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Page added on May 24, 2016

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Are We Nearing Peak Oil?

Are We Nearing Peak Oil? thumbnail

According to Bernstein Research, peak oil – when oil usage is expected to begin falling globally – could arrive as soon as 2030. While this may seem unlikely with low prices and plentiful supply today, it is not only possible, but also necessary.

If this sounds like deja-vu for you, it probably is. For years, we’ve heard predictions about peak oil, including during the last “boom” a few years, when oil prices hit $150 a barrel on fears that supply would never catch up to demand. Even the 1970s OPEC oil embargo was hailed by some as peak oil (we’ve nearly doubled oil consumption globally since then).

Oil today is cheap and plentiful, and it’s hard to imagine that it is anywhere near peaking, especially with countries like Saudi Arabia and, soon, Iran looking to increase production in the coming years. Moreover, new technologies such as oil sands extraction and more complex offshore drilling are making more and more oil resources exploitable, one reason known reserves continue to climb. Even at $25 a barrel, Saudi Arabia can make profits.

So, why does Bernstein Research think that oil will peak? Partly because, in some parts of the world, it already has. The global North, for example, peaked in 2005. All the growth since then has come from the global South — most notably China and India — and Bernstein expects those countries to begin shifting away from oil in the coming decade.

A few factors will work to level out that demand growth. Increased fuel efficiency and the diversification of fuels used to power the world will keep prices below the peaks we saw over the past decade. This includes everything from liquefied natural gas and diesel to electric vehicles.

One scenario that oil could follow is that of its fellow polluting commodity, coal. A decade ago, few expected the cheap, plentiful fossil fuel was anywhere near its peak. Yet, due to a wide variety of factors, coal has not only peaked globally, but it has begun to fall off a cliff.

This brings up a key point. Peak oil does not necessarily mean, as we once thought it did, that we have consumed the majority of the world’s oil resources. It merely means that our usage of it has peaked. Coal remains plentiful, and even here in the United States, where we’ve mined the dirty fossil fuel for generations, the vast majority of it remains underground — where it will likely stay.

Could oil follow this path? Actually, it’s not theoretical. It must. We need to pretty much stop burning fossil fuels within the next decade, and certainly before 2030, to have any chance to stay below the 1.5 degrees Celsius limit that has become the scientific consensus on allowable warming. All these factors can come together and help wean the global economy from oil.

“We can see a plausible future in which global oil demand peaks in the next decade due to major improvements in petroleum alternatives, and due to ongoing conservation and efficiency efforts,” lawyer and energy expert Tam Hunt wrote of Bernstein’s findings on GreentechMedia.

Peak oil, coming soon. Otherwise, kiss global climate goals, and any hope for sustainability, goodbye.

triple pundit



40 Comments on "Are We Nearing Peak Oil?"

  1. rockman on Tue, 24th May 2016 2:52 pm 

    “Yet, due to a wide variety of factors, coal has not only peaked globally, but it has begun to fall off a cliff.” So one more ignorant fool or a liar. From the IEA:

    Is coal production declining? No, far from it. Since the start of the 21st century, coal production has been the fastest-growing global energy source. While provisional IEA figures show a slight decrease in 2014 driven by a decline in China and some exceptional circumstances such as unrest in Ukraine, the IEA sees global supply increasing at an average rate of 0.6% through 2020. This incremental growth stems from OECD non-member economies, the Medium-Term Coal Market Report 2015 reports, while falling output in OECD Americas and OECD Europe leads to an overall decline in OECD production despite increased volume from OECD Asia Oceania.

    What about coal consumption? Global coal consumption increased by more than 70% from
    4.600 Mt in 2000 to an estimated 7.876 Mt in 2013, and at a 4.2% annual rate, coal was the fastest-growing primary energy source in the ten years through 2013. But demand growth has slowed of late. Preliminary data for 2014 showed the first actual decline since the 1990s, falling 0.9%; but the main driver of that result was a reported drop in Chinese demand that is based on preliminary data. Indeed, the IEA expects slowed but continued coal demand growth, with the Medium-Term Coal Report 2015 seeing a 0.8% increase through 2020.

  2. PracticalMaina on Tue, 24th May 2016 3:01 pm 

    Its been a bad year for them though Rockman, most of the big players in the US are under chapter 11. An Indiana utility is considering shuttering 2 gigawatts worth of coal. Coal dust kills coral, coal has a huge healthcare cost. The mines that are owned by chapter 11 companys in Wyoming were at one point called the most efficient in the world.

  3. JuanP on Tue, 24th May 2016 3:24 pm 

    “All the growth since then has come from the global South — most notably China and India —” This fucktards need to go back to elementary school or take some remedial college geography. Both China and India are in the Northern Hemisphere. Why should I waste my time reading this crap if the author doesn’t even know where the two most populous countries in the world are? I am dumbfounded by most people’s ignorance. I knew where India and China where when I was in preschool and five years old.

  4. Joe D on Tue, 24th May 2016 3:35 pm 

    The author of this article hasn’t a clue on how to research a subject. Referring to economists, lawyers, financial analysts, etc., to research a subject of scientific nature, will keep you ignorant. But then again, it’s just all about collecting that green stuff. Who’s cares about the content.

    The author refers to:

    1. ‘Bernstein Research’, written by Matthew Nitch Smith, a Finance Writer and Business Insider.

    2. ‘1970s OPEC oil embargo’, written by Tam Hunt, a lawyer and owner of Community Renewable Solutions LLC.

    3. ‘Saudi Arabia can make profits’, written by Colin Chilcoat, a specialist in Eurasian energy affairs and political institutions.

    4. ‘it has begun to fall off a cliff’, written by Nithin Coca himself, a freelance journalist who focuses on environmental, social, and economic issues.

    5. ‘Coal remains plentiful’, written by Nithin Coca himself again. LOL

    6. And finally ‘GreentechMedia’, written by Tam Hunt, the same as #2 above.

    Simply lazy!

  5. ghung on Tue, 24th May 2016 4:50 pm 

    I always chuckle at authors who link to their own articles as citations. From one of his links:

    “Coal production is not just declining. It’s falling off a cliff — and it’s barely a third of what it was just six years ago, according to the U.S. Energy Information Administration (EIA). The worst is yet to come, as the EIA predicts 2016 will be the biggest year-on decline for coal … ever.”
    It’s Really Happening: The Collapse of U.S. Coal

    EIA US coal production (thousand short tons):
    2009 – 1,074,923
    2015 – 895,935

    Barely a third of what it was just six years ago? Maybe I’m missing something….

  6. dave thompson on Tue, 24th May 2016 5:08 pm 

    This one sounds like he was told to stick to the econ101 narrative to get paid for this article, that is if he wanted to keep his job.

  7. makati1 on Tue, 24th May 2016 7:33 pm 

    I knew this article was a waste of my time when I read the headline, so I skipped to the comments. Obviously I was correct.

  8. Truth Has A Liberal Bias on Tue, 24th May 2016 8:14 pm 

    Click bait for retards. Seems to be working.

  9. Rick Bronson on Tue, 24th May 2016 9:44 pm 

    Peak Oil varies with price.
    The question is at a given price point, let us say $50 / barrel, how much oil can be produced.

    The American shale oil production is gradually going down and the price is coming up. But whether the shale oil production will increase in response is questionable.

    If they don’t turn the taps on, probably we have hit a peak oil.

    A part of the oil demand could be met by other fuels like Coal & Natgas.

  10. Boat on Tue, 24th May 2016 10:09 pm 

    Rick,

    World oil and US oil supply have entirely different stories. Which are you talking about.

  11. GregT on Wed, 25th May 2016 12:07 am 

    Rick is talking about precisely the same thing that most everyone else here has talked about Boat. Yet one more tidbit of simple common sense that you are incapable of comprehending.

  12. rockman on Wed, 25th May 2016 6:21 am 

    Ghung – So we’re producing 83% of the coal we were in 2009…the year the US hit its all-time high in coal consumption.

    Practical – Yes: some companies hurting and some companies aren’t. And you know what happens when a fossil fuel producer has revenue problems: they cut prices trying to sell more…just like the KSA is doing. BTW when a coal company files bankruptcy it doesn’t necessarily mean they stop mining coal. In fact in some cases it allows them to continue mining. Hence despite bankruptcies US coal production has only dropped 17%. And during the time of this small retreat in US coal mining both India and Australia have significantly increase production. And the Australia (AS WELL AS FROM THE US) has significantly increased coal exports. But we’re talking about global coal consumption. Today coal provided 40% of the energy for electrical generation, NG 22% and oil 5%. IOW the world gets 2/3 of its electricity from fossil fuels.

    Coal prices took a hit about 4 years ago. And since then prices have been relatively stable to slightly increasing in a few markets. The “King Coal is dead” rant is not only false but dangerously misleading IMHO.

  13. shortonoil on Wed, 25th May 2016 7:18 am 

    During 2013 the oil industry spent $750 billion to discover and develop 4 Gb of oil. It pumped 32 Gb. In 2015 it brought 2.8 Gb of new oil on line and pumped 34. The cost to discover and bring online new oil has increased by 50% over the last decade. Almost 60% of the world’s production comes from less than 1% of its fields, and they are on average more than 60 years old. Most of those fields have already passed their original URR estimates. They are being kept alive with horizontal drilling, and CO2 injection to skim the last of their reserves from their depleted oil columns.

    Asking “have we hit peak”, is like asking a dead man if he is dead. It has become an irrelevant question. References to Shale, that account for 2.6% of the world’s crude production, and 3.7% of its Boe, when world decline rates are 4 to 5% is like pouring a shot of brandy down the cadavers throat. It is a nice gesture, and a waste of brandy. Further development of Shale is like swapping out for a bigger gasket.

    Now that the end of the oil age has arrived at the door, do we mill around the mortuary lobby and discuss what the cadaver could have done if it wasn’t dead; or do we bury the remains, and go on to Plan B.

    By the way – does anyone remember what happened to Plan B?

  14. Davy on Wed, 25th May 2016 7:30 am 

    Yea Short, it is called plan C and that is plan collapse. It is a default to plan when there is no plan B.

  15. JuanP on Wed, 25th May 2016 7:35 am 

    Twilight of the petrostate. http://nationalinterest.org/feature/twilight-the-petrostate-16235?page=show

  16. Davy on Wed, 25th May 2016 9:16 am 

    More headwinds for oil and the economy.

    “US Services PMI Tumbles, Misses By Most On Record “Dealing Blow To Q2 Rebound Hopes”
    http://www.zerohedge.com/news/2016-05-25/us-services-pmi-tumbles-misses-most-record-dealing-blow-q2-rebound-hopes

    “After a brief dead cat bounce, the US services economy has tumbled back to 3-month (near 7 year) lows, missing expectations by the most on record. With the slowest pace of hiring since Dec 2014 (signalling a mere 128k rise in payrolls for May), business optimism plunged to record lows (since the survey began in Oct 2009).”

    “With no sign of any growth rebound and the labour market cooling, only one of the Fed’s three tests for a June rate hike – rising price pressures – is passed according to the PMI data. However, with prices rising largely on the back of higher oil prices rather than a fundamental improvement in demand, it seems that even core inflationary pressures remain subdued.”

  17. Robert Spoley on Wed, 25th May 2016 2:37 pm 

    Neither oil, gas or coal are dead and will not be for a long time. What they are used for will probably change as they get scarcer and more expensive. Liquid fuels are most valuable for transportation and should probably not be used for stationary energy production. Electricity production will eventually shift to thorium reactors, not because we want to, but because there are no other practical solutions. Natural gas will eventually be converted to diesel and used for safe transportation. Eventually most of the gas will come from methane hydrates whether you like it or not. There just aren’t any other reasonable choices. Live with it.

  18. shortonoil on Wed, 25th May 2016 6:07 pm 

    “Neither oil, gas or coal are dead and will not be for a long time.”

    In 1960 a barrel of oil (API 37.5° crude) delivered to the economy 5.52 million BTU of its 5.88 million BTU of initial energy content. In 2016 that same barrel is delivering 2.59 million BTU of its initial 5.88 million BTU content. A long time is not in the making for oil.

    http://www.thehillsgroup.org/

  19. Boat on Wed, 25th May 2016 7:12 pm 

    short,

    Where is your link. Another hills group fantasy?

  20. sidzepp on Wed, 25th May 2016 8:14 pm 

    The best thing that could happen to the planet is if oil had already peaked and were on a downward spiral to not being used!

  21. shortonoil on Wed, 25th May 2016 8:19 pm 

    Yes Boat – there really is 5.88 million BTU in a barrel of 37.5° API crude. But I seriously doubt that you are able to calculate that. As far as the rest, well, one would probably have luck teaching quantum mechanics to their geranium!

  22. shortonoil on Wed, 25th May 2016 8:25 pm 

    If you ever do get an urge to actually calculate the energy in a barrel of 37.5° API crude you can use this graph:

    http://www.thehillsgroup.org/depletion2_011.htm

    Complements of the:

    http://www.thehillsgroup.org/

  23. GregT on Wed, 25th May 2016 9:17 pm 

    Kevin,

    Where is your link disproving the work of people vastly more intelligent than yourself? Fantasy boy.

  24. Apneaman on Wed, 25th May 2016 9:46 pm 

    Euan is a very intelligent human.

    ERoEI for Beginners

    Posted on May 25, 2016 by Euan Mearns

    “In today’s energy mix, hydroelectric power ± nuclear power have values > 50. At the other end of the scale, solar PV and biofuels have values 5 to 7 is required for modern society to function. This marks the edge of The Net Energy Cliff and it is clear that new Green technologies designed to save humanity from CO2 may kill humanity through energy starvation instead. Fossil fuels remain comfortably away from the cliff edge but march closer to it for every year that passes.”

    http://euanmearns.com/eroei-for-beginners/

  25. noobtube on Thu, 26th May 2016 1:14 am 

    Why is the comments section always better than the actual article?

  26. makati1 on Thu, 26th May 2016 2:32 am 

    Maybe because it presents a lot of various views on articles usually written to promote BAU or some hopey, feely future that would only happen in fairy tales? And, you get a world wide cross section of intelligence, experience and ideas. Although, I’m not sure where the religious zealots came from recently?

  27. shortonoil on Thu, 26th May 2016 6:13 am 

    “Where is your link disproving the work of people vastly more intelligent than yourself? Fantasy boy.”

    He is using is best reference: “The Complete Idiot’s Guide to ERoEI”

  28. Boat on Thu, 26th May 2016 7:29 am 

    short,

    You sure have a smart mouth when you mostly lie and spew disinformation. Here is a chart showing price by api. The camel pee at is more valuable than heavier oils. This is why the US cut imports and there is a market.

    http://www.phillips66.com/EN/products/business/crude_oil/gravityscale/Pages/index.aspx

  29. Boat on Thu, 26th May 2016 7:36 am 

    greggiet,

    We know you have problems with charts. Just stick with being intelligent and parrot the intellectuals.

  30. marmico on Thu, 26th May 2016 8:20 am 

    In 1960 a barrel of oil (API 37.5° crude) delivered to the economy 5.52 million BTU of its 5.88 million BTU of initial energy content. In 2016 that same barrel is delivering 2.59 million BTU of its initial 5.88 million BTU content

    What a crock of shit since you maintain (wrongly) that a refinery consumes 34% of the BTUs. How can you have 94%(5.52/5.88) net energy in 1960 when at least 34% (wrongly) of the BTUs are consumed in processing crude into products?

  31. GregT on Thu, 26th May 2016 9:23 am 

    “You sure have a smart mouth when you mostly lie and spew disinformation. Here is a chart showing price by api. The camel pee at is more valuable than heavier oils.”

    You clearly don’t understand ERoEI Boat. More of your usual complete and utter nonsense.

  32. Robert Eliiott on Thu, 26th May 2016 9:34 am 

    Whoever wrote this must be a retard and need to get there facts correct. The global north and south? New supplies are not coming from India and China both of these countries have peaked and are in decline. Diesel is not an alternative fuel anyone with half a brain knows it refined from oil.

  33. marmico on Thu, 26th May 2016 11:39 am 

    You clearly don’t understand ERoEI Boat

    Neither do you, tiny brain GreggieTee. The ETP curve fitting EROI exercise has been blown to smithereens.

  34. GregT on Thu, 26th May 2016 11:48 am 

    Price by api, and ERoEI are not the same things marmi. No matter how hard you try to confuse the issue.

  35. GregT on Thu, 26th May 2016 11:56 am 

    The low hanging fruit is always picked first. It is purely a matter of common sense.

  36. marmico on Thu, 26th May 2016 12:10 pm 

    What a riposte from tiny brain GreggieTee. Through the Bartlett exponential in there for good measure.

    The ETP curve fitting EROI exercise has been blown to smithereens.

    I thought that you pound your chest as a salute to your tribal affiliated elders. When it comes to Bedford W. Hill it was $209 WTI in 2020 until it became $12 WTI in 2020. Find another busted weather vane to worship.

  37. shortonoil on Thu, 26th May 2016 12:28 pm 

    You are absolutely right Marm, ERoEi has nothing to do with the price of oil:

    http://www.thehillsgroup.org/depletion2_009.htm

    Now go climb back under your rock, and leave thinking exercises to more intelligent creatures; like fruit flies. Marm the exception to the rule: “there is no substitute for stupidity”. There is a Marm!

  38. GregT on Thu, 26th May 2016 12:37 pm 

    You’re full of shit marmico, and you have nothing meaningful or considerate to add to the conversation. A pathetic example of a human being.

  39. marmico on Thu, 26th May 2016 1:04 pm 

    The ETP curve fitting EROI exercise has been blown to smithereens.

    Bedford W. “The Fuctard” Hill’s last tribal council meeting will be the 2016 summer solstice. Of course, if he changes his witchcraftery he can appear before the Doom Porn Tribal Committee chaired by tiny brain GreggieTee to make a case to be invited to the 2017 council in an ex-officio capacity.

    Bedford W. Hill is a non-responsive fuctard.

  40. shortonoil on Thu, 26th May 2016 5:58 pm 

    “The ETP curve fitting EROI exercise has been blown to smithereens.”

    Give us a link to one graph that you have put up, one article you have published, one anything besides stupid rebuttals done by an obvious retard. You can’t because you are not smart enough to put up a web site, create a graph, or hold an intelligent conversion.

    You are an idiot troll, and all you want to do is waste everyone’s time. That also makes you a thief. In most societies thievery is a despicable crime done by criminals. Anti social, despicable people without a consciences. Why are you wasting your time as a noneffective stupid troll – you could have been a banker.

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