[SHiFTY]

I am posting this in the interests of rational scientific debate about this subject. I have some serious problems with the theory behind peak oil and would like to hear people's opinions.

My problems are threefold:
1)Peak oil theory relies on dubious assumptions;
2)Peak oil fails to count any geo-political factors which influence oil production; and
3)peak oil theory fails to account for other economic factors, including how markets work.

1) Non-proven assumptions: The basic theory of peak oil is that US oil discoveries peaked, and about 15 years later, production peaked and then declined irreversably. The main assumption is that the aggregate production of the entire world's vast oilfields will also follow a similar distribution- the peak production will follow peak discovery. This incredibly crucial assumption is the chief flaw in the peak oil theory.

The problem is the classic western mindset- the whole idea that, through technology and capitalism you can ruthlessly exploit a resource as much as you can, for maximum profit, until it is gone.

In the US boom days, there were wildcat drillers and companies competing against each other, the race was on. When one player got too big (Standard oil) it was broken up by the government. Profit was the motive, free markets allowed anyone to have a go, and property rights created the conditions for the oil boom.

None of this is true in the dominant oil producers of today.

There exists a vast world out there with many different mindsets to the one we are all used to. Most OPEC countries have a single oil producer- the government, or more accurately the governemnt owned oil company. As I'm sure the free marketeers will attest, governments are generally bad at running efficient for-profit businesses, and often have very different motives, for example sustainability/conservation, local development and particularly staying in power.

This may lead to deliberate underinvestment in oil production- why should a government strip-mine their resources when they can leave some for future generations. I believe this is the reason that Iraq has only a few thousand wells that have been drilled, while Texas has over a million.

So if this is the case, could it not be possible that there are many billions of barrels being extracted very inefficiently, or deliberately left in the ground. The motive of OPEC and the other state producers is to produce oil at a huge profit, but not so expensive that alternatives are viable. This does not sound like the US oil producers at all- it is a cartel versus a competitive market.

In my mind tends to suggest a plateau of production rather than a peak production.


2) Geo-political factors. Many oil producers have much more riding on oil than just a change in lifestyle. The west basically keeps half the mid east at peace- the luxury existence of the princes Saudi are legendary. Most of these countries and their rulers are supported militarily by the west, so long as the oil keeps flowing. However, if and when it stops flowing, the people will probably rise up in an Iranian-style revolution. Therefore it would be in the interests of these rulers to keep production tight and underinvest.

I also believe that the US has done itself a disservice in playing hardball with Iran. Not only does it now probably have nukes, but the hardliners have whipped the population into a frenzy of fundamentalism. This is witnessed in their choice of a fairly anti-west president. This is a shame as Iran seemed to be "coming around" towards a more moderate outlook.

With oil supplies tight, and possible nukes, they know they have the west by the balls. Just by cutting production, they can cause an economic recession! If they overproduce their oil, they lose this advantage. Another reason to underinvest.

Russia is the same- their oil resources are incredibly strategic to their interests. They are unlikely to want to burn through their resources just to keep Americans in SUVs.

3) Other economic factors make peak oil less likely. It may have escaped many, but the value of the US dollar is very low, it has been effectively devalued heavily against many other world currencies and commodities. The price of gold, for example, has increased roughly the same percentage amount as oil. See the graphs below.





This implies that the price of oil is high because the value of the US dollar is low, or has been manipulated that way.

The other economic factor that I question is the behviour of markets. Some seem to think that markets would discover a peak of oil and crash and never come up, just kind of give up. I dont think this will happen, simply because markets are so short-term in their thinking. Certainly the world may be due for a recession or depression anyway, but I doubt high oil prices would suddenly discourage vast hedge funds from trying to make a quick buck. Investments in alternative energy will soar- they already are- and another "manhatten project" for fusion could be a realistic scenario.

I do also think the peak oil theory is a bit of a doomsday cult. Why couldnt we also have an oil consumption peak? It happened in the 1970s- people ditched their old fuel inefficient cars, conserved energy and bought local. This could easily happen again- get rid of $10 airfares, 3000 mile farm produce and SUVs and you would probably reduce oil consumption by a significant amount.

My theory is that, as long as there is no shock (like tripling of prices overnight) but a slow, steady increase along the oil plateau, then peak oil will not be the end of the world at all- it may be hard, and involve driving 600cc cars, but the markets will prevail. At least in the west.

Phew, sorry about the length of this!

[NevadaGhosts]

Yawn...

Peak oil is not a theory, but a proven fact. Do you even realize that many oil producing countries arouund the world have already peaked and are in terminal decline? The US oil peak and decline in the early 70's is a perfect example. The US is the most (oil) explored country in the world, and it is depleting more every year. World peak oil is not a question of 'if', but 'when'.

I suggest to try doing more research before posting such ignorant statements.

[Geology_Guy]

The issues you raise-OPEC not pumping as much oil as they could and economic recessions only serve to lower the ultimate peak production-not eliminate it. If we have a recession and use much less oil it will just push the peak into the future-there will still be a peak. It might be our grandchildren's peak oil.

You cannot escape physics-there will be a peak-the only question is when. Read this weeks editorial by the state Geologist of Texas-Tinker I think his name is. He believes there will be a peak in oil production. He just does not believe it will happen until many years from now. The USGS (United States Geological Survey) believes the peak will occur around 2037. That is only 32 years from now. I hope to be drawing a big fat Social Security check in 32 years!

It will be an interesting 32 years.

[MD]

1) Your concluding statement supports a plateau instead of a peak. If you would study, you would discover agreement from many analysts that have studied peak energy models. The rest of your objection is remarkably devoid of data except one comparison between Texas and Irag well counts, which is hardly overwhelming.
2) True, and the geopolitical factors, given human history, are likely to make the problems much worse, in aggregate.
3) Same answer as number two. The market structure can't effectively respond to the changing conditions, especially since numerous government entities are interfering.

You have hope for a soft landing. So do I. The data and history do not support our hope.

[jato]

$this->bbcode_second_pass_quote('', '1')) Non-proven assumptions: The basic theory of peak oil is that US oil discoveries peaked, and about 15 years later, production peaked and then declined irreversably. The main assumption is that the aggregate production of the entire world's vast oilfields will also follow a similar distribution- the peak production will follow peak discovery. This incredibly crucial assumption is the chief flaw in the peak oil theory.

[SHiFTY]

Those (mostly western) countries that have peaked have capitalist governments, competitive industries and transparent accounting. Their main motive is profit- get as much as you can, as fast as you can. As I see it, the mid-eastern governments motives are very different.

It also boggles my mind how some people can predict a peak without any numbers- there is a thread here about how Iraqs reserves could be 200 billion barrels, 400 billion or even more!

BTW I don't mean to offend anyone with the doomsday cult comments- but you do realise that you can opt out of the industrial society already? There is plenty of land in the world, I know several people living a very sustainable lifestyle already (and loving it). If thats what you want to do, why wait?

[Jaymax]

$this->bbcode_second_pass_quote('', 'r')ational scientific debate

[Free]

Isn't it weird how we go over and over through the same flawed thinking and arguments again and again?

This is not ment as an attack on Shifty, at least he started to think and analyze by himself, that's more than the most people do, including myself, who just listen to the informations and reasonings from the different analysts. By the look of it he will go through the same stages as most of us, after he did some more research.

But what I think I can conclude myself so far from all the facts on the table is that the supply side is pretty much transparent and quite foreseeable, it's only logical that extraction first increases, reaches a pinnacle, and then declines. It's pure physics, geology and statistics, and even if it turns out that we reach peak 40 years later than we think now, it changes nothing about the original problem.

Demand is a total different kettle of fish, I think we know as good as nothing about it. Most here assume that demand will continue to grow indefinitely. But what if we repeat history and, like in the seventies, after going through a massive oil shock demand rapidly shrinks and buys us a couple of decades of time? Some assume that demand of fossil fuels is inflexible because it's so vital, for example in agriculture, sure, but what about all the energy that is wasted on non-vital things? Yes I know Jevons paradox, but nevertheless I think a massive depression would take care of a lot of demand, at the cost of lot's of suffering, but not necessarily starving half of mankind.

My only fear is, that after the ppb plummets to, let's say 20$ again, people will just say: "I told you so, the market will take care of it" and continue to ignore the underlying fundamental energy problem and do business as usual, postponing the catastrophy. But this rollercoaster could go on for quite a long time...

[Jaymax]

$this->bbcode_second_pass_quote('SHiFTY', 'T')hose (mostly western) countries that have peaked have capitalist governments

[Free]

It's true that sometimes all this is reminiscent of a doomsday cult. But only because there are doomsday cults does that mean there is no doomsday? To assume that would be as silly as being the member of a cult.

Let's say there is a man who is cries "the end is nigh" and is very upset, and he tells you that god is gonna punish us all because of our sins, and that it's written in the holy book, well, you think your part.

And if there is another man who is just as upset and also cries "the end is nigh", and he tells you that an asteroid is gonna hit the planet, wouldn't you at least ask him to show his evidence?

[Whitecrab]

First of all, that was a really good first post. Well reasoned skepticism.

$this->bbcode_second_pass_quote('SHiFTY', 'T')here exists a vast world out there with many different mindsets to the one we are all used to. Most OPEC countries have a single oil producer- the government, or more accurately the governemnt owned oil company. As I'm sure the free marketeers will attest, governments are generally bad at running efficient for-profit businesses, and often have very different motives, for example sustainability/conservation, local development and particularly staying in power.

This may lead to deliberate underinvestment in oil production- why should a government strip-mine their resources when they can leave some for future generations. I believe this is the reason that Iraq has only a few thousand wells that have been drilled, while Texas has over a million.

...Geo-political factors. Many oil producers have much more riding on oil than just a change in lifestyle. The west basically keeps half the mid east at peace- the luxury existence of the princes Saudi are legendary. Most of these countries and their rulers are supported militarily by the west, so long as the oil keeps flowing. However, if and when it stops flowing, the people will probably rise up in an Iranian-style revolution. Therefore it would be in the interests of these rulers to keep production tight and underinvest.

[Jaymax]

$this->bbcode_second_pass_quote('', 'N')othing has the energy profit and convenience of oil and natural gas.

[bart]

It's good to see someone wrestling with PO ideas.

Several good points, SHiFTY, although when you add them up they don't amount to a refutation of Peak Oil, more a wrinkle or two to the main ideas.

$this->bbcode_second_pass_quote(' SHiFTY', 'w')hy should a government strip-mine their resources when they can leave some for future generations.

[Petro]

oh gawd, yawn perhaps you will adopt all these things you espouse and show us how it is done? Jamax, those like you that do not walk the walk should not tell tell others.... are you self suffieiernt? are you poised for the technological revolution on this horizon? if you are share with the rest of us.

[Tyler_JC]

$this->bbcode_second_pass_quote('Jaymax', '')$this->bbcode_second_pass_quote('', 'N')othing has the energy profit and convenience of oil and natural gas.

[Jaymax]

$this->bbcode_second_pass_quote('Petro', 'o')h gawd, yawn perhaps you will adopt all these things you espouse and show us how it is done? Jamax, those like you that do not walk the walk should not tell tell others.... are you self suffieiernt? are you poised for the technological revolution on this horizon? if you are share with the rest of us.

[gt1370a]

This post is SOOOO 2004.... does anyone still care whether the Gaussian curve is a better fit than a log-normal, or if reserves are 2 trillion barrels or 2.2, or if it's a peak or a plateau, or what the actual date is +/- 5 years, or whatever? Just look at what is going on in the world. I vote we follow the lead of lifeaftertheoilcrash.net and focus on solutions to problems. Basic transportation, getting out of debt, hedging against inflation, gardening, community and government approaches. If people don't get it by now, it's their problem.... all the information for both sides is already out there, nothing new will be said anyway.

[Jaymax]

$this->bbcode_second_pass_quote('', 'I')f you find me an energy source that is better than oil, you have found a solution for peak oil. That does NOT mean that peak oil won't happen or that we won't have an oil crisis.

[gego]

My take is that SHiFTY is lost in the details, and is wishfully thinking, not wanting to be part of the dieoff.

The US oil production panned out, more or less as predicted, following a Gaussian curve.

The world oil production curve should follow such a curve simply because that is the way oil production works.

Food production and human population is dependent on that curve, and in fact should follow that curve.

Human population is far above three standard deviations above its mean value of approximately 1 to 2 billion which can be sustained for only 2 1/2% of the time.

The logical conclusion is that humans are in for a dieoff of gargantuan proportions that should overshoot the long trend.

The strange part to me is that I can today ride down highways full of oblivious people, and the breaking point, the beginning of the dieoff, is so, so close.

My take is that 20% will survive by the end of 50-75 years after peak. Good luck.

[Bandidoz]

SHiFTY I suggest you take a look at a series of ASPO newsletters - from them you will be able to see how the peak discovery - to - peak production pattern repeats (PDF format):

http://www.peakoil.ie/downloads/newsletters/

Also bear in mind that "non-capitalist" countries have been exporting to "capitalist" countries; although their domestic consumption may not be guzzling they are probably selling most of it as the "capitalist" countries guzzle as much as necessary to meet demand.