THE STRAIGHT DOPE

What’s the Latest on Peak Oil?

Sun, Nov 04, 2012   By Cecil Adams    30 Comments

Straight Dope - Peak Oil

 

What’s the current thinking on peak oil? Your column six years ago led me to think the petroleum tap was running dry and we’d soon be trading in our cars for bikes and roller skates. Now high-profile opinion types like David Brooks and Fareed Zakaria are making it sound like we’ve got nothing to worry about, what with fracking and dropping natural gas prices. Were you being an alarmist then, or are the optimists kidding themselves now? — David Wargo

 

Me, alarmist? Never. I just emphatically point out the facts. However, the situation has changed since my 2006 column on peak oil. Let’s take it step by step:

1. Peak oil is the point when oil production stops increasing and starts falling, with potentially dire economic consequences. That day will arrive eventually; the question is when.

2. Pessimists note oil production is tapering off or declining in many parts of the world and anticipate a peak soon — not long ago, some thought it would happen any day. However, people have been making gloomy forecasts for years, and virtually none have panned out.

3. The exception was in 1956, when geophysicist M. King Hubbert introduced the concept of peak oil in a famous paper. Drawing on analyses of U.S. petroleum reserves plus some informed conjecture, he correctly calculated domestic oil production would peak in 1970.

4. Global petroleum estimates were much fuzzier. Hubbert thought the “ultimate recoverable resource” for world oil was 1.25 trillion barrels; most reports I see now say it’s at least 2 trillion, perhaps much more. His prediction that global oil production would peak in 2000 was accordingly way off.

5. The official word is we haven’t reached peak oil yet, and probably won’t for a while. The U.S. Energy Information Administration says world oil production was about 85 million barrels per day in 2011, and predicts a steady if slowing increase to 99 million barrels per day by 2035 — as far out as the forecast goes.

6. Now for the part no one anticipated in 2006: U.S. energy production has jumped in the last few years due to improved recovery techniques such as hydraulic fracturing of shale rock, also known as fracking. EIA statistics show a 24 percent increase in U.S. production of petroleum and natural gas between 2006 and 2011. Domestic natural gas is now so abundant the EIA predicts the U.S. will be a net exporter by 2022.

7. This puts matters in a new light. Oil has been the focus till now because transportation relies heavily on liquid fuels — currently natural gas is mostly used for heating and electricity generation. However, it can also be used to power vehicles — some transit agencies use compressed natural gas to fuel buses. So we should really be talking about peak oil and gas. When might this occur?

8. My assistant Una dug through the statistics and established the following. First, as of 2005, ultimate recoverable natural gas in the world was between 8.5 and 12.5 quadrillion cubic feet. Second, between pre-fracking 2000 and frack-happy 2010, U.S. proved natural gas reserves increased 72 percent.

9. We then commenced arguing. I noted fracking was now mainly confined to the U.S., due partly to scruples about contaminated groundwater and such. Let’s suppose the world gets over all that and starts fracking as much as we do, with the result that world recoverable gas reserves jump at the same rate as U.S. proven reserves. That would give us 17 quadrillion cubic feet.

10. This was too cavalier for Una. The most she’d concede was 12.5 quadrillion feet, the equivalent of 2.3 trillion barrels of oil.

11. Fine, I said. But another fossil fuel can also be liquefied and used for transportation in a pinch, namely coal. What’s the recoverable world stash of that? One trillion tons, Una said, the equivalent of 3.3 trillion barrels of oil.

12. By now it had dawned on us the limit of importance wasn’t oil, or oil plus gas, but all fossil fuels taken together. We computed global recoverable fossil fuels as follows: 2 trillion barrels of oil + 2.3 trillion barrel-equivalents of natural gas + 3.3 barrel-equivalents of coal = 7.6 trillion barrel-equivalents total.

13. Finally we (well, I) took a stab at estimating peak fossil fuels, which I called PFF, or “piff.” Much depends on developments in the world economy, conservation, alternative fuels, and who knows what else, but I optimistically predicted PFF wouldn’t occur till 2100.

That kicks the can down the road. However, let’s remember a few things. One, if we’ve burned through half the planet’s fossil fuels by 2100, our problem won’t be global warming, it’ll be global scalding. Two, fossil fuels provide the bulk of the energy for everything — transportation, heating, electricity. Looked at in that light, 2100 isn’t that far away.

The market will remind us. Although natural gas now is cheap, long-term energy prices due to growing world demand will inexorably rise. That noise you hear? Perhaps you thought it was the ringing of the cash register. Ah, no. It’s tick tock.

— CECIL ADAMS

Send questions to Cecil via straightdope.com or write him c/o Chicago Reader, 350 N. Orleans, Chicago 60654. Subscribe to the Straight Dope podcast at the iTunes Store.

Tagged , , , , , ,



You might also like:

30 Comments

  1. powerMon, Nov 05, 2012 at 4:09 am

    So why the war for oil control? anyway as big as a debate as this topic is..theres bigger fish to fry on the global front but everyones too interested in ipads iphones facebook big cars big speakers a hundred pairs of nike sneakers and bling,skinny jeans and hair straighters prrfttt said the guy on the laptop huh? haha

  2. Ian Brett CooperMon, Nov 05, 2012 at 6:18 am

    Erm… we reached peak oil in 2005. The idea that the peak is in the future is nonsense. All they did was change what counts as ‘oil’ so that they could pretend (for a few more years) that we’re still in a pre-peak world.

  3. Peak SignsMon, Nov 05, 2012 at 7:34 am

    Spot on Ian. Peak production of conventional crude oil has already happened. Conventional crude oil production is declining. Currently the decline is being slightly more than offset by unconventional oil production, natural gas liquids and biofuels. All of which have less net energy and are much more costly to produce. In short we are replacing lost production of $20-$30 barrel oil with $80-$100 barrel liquid fuels. That’s why the prices remain high even though demand is flat and subdued compared to 2007 demand levels.

    The real question is, how much longer can these unconventionals continue to offset the decline in conventional crude oil, which is the bulk of our liquid fuel energy supply.

  4. WhyDenyPhysicsMon, Nov 05, 2012 at 7:39 am

    Way off? Did you even look at global crude production charts? Ian is right, 2005 was global crude production peak. The fracked gas people don’t even realize the low price was due to too many people getting in on the action. Those prices do not support the costs needed to produce that resource so the drilling has already slowed down. It will take a few years for the price to balance out. Then you will see that this low EROEI resource, like tar sands and very deep water, is just too expensive to maintain our current lifestyles. Growth like we saw for over 150 years is over.

    Peak is not a theory, it is a fact. We live on a finite planet and fossil fuels are a non-renewable resource. If you keep drawing down that resource, eventually peak will hit. I don’t understand how people that don’t even understand basic math can deny such facts. That seems so arrogant, at the very least. Almost like denying that drinking from a glass of milk can be sustained forever.

  5. GhungMon, Nov 05, 2012 at 7:46 am

    Wow… let’s just pay minor service to the role economics will play in this fossil fuel end-game. A quadrupling of the cost of oil has only yielded a minor increase in production. While squeezing more tight oil out of the ground, or scaling up production of unconventional liquid fuels may be technically feasible, the economics will be the ‘decider’, not our needs or wants. US natural gas extraction has been operating at or below the profit margins for several years, and crude oil prices have been fluctuating between $80 and $120; significant to economies that evolved around oil in the $20 range. This protracted economic downturn is very much a function of economies robbing Peter to pay Paul’s energy bill, and related knock-on effects. Expect natural gas markets to correct themselves (further exacerbating the affordability factor), and credit/CAPEX to become increasingly constrained.

    We, in the West, have reached the limits as to what we can pay relative to derived utility and economic benefits. We are also reaching a point of diminishing returns from efficiency improvements. The process of economics ignoring hard limits through repeated injections of faux capital is self-limiting. Scraping the bottom of the barrel, we are. I don’t share any sense of complacency regarding the peak extraction of fossil fuels and am making other arrangements, keeping it local.

    Oh,,, and I spared the readers any discussion of the plethora of other predicaments we face, all of which will constrain our ability to extract oil and its so-called substitutes. Good luck out there…

  6. martincometMon, Nov 05, 2012 at 7:55 am

    with gigantic new discoveries in the US and soon all over the world the peak oil thesis is now delayed by at least a hundred years but as you point out climate change is by far the more pressing issue. as we have seen with ‘Sandy’, predictions that were not taken seriously in the past (NYC subways flooded) are now becoming reality. sadly this is just the beginning. god help us if romney is elected, he will further cut environmental regulations and a much needed move towards a sustainable energy policy.

  7. MrColdWaterOfRealityManMon, Nov 05, 2012 at 8:00 am

    Hydrocarbon supply doesn’t equal energy supply. What matters is net energy. The last half of our oil supply represents, in total, far less NET energy than the first half. Ditto for coal. Natural gas is a bright spot, certainly and my keep us going for quite a while. But by 2100, we’re not going to have much to work with there. At that point, we have nuclear power and a non-pathetic battery technology, or we have wood, steam and muscle.

  8. Sandra CassMon, Nov 05, 2012 at 8:34 am

    Wow martincomet

    I am waiting to be enlightened about the gigantic new oil discoveries in the US. I am not aware of any and neither is the EIA. I hope you are not thinking of the tight oil in the Bakken (North Dakota) and in Eagleford (Texas) because both of them were discovered decades ago.

    The fact that they are now being exploited is simply due to the high world price of oil – which make their pursuit economically feasible. But the high price of oil is die to the peaking of world oil production – as several others have pointed out.

    Since production (millions of barrels per day) is very slow for the tight oil, and will cease if the world oil price drops significantly; tight oil is not a solution to the peak predicament. The “peak oil thesis” is not a thesis but a fact and the last seven years of world production data indicates it is upon us. 100 years delay – how?

  9. GoinFawrMon, Nov 05, 2012 at 9:19 am

    Relax Sandra. ‘Peak oil’ doesn’t matter so much to a nation with captive suppliers. Think Saudi; or closer to home, think NAFTA, think Canada, think ‘proportionality clause’.

    Under the pretense of respecting environmental concerns, Canucks will never ever be permitted to build a pipeline to one of their own coasts, where they could demand actual market prices for their hydrocarbons; but you can bet your sweet a## all pipelines that are directed south will be constructed, even if the populations affected have to be dragged along kicking and screaming to git ‘er done.

    If at this point you’re still looking for the reason why this is inevitable simply examine the ~half-price/bbl of Western Canadian Select vs. Brent.

  10. notaneoliberalMon, Nov 05, 2012 at 1:48 pm

    Why try to equate “oil and gas” to oil. Oil is oil. Gas isn’t oil. The glut of natural gas does next to nothing to affect transportation fuel availability.

  11. MrColdWaterOfRealityManMon, Nov 05, 2012 at 1:55 pm

    But natural gas can be re-purposed as transportation fuel. We don’t do it much in the USA but this is not the case in other countries. When gasoline gets expensive enough (and it will), natural gas vehicles will become available either through retrofit or direct manufacture. It’s possible to convert either natural gas or coal to oil, but this involves extra expense and energy loss. It makes more energy sense to use either directly where possible.

  12. martincometMon, Nov 05, 2012 at 3:05 pm

    Sandra, I guess you have not been paying attention.

    The EIA is notoriously slow so you have to pay attention to the explorers and drillers. New major oil reserves are being discovered faster now than ever before in American history. The technologies that led to the natural gas glut between 2008 and 2012, have been put to work in oil fields across the U.S. The resulting oil boom is underway right now.

    You mention the Eagle Ford in Texas: There is a land rush going on in county after county there as we speak. None of this is due to the economics changing but to new discoveries. Yes, these are additional finds in existing fields. the latest estimates from Goldman Sachs indicate that the USA will outpace Saudi Arabia in oil production before the end of this decade.

    Official estimates of US proven reserves have already gone up from $15 billion to $20 billion but the oil companies have dramatically increased their reserve estimates in the last 2 years. Each one of our 5 major shales is now showing additional finds that might put the proven reserve total at $20 billion barrels for EACH one of them. So total proven reserves for the USA alone are in the process of going up 5-fold. To $100 billion barrels. You won’t find this on the EIA website (yet) but in the quarterly reports of major and minor oil companies from all over the world.

    Of course this is good news and bad news depending on how you look at it but the size of the new discoveries is staggering.

  13. martincometMon, Nov 05, 2012 at 3:20 pm

    Because we found so much of it a few years ago Natural Gas is much cheaper here in the US than in other parts of the world. We have very few export facilities in the US yet or companies would love to sell it abroad for 3 times the price they can get here. But due to the low prices many truck and bus fleets have been converted to run on gas lately and this trend will surely continue and also become a factor with passenger cars. We see it here in WeHo where all the garbage trucks by Athens as well as the MTA buses run on Nat Gas. Let’s hope that the local City Line buses will be next, once the fleet gets expanded from just 2 minibuses. We need clean public transportation.

  14. ronwagnMon, Nov 05, 2012 at 5:06 pm

    Natural gas is the future of energy. It is replacing dirty old coal plants, and dangerous expensive nuclear plants. It will fuel cars, vans, buses, locomotives, aircraft, ships, tractors, engines of all kinds. It costs far less. It will help keep us out of more useless wars, where we shed our blood and money. It lowers CO2 emissions. Over 2,400 natural gas story links on my blog. An annotated bibliography of live links, updated daily. The big picture of natural gas.
    Ron Wagner

  15. MassbytesMon, Nov 05, 2012 at 5:47 pm

    martincomet…Reserves are not production and much of them never will be. The resources needed to drill and complete the shale wells are massive and of course, being human we are drilling the best spots first. America will never again produce more oil than we did in the 70′s even with your new massive reserve “discoveries”.

  16. martincometMon, Nov 05, 2012 at 6:18 pm

    massbytes, in general you are correct. but i was addressing the idea that “peak oil” is imminent or has already happened by pointing out the proven reserves that are currently multiplying.

    but new drilling technologies have cut the costs of extraction substantially.
    of course the market will determine what is feasible to extract but production has and is growing fast right now and as long as oil prices stay high it is very much feasible for companies. it certainly is now with oil prices still above $80, for the first time since 1949, America is now a net energy exporter again.

    i don’t have the production numbers for the 70s but i doubt your claim that production numbers can’t be surpassed. production has gone up fast and continues to do so. here’s a taste of the boom that’s coming. oil production in the Eagle Ford was 4.3 million barrels during 2010. just one year later it was almost 10 times more – 36.6 million barrels. By the end of 2012, that figure will certainly be over 50 million barrels and this rate of growth is going to continue until the price of oil goes down substantially.

    my point is that the market (including speculation) will determine the scale of production. but there is no shortage in reserves as long as the price stays where it is now.

  17. DurangoKidMon, Nov 05, 2012 at 11:16 pm

    A couple of things to keep in mind about “gigantic” oil finds. The world goes through about 1 billion bbls every eleven days. Finding a 1 billion barrel reservoir is nice, but nothing to really crow about. Also, consider the production rates of some of the larger unconventional finds. Not too impressive. And the cost per barrel. For some deep water oil, prices below $60/bbl spell trouble. Compare that with a buck or two for some onshore oil in the middle eastern oil patch. Then there are the expanding reserves and refinery gains that amount to a lot of fuzzy numbers. Let’s consider the price of oil. $85/bbl today. At that price shouldn’t everyone and his brother be pumping oil like there’s no tomorrow? Why doesn’t all this new oil drive the price down?

    The only explanation that seems consistent with the facts is that conventional oil production is in serious trouble. Unconventional oil production will grow simply because that’s the next stage in oil production. But the production rates for unconventional oil are a lot lower. Production from all sources combined has more or less stagnated since 2005. Is it growth in supply or just noise in the system? Cheap plentiful energy would be a big help in getting us out of this recession. Where is it?

  18. DaShuiTue, Nov 06, 2012 at 7:43 am

    Don’t forget about peak exports.

  19. DurangoKidTue, Nov 06, 2012 at 10:10 am

    DaShui, the devil is in the details. By some projections the export market is supposed to decline twice as fast as conventional production. Who in the west doesn’t import oil? It’s a pretty small club. Walkable neighborhoods, mixed use zoning, electrified rail transit. It’s not like I don’t have answers!

  20. martincometTue, Nov 06, 2012 at 10:54 am

    durango kid, the price of oil is not only determined by supply and demand. geopolitical events as well as speculative trading can be the overriding factors in the short and mid term. with monetary easing policies worldwide (money printing) investors are fleeing into commodities like oil and keep the prices high. the current relative high price cannot be explained by supply demand ratios. transportation is also an issue, you cannot move the north dakota oil (where production is skyrocketing, they are about to overtake Qatar in production!) to california or the east coast.
    but within the next few years we might see prices drop because of a glut in supply just as they did with nat gas. most US shale and tight oil is profitable to extract as long as prices stay above $50-65 levels.

  21. LandbeyondTue, Nov 06, 2012 at 11:32 am

    “America is now a net energy exporter again.”

    martincomet, you do understand that America is not a net oil exporter? It is a net petroleum products exporter, and the volume is tiny compared to the something like 8 million barrels of oil per day that it still imports. Thee has been a small recent increase in oil output, but comes the next (stage of the) recession the price of oil will drop and so will the output of this expensive-to-produce oil.

    Natural gas is another story that will likely soon end in tears. There is no energy fairy, and America and the world are still slipping into an energy crisis with their heads in the sand.

  22. martincometTue, Nov 06, 2012 at 3:19 pm

    landbeyond, i do understand the difference, that’s why i wrote ‘energy’, not ‘oil’.
    nobody’s head is in the sand except yours if you believe that we are ‘slipping into an energy crisis’ anytime soon. the numbers say differently.

  23. Matt MTue, Nov 13, 2012 at 1:06 am

    Interesting analysis. It would be good if Una were able to fold in the conversion costs. I.e. net out the barrel of oil equivalents required to convert coal to useable oil. I suspect big challenges which are missed today is the amount of energy required to extract the unconventional fuels and process them into something we can use.

  24. sallyandjaneThu, Nov 15, 2012 at 9:12 am

    What is the purpose of increasing outputs at this point? It’s a game for fools. Can’t people see that we are only accelerating depletion. This is not the way that we are going to achieve a controlled descent. The higher we push the peak the steeper the downward slope will be.

  25. martincometThu, Nov 15, 2012 at 10:27 am

    sallyandjane, i completely agree, not to mention the climate consequences. only a global carbon tax or carbon credit system could slow things down, combined with tax incentives for sustainable energy.

  26. AndrewSat, Nov 17, 2012 at 11:17 am

    A house cat is smart enough not to take a crap in it’s own drinking water; humans, not so much.

    Women and animals are experiencing spontaneous abortions after the water table becomes contaminated. The documentary, “Gasland” mentioned 80 contaminants in the water table, including Benzene: http://en.wikipedia.org/wiki/Benzene#Health_effects

    You can see the “jellyfish” that one woman gave birth to, in “Weibo’s War”: http://www.youtube.com/watch?v=dnBibPMCcME

    From the documentaries, “Blue Gold” and “A World Without Water” only 2% of the water on the planet is drinkable. Desalination plants are too expensive for corporations to build.

    Meanwhile, the control freaks who run the world are busy assassinating anyone working on anything even vaguely progressive, including the concept of Free Energy:

    http://www.youtube.com/watch?v=uWOxnXKB8VQ

    http://www.sirius.neverendinglight.com/

    “Not too bright folks, not too fucking bright” – Carlin: http://www.youtube.com/watch?v=K4afEzfNvX8

  27. Adam GrantWed, Nov 21, 2012 at 12:06 pm

    Oil will only keep coming out of the ground as long as it’s cheaper than other forms of energy. As the combined capacity of installed solar installations becomes significant, expect a reduction in demand for fossil hydrocarbons.
    As oil prices continue to increase, solar capacity will expand until most energy comes directly from sunlight. That is to say, the right side of the Hubbert curve will be cut off, ultimately leaving more oil in the ground than would be expected if it were the only energy source.
    There is so much sunlight falling on the Earth every hour that the supply is effectively infinite.

  28. martincometWed, Nov 21, 2012 at 7:09 pm

    adam, that would be nice but since we are dealing with an impending oil supply glut, prices can hardly be expected to increase in the next few decades. my concern is that the recent estimates indicate that the point of “peak oil” won’t happen this century. that’s why we desperately need carbon tax or credit policy to implement a sustainable energy infrastructure. sadly it won’t happen anytime soon without policy intervention.

  29. chloe rossTue, Apr 02, 2013 at 7:17 pm

    As it so happens my son is an expert on peak oil. He is at UCSB at the Bren School of Environmetal Engineering. His name is Tariel Morrigan. Google him and see his already published papers on the subject.

Leave a Comment

dailyFix Newsletter Signup