Peak Oil is You
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Page added on August 6, 2013
Michael Lynch: Is Peak Oil Demand Real?
There has been increasing chatter in the Internet aether about the possibility that world oil demand might peak sometime in the near future. The thinking is informed primarily by falling demand in areas like the US and Europe, but especially the perception that a plethora of new transportation technologies, such as plug-in hybrids, electric vehicles and hydrogen fuel cell vehicles are now viable.
Economists agree to the possibility, often citing the aphorism, “The Stone Age didn’t end because we ran out of stones,” which was used to refute the ‘peak oil’ view of scarce resources. But it also referred to the fact that resources are much less likely to ‘run out’ than to be replaced by better resources–better meaning cheaper, more convenient, and cleaner, among other attributes.
Clearly, the weak demand for oil in the industrialized nations could prove permanent, as it reflects not just recent weak economic growth, but also population decline in some countries and especially price-driven efficiency, most notably in the US. Transport fuel demand has fallen by over 1 million barrels per day in the US in the past 5 years, although it is not clear if lower gasoline prices would see a reversal of this trend.
The problem is that we don’t yet have a ‘better’ energy source than petroleum, especially for transportation. Compressed natural gas comes closest. It is great for fleet vehicles, but inconvenient for passenger cars and trucks, requiring a large tank and lacking many fueling stations. But the market is likely to remain a niche one, not expanding beyond current areas.
This is not to say that there aren’t many applications where oil is overused. In some countries like Japan, significant amounts of oil (a quarter million barrels a day last year) are used for power generation where gas would be better, but is overpriced (see Coffee, Tea or Gas? The Mispricing of Gas on World Markets).
Even worse is the number of poor countries where people do not have access to reliable power from their national grid, and as a result frequently rely on diesel generators. Countries like India and Pakistan suffer in this way because of bad policy and especially political graft and corruption. Attempts to bring solar power to them are usually motivated by a desire to promote solar power, despite its high cost. Kind of a “let them eat green cake’ attitude.
English: The Lucas Gusher at Spindletop Hill, South of Beaumont, Texas, United States (Photo credit: Wikipedia)
On the other hand, oil is often underutilized. Billions of people are ‘energy impoverished’ and rely on biomass like wood and dung for cooking fuel, resulting in both significant health problems; the WHO estimatesindoor air pollution causes nearly 2 million premature deaths a year. And deforestation creates numerous problems for the poor in a number of countries where commercial energy is not available. Although the idea is anathema to many activists, most of these people would be much better off using propane or even kerosene, if natural gas or electricity isn’t available.
In 1901, the discovery of Spindletop in Texas convinced the railroads that oil was not a scarce resource and encouraged them to switch from coal to diesel fuel. Maybe now, the new gusher of shale oil will help promote the use of more petroleum, particularly where it is the fuel of choice. This includes automobiles, not just cooking stoves, as much as some dislike it.
8 Comments on "Michael Lynch: Is Peak Oil Demand Real?"
Keith_McClary on Tue, 6th Aug 2013 9:42 pm
“resources are much less likely to ‘run out’ than to be replaced by better resources–better meaning cheaper, …”
You mean the last half of oil is getting too expensive to produce, Mike?
rollin on Tue, 6th Aug 2013 10:09 pm
“The problem is that we don’t yet have a ‘better’ energy source than petroleum”
Of course we have a better energy source than petroleum, it’s called the sun and will not stop putting out energy, unlike petroleum that is a depleting resource. We just have not learned how to fully utilize this energy source, and how to handle our own desires for energy.
So we can develop more fossil fuels and get hung out to dry in the future, or we can learn how to use the primary energy source on this planet.
shortonoil on Tue, 6th Aug 2013 11:20 pm
“You mean the last half of oil is getting too expensive to produce, Mike?”
Unfortunately it is not the last half. It is the last quarter, and, yes, the last 25% will cost orders of magnitude more to produce than did the first 25%.
DC on Tue, 6th Aug 2013 11:49 pm
Q/On the other hand, oil is often underutilized. Billions of people are ‘energy impoverished’ and rely on biomass like wood and dung for cooking fuel, resulting in both significant health problems
OmFG! is this retard serious?!! And Oil *does not* have serious health problem associated with it use?
The world according to Forbes….
DMyers on Wed, 7th Aug 2013 12:23 am
If Michael Lynch were to read the article immediately preceding his, i.e., the ASPO article laying out the real parameters on the unconventional oil sources, he would then realize that “gusher” is not an accurate description of what shale oil brings. The whole tone of this thing, the rediscovery that “…oil is not a scarce resource…,” is completely unfounded.
I can’t argue with the sentiment that people who cook with animal dung fuel would properly benefit from access to oil. There might even be a moral argument that those people should have first choice of the oil used to transport shoppers to malls. But arguing the efficacy of using more oil and opening new markets, at this point in the process of peak and decline, shows a sad lack of realization of the point where we are in the process of peak and decline.
The comparison of shale oil with the gusher phenomenon of conventional oil shows a huge lack of understanding of the essential difference between the two. Ahh, if only shale would gush, we could do away with fracking!
BillT on Wed, 7th Aug 2013 12:56 am
Forbes cannot even hint at the FACT that real petroleum has peaked and is rapidly going down the other side of the curve. To do so would cause a panic in the investment circles.
YOU are probably heavily invested in oil if you have a retirement account somewhere, a 401k or similar. If/when oil gets too expensive (read ‘energy negative’) the game is over. Oil stocks will be worth the same as those famous tulip bulbs before 2050.
rollin on Wed, 7th Aug 2013 4:37 pm
Oil is still profitable up front, definitely a huge loss on external costs, and a giant “tar baby” because it is so difficult to leave once the system is dependent upon it.
Energy wise, oil is a big negative because it induced further actions that require it use and other fossil fuel use. So using it causes the use of more energy, thus making civilization a giant hamster wheel rolling toward a cliff.
Allan
Luke on Wed, 7th Aug 2013 7:24 pm
Hi Mike Lynch, are you sponsored by the Big Shale guys?
Advertising to fuel more fossils, because there is no alternative? The consequence for next generations is: climate dead, no alternative. Maybe next generation might lynch your thoughts!?