Peak Oil is You
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Page added on November 10, 2016
Is the age of oil about to end? This oilman thinks so
There’s a new “Peak Oil” prediction out, and this one is worth taking seriously if for no other reason than its source.
Peak Oil, you may recall, refers to a theory propounded by the late geologist M. King Hubbert, who predicted that world oil production would ultimately reach a maximum and then go into a long decline. He initially predicted this would happen in the 1965 to 1970 time frame. Later versions of the theory held that Peak Oil would be achieved a few years ago.
The theory has been repeatedly debunked by reality, most recently by the appearance of new oil and gas exploration and production technology like three- dimensional seismology, horizontal drilling and multi-stage fracking.
What sets the latest Peak Oil prediction apart is that it is based on peak demand, not peak production — and that it’s predicted to occur as soon as five years from now. That and the fact that the person making the prediction is the Chief Financial Officer of Royal Dutch Shell (Hubbert’s old company) — who says Shell is already taking the prospect of Peak Oil demand into account in its strategic planning.
“We’ve long been of the opinion that demand will peak before supply,” Shell CFO Simon Henry said during a conference call with financial analysts last week. “And that peak may be somewhere between five and 15 years hence, and it will be driven by efficiency and substitution more than off-setting the new demand for transport.”
Back when I was writing about energy in the 1980s, I began wondering whether the age of oil might end due to lack of demand instead of lack of supply, but it was such a contrarian view I didn’t have the guts to write it at the time. Lately, I’ve been thinking it’s an idea whose time has come.
For the following reasons:
All of the world’s major auto companies are adding all-electric cars to their product lines and improving their range on a battery charge. Tesla and Chevrolet will both be offering cars that get more than 200 miles driving range in their latest product lines; Toyota is expected to have a similar offering by 2020.
The most critical electric car technology, batteries, is being incrementally improved at an accelerating rate. It is entirely possible the range of electric vehicles will double or triple over the next 10 years. That alone could cause sales to explode.
Tesla is producing all-electric cars that compete with and out-compete all but the highest-end conventional ones on performance, which is a necessary condition if all-electric cars are ever to take market share from conventional ones. “Performance” means metrics like 0-60 mph measured in seconds. The auto industry learned decades ago that it will sell a lot more cars by being bad than by being green.
Semi-autonomous and self-driving cars are on the verge of entering the market. These technologies will save fuel as well as lives.
Conventional cars are becoming a lot more fuel efficient, while giving away nothing in terms of performance. In order to meet the more stringen Corporate Average Fuel Economy (CAFE) standards imposed by the government in 2008 auto makers have developed and deployed the technologies that are making it possible.
In the past 10 years, the CAFE of cars sold in America has risen roughly from 25 miles per gallon to 35 mpg — and is on track to rise by another 10 to 15 mpg in the next 10. So the amount of fuel used is going down while the number of cars and miles driven is going up. The technology that is making this possible is being adopted by automakers all over the world.
And so on.
So does this mean green activists won’t have fracking to kick around anymore? Hardly.
Demand for petroleum may peak, but oil won’t become a minor player in the world’s energy mix for decades. There are about 200 million internal combustion engine powered cars in the United States. It will take the better part of a generation to replace them all.
Oil production around here will probably be among the last to be phased out. That’s because the oil industry has invested billions of dollars in infrastructure development in the Wattenberg Field in Weld County (which extends into eastern Boulder County as well). That investment is a sunk cost that makes Wattenberg oil some of the cheapest to produce in the country. In a shrinking market, that matters big time.
As for the oil companies themselves, they will shift their focus from oil to natural gas. The latter produces half the CO2 of coal when it’s burned in power plants, and the demand for electric power is expected to explode as electric cars replace oil and gas driven ones. Natural gas has the inside track for producing a lot of it in a hurry.
The important point here is that the end of the age of oil will be brought about by a drop in demand not a drop in supply — and that the drop in demand will be brought about by fossil fuels being displaced by technological advances, not by political decisions.
20 Comments on "Is the age of oil about to end? This oilman thinks so"
bahamased on Thu, 10th Nov 2016 8:05 pm
I stopped reading at “based on peak demand,”
No one is going to give up oil voluntary,
Peak Demand just means that people can no longer afford oil.
They can no longer afford oil because it will soon costs more to get oil out of the ground and into your tank then it’s worth.
See the ETP thread
Go Speed Racer on Thu, 10th Nov 2016 8:30 pm
It’s true. Demand will peak before oil.
Example. The Boeing Company replaced the
passenger seats with exercise bicycles.
Although the passengers have to pedal, the new
plane doesn’t need any fuel. And this is precisely
what Shell is saying, that we don’t need fuel anymore.
So demand will fall before the supply does.
Plantagenet on Thu, 10th Nov 2016 11:08 pm
Is somebody going to buy me a Tesla to replace my old Landcruiser? And will the Tesla work when it’s -40?
Cheers
rockman on Thu, 10th Nov 2016 11:09 pm
Hell, I gave up even sooner:
Peak Oil…refers to a theory propounded by the late geologist M. King Hubbert, who predicted that world oil production would ultimately reach a maximum and then go into a long decline. He initially predicted this would happen in the 1965 to 1970 time frame”.
First, PO isn’t a “theory”…it’s an absolute certainty. The only question is when.
Second, of all the idiots who have misinterpreted Hubert’s world this guy win the prize for being the biggest fool. Even the most ardent critics of his work know the time frame this ass notes was for US PO and not when “world oil production would ultimately reach a maximum”.
And who posts such a piece without identifying the author? But I found him: Paul Danish of Boulder, CO. And an “oilman”??? Well, kiss my ass. LOL. Who is Mr. Danish? Frtom the editor of the Boulder “Gazette”: “The liberal Democratic former legislator, county commissioner and Soldier of Fortune editor…”.
Soldier of Fortune editor? Oh, yeah, I think I remember him from when I started with Mobil Oil 41 years ago. LOL.
Apneaman on Fri, 11th Nov 2016 12:09 am
Saudi Arabia owes billions to private firms after collapse in oil revenues
Finance minister admits that thousands of mainly construction workers from overseas have gone without pay for months
“I don’t recall the exact amount now but its billions of dollars,” Mohammed Aljadaan told reporters on Thursday.”
https://www.theguardian.com/world/2016/nov/11/saudi-arabia-owes-billions-to-private-firms-after-collapse-in-oil-revenues
I don’t recall the exact amount – I’m only the finance minister. Why would you expect me to know the kingdoms finances?
joe on Fri, 11th Nov 2016 1:24 am
Somhow I think a Trump Presidency will keep oil going for a bit longer than 15 years….
Eleo on Fri, 11th Nov 2016 7:24 am
yeah boys – what would this guy know anyway. Kodak is still there….
Sissyfuss on Fri, 11th Nov 2016 8:52 am
Ape,that would explain why the Sauds are playing let’s make a deal with Aramco while cutting back on subsidies to the masses. Hey, do what we do, print, Abdullah, print.
rockman on Fri, 11th Nov 2016 8:59 am
Joe – “Somhow I think a Trump Presidency will keep oil going for a bit longer than 15 years….” How could US fossil fuels not do great under a President Trump…look how it went under 8 years of a D POTUS tagged as the greenest US leader in history. LOL. Seriously. Even with the recent drop the current oil price is still significantly higher then the average price during President Bush’s terms. And the most obvious: US oil production was much higher under President Obama.
And as you know the Rockman seldom makes predictions…he knows what he doesn’t know. LOL. But I will say that the Rockman won’t be the least bit surprised if the oil price and US production rate at then end of a President Trump’s first 4 years will be significantly lower then that at the end of President Obama’s first term.
Which will highlight that anyone who thinks the POTUS has any meaningful impact on the energy dynamic is absolutely, unconditionally and with zero doubt is FULL OF SH*T. LOL.
Dredd on Fri, 11th Nov 2016 9:00 am
“The important point here is that the end of the age of oil will [not] be brought about by … political decisions.” – Boulder Weekly
(Everybody Knows)
Mark Ziegler on Fri, 11th Nov 2016 9:49 am
Oil is required for things other than transport. 7 gallons of oil in every tire.
All plastics are made from oil. All pharmaceuticals, clothing, nylon, mylar, toothbrushes, even asphalt for roads, pesticides and fertilizers, which means our food supply comes from oil. The Saudi Guar field has peaked. The water cut is over 50%. We can easily see shortages in the future.
rockman on Fri, 11th Nov 2016 12:55 pm
Mark – Since the thread is drying here’s an interesting side bar I saw on “Nova” last night. Speaking of oil in tires: for those that aren’t aware the main component added to iron to make steel is carbon. A company is close to going commercial using discarded tires as the carbon source. Given that tire disposal is a major problem in many areas this development is some what exciting.
denial on Fri, 11th Nov 2016 1:32 pm
Ya’ll are a bunch of idiots! It does not matter who is president the cake is baked already. Trump will have the unfortunate luck of becoming president at the wrong time. the markets have been massively manipulated by the FED and they have painted themselves into a corner…great depression is just around the corner! So no there won’t be more drilling etc…the system is failing and it does not matter what retard is in office…..I will say I am a bit shocked at how everyone on here now thinks all is well that the “great liberal devils are gone!!!” Makes me question a lot of people that I used to agree with….in reality they are just some old crusty codger shitting in his pants…you know who you are…
shortonoil on Fri, 11th Nov 2016 1:59 pm
The oil age ends when producers can no longer make money producing oil. Which is exactly what we have been saying would happen in the near future for the last 3 years. The industry has already reached the point where producers can no longer make money during their products full production life cycle. Prices are down 57% from their highs, which makes it the longest and largest down turn in the 158 year history of the industry. Demand has barely responded. Revenue for for the extraction portion of the industry has fallen by $1.7 trillion per year, and producers can no longer replace the reserves that they are extracting. The last part, is by definition, for an extractive resource industry a death toll.
The long term trend for the price is downward. The average minimum operating cost is likely in the $20’s, which we will reach no later than 2022.
http://www.thehillsgroup.org/depletion2_022.htm
Petroleum can no longer supply enough energy to the end user to cover all of the cost of its production. The next few years will be extraordinary for its project cancellations, mergers, shut ins, and bankruptcies. Petroleum as a primary energy source is getting very close to its end.
http://www.thehillsgroup.org/
Longhorn on Fri, 11th Nov 2016 3:30 pm
I love it when people reference the “hillsgroup” as some authority or scientifically important group. Ha- any fool with an idea and a webpage can be referenced, (sad)
rockman on Fri, 11th Nov 2016 5:11 pm
Longhorn – A website makes you an expert? Hmm…maybe time for Rockman.com. Thanks from an Aggie, you possible tea-sip. LOL.
Shortend on Fri, 11th Nov 2016 5:34 pm
Longhorn…please post a group that you deem an authority or scientifically important to the topic at hand….sound of crickets.
. Don’t think the establishment wishes this to be confirmed by a recognized scientific academy.
Anyhoot,what would it matter….every scientific academy on the planet agrees with the IPCC conclusions on AGW.
Seems they aren’t taken seriously likewise!
Apneaman on Fri, 11th Nov 2016 6:14 pm
Shortend, all those texass sissy faggots deem the Texas Railroad commision as the ultimate authority. Two pegs above Jee-bus and one above capitalism.
Shortend on Fri, 11th Nov 2016 6:52 pm
Ap, must face the reality that Trumps term in office means the nail to the coffin in regard of meaningful action to stem run a way positive feedbacks. Believe me, I appreciate your posts on the subject. Even with collapse of the Industrial consumer complex…
From the comment of Jack Dale
n starting in the mid 18th century we dumped 1.5 trillion tonnes of CO2 into the atmosphere by burning sequestered fossil fuels raising the CO2 levels by 40% to over 400 ppm, a level not seen in 3-5 million years. That messed up the natural cycles.
CO2 is a known greenhouse gas. It retains heat in the troposphere; without it the earth would be a ball of ice. But it does have optimal limits which, using history as guideline, is between 180 and 300 ppm.
The last time atmospheric CO2 was at 400 parts per million was during the ancient Pliocene Era, three to five million years ago, and humans didn’t exist.
– Global average temperatures were 3 to 4 degrees C warmer than today (5.4 to 7.2 degrees F).
– Polar temperatures were as much as 10 degrees C warmer than today (18 degrees F).
– The Arctic was ice free.
– Sea level was between five and 40 meters higher (16 to 130 feet) than today.
– Coral reefs suffered mass die-offs.
“The extreme speed at which carbon dioxide concentrations are increasing is unprecedented. An increase of 10 parts per million might have needed 1,000 years or more to come to pass during ancient climate change events. Now the planet is poised to reach the 1,000 ppm level in only 100 years if emissions trajectories remain at their present level.”
A fact is a FACT
Apneaman on Fri, 11th Nov 2016 7:50 pm
Thanks, Shortend. Yes the self reinforcing positive feedback loops. Some are underway and likely could only be slowed at this point with radical action. I don’t see that happening. Arctic amplification is blowing away all predictions from 5-10 years ago by 50 -75 years. Unless one is in their 70’s they can forget about that “not in my lifetime” shit.
Like A Candle Burning At Both Ends: Polar Heatwaves Have Ice In Retreat At Both Ends Of The Planet
“Oldspeak: “Two words that in the Old World would never be in the same sentence. Polar and Heatwave. Yet another blaring alarm bell. I don’t know that there is any more blatant indication that we’ve entered an new and unheard of era in human history. The New World is here. Polar fucking heatwaves at both poles at the same time has sea ice extent at record lows. Scientists are now predicting completely a sea ice free north pole by 2030 (probably very conservative estimates, I’d round that down to 2020-25, given the reality that changes around the globe have consistently been occurring MUCH FASTER than expected.)”
http://bit.ly/2epU8jM