Peak Oil: Yes, Still a Serious Issue

By Ray Long, ASPO-USA Assistant Director

The director of the U.S. Geological Survey (USGS) will be delivering a lecture titled “U.S. Energy Outlook: Whatever Happened to ‘Peak Oil’” at Indiana University on February 6. The description of the lecture provides some background: “Not long ago, the public heard much concern that the nation and the globe had reached or was about to reach the point of peak oil production and would be on a downward trajectory due to declining resources. Despite growing demand for energy, however, fossil fuel resources have never been higher.”

One would hope that the USGS director will point out that the peak of US oil production occurred in 1970 around 10 million barrels of oil per day, and while US production has increased recently, it currently stands far below the peak at approximately 6 million barrels of oil per day – this in a time when “fossil fuel resources have never been higher.” As those familiar with Peak Oil know, the key issue is not the total size of the resource – but the rate at which the resource can be extracted and utilized.

News of the USGS director’s address prompted thoughts about the nature of the Peak Oil debate and how criticism of Peak Oil typically contains certain predictable characteristics, often fails to emphasize the daily rate of extraction, and dismisses the reasonable view that we should soberly examine both optimistic and pessimistic projections about future oil supplies.

Anatomy of the Peak Oil Critique

Peak Oil thought is on a spectrum, and it is important to remember that there are a wide variety of opinions and positions. But for the purpose of discussion, it’s still possible to examine larger groups, two of which I’ll call: mainstream Peak Oil educators and mainstream Peak Oil critics.

The differences between the two were on display again this past week with the publication of “Oil’s Tipping Point has Passed” in the journal Nature. The essay, by James Murray and David King, argues that the economic pain of our flattening oil supply will trump climate change as the primary reason to transition away from fossil fuels. The essay was featured online in Wired, Scientific American, and the blog of the New York Times (a summary of the essay is presented at the Energy Bulletin).

Within hours, articles critical of the Murray/King essay began to appear. And as I read them, I was reminded that most articles critical of Peak Oil tend to share some of four predictable characteristics that you see again and again:

• The Peak Oil Theory: An unfortunate common practice is attacking the speaker rather than the speaker’s position. It is common to see Peak Oil with the words “so-called” before it and “theory” after it. When Matthew Simmons was alive, he was frequently called a Peak Oil prophet in print, accused of spreading his Peak Oil religion. These are attempts to suggest that the “case is still out” on Peak Oil.  To be clear: the only way to argue against Peak Oil is to advocate that oil is an infinite resource that will never reach a production peak. The true debate is not about Peak Oil itself, but about the characteristics and ramifications of Peak Oil. By attacking the speaker, some critics hope to win the public relations battle in the mind of the audience before they ever have to have the true debate focused on data.
• Running out of Oil: There are two things you usually can say about someone using the phrase “Running out of Oil” in 2012 – first is that the person is probably early in their full understanding of the Peak Oil concept. Second, if the first isn’t true – then it’s usually someone trying to mislead the public about the Peak Oil concept. No one suggests that we’re running out of oil. But Peak Oil critics work tirelessly to attach this particular straw man onto Peak Oil educators – because it’s very easy to argue against. Michael Levi strongly disagreed with the Murray/King essay and wrote about it an article that is worth reading. Unfortunately, he gave the article the title: “How Not to Argue That We’re Running Out of Oil.” Of course, that’s not what Murray/King are suggesting at all. They even go so far as to literally include the line that’s become almost mandatory in any Peak Oil essay: “We are not running out of oil, but we are running out of oil that can be produced easily and cheaply.”

• Arguing Against the Past: Daniel Yergin frequently spends a great deal of time focusing on past dire predictions that didn’t come true – as to somehow suggest that the thoughts of modern-day Peak Oil educators are unfounded. In the Business Week article “Everything You Know About Peak Oil is Wrong“, Charles Kenny spends the bulk of his article attacking the Limits to Growth, a book from the 1970s. When Newt Gingrich, current US Presidential candidate, called Peak Oil “one of the great myths of the past 20 years,” he also argued against the Limits to Growth. And in a recent article, Steve Maley spends the majority of his time discussing M. King Hubbert’s work in the decades 1950-1980. With much respect to the publication of the Limits to Growth and the great work of M. King Hubbert – both took place well before I was born! Peak Oil thought didn’t simply end at 1980. Peak Oil critics need to do a better job of staying in the present, debating the current thoughts and data of the prominent Peak Oil experts of today.

• The Chief Prescription: Faith. The only thing more curious than the amount of times you see phrases like “Oil is created in the minds of men,” is how often these phrases are taken seriously. Of course technology will improve. New oil will be discovered. And new methods of more efficient extraction developed. But should one simply assume that all of this will happen on-time, and in exactly the quantities and quality needed? Many Peak Oil critics would argue “Yes,” that if you simply believe hard enough and trust the power of market forces, all will end well. In the case of the two hungry economists waiting for the demand of their growling stomachs to bring them a sandwich… they’re likely still waiting.

(Some of these characteristics are also covered in Robert Rapier’s excellent article “Five Misconceptions about Peak Oil“)

This chart from the IEA’s 2010 annual report can take on different meanings depending on how you interpret the oil yet to be found/developed.

Australia’s Catalyst program examined this point in their video report from April 2011:

An Argument in Different Languages

A few years ago, someone developed an image of a cubic mile of oil, roughly the amount of oil consumed by the world in a year. Imagine that a large tube extended from the cube, and that this tube was the only way to access the giant amount of oil contained within. In this scenario, the Peak Oil critic would focus on the cube, correctly explaining the massive amounts of total oil available. A mile wide on all sides and up through the sky – it would seem endless. Meanwhile, the Peak Oil educator would discuss the tube, explaining that total size of the cube – while important – isn’t the point, the size of the tube and the amount of oil one is able to extract per day (and its cost) should be the true focus.

In this way critics and educators often spend time speaking correctly about different issues.

In the current US Presidential campaign, the issue of colonies on the moon was actually a point of discussion recently. The moon represents a large source of resources, but most people intuitively understand the tremendous costs of currency and energy required to travel to the moon, and the difficulties of operating in that environment. Unfortunately back on Earth, when a Peak Oil critic speaks breathlessly about large oil supplies trapped in shale, under miles of water in the Gulf of Mexico, or the icy waters of the Artic – the public often does not have the same understanding of the difficulty of extraction and processing. To them, oil is oil. But in reality, the energy-returned-for-energy-invested for oil production has declined steadily over the past 100 years – oil production is simply more difficult and more costly today than it was in the past – a simple sign of that is the price of oil itself.

Large new supplies of oil are wonderful, but if the cost of oil continues down the path of ever increasing price and volatility – the economy as a whole will still suffer.

Prudence is Always a Reasonable Position

Now in 2012, as more and more people begin to understand the true nature of the Peak Oil debate, the arguments of Peak Oil Educators continue to gain traction.

This position – that we should critically examine global oil depletion and develop a plan to mitigate the economic consequences of oil production decline – is not just the position of ASPO-USA, it’s also the position of organizations from Australia, the United Kingdom, and around the globe, financial professionals, public health professionals, growing numbers of economists, and institutions as varied as the US and German militaries, and the U.S. Government Accountability Office.

The notion that planning for our collective energy future should take into account pessimistic projections as well as optimistic projections, and that future planning should not rely solely on oil fields not yet found and extraction technology not yet invented: these are not radical views, for most – they are common sense.

D. Ray Long serves as the Assistant Director for ASPO-USA and resides in Washington D.C. He received his Bachelors of Science from Michigan State University and a Masters in Engineering studying alternative energy at Wayne State University. Previously he served as a consultant focusing on residential appliance energy standards for the U.S. Department of Energy’s Energy Star program.

Category: Commentary