Peak Oil Doesn’t Mean No Oil

Message Becomes Muddled

Some people who believe in Peak Oil look very worried.

They say that society, governments, nations have to act today to avoid an economic disaster in the future.

But they have a problem.

How do you sound an alarm without sounding alarming?

“I don’t think you can,” said Robert L. Hirsch, senior energy program adviser for Science Applications International Corporation (SAIC) in Arlington, Va.

“You can’t have an alarm that’s full of qualifiers,” he noted.

Peak Oil theory says the world’s conventional oil production will reach a maximum limit and then begin declining steadily.

Believers put that peak in production anywhere from one year to 25 years away.

A few think the peak might have happened already.

Many are now worried about rapidly rising oil demand that threatens to outrun oil supply, about political constraints on oil production in addition to physical constraints.

They worry about a past lack of attention at the national level.

“We’ve been stuck on stupid for 30 years when it comes to energy policy,” said Randy Udall, director of the Community Office for Resource Efficiency in Aspen, Colo.

Almost every Peak Oil believer expects a painful transition for society when oil abundance disappears.

Just how painful is open to debate.

You could have an apocalypse later.

Or, you can have ...

Apocalypse Now

Several leading proponents of Peak Oil appear in the 2004 documentary The End of Suburbia, a film that was shown to AAPG Foundation Trustee Associates at the group’s meeting last fall.

In it they discuss the ramifications and likely aftermath of a peak in world oil production.

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Some people who believe in Peak Oil look very worried.

They say that society, governments, nations have to act today to avoid an economic disaster in the future.

But they have a problem.

How do you sound an alarm without sounding alarming?

“I don’t think you can,” said Robert L. Hirsch, senior energy program adviser for Science Applications International Corporation (SAIC) in Arlington, Va.

“You can’t have an alarm that’s full of qualifiers,” he noted.

Peak Oil theory says the world’s conventional oil production will reach a maximum limit and then begin declining steadily.

Believers put that peak in production anywhere from one year to 25 years away.

A few think the peak might have happened already.

Many are now worried about rapidly rising oil demand that threatens to outrun oil supply, about political constraints on oil production in addition to physical constraints.

They worry about a past lack of attention at the national level.

“We’ve been stuck on stupid for 30 years when it comes to energy policy,” said Randy Udall, director of the Community Office for Resource Efficiency in Aspen, Colo.

Almost every Peak Oil believer expects a painful transition for society when oil abundance disappears.

Just how painful is open to debate.

You could have an apocalypse later.

Or, you can have ...

Apocalypse Now

Several leading proponents of Peak Oil appear in the 2004 documentary The End of Suburbia, a film that was shown to AAPG Foundation Trustee Associates at the group’s meeting last fall.

In it they discuss the ramifications and likely aftermath of a peak in world oil production.

The documentary also touches on the end of long-distance trucking and the highway system, a permanent economic depression, severe food shortages and the destruction of suburban home values -- in general, on topics that make the Bible’s Book of Revelation seem way too optimistic.

Stephen B. Andrews is a Denver energy consultant and co-founder of the Association for the Study of Peak Oil and Gas-USA.

Andrews appears briefly in The End of Suburbia, and he concurred that the documentary is alarmist in tone.

“I’m much less certain than a lot of people about what the economic impacts and the social impacts (of Peak Oil) will be,” he said.

He expects a world production peak within 10 years, but not a sharp decline immediately afterward.

“In scenario planning, I really think you have to pick a certain date. I pick 2015. There’s nothing certain about that, except the date. We’re going to get there,” Andrews said.

“In the world of Peak Oil prognosticators, that would put me in the middle of the road. A number of people believe we already have peaked. I don’t believe that’s true,” he added.

For the public, the idea of Peak Oil has become muddled with the alarmist belief that the world is running out of oil.

“The way to talk about Peak Oil without sounding alarming is to say that we’re not running out,” Udall observed.

“At the moment you get to Peak Oil you have a bigger (producing) resource than you’ve ever had, and more than you’ll ever have in the future.

That’s why it’s a peak,” he said.

Peak Oil doesn’t have to cause catastrophic consequences, in that view.

“It isn’t a question of running out. It’s a question of oil prices being more volatile and trending up over time,” Udall noted.

Breaking Away, Starting Over

Hirsch served as project lead for the 2005 SAIC report “Peaking of World Oil Production: Impacts, Mitigation and Risk Management,” prepared for the U.S. Department of Energy’s National Energy Technology Laboratory.

That evaluation has become known as “the Hirsch Report,” and it presents Peak Oil as a risk-management problem -- but one without an easy solution.

Take the challenge of increased fuel efficiency, Hirsch said.

“The vehicle fleets in the United States and the rest of the world are very large,” he explained. “It takes a long time to make a dramatic difference.”

Modernizing the rail system and converting locomotives from diesel to electric power would require a huge build-up in electric generation, a massive amount of capital and many years of effort, Hirsch noted.

“Ultimately I think that’s a good idea and it’s one way to go, but the magnitude of the timescale involved is enormous,” he said.

Problems like that trouble Hirsch, because he thinks serious mitigation efforts should start at least 20 years before Peak Oil occurs. That would lessen the most serious effects of declining production.

If mitigation begins 10 years before Peak Oil, there would be 10 years of world energy problems.

Without mitigation, serious energy problems -- if not a world energy crisis -- would persist for 20 years or more.

“If you’re in a decline situation and you have increasing demand around the world ... what you’re going to have is oil prices increasing, and the $3 (per gallon gasoline) complaints are going to be much worse, because you’re talking about $6 gasoline or $8 gasoline,” Hirsch said.

At higher price levels, governments will be tempted to intervene with price controls, ultimately dampening gasoline production, he added.

“Then you’ll have $6 a gallon gasoline. But you won’t be able to get any,” he said.

Hirsch acknowledged the conundrum in calling for mitigation 20 years before a Peak Oil event no one can predict with certainty.

“The best thing to do is to recognize that we have a very serious problem,” he said, “and it’s better to err on the side of doing things too early rather than too late.”

All That Jazz

Recently, Peak Oil proponents have broadened their focus beyond the world’s oil supply. Escalating oil demand could cause near-term disruptions and make the peaking effects much worse, they say.

They also view geopolitics as a serious and growing threat to world oil production.

“I think the other half of the drivers -- the non-geologic-limit drivers -- are right now more significant in many regards,” Andrews said.

He noted that many oil-producing countries have problematic politics, in Latin America, Africa, Russia, Asia and the Middle East.

“When you look at the fact that they have the oil and they hold the keys to determining how much and how fast oil will be produced in the future, it really isn’t that hard to say we could be hitting a peak in production in the timeframe I’ve suggested,” he said.

Udall sees more bad news that’s good for unconventional energy resources.

“The good news on the unconventionals is that most of them are in the Western Hemisphere. But there are problems with unconventionals. They are never going to come onstream in a fast way. And they are very expensive,” he said.

He called the expense of developing Canada’s tar sands “mind-boggling” and referred to oil shale as “the world’s worst fossil fuel.” The problem with Venezuela’s heavy oil resource is that it happens to be in Venezuela, he said.

To Udall, Peak Oil is a reality waiting to happen -- anyone should be able to do the math of production declines and oil replacement rates.

“It’s just arithmetic now,” he said.

So he’s puzzled that the oil industry hasn’t shown more interest in Peak Oil.

“It’s interesting to me that among the petroleum community there’s so much resistance to this idea that depletion is a daily foe,” Udall said.

“Petroleum geologists deal with depletion every day. That’s job one,” he noted.

The China Syndrome

As one indication of future energy trends, Hirsch observed that China expects world Peak Oil to occur in 2012.

And what are the Chinese doing?

“They’re out paying top dollar for oil reserves and production and pipelines around the world,” he said.

Some people expect market forces to smooth over the economic effects of Peak Oil. Energy starts costing more, people start using less energy, where’s the worry?

“Anybody who says that hasn’t really thought about the problem,” Hirsch said. “Nobody has looked at an abrupt, forced change. We’re talking about something that has never happened before.”

Hirsch studied several countries where oil production is already in decline. He thinks a sharp peak followed by a serious world oil production drop-off could be possible.

“In many of those cases, the declines were sharp to very sharp,” he said. “Think of the North Sea, for instance.”

To get their message across, Peak Oil proponents have started spreading more information and less alarm.

“If you get the ‘running out’ idea off the table, you can say that global oil production has been increasing for 150 years. How much longer can that continue to happen?” Udall asked.

For Hirsch, the real challenge lies in generating public attention and public action.

“Along comes this thing that feels like an abstraction,” he said. “How do you elevate that to a priority?”

False predictions of Peak Oil in the past make that task even more difficult.

“We thought oil production was going to peak several times before, so that now we’re somewhat conditioned by false alarms,” Hirsch commented.

“It’s like the boy who cried ‘Wolf!’” he said, recalling what happened at the end of that story:

“The wolf finally came.”

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