the rest of the world--e.g., another way of imposing US hegemony, as oil becomes just another weapon of imperialist diplomacy: who gets to buy, and and what price (financial and otherwise).

Your "denial of oil" theory would appear to be in violation of the reality that China is needed to finance US military adventures. These theories all disolve under the slightest critical analysis.

The projection is ten year, not three year. The Canadian, Venezuelan, and Brazilian production is all exceeding expectations. The fact that Iraqi, and Iranian developmet is currently lagging is no surprise, or does it surprise you? Joseph Stiglitz explains that in the face of aggression, all of the Persian Gulf produces are holding back on new investment. Can you blame them? The Stiglitz interview link is imbedded in the article Militant Zionism and the invasion of Iraq.

He will deny global warming and provide evidence that proves the existence of the tooth fairy.

how else can the US ever pay off the Chinese debt unless 'we' have foreign earnings in a useful currancy, like euros, yen or rubbles? They steal our money; we steal their oil and sell it back to them for our dollars (or better)...try watching Network (1975) again, esp. Ned Beatty's "Mr Jensen" explains the universe to Peter Finch (Howard Beal) scene; most illuminating. BTW: guess you haven't heard the Chinese gov't. recently ordered the central banks to stop buying US treasury notes...

...looking for a use. Ultimately somebody has to offer something of value to the sellers of the oil. "Controlling" the oil and thereby the proceeds has been shown to return 5 cents on the dollar, that's the fast track to bankruptcy as is now obvious. Yes, the occupation of Iraq costs 20 times the oil revenues generated, it's neither a realistic scheme nor a tenable explanation for current bipartisan US foreign policy. We have to face up to the fact that the wars are only for Israel.

If you are referring to me, please see:

http://www.progressiveindependent.com/dc/dcboard.php?az=show_mesg&forum=220&topic_id=910&mesg_id=910&listing_type=search

This will have lots of links that may interest you. I am not to much into this discussion as I believe that I can get as many gallons down on the corner as long as I come up with the money. Today they are happy with $3.49 and I was only happy to let go of $3.

http://educate-yourself.org/cn/peakoilindex.shtml

Close counts in horseshoes and atomic bombs and rounding to millions. What alternative number do you suggest? One million is the only number I have ever seen. I am listening.

Tar sands are tar sands. Oil is oil. Natural gas is natural gas. Is is is. Isn't is isn't. Tar sands are not oil. They may have equivalency, but that is still not oil even in this time when hamburger making counts as manufacturing. If it were oil, it would be called oil. Don't get goofy to prove whatever it is you are trying to prove. Do you have the numbers for 2006, 2007, and any part of 2008? This thread is all over the place on energy. My heart is not in this, but I would like to hear what your definition of peak oil is even if it is like Martians, it is vocabulary for something that does not exist. But what do you call it when the oil production (as in we discovered oil and not we discovered tar sands) actually does decline? I am happy with "the long anticipated decline in oil production," but "peak oil production" seems like it would be better and if there came an increase above that peak and it fell, it seems like that could be called "The Second Peak Oil," kind of like the World War numerology where they did not need the number one until they needed the number 2.

You keep bringing up alternatives, you have the possibility of a downturn because the alternatives limit production instead of available oil limiting production. I say peak oil happens on the first downturn of production based upon definition of the word peak.

This whole thing follows servant to the expression "peak oil" while it leaves out levels of scarcity. The fact that tar sands become an alternative is one level of scarcity. It also keeps us out of the moment where gas is $3.50 a gallon and the discussion of what price levels are doing to the American way of life, although it really does not need much discussion as everyone lives it day in and day out.

The oil they pump out of the ground has got to decline sometime, but right now it is that $3.49 a gallon that has my attention. Like I said, my heart is not in this and even I see more as idle typing than substance. I would erase it if I thought many people would waste their time reading it.

"What alternative number do you suggest? One million is the only number I have ever seen. I am listening."

While the "fossil fuel" theory is widely accepted by Western establishment geologists, it must be acknowledged that it is just a centuries old theory that has never been prooved. Many such theories have fallen by the wayside in our time. It must be acknowledged also that this theory is cherished by the oil marketers because "scarce" commodities can command higher prices than primordial matter. I don't have "an alternative number", however I don't see any reason to subscribe to the institutional dogma.


"Tar sands are tar sands. Oil is oil. Natural gas is natural gas. Is is is. Isn't is isn't. Tar sands are not oil. They may have equivalency, but that is still not oil even in this time when hamburger making counts as manufacturing. If it were oil, it would be called oil."

My only concern is the actual cost of the end products which are identical to refined "conventional" oil. These costs are about half the present market value of light crude so we are surely already in the era of "non-conventional oil", exploitation of these resources IS economical with current technologies and the total reserves as well as the potential rate of production far exceeds the light oil that has as yet been exploited.


"I would like to hear what your definition of peak oil is, is it vocabulary for something that does not exist."

A peak in petroleum production may occur within ten to fifteen decades, my guess would be that the cause will be that preferable alternatives will elbow oil aside just as we presently prefer natural gas to coal. I won't try to be so clairvoyant as to say what will come along in the 22nd century that will ultimately replace petroleum. The point is there is no scarcity or crisis. It is surely alarmist and/or genocidal to present energy "shortage" as a rationale for radical social and economic manipulations.


"I am happy with "the long anticipated decline in oil production," but "peak oil production" seems like it would be better and if there came an increase above that peak and it fell, it seems like that could be called "The Second Peak Oil," kind of like the World War numerology where they did not need the number one until they needed the number 2."

If I understand your point, perhaps you are correct. We may see a peak in light oil land based production within a few decades, that's irrelevant because "non-conventional" production will exceed the current total production. Why should it matter if we utilize Venezuela's vast stranded natural gas reserves to refine heavy oil, there is no better use for this energy which can also satisfy S.America's gas needs for centuries.


Carbon based fuels are currently vital to the world's peoples, including the poorest billions that have little extra income to pay for higher priced food (a commodity with a price that is impacted by phony oil scarcity). This issue is the most important one that we confront.

http://populistindependent.org/phpbb/viewtopic.php?t=629&postdays=0&postorder=asc&start=0

Oct. 15 (Bloomberg) -- Crude oil fell below $75 a barrel for the first time in more than a year ... Prices, down 13 percent from a year ago, have dropped 49 percent from the record $147.27 a barrel reached on July 11.

http://www.bloomberg.com/apps/news?pid=20601081&sid=arxoACUOGdPE&refer=australia


The German-based Energy Watch Group said:

"Output peaked in 2006 and will fall 7% a year"


Yet Bloomberg reports futures selling below even today's spot price:

Brent crude oil for November settlement declined $3.73, or 5 percent, to settle at $70.80 a barrel on London's ICE Futures Europe exchange. It was the lowest settlement since Aug. 28, 2007.



Does that reflect a 7% decline in production? It seems that the "German-based Energy Watch Group" was just another nameless entity being used for alarmist ends.

It is your subject. $75 is still three times what it was when Bush stole office. If there were all kinds of oil why did it go above $25 a barrel?

What would one expect the result to be of five year of occupation and chaos in Iraq coupled with increasingly tighter sanctions against Western oil majors providing services or entering into all types of contracts with Iran (two of the formerly cheaper areas of oil production globally)? Even other Persian Gulf producers have been reticent to invest in new development which might become a target for retaliation for Western or Israeli attacks on Iran. Yet the rest of the world did replace the lost Gulf production even though it meant making investments which would be noncompetitive if peace were to prevail in the Gulf. In the interim, prices rose and were kept high by all the saber rattling and speculators. Academic studies have now validated this explanation.
Now, can you give us as simple an answer to why gold has more than tripled in the same time period?

My answer is you can print money, but you cannot print gold.

I don't buy that answer, but I really don't care. I was trying to furnish you with a thread that carried the same question as this one. I never did see your figures on world oil production and I still say that the oil production used now that includes oil from tar sand reflects a new definition of oil production made possible by the scarcity of oil from conventional fields in relation to demand.

The thread I put up said we already reached peak oil and I have to think $3 gas that crippled the economy is a good sign. I did not put that thread up idly as chlamor has an intellectual drive and will give an intellectual answer to it all. It runs 9 pages that can be filtered down so that to know anything you only need listen to chlamor.


Chlamor at http://populistindependent.org/phpbb/viewtopic.php?t=629&postdays=0&postorder=asc&start=0
As a starting point we might discuss those huge stockpiles of beer barrels and where exactly is that warehouse across town and what is the quality and usability of that beer and how accessible is that warehouse and how far across town this warehouse resides and how easily, or not, one can access and transport those barrels.

It's remarkably simple.

In short the argument that Kovarik is making, I'm quite familiar with it, and what you are buying into is what is widely promoted by economic cornucopians.


What Kovarik has been espousing (and you?) is essentially that through utilizing the tar sands (heavy oil), abiotic oil (magic), ability to access oil through better technology (myth) that these beer barrels across town are going to come rolling in and that there is far more oil out there then the "peakers" ("alarmists?) declare. That doesn't address the situation in any way. There's far more to this than what Kovarik even hints at and it is not entirely related to pricing mechanisms.

In any case you've put a lot of stuff up and through the week I'll take on the project of discussing many of the points if you're interested. If you wish to distill some of these points into a single post it would be useful but not necessary.

I'm just going to tell you Kid, Kovarik doesn't know what what the fuck he's talking about in the least and I will prove this to you unequivocally. He's a windbag who goes into zero detail. Easy for him.

How would you rewrite this paragraph from the threadstarter of the above link?


However, the EWG study relies more on actual oil production data which, it says, are more reliable than estimates of reserves still in the ground. The group says official industry estimates put global reserves at about 1.255 gigabarrels - equivalent to 42 years' supply at current consumption rates. But it thinks the figure is only about two thirds of that.

I see you have an interest in the subject. I am trying to tell you who to listen to in chlamor.

The fact is that Canada produces millions of barrels of petroleum from tar sands DAILY and RIGHT NOW. If you feel you can disregard this, you need to make a better case. Billions are currently being invested in the development of Orinoco's heavy oil, those are viable investments at $35/barrel. Non-conventional sources dwarf light oil in proven reserves of non-conventional against all historic use of oil to date. That's just what is viable at the $35/barrel production cost. All of the alarmists pretend that the global economy can't survive $35 oil. That was the argument ten years ago. It's a bit stale eh?

It is like the definition of the United States under George Washington where it was defined as a union of 13 states and now where it is defined as a union of 50 states. It is a new definition. That new definition comes about because for whatever reason oil is nearly triple what it was 8 years ago even if it is only half of what it was a few months ago. And that $140 oil came as the world geared up for ethanol production and people rioted in the streets for food.

If peak oil had a characteristic of disruption due to higher prices as you talk about in your thread starter we surely have had higher prices and disruption. There is always going to be energy for those that can afford it and that seems to be what you are trying to defend.

You are going on and on but do not give world oil production for the last few years. I can take tar sand oil production as oil production but it should come with an asterick like Roger Marris homeruns. Give up on the words. Let's see some numbers. Cheap oil is so twentieth century people think $70 a barre; is cheap, where the twentyfirst century definition of cheap oil does not resemble the twentieth century definition of cheap oil.

Show us your numbers that show oil production continues to rise. I have shown you reason to say that peak oil is already happened and we all know of the food riots and the starving populations as we burn food to drive around.

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Wikipedia for "oil reserves"- http://en.wikipedia.org/wiki/Oil_reserves - economic conditions have made oil reserves out of tar sands that were not considered oil reserves in the 1956 of M. King Hubbert. But again, I do not care about this "peak oil" as it is an inevitability that looks to me like has already happened as the day of "cheap energy" is gone and loss of cheap energy is what counts most to me.

http://upload.wikimedia.org/wikipedia/en/1/19/Total_World_Oil_Reserves.PNG

The current economic crisis is a systematic looting in which high oil prices play only a small part, that only occurred as a side effect of the wars for Israel.
Current global production is above 85 million barrels per day of a production capacity of over 87 million. Production never exceeds demand. If you feel there have been unmet orders, name just one. Oil is now no more inflated than most other commodities.
Daily output from Orinoco is only limitted by how much steel and manpower we can dedicate to work there (we could literally replace all global production from just Orinoco). What is your argument that there is a forseeable "peak" in output?

Can't you see that by blaming all of our problems on "oil scarcity" you give the true problems (militarism, zionism, plutocracy, etc...) a free pass?

What will we ever sell to pay for all this oil we import?

This is a good chart showing how US production has fallen- http://www.indexmundi.com/energy.aspx?country=us&product=oil&graph=production

This website has lots of information on energy- http://tonto.eia.doe.gov/dnav/pet/pet_move_imp_dc_NUS-Z00_mbblpd_a.htm That particular page shows we imported over 10,000,000 barrels a day in 2007. So if we are at that level even at the unbelievable low price of $70 a barrel isn't that $700 million dollars a day?

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Here is a chart of recent global production- http://www.worldoil.com/INFOCENTER/STATISTICS_DETAIL.ASP?STATFILE=_WORLDOILPRODUCTION

TheOilDrum was introduced to me by chlamor and it reports a new global record of oil production in January, 2008 of 74,466,000 barrels per day, replacing the peak of May 2005 by 168,000- http://www.theoildrum.com/node/3835 This chart from that page distinguishes Canadian tar sands as this is the age of information, not that you can tell it from government or television. It is best to look for them in the last years as it is just a little strip on top of the very bottom dark color.

http://www.theoildrum.com/files/PU200804_Fig1c_0.png

Imagine the claim you could have made for oil having peaked in 1980, until the late 80's rolled around anyhow.
As for how to pay for it, well that's a different matter, no? Oil use has declined during all recessions, that's also another fact that the alarmists choose to ignore when projecting compounding growth of demand.

The chart makes no argument. It is just a chart. It is not meant to make a point. I wa trying to introduce you to some websites.

Peak oil is a certainty. I believe it has already happened. Cheap energy is gone and that is what concerns me. So as I abandon whatever is happening here, what exactly is your point?. Is it that "Peak oil is a myth" or what?

[quote]No one disputes that oil production will top out some day. It is, after all, a finite resource. The argument is about how far off the peak is. As Simmons and others point out, many of the world's largest oilfields - Prudhoe Bay, the North Sea - have already gone into decline. The most optimistic estimate for the average depletion rate of the world's currently producing oilfields is between 4% and 5% annually, or about four million barrels per day at our current rate of production. That means that each year we must find enough new oil to first replace those four million barrels of lost daily production before we even add enough to meet new demand. This is all the more worrisome because world oil discovery of new reserves has been slowing since the mid-20th century.

- http://money.cnn.com/2008/09/15/news/economy/500dollaroil_okeefe.fortune/index2.htm
(This is a very good article by the way. It is in the last page of the thread that I put up that you obviously did not read)[div]

Complete irrelevance to access to adequate petroleum. Why? Because they are only referring to light oil, a baseless rejection of non-conventional oil. Yes, if peak oil is over ten generations away, discussing it as though it is imminent IS mythical.

Why did you post the chart and not just the links to the alarmist crackpot website?
By the way, I am aware that there are any number of think tank disinformationists out there like the quoted un-named "German institute", all pushing the peak oil meme. And yes, some of them actually get the MSM to sully their credibility by giving them a soapbox. I prefer to use reliable sources such as Cambridge Energy Research Associates, the U.S.D.O.E., Saudi oil minister Ali Al Naimi, Hugo Chavez, and Mahmoud Ahmadinejad. These sources have proven reliable over time unlike the alarmists.