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Page added on February 4, 2012
Michael Lynch: The Unfounded Fear of the ‘Peak Oil’ Monster
Michael Lynch is the president and director of global petroleum service at Strategic Energy & Economic Research.
Another article has appeared in Nature magazine that argues that the world has entered a period of ‘peak oil,’ and it is more illuminating as to the nature than the content of the debate. The authors are James Murray, an oceanographer, and David King, former British science adviser and a physical chemist.
What would a physical chemist and an oceanographer know about forecasting oil production? Ay, there’s the rub. The two have apparently read a number of articles, online postings, etc., and regurgitated it to make a case for global oil production having peaked. However, they are unfamiliar with the literature and more generally the subject, focusing only on those which agree with them. Cherry-picking is good for farmers, but not policy makers.
The list of mistakes included in their writing is enormous, but to focus on one, the confusion of physical science and economics. Tellingly, they comment that “the oil market has tipped into a state, similar to a phase transition in physics.” Indeed, they ignore the reasons why production has declined, reminding one of Mary Shelley’s Frankenstein, who complained about his colleagues who observed, but didn’t try to understand the causes of, phenomena. “The most learned philosopher….might dissert, anatomize, and give names; but, not to speak of a final cause, causes in their secondary and tertiary grades were utterly unknown to him,”
This is in keeping with other peak oil advocates who are physicists, including Albert Bartlett and David Goodstein, and are applying aspects of physics to what is, mostly, economic behavior. Geologists complain that economists assume discovery, which is often true, but this is like assuming automobile production won’t rise because you don’t know where factories will be placed. There is no given where we’ll necessarily find oil, but in aggregate, discoveries can be predicted.
Physical variables like gravity and chemical reactions do not respond to intangibles, like political uncertainty, and so can be safely extrapolated. And so here, the scientists are, implicitly, assuming that the decline cannot be resolved and will continue. In reality, it is due to first, weak demand as the result of high prices and the recent recession, but also political unrest in Libya, Nigeria, Iraq, and Venezuela, which at different times has taken 2-3 million barrels a day off the market.
This ignorance of causality also drives their presumption that a failure to increase for several years must be insurmountable: in other words, blind extrapolation of the current trend. In fact, global oil production has repeatedly peaked, dropped and recovered in the past, and no reason has been put forward to show this time is any different.
Their ignorance of the industry also shows when they discuss the production of a subset of petroleum production, namely, crude oil (plus condensate, which they don’t mention), rather than total liquid fuels. While many other liquids (propane, heavy oil, additives, biofuels, etc.) are not precisely the same as crude, they contribute to the overall supply. Here, production has been rising, up three million barrels a day since 2005 and, according to latest estimates, setting new records.
12 Comments on "Michael Lynch: The Unfounded Fear of the ‘Peak Oil’ Monster"
Brian on Sat, 4th Feb 2012 4:52 pm
Mr. Lynch – if only you could present some information to support your thesis. Unfortunately all of the evidence of a continued growth in oil supply is too weak. From an economics standpoint the fact is that as the price of oil rises again the demand will decrease and thereby the production of unconventional sources will slow down. We will not have the means to amass the additional debt necessary to develop what’s left to a point where production increases beyond what has been the peak (or undulating plateau) from 2005-present. So your argument about more oil existing out there actually supports the peak oil theory, and either we will have to switch over to alternative (hopefully renewable) solutions to maintain our way of life, or in the more dire scenario we will simply scale back our way of life (our numbers and consumptive habits) and live more simply in balance with nature. I personally prefer that the later happens by choice, but I doubt the majority is going to accept this transition.
cusano on Sat, 4th Feb 2012 9:04 pm
Wow..talk about regurgitating industry soundbites. This piece is yet another attempt to make everyone feel good about fossil fuel use and future supplies. Where has the author been? Perhaps living at fantasy castle in Disneyland.
tubaplayer on Sat, 4th Feb 2012 10:38 pm
Michael. Did you ever ONCE look at the graph of time/oil discoveries? I can only conclude not. Peak discoveries was way back in the mid-1960s. Oil consumption passed oil discoveries in the 1980s.
Economics WILL NOT EVER find a way around the laws of phyiscs.
Enjoy your fantasy of economics over physics whilst it lasts.
John Orr on Sat, 4th Feb 2012 11:14 pm
That article is a lot of words, I could say the same thing in five, “what?” what a waste of typing, if anyone makes any sence of reading that article please post the conclusions
BillT on Sun, 5th Feb 2012 1:05 am
Someone trying to convince himself that he is actually important? Uses big words and twisted logic to fool the sheeple into believing he actually knows something? Or is he just stupid?
Actually, I think he is not stupid, just not willing to admit what he knows because the oil people that pay his salary would not want the sheeple to understand that oil is not going to be there for them in the future.
The world economy will dictate how much oil comes out of the ground because you and I can only afford so much of it and as our paychecks shrink and as prices increase due to the cost of oil retrieval and refining increasing, we will buy less and less of it. Could be that the age of Petroleum will not end, just our use of it will end or be reduced to a trickle by circumstance.
However, we do know that there is a limit out there as to how much we could retrieve. The question is how our lives change and when. I think that we have already begun to downsize our expectations/lifestyles and can expect the slide to continue for the rest of our lives, no matter how old we are today or even if we are yet born.
Wheeldog on Sun, 5th Feb 2012 4:49 am
The gist of this article is that oil production will rise – simply because it must. Based on the reasoning of the author, if oil production grew in the past it must continue to grow in the future. He offers no hard evidence to support his contention and implies that faith should suffice. Global oil production essentially peaked in 2005, almost seven years ago. The U.S. reached its highest point of crude oil production in 1970. National production has gone up and down over the ensuring years, but it has never surpassed this historic high mark.
There is an even more important statistic than the peaking of gross oil production. It is net oil, the amount of oil remaining after subtracting all the oil/energy equivalent required to extract and refine it into useable products. That measure has been in decline, simply because oil is becoming increasingly difficult to find, develop, transport and refine. It means the era of abundant cheap oil is over. Regardless of how much oil may be in the ground in whatever form, it cannot maintain the current economic/industrial system if it is literally too expensive to burn.
BillT on Sun, 5th Feb 2012 7:02 am
Wheeldog, you are correct. The oil in the tar sands is not much better than the asphalt in the paved road in front of your house. Will we get desperate enough to start tearing up the asphalt and refining it? After all, I calculated that there is some 4 billion barrels of oil in the millions of miles of paved roads in the US. I think economics is going to restrain our oil use in the future and all kinds of unnecessary stuff is just going to disappear.
Timson on Sun, 5th Feb 2012 11:32 am
The easiest way to shut up those deniers is talking money:
In 2004, $ 30 a barrel was considered to be life-threatening to the world economy. 6 years later we paid $ 100 with a smile on our face and Saudi-arabia says prices shouldn’t go under a 100 dollar anymore to keep everybody happy.
How can anyone explain a 5-fold raise in 6 years without any supplying matters..?
jaime on Sun, 5th Feb 2012 2:17 pm
friends at the end of oil.i really like all of you’re comments, the money system will be remove,are you ready? where you live.i
jaime on Sun, 5th Feb 2012 2:18 pm
i will pass along george soros own words its all a matter of survival.
SOS on Sun, 5th Feb 2012 4:35 pm
North Dakota is now the third largest oil producing state in the nation and it is going to take 30 yrs to drill it based on current well spacing laws. It could go much faster if the size of the drilling industry is increased. Why is this happening? Most of the oil producing lands are privately held. The government and enviromentalists cant interfere with production. Mr Lynch is exactly correct in his article. The most important thing is to listen to those who know and whose logic is sound.
cusano on Tue, 7th Feb 2012 12:16 am
SOS…do you really believe that North Dakota can produce enough oil to make a difference?