Peak Oil: Facts To Keep In Mind

Good news sells, and doesn’t rock any boats, but policy makers and politicians comforted by rosy forecasts are unable to understand the risks and properly prepare the country for long-term energy sustainability….
A more prudent, conservative US oil forecast would look very different. It would consider that, although surprises are always possible, the most productive fossil fuel resources do tend to be discovered first and produced first. It would take note of the fact that production in fracked wells declines extremely quickly, requiring an accelerating drilling treadmill to maintain—let alone grow—production, with associated collateral environmental impacts. It would assume that most tight oil plays producible at current oil prices have already been discovered and put into production, and that major new resources—if they exist—are unlikely to be forthcoming unless there is a significant rise in oil prices. In short, the forecast would be based on actual data from existing and legitimately forthcoming plays, and leave the feel-good speculation about future resource abundance to Wall Street.
This is no small matter. The projected availability and price of future oil directly impacts decisions being made today about everything from factory expansions to multi-billion dollar transportation projects. It influences federal government policy on encouraging (or discouraging) gas mileage standards, electric vehicles, building efficiency, and renewable energy. And it certainly colors the debate around regulating the exploration and production of fossil fuels in communities and public lands across the country. (Links/citations in the original) [1]

No small matter indeed! (And yes, facts can suck the life out of the best of stories.)

When the fossil fuel industry’s pleasant tales of energy abundance and just-around-the-corner energy independence via “Saudi America” are seemingly supported by rosy forecast scenarios by the federal government, it’s difficult to pierce the veil of all that optimism and consider the genuine information and facts.

Riding that wave of abundance-at-hand narrative are citizens and other organizations, businesses, and commercial enterprises who base their future plans in part on what is a likely scenario from trusted sources. It’s one thing to acknowledge that those in the industry are a wee bit biased and will work diligently to spin out the best possible projections. But when the government seems to support those expectations, the hill which facts must climb becomes steeper by a substantial factor.

Those [like me] urging a more cautious assessment and a more serious approach to the facts at hand can be more easily dismissed as nothing but doom-and-gloomers looking to spoil a good news party at a time when good news about the future is at a premium. If it were true, it would be an even better story!

As Daniel Lerch painstakingly details in his well-worth-reading analysis, the optimism expressed in the Energy Information Administration’s (EIA) Annual Energy Outlook 2014  (AEO 2014) isn’t exactly deserved. Speaking to the Outlook’s forecast projections, he states:

[The] impending and long-term US oil abundance is not just surprising—it’s a dangerous return to a 2004 way of thinking….
Is the forecast that the United States will hit 9.61 million barrels of day of oil in 2019 credible? Perhaps, if everything goes right and capital inflows don’t falter; the forecast is largely driven by measurable results from the most productive areas of the Bakken and the Eagle Ford. But once those are tapped out, there’s scant evidence for a future in which the oil produced from the remaining tight oil plays will amount to nearly four times as much as from the Bakken and Eagle Ford—let alone that tight oil production will decline only gradually over the following 20 years. Indeed, one must conclude that the EIA’s projection assumes that future technological innovations will make it economical to produce currently unprofitable oil despite oil prices hardly changing. (Links/citations in the original)

Quite the stretch.

As Lerch explains, the projections resulted from some ambitious tweaking poured onto a lot of optimistic assessments. That’s not to say the EIA’s report is instantly suspect, but there’s little room for error. If, as the evidence suggests, overlooked data turns out to be important, or massaged information proves to be of much less value than expected, we’ll have more problems, not less. That’s risking a lot more than the reputation of just one federal agency.

When members of the public—with little time, means, or inclination to sink their teeth into the full range of information on such a complex subject in order to arrive at their own reasoned conclusions—are left with a satisfying impression that energy supply worries are not a concern, they will plan and proceed accordingly.

Given the analysis and information Lerch shares, a lot of people and industries are relinquishing the opportunity to learn more and plan differently on the basis of information which is optimistic in the extreme. No room for errors in forecasting means that when the facts roll out, we’re all going to be further disadvantaged because accurate data was glossed over and thus we’re then with fewer opportunities to plan and adapt to energy supply conditions which were unmoved by optimism.

peak oil matters