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Page added on June 10, 2014
Dr. Morris Adelman And Peak Oil Theory
Several weeks ago, the US Energy USEG -2.63% Information Administration (EIA) made big news by severely reducing its estimate of recoverable oil from California’s huge Monterey Shale formation. This change in calculation by some guys sitting at desks in Washington DC led to a very predictable series of misleading stories with sensationalized headlines like this one from the Los Angeles times, this one from Reuters, and this one from the UK Guardian.
The change in calculation also temporarily emboldened the Usual Suspects in the cultish Peak Oil movement, resulting in an array of celebratory Tweets and blog postings at a variety of sites around the web.
So why bring this up now? Well, as I was tooling around the web early this morning, I noted the passing of the famous energy economist Morris Adelman. Dr. Adelman actually died peacefully at his home in Newton, Mass. on May 8, but the New York Times just noted the event with a very nice obituary penned by Douglas Martin on June 8.
Dr. Adelman played a prominent role in the energy-related debates of the 1970s, and became noted for his theory that oil supplies were virtually inexhaustible, and that official reserves estimates were grossly understated due to their reliance on what amount of resource was producible using current technology. This artificial dictate was in fact the motivating factor behind the EIA’s reduction of its estimate of recoverable oil in the Monterey Shale – EIA simply decided that current technology is insufficient to recover the bulk of the billions of barrels of oil that they freely acknowledge exists inside the Monterey’s underground rock.
Of course, over-reliance on and mis-application of such artificially understated estimates is why purveyors of Peak Oil theory have been demonstrated to be completely, comically wrong time and time again, going back to the 19th century. Mr. Martin’s obituary of Dr. Adelman helps to explain why in the following passage:
Dr. Adelman contributed to a debate that has raged almost since Edwin Drake discovered oil in Pennsylvania in 1859. Geologists and others have long insisted that oil is running out, but economists have countered that oil will continue to be found as long as extraction technology advances and the price is sufficient.
Dr. Adelman used the Kern River field in the San Joaquin Valley of California to prove the economists’ point. In 1942, he said, the United States Geological Survey estimated that the field had 54 million barrels of reserves. In 1986, the agency raised its estimate to 970 million barrels, based on what could be recovered by modern technology. (The oil had been there all along but had been unrecoverable at prevailing prices and technology.) Between 1942 and 1986, the field produced 736 million barrels as increasingly better technology made it possible to squeeze more oil from the ground.
His point was that reserve estimates are based on current technology and prices, not just underlying geology. The original geologists were not incompetent, he said, rather, the technology to extract oil vastly improved.
“When will the world’s supply of oil be exhausted?” Dr. Adelman asked. “The basic answer is never.” His point has been proved many times in oil industry history, most recently by widespread use of new drilling techniques that include hydraulic fracturing and horizontal drilling to force more oil from the earth. The federal government estimated that domestic crude oil production this year will average 9.24 million barrels a day, the highest since 1972. As a result of increasing production, oil imports last year fell to 36 percent of United States’ consumption from 60 percent in 2006.
And that, in a nutshell, is the thing: technology always improves in the oil and gas industry. It always advances, without exception. It always improves, becomes more efficient, more cost-effective. It has since day one, and that dynamic will never change. It is this unalterable fact of the very nature of the oil and gas industry that the leading advocates of Peak Oil theory steadfastly refuse to factor into their calculations. And really, you can’t blame them for that: after all, if they do consider inevitably advancing technology, the entire foundation for their favored theory falls completely apart.
Oil is not ‘inexhaustible’, as Dr. Adelman liked to say, but it remains extraordinarily abundant. And yes, that even applies to the Monterey Shale formation. Despite the protestations of today’s cultish purveyors of Peak Oil theory, 40 billion barrels of oil did not magically disappear because some guys in Washington DC decided to change a mathematical calculation.
The oil is still there, and billions of barrels of it will ultimately be produced because, as Dr. Adelman knew, the inevitable, unstoppable advance of technology will make it so.
Morris Adelman, RIP
14 Comments on "Dr. Morris Adelman And Peak Oil Theory"
Northwest Resident on Tue, 10th Jun 2014 4:03 pm
Oil is not ‘inexhaustible’, as Dr. Adelman liked to say, but it remains extraordinarily abundant.
Also inexhaustible is the fictional hope that technology can accomplish any goal that humans pursue — such as, being able to economically extract oil from layers of rock, at a profit. That’s called “hopium”, otherwise known as blind faith that technological advancement will save us from the total mess we’ve made of planet earth — and that hopium IS extraordinarily abundant thanks in part to articles like this constantly being perpetrated onto the masses by the likes of Forbes, Motley Fool and others.
penury on Tue, 10th Jun 2014 4:23 pm
I am pleased that oil will never run out. I just hope that as we run out of 160 dollar a barrel oil our minimum wage increases to 50.00 dollars an hour so we can afford to use it. We of course being Americans as no third worlders need apply.
tahoe1780 on Tue, 10th Jun 2014 4:38 pm
“more cost-effective” So fracked oil is cheaper than conventional?? How about higher prices, out of desperation for the product, driving the use of those (actually decades old) “new” technologies?
shortonoil on Tue, 10th Jun 2014 5:09 pm
“most recently by widespread use of new drilling techniques that include hydraulic fracturing and horizontal drilling to force more oil from the earth.”
It is possible to force more oil from the earth. The only problem is that the industry is now spending $1.67 on drilling costs to produce a $1.00 worth of product. The Laws of Physics place boundaries on what can be done, and what can’t. This is just another economists who can’t get their head wrapped around the idea that we are getting very close to those boundaries. Nor, can they comprehend that we can’t change them regardless of the amount of money thrown at the problem.
http://www.thehillsgroup.org/
mack on Tue, 10th Jun 2014 6:00 pm
a good title for article might be “somebody somewhere will think of something, I just know it.” The belief that the magic of technology can solve any problem. Of course technology always requires cheap and abundant energy and there lies the rub.
Dave Thompson on Tue, 10th Jun 2014 6:20 pm
http://www.youtube.com/results?search_query=Charles+Hall+eroei
Makati1 on Tue, 10th Jun 2014 8:29 pm
The addicts are getting restless as their supplier starts to run out of hits and the price goes past their reach. Now what? Ah! Rob someone for the needed cash to buy the next hit.
This is the world today, but it is countries, not individuals, doing the plundering and murdering, with the US leading the way and providing the means. BAU until it isn’t.
banjo on Tue, 10th Jun 2014 10:58 pm
Look we all know the US Navy is making fuel from sea water. So reserves are literally unlimited. Just plonk in a straw and off we go. Shut down tar sans etc and every coastal town is an energy exporter. On top of this there is enough energy from the sun hitting the earth every day and lets not forget thorium reactors soon fusion reactors.
There are also perpetual motion energy devices.
Hey why are we buying oil anyhow. Oh look Americas got talent…
Satori on Tue, 10th Jun 2014 11:24 pm
boy this guy is right on the money
“technology always improves in the oil and gas industry. It always advances, without exception. It always improves, becomes more efficient, more cost-effective”
why the technology is so efficient and cost effective that I’m paying 75 cents for a gallon of gas !
oh wait
that $3.75 you dumb sh_t
at least Forbes is good for one thing
handy when you run out of toilet paper!
mike on Wed, 11th Jun 2014 12:44 am
“Oil is not ‘inexhaustible’, as Dr. Adelman liked to say, but it remains extraordinarily abundant. And yes, that even applies to the Monterey Shale formation.”
And floating around in solution in the oceans are immense vast abundances of gold. There is enough gold to pay off every country’s national debt probably ten times over. The only problem is figuring out how to get it. Have faith. There are no limits to mankind’s (or America’s) ingenuity and technological advance. Soon, we’ll get at that gold and all humanity’s problems will be solved. I think.
Meld on Wed, 11th Jun 2014 3:30 am
Filled with emotionally charged terms (like cultish peak oil)and the chap clearly doesn’t even begin to understand EROEI. Lets just laugh this one of chaps, it’s clearly meant for a certain section of the human race who are firmly ensconced in the religion of progress and want the priest to tell them everything is going to be ok.
Poor bastard. He’s going to be entering the world of conspiracys soon to try and work out why his predictions aren’t coming true.
Sinnycool on Wed, 11th Jun 2014 4:39 am
It’s a bit like getting gold from the ocean. According to NOAA there’s something like twenty million tons of it (http://oceanservice.noaa.gov/facts/gold.html)
How wonderful! We can have as much gold as we want – all it takes is a little more amazing human technology…
And lots and lots of energy.
When will people understand that technology totally depends on and consumes consumes vast quantities of energy?
Have a look at energy usage per industry:
http://energyfuture.wdfiles.com/local–files/us-energy-use/subsectors%282%29.JPG
bob on Wed, 11th Jun 2014 5:47 pm
Skinny where is that chart from the 1990’s?? It says nothing about internet that you are typing away here how much energy do you think Google…facebook etc…use??? That chart looks like my 3rd grader made it….I take that back she could do a much better job…
Baggins on Thu, 12th Jun 2014 11:44 am
“technology always improves….It always advances, without exception”
More complicated technology demands more energy, just like a more complicated society demands more energy. Not to forget that a human input is needed.
Believing in an always advancing technological level is like believing in perpetual motion.