Richard Heinberg: Is Peak Oil ‘A Misleading Concept?’

George Soros has just published an interesting article in the New York Review of Books for September 25, titled The Perilous Price of Oil. In the course of explaining the recent spike in the barrel price of petroleum he writes that “the cost of discovering and developing new reserves is increasing, and the depletion rate of aging oil fields is accelerating.” The discussion of these worrisome facts, he notes, “goes under the rather misleading name of ‘peak oil’,” a phrase that implies that “we have approached or reached the maximum rate of world output.”

Soros goes on to point out that “some of the most accessible and most prolific sources of oil in places like Saudi Arabia and Mexico were discovered forty or more years ago and their yield is now rapidly falling.” But, tellingly, he reassures his readers that “[Peak oil] is a misleading concept because higher prices make it economically feasible to develop more expensive sources of energy.”


Soros is far from being alone in this opinion. There is a veritable cottage industry of economists and statisticians (including Daniel Yergin, Bjorn Lomborg, Peter Huber, and Michael Lynch) who tirelessly implore their readers not to panic over oil prices because The Market will always come to the rescue. As easy conventional oil depletes, tar sands, oil shale, and biofuels become more economic to produce. Even coal-to-liquids becomes feasible on a large scale. And, as everyone knows, there is an endless amount of coal.

Another cottage industry (this one much less prominent in the mainstream media) composed largely of physicists and geologists rebuts this argument. These writers point out that what may seem “economically feasible” on the basis of a few calculations may not be so in fact: physical barriers may prevent low-grade hydrocarbon resources such as tar sands from yielding the flow rates of regular oil, regardless of petroleum