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Page added on December 2, 2014
Peak Oil: What Does Any Of This Mean?
Daniel Yergin’s Pulitzer Prize (for his book The Quest) has earned him a fair amount of street cred, judging by how often his opinions are solicited on the state of fossil fuel supply and production. I haven’t read the book, but I’d be lying if I said that anyone worthy of a Pulitzer Prize doesn’t merit a measure of respect regardless of what one thinks of her or his opinions or ideologies.
When Cornucopians have run out of the few partial- or pseudo-facts they rely upon as the foundation for the magnificent spin they place on finite resources and reality, after a while the lines blur between plausible and “huh?” It would appear that major literary rewards does not make one immune to that assessment, nor elevate them to a position where they are not obliged to resort to the same puffery and light-on-facts commentary so prevalent in our public discourse on peak oil and climate change, among other issues of considerable impact.
Earlier this year, we were treated to the observations below by Mr. Yergin in an interview conducted by McKinsey. My comments follow in [ ].
To his credit—and at least from my observations in reading a dozen or so articles of his over the past few years—he does have a broader perspective on how we must meet our energy needs in the future.
But like too many of his peers, the unwillingness to address not just specifics, but acknowledge the limitations and legitimate concerns of fossil fuel production (which he must certainly understand) winds up doing more of a disservice to the public than anything else. If presumed experts are telling only part of the story, what’s the point?
The unconventional-oil and -gas revolution—shale gas and what’s become known as ‘tight oil’—is the most important energy innovation so far in the 21st century. I say so far, because we can be confident that there will be other innovations coming down the road.
[A wee bit vague, wouldn’t you say? Perhaps an issue with the potential to be so disruptive to so many components of our society and industry merits something slightly more specific than “we can be confident that there will be other innovations coming down the road.” That should not be an unreasonable expectation from someone of Mr. Yergin’s stature.]
Yes, we’ve gone through this period of running out of oil, but we’ve gone through at least five previous episodes of running out of oil. Each time, what’s made the difference? New technology, new knowledge, new territories. And something else that people forget: price. When we look at economic history, we see a very powerful lesson that has to be learned and relearned: price matters a lot. Price encourages consumers to be more efficient. It encourages the development of new technologies and new ways of doing things.
[It also causes consumers to simply stop purchasing as much. And while none of this found its way into the interview, high costs and lower than expected returns are putting considerable damper on the prospects for future exploration and production. High prices are what has enabled oil exploration and production of the “revolution.” When the source of funding diminishes, so doesn’t the production effort. Less production, less product.]
There are a number of big initiatives and opportunities that could bring changes.
[That’s it? We’re banking on “big initiatives” that “could bring changes”? Could? What “big initiatives”? Not even a single “for example…”?]
I don’t know what the pathway’s going to be to solve the problems. But when you have a lot of bright people working on a problem in a sustained way, you will probably get to a solution.
[If there’s a test to determine if a statement meets the barest of bare minimum requirements for an encouraging statement, that one might not even pass muster! We’re entrusting our energy supply future to the possibility that a lot of bright people will probably find a solution? Seriously?!]
[T]his great revolution in human civilization around energy innovation is going to continue as far as we can see—indeed, much further than we can see. Of course, history tells us that geopolitics can come along and deliver some shocking surprises, but surprises are one of the key characteristics of energy over the long term. One thing we can be sure of: there are always more surprises to come.
True. Unfortunately, surprises aren’t always good ones. Facts and reality tell us that unless we all get a lot more serious—and honest—about what awaits us if we do nothing more than continue to rely on “probably” it’s all but guaranteed that “surprises” are going to be decidedly unpleasant. That might be the best we can expect, which isn’t saying much.
19 Comments on "Peak Oil: What Does Any Of This Mean?"
SugarSeam on Tue, 2nd Dec 2014 7:32 am
And who is Yergin chairman of? Oh, that’s right, CERA. Another Harvard Business school grad who perpetually believes finance trumps physics. You know, the kinds of people literally ruining the planet.
Makati1 on Tue, 2nd Dec 2014 7:35 am
Stopped reading at the first two words.
Plantagenet on Tue, 2nd Dec 2014 7:37 am
You’ve got to give Yergin credit. He never bought into the claim that oil production would peak in 2005. And here we are 10 years later in the middle of an oil glut
westexas on Tue, 2nd Dec 2014 8:26 am
If we subtract out estimates for rising global condensate production, actual global crude oil production (45 and lower API gravity crude) has probably been approiximately at or below the 2005 rate since 2005.
Unfortunately, we don’t appear to have any global condensate data, but since condensate is a byproduct of natural gas production, it’s a reasonable assumption that we have seen a substantial increase in condensate production, given about a 22% increase in global gas production since 2005 (versus a 3% increase in global crude + condensate production from 2005 to 2013).
westexas on Tue, 2nd Dec 2014 8:27 am
In other words, global crude oil production has probably peaked, while global gas production and associated liquids–condensate and NGL–have so far continued to increase.
GregT on Tue, 2nd Dec 2014 8:32 am
If we were only able to produce 1 million barrels of oil per day globally, and nobody could afford that oil due to depression, I guess one could call that an ‘oil glut’. But that too, would be misleading.
Davy on Tue, 2nd Dec 2014 8:57 am
I am with you Greg. Look back to 05 at the excel goal seek global GDP oil production figures from EIA/IEA that nicely fit with forecast demand. IMA demand that was considered healthy at a time of normal economics in relation to today. Now look at where we are with growth, demand, and supply. I might further IMA look at the quality of growth and GDP which is mainly artificial liquidity from excessive debt along with repressed interest rates. This is hardly an example of a glut from healthy growth. It is more like a vomit because the global economy couldn’t stomach more expensive oil.
paulo1 on Tue, 2nd Dec 2014 9:02 am
re: “but I’d be lying if I said that anyone worthy of a Pulitzer Prize doesn’t merit a measure of respect regardless of what one thinks of her or his opinions or ideologies.”
I used to think this too, until Obama got one for Peace and immediately began bombing the hell out of brown people and autorizes every drone strike, (including those against US citizens). Now, I just wonder who, what, where, when, why, and try and get past the news coverage.
Aire on Tue, 2nd Dec 2014 9:25 am
Exactly GregT but that wouldn’t stop Planta from telling yall about the great oil glut age – at least he’s positive in that way… we could definitely be in a worse situation as Americans and other fellow 1st world citizens.
Perk Earl on Tue, 2nd Dec 2014 9:36 am
westexas, maybe you can post again that graph of yours that shows how much oil we would be using based on the trajectory before the plateau of 05 initiated.
Fact is, the world economy would be much bigger and we would be going through millions of more barrels a day of oil IF crude production had continued on its historical rise.
The fact that did not occur, explains a lot about why oil price should be rising to encourage exploration, but instead it has dropped about 30% recently due to a lack of demand. The world economy has been weakening under the strain of high energy costs.
Now it gets an opportunity to use relatively cheaper energy from oil to spur increased economic activity. But without an economy revving on high that can afford high priced oil, the whole scenario continues to descend towards collapse.
Anybody filled with a sense of joy over low oil prices hasn’t been following very closely. Fact is low oil price will further constrict future oil supply and put greater demand on the old giant fields discovered many decades ago.
agramante on Tue, 2nd Dec 2014 10:03 am
Precisely, Peak Earl. Instead, increasing constriction in supply, while demand (particularly in Asia) continued to rise, led straight to the global recession (which it seems that China is now finally feeling). And, though not a specialist, that’s why I’d argue that Europe is still having an employment crisis, because it can’t find a cheap enough supply of energy to start its economy growing again. Always and ever that growth paradigm, even when the supply of crude isn’t growing too.
Perk Earl on Tue, 2nd Dec 2014 1:19 pm
“Always and ever that growth paradigm, even when the supply of crude isn’t growing too.”
Ya to that agramante. The priority numero uno is growth and whatever it takes to generate it even if that requires an aberration of fiscal responsibility. If limits are met and ignored, forcing growth forward by whatever means, it does so at the risk of blowing a bubble that when it bursts all hell breaks loose.
Northwest Resident on Tue, 2nd Dec 2014 1:45 pm
“If limits are met and ignored, forcing growth forward by whatever means, it does so at the risk of blowing a bubble that when it bursts all hell breaks loose.”
Some would argue that the limits have already been met and ignored, and the resulting bubble is in the process of bursting with all subsequent hell already beginning to break loose!
Perk Earl on Tue, 2nd Dec 2014 6:40 pm
To some degree that is true, NWR, although I think we all know there is a crash ahead that will make all the others pale in comparison.
On another note, this one off topic, we are getting deluged with rainfall here in No. CA. Good news as our state had about reached it’s point of no return if this had been another drought rainy season. El Nino finally kicked in. Now wait until Feb.-Mar. and I guarantee there will be lots of mudslides.
Davy on Tue, 2nd Dec 2014 6:48 pm
Good luck on the rain Perk. I hope the redwoods are hanging in there. I found a real spirituality being near the big tress of the NW US. You and NR are lucky to be in such a wonderful region.
Northwest Resident on Tue, 2nd Dec 2014 7:36 pm
Perk — Totally agree. Just saying… 🙂 And that rain is definitely great news for California. We don’t need California drying up and blowing away at this particular point in time — we have plenty of other things to worry about. I guess all this cold wind we’ve been getting up here in Oregon is blowing all the rain your way?
Apneaman on Tue, 2nd Dec 2014 10:53 pm
I’m impressed with Yergin’s Pulitzer Prize to the same degree I’m impressed with Obama’s Nobel; not one fucking bit. I read the book;shameless cheerleader and propaganda. In case anyone doesn’t know, all awards can be bought. Sometimes for cash, like industry awards (a form of advertizing) but most often it’s quid pro quo.
dubya on Tue, 2nd Dec 2014 11:01 pm
…in the middle of an oil glut…
someone with more enthusiasm than me calculated that the current oil ‘glut’ is about 1 hour of consumption.
I just swept 1/4 cup of macaroni up off the pantry floor. I guess that puts me in a pasta glut.
Perk Earl on Wed, 3rd Dec 2014 1:58 am
“I hope the redwoods are hanging in there.”
Thanks Davy. Yeah, I think they’re doing alright. Most redwoods are in Mendocino and Marin county where the rainfall has been better than most of CA even in drought years.
Last year the rain was insufficient for fish to go upstream from the ocean to spawn. They had waited just about as long as possible, so this year was their last gasp and it looks like they will get their chance, thank goodness.
Well NWR, who woulda thunk it – Rain in CA and just wind in ORE? Yes, enough to think about without worrying about water too. Plenty of crazy stuff going on, even though amazingly some posters see it all as BAU forever, good news, no peak oil, go buy a Hummer, etc.