A year ago saw the final post on The Oil Drum, a popular blog — started in 2005 — devoted to discussing the idea that global oil production had peaked. Next up was an age of energy scarcity and economic collapse. Actually what peaked was interest in “peak oil.”
As reporter Russell Gold points out in the WSJ today, US oil production began to rise in 2009 and continues to rise today thanks to the oil field innovation of hydraulic fracturing and horizontal drilling. Innovation met scarcity and innovation won. And there are more innovations on the way, according to Gold. But won’t we one day run out of oil? It’s not infinite, after all, right? Actually price and technological advances rather than petroleum supply is more likely to keep plenty of oil in the ground forever. Gold:
When the oil industry overcomes an obstacle and boosts oil production, costs typically increase. That opens the door for a better and cheaper energy source that will eventually displace crude oil. So at some point, the cost of getting more and more oil likely will get so high that buyers can’t—or won’t—pay. … Despite the abundance of oil that fracking has delivered, global oil prices remain high. This has kept the door wide open for alternative sources of energy and spending on energy efficiency. Natural gas has been grabbing market share from oil for years. A few decades ago, heating oil kept American homes snug; now it’s natural gas. And gas is making inroads in transportation—trucks and trains—as are electric cars.
What’s more, climate change has altered the calculus. More advocates are pushing for alternative, low-carbon fuels to slow the rising level of carbon dioxide in the atmosphere. They argue that the possibility of running out of oil isn’t the only reason to reduce its use; in fact, they worry that the expansion of supply is dangerous, hindering efforts to take action on the long-term threat of climate change.
“There will be peak oil, but it will be [because of] peak consumption,” says Michael Shellenberger, president of the Breakthrough Institute, an energy and climate think tank in Oakland, Calif. “What we all want is to move to better, cheaper and cleaner sources of energy.”
Mr. Shellenberger suspects that oil’s long dominance in transportation is weaker than most people suspect. When something better comes along, he says, oil’s days are numbered. “We will be leaving a lot of oil in the ground, in the same way we are leaving coal in the ground,” he says.
GregT on Wed, 1st Oct 2014 8:16 am
“We will be leaving a lot of oil in the ground, in the same way we are leaving coal in the ground,” he says.”
It would appear that Mr. Shellenberger has a sense of humour, at least.
ghung on Wed, 1st Oct 2014 8:36 am
Per worldcoal.org:
“Total world coal production reached a record level of 7822.8Mt in 2013, increasing by 0.4% in comparison to the previous year.”
Leaving it in the ground? Yeah, Greg, funny that.
shortonoil on Wed, 1st Oct 2014 8:50 am
Petroleum is not a magic potion, it must have value to the economy to be in demand. Like everything else that value can be stated in dollars and cents. There is a point where its price becomes equal to its value. By our calculations there is a 98.5% probability that price lies between $97/b and $117/b. Above that point it is more profitable for the economy not to use it, than to use it. Peak Price is peak liquid hydrocarbon production.
There is another dynamic at play in this scenario. Production costs, unlike price, have no cap. As time progresses it becomes ever more expensive to produce petroleum, and its products. That is equivalent to stating: “as the ERoEI goes down, the cost of production goes up.”
http://www.thehillsgroup.org/depletion2_016.htm
When the point is reached that the average cost of production reaches the maximum price, production of higher cost oil is the first to be curtained. The highest cost oil is now bitumen, ultra deep water, shale, high sulfur extra heavy. These supposed saviors of the modern age, that have been promoted so highly by industry interests, will be the first to be abandoned.
As the economy goes into decline, for lack of affordable energy, demand will fall further. Over the long term price will continue to slope downward, and production cost will continue to rise. The age of oil is not far from coming to its conclusion.
http://www.thehillsgroup.org/
Mike999 on Wed, 1st Oct 2014 9:17 am
China has decided NO on Coal.
http://www.bloomberg.com/news/2014-09-21/china-coal-peak-imminent-makes-coal-risky-investment-study.html
Davy on Wed, 1st Oct 2014 9:49 am
Mike, it is like so many other de-carbon wanna-be’s. It will not happen except by collapse. It is too late to turn back now. No Money No time
JuanP on Wed, 1st Oct 2014 9:50 am
“US oil production began to rise in 2009 and continues to rise today thanks to the oil field innovation of hydraulic fracturing and horizontal drilling.”
I’l leave this one for Rockman. 😉
JuanP on Wed, 1st Oct 2014 9:54 am
“Mr. Shellenberger suspects that oil’s long dominance in transportation is weaker than most people suspect. When something better comes along, he says, oil’s days are numbered.”
LOL. I just read this crap for the laughs. Move on, this horse is dead already, stop beating what’s left!
Plantagenet on Wed, 1st Oct 2014 10:03 am
Oil prices dropped 3 bucks a barrel yesterday. What the frack is up with that?
Northwest Resident on Wed, 1st Oct 2014 10:06 am
Yeah, we’ll just wait for something better (than oil) to “come along”.
(ten thousand years later…)
Still waiting…
rockman on Wed, 1st Oct 2014 11:31 am
Juan – I won’t take up space again. If they keep repeating the same foolishness they are either incapable of understanding the reality or they are intentionally trying to mislead folks. In either case there’s no point in wasting anymore time on them IMHO
JuanP on Wed, 1st Oct 2014 12:18 pm
Rock, the space you take is put to very good use, IMO. Don’t ever stop!
Some things need to be repeated because they are important and there are people here that have never heard them. That’s why I keep repeating that I had a Vasectomy and it has been a great experience, I think it’s important for new people to read this even if I understand that it can get boring and repetitive for the regular crowd.
I was just thinking earlier today about how little I know about how oil is sold in the markets while I was wondering if and how oil prices could be manipulated. I realized that much of what little I know of this came from you.
Keep up the good work! 🙂
Kenz300 on Wed, 1st Oct 2014 12:43 pm
Quote —- “There will be peak oil, but it will be [because of] peak consumption,” says Michael Shellenberger, president of the Breakthrough Institute, an energy and climate think tank in Oakland, Calif. “What we all want is to move to better, cheaper and cleaner sources of energy.”
Electric, flex fuel, hybrid, biofuel, CNG, LNG and hydrogen vehicles are all growing in use around the world.
Walking, biking and mass transit are also growing in use as cities have begun to realize that they have met their auto congestion limits.. They are now looking at ways to reduce the number of auto’s in the city.
High prices for oil are making young people look for alternatives.
——————–
Streetfacts #1 – Bicycling Not Just for Big Cities – YouTube
https://www.youtube.com/watch?v=8AP25ShR2NQ
rockman on Wed, 1st Oct 2014 3:43 pm
Juan – Just consider the misleading aspect of the title of this piece: “Peak oil will return…”. Peak oil never left. More clearly the POD (Peak Oil Dynamic) has never left. The price of oil might have softened a bit in the last few weeks but it’s still trading about 300% higher than before the US oil production “surge”. And since you enjoy hearing me repeat myself here you go: the US consumer doesn’t give a crap how much oil we’re producing or how much oil we’re not importing today. They care about what it cost them to fill up the car. A while fuel prices might be down y-o-y they are still much higher than before the US production increase. Yes…US oil production has increased. And yes…the US consumer was much happier when we were producing less oil while importing more for a simple reason: they were happier with $30/bbl then $90/bbl.
It’s really that simple. It’s always interesting, isn’t it: they’ll post the chart showing US oil production but always fail to post the oil price curve with it. Wouldn’t that make a more illuminating graph?
JuanP on Wed, 1st Oct 2014 3:57 pm
Rock, Bravo! Thanks. Yes, that would make a better chart, cause and effect. The title made me laugh.
Harquebus on Wed, 1st Oct 2014 4:52 pm
Here is the problem that mainstream is trying to solve:
Increase energy production, grow populations, grow the economy, build massive amounts of energy guzzling infrastructure and pay off debt all while trying to reduce greenhouse gasses and the budget deficit…. Ha!
No mention of EROEI nor energy per capita.
HARM on Wed, 1st Oct 2014 7:37 pm
I seriously doubt that the U.S. will become “energy independent” anytime soon solely thanks to fracking, but that said… that graph is still something to behold, no matter what your stand on Peak Oil.
Let’s be honest, how many here would have predicted 9 years ago that the U.S. would come close to reaching (or exceeding) its 1971 production peak? How many other countries have managed to have “twin peaks” 43 years apart? I have to admit I am seriously impressed by the U.S. oil & gas industry’s ability to kick the can at least another decade down the road with fracking.
It comes at a horrible environmental price, and in the long run won’t “save” BAU of course, but still…
Davy on Wed, 1st Oct 2014 7:52 pm
You make a great point Harm. It is amazing what the US system can do in the right environment.
Paul Herman on Wed, 1st Oct 2014 8:03 pm
The Powers That Be are just trying to keep the whole juggernaught rolling, because to think it would stop is the worst possible thing, you know?
It makes me think of the almond farmers down in eastern Stanislaus County, California. During the worst drought in memory, they have planted 30,000 acres of new almond orchards, which are going to be irrigated by wells. That’s 100,000acre feet of water or so, and the aquifer is already severely overdrafted. Double down, baby!
Makati1 on Wed, 1st Oct 2014 9:04 pm
Shortonoil covered my comment well.
The ‘ability to buy’ is more important than the ‘volume left to consume’. There WILL still be billions of barrels of oil in the ground when the last well is closed.
The affordable limits are where we are now. The $147 spike almost killed the Age of Petroleum and crippled most of the world’s economies, especially the West and their wannabees. The next one certainly will as there are no more ‘heroic measures’ to prevent it.
Makati1 on Wed, 1st Oct 2014 9:07 pm
Paul, doesn’t that sound a bit like the definition of insanity? But then, California is not known for it’s normalcy.
Makati1 on Wed, 1st Oct 2014 10:33 pm
Sign of times to come?
“The oil and gas industry must do more to cut costs even if it means more job losses, it has been claimed.
Industry body Oil and Gas UK’s annual economic report said operating costs were 60% higher than three years ago while oil prices were falling.
There have already been substantial layoffs at companies this year….”
http://www.bbc.com/news/uk-scotland-scotland-business-29424188
marmico on Thu, 2nd Oct 2014 5:00 am
I seriously doubt that the U.S. will become “energy independent” anytime soon solely thanks to fracking
In the last decade, the US has moved from 70% to 85% energy independence, primarily due to fracking with flat consumption and renewables growth being secondary factors. The US will likely become 95% energy independent by 2020.
Davy on Thu, 2nd Oct 2014 5:38 am
Marm, if you look at total energy including oil, coal, gas, and others I can buy your figure of 85%. You are distorting the facts by weighting these energies the same. Oil is the critical element for all the other energies. The economics of the oil complex is critical. Oil is a global commodity the others are regional. You are distorting the facts by claiming a positive trend when in fact we see a predicament both American and global for oil production and consumption. We are bumping up to the net energy affordability curve for both consumption and production. The quality and quantity of the production per dollar invested matters hugely in a market driven business. The financial side of the equation matters hugely with debt and return. You can claim energy independence all you like but it is oil independence that counts. The reason you did not paint those number is because they are ugly.