Peak Oil is You
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Page added on April 8, 2015
“Peak Oil” Theory May Have Peaked
There are various versions of the “peak oil” theory, but for decades it garnered high-fives because it had been right about the U.S. Specifically, geophysicist M. King Hubbert published a theory of oil field development in 1956 that predicted total U.S. oil production would “peak” by about 1971 (at the latest) after which it would decline. Hubbert also predicted that the world would see a decline in total oil production by about 2006. Hubbert was wrong about the world, but for a while it looked like he had nailed the U.S. Yet the development of shale resources, and expanded use of “fracking” and horizontal drilling, in the United States during the last few years show that “peak oil” no longer applies even to its one success story.
A Chart of U.S. Crude Oil Production
The chart below is the latest from the Energy Information Administration (EIA) showing the history of monthly U.S. crude oil production:
The chart above shows why Hubbert was considered such a visionary, at least for a while. After his 1956 prediction, U.S. production did indeed rise and then peak just in time for the window Hubbert had given himself. The gentle decline in U.S. production from the mid-1970s through the early 2000s was also consistent with Hubbert’s theory, which treated the total national output as an aggregation of individual wells, each with a technically defined, bell-shaped curve lifecycle of output.
Yet as the chart also shows, the nice bell shape started turning around in 2009 and took off like a rocket in 2011. Looking at monthly figures, U.S. field production of crude in December and January were the highest values since 1972, and not far behind the all-time record set in 1970. Although the sharp decline in the world price of oil since last year may halt the rapid spike in U.S. output, it is obvious from the chart that the mechanistic model of “peak oil” theory is incorrect.
“Finite” Resources Never Run Out With Enough Ingenuity
The fundamental problem with “peak oil” theory is that it adopts a Malthusian mindset, in which we view humanity as the stewards of a single pool of oil that gets smaller every time we burn a barrel. Although oil (as far as we know) is indeed a finite, depletable resource, nonetheless economically the real constraint is always one of human creativity—as the works of Julian Simon and Robert Bradley emphasize.
Humanity doesn’t need technocrats micromanaging energy usage policies, because their technical expertise often overlooks the entire field of economics. The insight of geologists and other experts will be reflected in market prices, particularly futures contracts and more exotic derivatives. No human institution is perfect, of course, but the free operation of the market economy will foster the optimal development of energy from the various sources available. If history is any guide, we can expect that humanity will continue to use oil and other fossil-based fuels until private-sector innovations make something else even more efficient.
We don’t need to fear an energy shortage. To paraphrase the Doritos slogan: When it comes to crude oil, burn all you want; we’ll find more. The only threat to plentiful, affordable energy is political interference—in other words, “peak government.”
28 Comments on "“Peak Oil” Theory May Have Peaked"
GregT on Wed, 8th Apr 2015 7:19 pm
““Finite” Resources Never Run Out With Enough Ingenuity”
Without a doubt, the stupidest comment of the year award is in order. Who are these morons?
shortonoil on Wed, 8th Apr 2015 7:32 pm
IER
CEO Robert L. Bradley, Jr.
Bio: http://en.wikipedia.org/wiki/Robert_L._Bradley%2C_Jr.
GregT on Wed, 8th Apr 2015 7:59 pm
This guy’s BIO reads like a rap sheet.
Plantagenet on Wed, 8th Apr 2015 8:04 pm
You have to expect folks like Dr. Bradley to gloat a little bit now that oil prices have collapsed because of the oil glut. But Fortuna’s Wheel turns and turns again, and what is now down* may be up again.
*i.e. when the glut is over oil prices will rebound back to higher levels.
Davy on Wed, 8th Apr 2015 8:14 pm
Planter, I would call it moral criminality not gloating considering what is ahead. These type of folks should be strung up someday by the angry mobs. He is lucky the people who will be the angry mobs one day don’t read these things.
MSN Fanboy on Wed, 8th Apr 2015 8:36 pm
WOW…. Just WOW
More proof that having an economics degree is akin to brain damage.
I mean… finite resources never run out??? WTF
WOW
If brains were taxed, R.Bradley would get a rebate.
jjhman on Wed, 8th Apr 2015 8:37 pm
Thanks for the link Sort. This exerpt says it all:
“Bradley spent nearly 20 years in the business world, including 16 years at Enron, where for the last seven years he was corporate director for public policy analysis and speechwriter for Kenneth L. Lay.[5] His opposition to the company’s so-called “green” energy policy is recounted on his web site PoliticalCapitalism.org.”
Apneaman on Wed, 8th Apr 2015 8:42 pm
Austrian economics and National Socialism – Two really bad ideas that came out of Vienna in the early 20th century…..or maybe they are one and the same.
Nony on Wed, 8th Apr 2015 9:15 pm
peakers got their asses kicked by shale. Cry, cry. Hide, hide. TOD is dead, dead, dead, dead, dead!
Davy on Wed, 8th Apr 2015 9:44 pm
Innocent investors are going to get their butts handed to them NOo not peakers. Peakers can’t lose because nature rules the argument through the laws of depletion.
Newfie on Thu, 9th Apr 2015 6:19 am
“Finite” Resources Never Run Out.”
Isn’t human ingenuity amazing ?
ROTFLMAO.
rockman on Thu, 9th Apr 2015 7:44 am
“Yet the development of shale resources, and expanded use of “fracking” and horizontal drilling, in the United States during the last few years show that “peak oil” no longer applies even to its one success story.” An once more someone essentially lies about what Hubbert predicted in order to give themselves more cred. If one bothers to read the original work Hubbert clearly states he was predicting the future peak of the EXISTING oil trends in the US. He specifically points out that his model does not apply to future potential trends. His prediction continues to prove to be accurate to this day…those old conventional fields are on their last leg just as he predicted.
Today one can apply the same modeling technique to the Deep Water and shale plays. But if one hopes to be as accurate a Hubert has been proven they should wait until those trends mature a bit more just as Hubbert did with the population he based his stat upon.
samir on Thu, 9th Apr 2015 7:48 am
This article is clearly written by someone who is being paid to look stupid. No need to argue on logical terms with the author, he already knows!
shortonoil on Thu, 9th Apr 2015 8:32 am
“We don’t need to fear an energy shortage. To paraphrase the Doritos slogan: When it comes to crude oil, burn all you want; we’ll find more. The only threat to plentiful, affordable energy is political interference—in other words, “peak government.”
Over the last 6 months the petroleum industry has lost one-half of its income. Prices fell from $100/ barrel to $50. That is an annual income loss of $1.7 trillion. How many companies can take a hit of that size, and survive? Probably, not many!
Even if oil prices miraculously bounce back to $100 tomorrow, it would still take the industry many years to recover what it has already lost. E&D will be put on hold no matter what happens; future supply will be curtailed! “burn all you want” if you can find someone still in business to sell it to you?
We don’t think prices are going to miraculously bounce back:
http://www.thehillsgroup.org/depletion2_022.htm
we predicted this decline months in advanced based on the physics of petroleum production. Mr. Ex Enron is probably basing his prediction on how much he was paid!
http://www.thehillsgroup.org
Nony on Thu, 9th Apr 2015 8:57 am
rockman: completely incorrect. I have read the 1956 paper and repeatedly corrected your claims. Hubbert posited evolultion of technology, e.g. EOR.
Also, even if you were correct, what use is Hubbert’s work if cornies routinely say “technology will evolve and save us” and then we find out that peakers using resource depletion estimates have some get out of jail caveat?
P.s. Hubbert screwed the pooch hard on natural gas. Way, way, way off. [figures, guy was a Malthusian communist crank.]
peterev on Thu, 9th Apr 2015 9:54 am
Hey Nony,
I suggest you take up reading comprehension with regards to Hubbert’s seminal paper.
In the 2015 Exxon Mobile Energy Outlook: A view to 2040, Exxon clearly shows that Convention C+C peaked in 2005. I’ve attached that figure here. Of the “Peak Oil Predictors”, Ken Deffeyes was apparently the most accurate.
The overall curve has peak oil, gas, and their various products tending to peak in the 2040-205 time frame. This is based on finding “New Conventional C+C”. The resultant 30+ MBOD by 2040 is the equivalent to the production of 3 Saudi Aramcos.
Nony,can you point to the fields where this 30 MBOD will be produced from and using what techniques?
peterev on Thu, 9th Apr 2015 10:01 am
Hey Nony,
I suggest you take up reading comprehension with regards to Hubbert’s seminal paper.
In the 2015 Exxon Mobile Energy Outlook: A view to 2040, Exxon clearly shows that Convention C+C peaked in 2005. I’ve attached that figure here. Of the “Peak Oil Predictors”, Ken Deffeyes was apparently the most accurate.
The overall curve has peak oil, gas, and their various products tending to peak in the 2040-205 time frame. This is based on finding “New Conventional C+C”. The resultant 30+ MBOD by 2040 is the equivalent to the production of 3 Saudi Aramcos.
Nony,can you point to the fields where this 30 MBOD will be produced from and using what techniques?
The graph is located at:
http://peakoil.com/forums/download/file.php?id=845
Lawfish1964 on Thu, 9th Apr 2015 11:35 am
I remember distinctly listening to my parents chatting with friends over cocktails back in the mid-1970’s. The subject was the “energy crisis” which had just passed. My father’s take on the subject was “We’ll just use all the oil until it’s gone, and then we’ll use something else.” He was a cargo guy through and through. This garbage article relies on the same kind of wishful thinking.
shortonoil on Thu, 9th Apr 2015 12:18 pm
“The overall curve has peak oil, gas, and their various products tending to peak in the 2040-205 time frame. This is based on finding “New Conventional C+C”. The resultant 30+ MBOD by 2040 is the equivalent to the production of 3 Saudi Aramcos.
Most of these past prediction were based on the belief that the price of oil could/ would continue to increase. There was no consideration given to what the economy could actually afford to pay it; it was “assumed” that the price was unbounded. Most of these predictions were prepared by economists, and economics ignores the boundaries that are set by the laws of physics. It is a discipline that believes itself to be beyond the laws of nature; that there are no limits to human ingenuity.
In reality the value of petroleum has a limit, and we have already reached it. The mega fields of shale, bitumen, arctic, and ultra deep water are beyond our reach. They do not posses enough value to make them extractable. We can only dabble in them at the expense of other more beneficial sources. Almost every square foot of the planet has been explored, and re-explored for hidden sources of petroleum. Tens of thousands of geologists, and wildcatters have gone over, and over the planet for a century. There are no 3 Saudi Aramcos remaining!
http://www.thehillsgroup.org
Bob Owens on Thu, 9th Apr 2015 12:49 pm
Good Lord, I can’t stand articles like this. Mr. Hubbert’s theory is now almost 50 years old and was a stunning achievement for his day. And his theory is still as solid today as ever. There are, of course, some minor EOR items that he didn’t foresee, but, really, no one else has equaled his predictions, except for the Club of Rome. To now denigrate his theory with this article without offering a shred of proof except mankind will think of something is too much.
Apneaman on Thu, 9th Apr 2015 1:34 pm
Mankind thinks it is “smart”
Myths of The American Mind: Smartness
https://www.youtube.com/watch?v=gjR3h0RqVG0
Apneaman on Thu, 9th Apr 2015 1:38 pm
Econo priests and their followers think wealth comes from money and other fallacies.
Myths of the American Mind: Money Part I
https://www.youtube.com/watch?v=9hZmczjwjdY
Myths of the American Mind: Money Part II
https://www.youtube.com/watch?v=a9mbzn904o0
Apneaman on Thu, 9th Apr 2015 1:41 pm
Don’t worry about climate change and the host of other dire environmental disasters in the making…they’ll think of something.
Myths of the American Mind: Scientism
https://www.youtube.com/watch?v=Uuo21-9SJBI
Apneaman on Thu, 9th Apr 2015 1:42 pm
Jesus will spare the faithful.
Myths of the Modern American Mind: Religion
https://www.youtube.com/watch?v=tuGXtcVc330
Apneaman on Thu, 9th Apr 2015 1:44 pm
Can always blame the immigrants…..nothing new under the sun.
Myths of the American Mind: Race
https://www.youtube.com/watch?v=NrAh9xJ6WhY
Craig Ruchman on Thu, 9th Apr 2015 2:15 pm
“Over the last 6 months the petroleum industry has lost one-half of its income. Prices fell from $100/ barrel to $50. That is an annual income loss of $1.7 trillion. How many companies can take a hit of that size, and survive? Probably, not many”
I think I’ll invest my money someplace else!
To me it’s all about ERoEI and a rise in US production as other fields decline elsewhere. It would be nice to clarify the concept with chart showing our World C+C production over the last 20 years. Color the line black. Under this would be a blue line giving the average energy content of all the hydrocarbon fuels we extract in BTUs or Joules for a given year. This graph should be going down even as world production is going up, revealing the reality of PO. Now we draw a third red line showing the ERoEI. The 3nd curve is the energy content minus the energy used to get it out of the ground and refine it – what is actually given out to society. It should be plunging even faster than the 2nd line blue line.
Now we draw another chart alongside the first one that shows the dollar amount we spend per BTU or kJ each year as a black line. It should be going up over time. Finally, we show the dollar amount as percentage of GDP as a red line. This should be creeping up ever so slowly, doom for BAU.
Nony on Thu, 9th Apr 2015 3:50 pm
Hubbert screwed the pooch hard. He never made the caveat of excluding new production technology. And his prerdictions would be useless if he had. After all, cornies routinely tout new tech as a savior.
pat on Thu, 9th Apr 2015 7:42 pm
to put it simply the world major conventionals have already peaked and its the non-conventional which have enabled the sudden rise in the production. the last major sources of conventional mega fields in the ME etc are depleting fast and their ability to maintain the production rate is declining. the world is seeing the limits of everything, diminishing returns oil age will end before end of oil. the collapse of world economy has only prevented the huge shortages of oil in 2015 and the things of BAUs is past and the scope of ever rising growths, profits is over.