And You Thought Peak Oil Was Dead and Buried

Our resident lithium reserves expert, Juan Carlos Zuleta in La Paz, Bolivia brought to my attention an interview Washington Post reporter Brad Plummer did with energy analyst Chris Nelder, who in Plummer’s words, “has spent a lot of time scrutinizing the claims of the oil triumphalists.”

Nelder’s view?

“Our newfound oil resources, he argues, aren’t nearly as promising as they first appear. And peak oil is still as relevant as ever.”

There are several revelations that came out of that interview that struck me. The first is that despite oil production spending doubling since 2005 to the $600 billion that was spent in 2012, which tripled the price of oil, we only raised production 3 percent to 75 million barrels per day.

Nelder’s second point is the economic utility of oil: Asians get far more ‘bang’ for their buck – or Yuan or Rupee – than we do in America. He explains it this way:

In a poorer country, you might have a couple guys on a moped, burning one gallon of fuel to get to the market and back. They get so much more economic value out of doing that than a construction worker in the U.S. gets in his pickup truck burning 5 gallons per day.

He cites China where they are now building cars that get 50 mpg. That means they can sell twice as many cars for the same amount of oil it takes to power cars that only get 25 mpg.

“I’ve done the math,” Nelder says, “… it turns out we will never catch up with China on fuel economy, because we still have 240 million vehicles out there with low fuel economy.”

Economically this translates into the fact that China, in particular, can outbid the USA on the global oil market, which, he warns, means “we need to prepare for the day when oil is going to leave us.”

“The sooner we commit to an energy transition, to renewable energy, the better off we’ll be in every respect.”

That’s why we need to continue to not only push for the greater use of electric vehicles that can be powered by multiple energy sources, including wind and sun, but just as importantly, begin to seriously revamp our entire transportation system.

Will we do it? Voluntarily? I doubt it. But it will happen, like it or not, and it will be messy.

EV World