Peak Oil is You
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Page added on January 21, 2016
Demand is dying as technology improves
The tumble in the oil price from the $US110 a barrel it was trading at until 18 months ago down to $US30 and heading lower this week demolishes the “peak oil hypothesis” — the theory that the exploitation of the earth’s finite oil reserves is approaching the maximum output that is physically possible beyond which world oil supplies will enter an irreversible decline.
It is an idea that flowed from the arguments popularised in the late 1960s and early 1970s that the consumption of natural resources was unsustainable.
Dystopias of the time, like Stanford University Professor Paul Erlich’s 1968 book, The Population Bomb, predicting mass starvation by the late 1970s as the world ran out of food, and The Limits to Growth arguing that the world would run out of mineral resources including oil, were hugely influential.
The Limits to Growth, published in 1972 by the Club of Rome — a think tank established by business leaders, academics and politicians — sold more than 30 million copies. Its thesis appeared to be vindicated by OPEC’s quadrupling of oil prices over the following year.
It fed a new nationalism among the world’s resource rich countries.
Through the 1970s, there were efforts to set up cartels modelled on OPEC in other commodity markets — Gough Whitlam’s treasurer, Jim Cairns, signed Australia up to a Jamaica-based bauxite cartel.
Developing nations nationalised the investments of multinational mining and oil companies. Australia imposed tough limits on foreign investment in resources, with Whitlam telling our Japanese customers that he would prefer it if there were none.
Long established conservation movements were transformed by this dark vision of the industrial future into political activist groups like Friends of the Earth, Greenpeace and the Greens, with sharp critiques of capitalism.
Economic growth was seen to perpetuate the ravaging of natural resources for the sole purpose of the profits for a handful of powerful corporations.
Nature and business were incompatible. “The common enemy of humanity is man,” declared the Club of Rome.
When commodity prices took off in the 2000s, the belief that the world was entering an era of permanent scarcity of resources influenced Treasury’s thinking. Because it thought commodity prices would remain high indefinitely, it endorsed the Howard and Rudd governments’ recycling the surge in tax company receipts as permanent personal income tax cuts.
Treasury rejected the idea of saving the windfall revenue in a sovereign wealth fund many times the size of the Future Fund, as did Chile and Norway.
The idea of resource scarcity also contributed to Treasury’s formulation of the ill-fated resources rent tax.
The then Treasury secretary Ken Henry rejected arguments that prices for mineral resources were in a long-term decline relative to the price of manufactured goods.
“We cannot simply dismiss opposing theories that argue that relative commodity prices will trend upwards over time as non-renewable resources are depleted and as the marginal cost of extraction increases as producers are pushed towards the more marginal deposits. ‘Peak oil’ is the best known of these theories,” he said.
The oil producers themselves became convinced that the oil reserves they kept in the ground were more valuable than the oil they were pumping up and selling.
US energy analyst Amy Myers Jaffe says the Middle East producers believed that by the 2010s, the world would have exhausted its easily accessible oil and would become increasingly dependent on OPEC.
All the oil cartel needed to do was wait for that day to come.
Jaffe argues that instead of peak oil supply, the world faces the prospect of peak oil demand. Confronted by that realisation, the Middle East countries are acting as if the oil they sell now is more valuable than the oil they may sell in the future and are pumping out as much as they can.
In the United States, oil demand peaked in 2007, while Australian figures show oil consumption has been static since 2008. In advanced countries, the decline in oil demand is the result of greater efficiency in motor vehicles, the substitution for other energy sources by industrial users and the general decline of manufacturing.
Forecasts of everlasting growth in global demand for oil assume that something like the trends of the last decade driven by China’s rapid industrialisation continue. However, the growth of that past decade was unsustainable and likely unrepeatable.
There is a reckoning under way in China as it confronts the excesses that the decade left behind.
The collapse in oil prices will not halt the efforts to develop substitutes, with massive investment under way to advance battery capacity.
The march of technology has brought peaks in demand for many other goods and services that were once thought to be closely bound to economic growth.
In Australia, newspaper sales peaked in 1990, retail space has been in decline since 2010, and landlines have been declining since 2004 as have the number of kilometres people drive every year.
The world of resource scarcity that Henry envisaged might have left Australia, as the world’s greatest natural resource producing nation, fat and comfortable.
The world of resource abundance leaves us with a budget in structural deficit thanks to our imprudence during the boom, but dependent upon the technological expertise of our resource industry to be the lowest cost and most profitable producer.
Human mastery of technology, it turns out, is the true friend of the earth.
25 Comments on "Demand is dying as technology improves"
penury on Thu, 21st Jan 2016 3:57 pm
It is definetely time for me to stop reading doomer porn and switch to the real stuff. We have been saved, go buy a new device.
Repent on Thu, 21st Jan 2016 4:24 pm
What bullshit- why was this article even published here?
vulcanelli on Thu, 21st Jan 2016 5:11 pm
Was this article written by some cheese eating high school boy or what.
“Human mastery of technology, it turns out, is the true friend of the earth.”
Is this perhaps the same technology friend that has upset the natural food chain with GMO crops, poisoned rivers and oceans with chemicals, irradiated our polluted the atmosphere and decimated the pollinators.
shortonoil on Thu, 21st Jan 2016 5:18 pm
“What bullshit- why was this article even published here?”
We are seeing it because the 1% are getting desperate. The crash in oil prices has started the largest movement of money in history; from the top to the bottom. $trillions are now moving from the 1% to the 99%, and the 1% are stuck. If they stop paying for the oil all of their wealth disappears when the economy collapses; if they don’t all their wealth disappears. They will spend it to produce the oil that is needed to secure their wealth. The energy half way point turned everything around, and as yet – the 1% don’t have a clue.
http://www.thehillsgroup.org/
sidzepp on Thu, 21st Jan 2016 5:31 pm
Yes, technology saves humanity. Starting with Malthus over 200 years ago there has been a steady stream of doomsayers. Yet the threats we have today are so numerous we are rapidly heading down the steep slippery slope towards catastrophic events. Melting ice caps, glaciers, diminishing fisheries, deforestation, rising temperatures, depletion of soil, a rapid, etc. Lot of challenges for the technocrats. Lets keep mining and drilling and we all will be saved.
twocats on Thu, 21st Jan 2016 5:36 pm
We are seeing it because the 1% are getting desperate. The crash in oil prices has started the largest movement of money in history; from the top to the bottom. $trillions are now moving from the 1% to the 99%, and the 1% are stuck. If they stop paying for the oil all of their wealth disappears when the economy collapses; if they don’t all their wealth disappears. They will spend it to produce the oil that is needed to secure their wealth. The energy half way point turned everything around, and as yet – the 1% don’t have a clue.
http://www.thehillsgroup.org/ [short]
your argument is very strong short, but i remind you: you are dangerously close to validating a theory floated by “Boatok human can do superspecial everything” a week or so ago. the world really is ending!
MaxData21000 on Thu, 21st Jan 2016 6:09 pm
Some moron element keeps saying Erlick is wrong, proving they are TOTALLY BLIND TO ENVIRONMENTAL NEWS.
There is a crash going on right now in fishing:
http://www.zmescience.com/science/oceanography/fish-stocks-ocean-20012016/
If you want to beat these morons in the stock market, look at Environmental News.
Apneaman on Thu, 21st Jan 2016 6:15 pm
the Australian – Piece of shit Rupert Murdoch home town rag sounding desprate.
Australia is like an old whore, whose #1 John, China, recently lost his hard on. Even her banking pimps are abandoning her since they know her careerer is done.
Barclays quits Australia, 80 jobs set to go
http://www.smh.com.au/business/banking-and-finance/barclays-pulls-out-of-australian-market-20160121-gmbh3d.html
james tipper on Thu, 21st Jan 2016 6:19 pm
“the theory that the exploitation of the earth’s finite oil reserves is approaching the maximum output that is physically possible beyond which world oil supplies will enter an irreversible decline.”
But thousands of wells closing worldwide isn’t enough evidence?
“In Australia, newspaper sales peaked in 1990, retail space has been in decline since 2010, and landlines have been declining since 2004 as have the number of kilometres people drive every year.”
I feel like this should be made in some crummy newspaper.
makati1 on Thu, 21st Jan 2016 6:48 pm
Don’t you just love reading techie porn? No pictures?
LMAO.
Davy on Thu, 21st Jan 2016 6:59 pm
That’s a knockout punch if I ever saw one. “Human mastery of technology, it turns out, is the true friend of the earth”. Man, what a bold statement. What is going on with our earth and our species is much more than oil or even technology although both are primarily responsible for our coming bottleneck. We have a situation of a living arrangement without a future at multiple different existential levels. Probably the biggest problem we have is with us. We have an attitude problem as individuals and as a species. It is likely we will not overcome this in time to make other arrangements. This is a slow motion unfolding of overshoot with continued poor decision making at all levels. The above statement hit the nail perfectly why our current culture is doomed.
Apneaman on Thu, 21st Jan 2016 8:07 pm
Technology? Can’t even handle what they got. Tie down ropes were once considered technology.
Breakaway Barges Close Section of Mississippi River
“A three-mile section of the Mississippi River was closed Wednesday after 22 barges broke free, some of them hitting other vessels before they were brought under control or came to rest.
The incident occurred at mile marker 54 on the Mississippi River near West Pointe a la Hache in Plaquemines Parish, Louisiana on Wednesday.
The 22 barges were all loaded with coal and petroleum coke, a coal like substance.”
http://gcaptain.com/2016/01/21/22-breakaway-barges-close-section-of-mississippi-river/#.VqFl5VJWiSo
Boat on Thu, 21st Jan 2016 8:56 pm
Apeman,
There is always tech that will work. Regulations catch up with common sense and extra cost after an incident. This is how the human system works.
paulo1 on Thu, 21st Jan 2016 9:26 pm
Whenever I read idiotic articles such as these of late, I think of Flint Michigan water. Lead pipes for Christsakes…in 2016? Yeah, the technological marvels are astounding. Unless you’re poor, black, brown, yellow,……whatever.
Apneaman on Fri, 22nd Jan 2016 1:44 am
Boat you’re a babbling retard who constantly contradicts himself.
Aging Infrastructure, Fracking Eyed in Massive Porter Ranch, California Methane Leak
““Events of this size are rare, but major leakage across the oil and gas supply chain is not,” Director of Environmental Defense Fund’s California Oil & Gas Program Tim O’Connor said in a statement last month. “There are plenty of mini-Aliso Canyons that add up to a big climate problem — not just in California, but across the country.”
The Porter Ranch incident — where over 86,000 metric tons of methane have already been released, according to a counter posted online by the Environmental Defense Fund — involves a well that was first drilled back in the early 1950’s. And then, in 1973, after the oil field was drained, it was repurposed and used as part of an underground methane storage field that can hold over 130 billion cubic feet of natural gas.”
http://www.desmogblog.com/2016/01/20/aging-infrastructure-fracking-eyed-massive-porter-ranch-california-gas-leak
makati1 on Fri, 22nd Jan 2016 4:27 am
Fraking and Earthquakes…an interesting observation:
https://www.youtube.com/watch?v=i93LzNi7Icg
“1/17/2016 — Mystery Rumbles in Northeast SOLVED — Earthquake forecast USA + West Pacific”
Dredd on Fri, 22nd Jan 2016 7:30 am
There are not enough sugar crisps to do the job (Flailing In a Sea of Panic and Propaganda)
rockman on Fri, 22nd Jan 2016 9:32 am
“…Fracking Eyed in Massive Porter Ranch, California Methane Leak” Folks shouldn’t be confused: frac’ng had nothing to do with the Porter Ranch methane leak.
rockman on Fri, 22nd Jan 2016 9:35 am
Also: “Demand is dying as technology improves’. An amazing title to put out at the time when the world demand for oil is greater today then it has ever been in history.
Kenz300 on Fri, 22nd Jan 2016 10:19 am
Some people keep looking to the past and assume that it will be the same in the future….. their children see the future
There Are Now More Solar Jobs In America Than Oil Jobs
http://www.huffingtonpost.com/entry/solar-jobs-rising_569409e5e4b0cad15e65be87
——
70 More Earthquakes Hit Oklahoma, Averaging Nearly Three a Day in 2015
http://ecowatch.com/2016/01/11/fracking-earthquakes-oklahoma/?utm_source=EcoWatch+List&utm_campaign=1fd6621515-Top_News_1_11_2016&utm_medium=email&utm_term=0_49c7d43dc9-1fd6621515-86023917
—-
Half of U.S. Fracking Industry Could Go Bankrupt as Oil Prices Continue to Fall
http://ecowatch.com/2016/01/18/fracking-industry-bankrupt/?utm_source=EcoWatch+List&utm_campaign=bddf330f10-Top_News_1_18_2016&utm_medium=email&utm_term=0_49c7d43dc9-bddf330f10-86023917
Apneaman on Fri, 22nd Jan 2016 10:48 am
Go on take the money and run…
Exclusive: California gas leak spotlights shoddy regulation of aging storage wells
http://www.reuters.com/article/us-losangeles-gas-leak-regulation-exclus-idUSKCN0V00DM
Apneaman on Fri, 22nd Jan 2016 10:54 am
Schlumberger reveals 10,000 recent job losses amid oil price slump
http://www.bbc.com/news/business-35378894
Apneaman on Fri, 22nd Jan 2016 10:56 am
Crashing oil prices decimate Texas boomtowns
http://www.usatoday.com/story/news/2016/01/20/texas-oil-prices-boomtowns-crash/79086400/
Apneaman on Fri, 22nd Jan 2016 11:03 am
Demand ain’t dying, but the biosphere is, or rather it’s being killed and so are your kids and grand kids by extension. Sorry kids – you ain’t going to see 30. Today’s youngest generation will be the last of the cancer monkeys.
Global Warming Helped Exacerbate Biggest Year Ever for U.S. Wildfires
A warmer, drier climate played a role in fires that burned more than 10 million acres
http://www.scientificamerican.com/article/global-warming-helped-exacerbate-biggest-year-ever-for-u-s-wildfires/
makati1 on Fri, 22nd Jan 2016 6:26 pm
Ap, Short doesn’t give a damn about kids or the future, just his oily paycheck. Typical American.