Peak Oil: Same Nonsense, Different Day

If they don’t get it [doubtful], then they either need to learn some basics, or write about what they know.

If they do know but have made a determination that full disclosure of facts to the public would not be in their own best interests, well … draw your own conclusions.

The seemingly endless parade of carefully-manicured, in-close-proximity-to-the-truth commentary attempting to debunk the concept of peak oil once and for all made its regularly scheduled appearance courtesy of this recent article by John Kemp, which disputes conclusions drawn by the University of California’s James Hamilton on higher oil prices.

Of course, disputing reality by those who cannot seem to bring themselves to an actual discussion of the relevant facts is the standard MO. That it is “successful” does nothing to diminish the potential harm to countless millions of readers unaware and otherwise uninformed about subjects such as peak oil. (Climate change and just about anything offered by President Obama fit neatly into this structure as well.)

Professor Hamilton offered an excellent brief on high oil prices and the near-certainty that those high prices are going to be with us for a long time to come. But, as is true too often with those who have a vested interest in making certain the public doesn’t understand the realities of oil production in the 21st Century, the evidence offered by Mr. Hamilton is a distraction from their message. And so the nonsense continues….

Most of that discussion focuses on the high cost of drilling and fracturing shale wells; the rapid decline in production; the alleged unprofitability of shale wells; and question of whether the conditions that produced the shale revolution in North American can be replicated in other parts of the world.
But this part of the paper is also the weakest, and it highlights the fundamental limitations with Hamilton’s entire argument about the increasing difficulty and costs of producing crude oil.
Since 2008, the dramatic increase in oil and gas production from shale formations in North America, and the abundance of shale resources around the world, has discredited theories about peaking oil production.
The simple theory that supplies will run out has been reframed as a more sophisticated one about rising prices.

Nice statements offered by Mr. Kemp, but he seems to have omitted the part of the conversation which begins with “Because … ” in his attempt to dispute the reasoning supplied and conclusions rendered by Hamilton, whom he acknowledged as “one of the most respected economists writing about oil.”

While it would appear that the mere utterance of “this part of the paper is also the weakest, and it highlights the fundamental limitations with Hamilton’s entire argument about the increasing difficulty and costs of producing crude oil” is presumed to be sufficient to rebut the professor’s assessment, some of us—at least every now and then—like to know “why” a position is being contested.

We also happen to think that “the high cost of drilling and fracturing shale wells; the rapid decline in production; the alleged unprofitability of shale wells; and question of whether the conditions that produced the shale revolution in North American can be replicated in other parts of the world” are actually quite important and quite valid reasons for questioning the deniers’ optimistic view of “No Energy Supply Worries Here.”

Facts, evidence, reality tells us that drilling/fracking shale is in fact much more expensive than conventional crude oil production efforts. The rapid decline rate in production from shale wells is both well-documented and actually worrisome. If the wells being tapped are emptying themselves much faster than the crude oil fields we’ve relied on for more than a century—and oh by the way those conventional fields are likewise on the downside of their peak in production—and the best locations (“sweet spots”) have been tapped first, then most of us ought to be able to draw the obvious conclusion: “Uh oh!”

And like all other deniers, mentioning “abundant” (or “vast,” “massive”—pick your favorite) resources is presumed to be the perfect rebuttal. If explanations, distinctions, and information about abundant resources below ground or the seabed are added to the cheers, it quickly becomes apparent that resources somewhere out there is far from an assurance that they will soon find their way “here” at affordable prices. But if deniers invest a minute or two to explain any of that, well … there goes a major talking point, along with credibility, while adding the embarrassment of having to explain why the truth was so difficult to share.

Given the just-as-well-documented investment and funding concerns propping up the industry (no funding = no producing), coupled with the geological, technological, and geopolitical considerations which must be duly accounted for when contemplating the “abundant” resources in all four corners of the world, “uh oh” is all the more obvious.

At least it is to those actually concerned about the future beyond the next earnings report.

More to come….

Peak Oil Matters by Rich Turcotte