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Peak Oil, World Oil Production Decline Acknowledged

John Hofmeister, Founder & CEO, Citizens for Affordable Energy and Joshua Saks, Legislative Director, National Wildlife Federation discuss the XL Pipeline

Hofmeister, the former president of Shell Oil, acknowledges what perilously few in the general public know or choose not to accept which is that Peak Oil is real and it is here now. The age of cheap, easy and abundant crude oil is over.

47 Comments on "Peak Oil, World Oil Production Decline Acknowledged"

  1. Plantagenet on Sun, 25th Jan 2015 11:08 am 

    The claim that the age of cheap abundant crude is over rings hollow in the middle of an glut when gasoline prices are falling.

  2. GregT on Sun, 25th Jan 2015 11:30 am 

    “The claim that the age of cheap abundant crude is over rings hollow in the middle of an glut when gasoline prices are falling.”

    Only for those who’s memories are very short. Oil prices are still close to double that of historical prices. Also, calling this an oil glut without factoring in the unaffordablibity of that oil to society, is misleading at best, and idiotic at worst.

    The demand for the oil will always be there, whether the economy can afford it is an entirely different thing.

  3. Kenz300 on Sun, 25th Jan 2015 11:46 am 

    Depletion continues…….

  4. bobinget on Sun, 25th Jan 2015 12:14 pm 

    Let’s change: ” whether the economy can afford it is an entirely different thing” to: How did slavery effect
    the economy of pre Civil War America?

    Ok. Ok perhaps comparing human bondage to oil is a ‘crude’ comparison.

    I would like anyone to deny how greatly the US economy prospered under slavery in 18th and 19th century pre-industrial age.

    Most Americans take oil, cheap oil, for granted.
    I’ll contend, if Europeans got along paying six times
    as much for gasoline and diesel for dozens of years,
    yes, long, long before EU, taxes on petrol have always been ten times higher the US fuels tax.

    Europeans never ‘downsized’ their cars. In fact, export products are always larger then popular domestic models. At ten bucks a gallon only the wealthy could afford to drive Detroit Iron.

    OTOH, Considering the misery “the oil curse’ is causing around the world, maybe my ‘slave’
    comparison isn’t so far fetched?

  5. DMyers on Sun, 25th Jan 2015 12:27 pm 

    The question here is: What is the significance of Hofmeister’s statement in the interview?

    “The world is going to be oil short within the next three to four years.”

    That is what he said. That may not be an acknowledgement of oil production decline any more than it is a portent in his mind of demand growth. In either event it is an acknowledgement of something grave: a shortage of oil within four years.

    Hofmeister is described as a former president of Shell Oil. For purposes of an informal consideration, I would conclude that he is an insider. An insider is predicting an oil shortage in the short term and arguing the criticality of a mere 800,000 barrels a day from Canada (for “energy security” of course).

    It is what it is, but it could signal a hole forming in the wall of denial.

  6. Davy on Sun, 25th Jan 2015 12:31 pm 

    Planter said “The claim that the age of cheap abundant crude is over rings hollow in the middle of a glut when gasoline prices are falling”. Planter you are like a dog with a bone. For a while it was Obee not it is glut. Geez, Planter, you are such a bright individual to be in such a rut all the time. Snap out of it son!

  7. GregT on Sun, 25th Jan 2015 12:43 pm 

    Perhaps I should have been more specific Bob, “This” economy would have been a better choice of words.

    I have no doubts that some sort of steady state economy could be a possibility, but as long as our economy is tied to a monetary system that requires exponential growth, “this” economy cannot afford higher oil prices. Theoretically, we could build an economy with greatly increased oil prices, but ‘this’ current economy will need to be collapsed first. Considering the fact that TPTB are dependant on the current monetary systems to maintain their control, and they are the ones making the decisions, I don’t see that happening anytime soon, at least not voluntarily. Add to that the unfortunate reality that we cannot continue to burn fossil fuels, if we hope to maintain a comfortable existence on our one and only ‘home’, then even a steady state economy with greatly increased oil prices is no longer a possibility.

    Sooner or later we are going to have to learn to live with a lot less. The longer we wait to make the transition, the fewer of us will be able to make do with even less.

  8. Perk Earl on Sun, 25th Jan 2015 12:45 pm 

    His point of being short oil in 3-4 years makes every bit of sense. This is one of the things I’ve been harping on, i.e. super low oil price (and let’s not get into comparing prices to long ago because we’ve had a lot of inflation since yesteryear and capex requirements have risen much, much higher), is obviously going to reduce exploration in the arctic, fracking for LTO, exploration of any kind for that matter, and what we’ll end up doing is relying more on in place conventional.

    When the shortages of oil occur 2-4 years from now, price should rise, but will it rise sufficiently to make profitable many marginal sources?

    No, and the reason why is depletion. As the value of oil by way of its energy content goes down, affordability drops yet capex must rise, so what gives? Supply drops from a peak to who knows what lower level. But it suggests a major reduction in world economic activity in the 2-4 year future.

  9. Plantagenet on Sun, 25th Jan 2015 12:56 pm 

    Hofmeister is exactly right that the world will be short of oil in 3-4 years. But that doesn’t change the reality that the world is in an oil glut now.

    Unfortunately, our political leaders from obama on down are too busy patting themselves on the back and trying to claim credit for the fall in gasoline prices resulting from this temporary oil glut to take the necessary steps to prepare for the coming oil shortages and concomitant effect of much higher gasoline prices.

  10. Perk Earl on Sun, 25th Jan 2015 12:56 pm 

    Another way to look at this is we are living in an inflection point, the juxtaposition of knowing we need to secure future supply, but being unable to due to economic constraints of capex requirements being greater than end user affordability.

    Wait until 2-4 years from now and people will be saying the oil’s down there, just get it! And that will be the strangest feeling of knowing billions even trillions by some count of oil conceivably available yet uneconomical to bring to market. The arguments will be many and go on ad infinitum but once it makes no sense economicly, then we descend from a peak whether we like it or not.

  11. GregT on Sun, 25th Jan 2015 12:58 pm 

    “I would like anyone to deny how greatly the US economy prospered under slavery in 18th and 19th century pre-industrial age.”

    I would also argue Bob, that we still live under slavery. Debt slavery. Our increased ‘quality of life’ is a result of an increase in energy available, we are still enslaved to our ‘Masters’.

  12. Perk Earl on Sun, 25th Jan 2015 12:59 pm 

    “Unfortunately, our political leaders from obama on down are too busy patting themselves on the back and trying to claim credit for the fall in gasoline prices resulting from this temporary oil glut to take the necessary steps to prepare for the coming oil shortages…”

    And that’s true at least from the standpoint of putting in place the pipeline. Sure, in an idealistic world we’d prefer not to, but as things stand we’ll need that tar sands crap (and I don’t think we’ll be exporting anything at that point), when oil supply drops.

  13. Davy on Sun, 25th Jan 2015 1:11 pm 

    Greg said “I have no doubts that some sort of steady state economy could be a possibility”. Greg, I would agree but with a much much smaller world population. There is little hope of any kind of economy except a cannibalistic one with our current population size. I am not saying one that eats human flesh I am saying an economy that is environmentally exploitive and not sustainable nor resilient. Any talk of a steady state economy and BAU is foolish thinking. Our population limits most of our options. This is a fundamental problem because no one is willing to discuss population reduction policies. Not that that would be enough. The reality of the situation is nature will shrink the human population and if we are lucky and still have civilization maybe we will have evolved enough to see the value of a steady state economy. You know after we have destroyed the world we have maybe we will learn from our collective mistake.

  14. Plantagenet on Sun, 25th Jan 2015 1:19 pm 

    It is impossible to have a “steady-state” economy without having a steady state population.

    Unfortunately the same people who are dreaming about a steady state economic system are often the exact same one who would never countenance taknig steps to curtail global population growth.

  15. GregT on Sun, 25th Jan 2015 1:20 pm 

    Plant got his two little pokes in. Obama, and the ‘oil glut’.

    I say that we all let Plant have his fun, while the rest of continue on discussing the real world as adults.

  16. Plantagenet on Sun, 25th Jan 2015 1:26 pm 


    If you are so interested in “slavery” then why you don’t study the way the Spanish colonies operated in Nicaragua—-your very own country. The native population was slaughtered and then enslaved in the mines or on giant Spainish plantations.

    Check it out.

  17. GregT on Sun, 25th Jan 2015 1:27 pm 

    “It is impossible to have a “steady-state” economy without having a steady state population.”

    Very good Plant. One plus one equals two. Impressive!

  18. GregT on Sun, 25th Jan 2015 1:32 pm 

    Plant said,

    If you are so interested in “slavery” then why you don’t study the way……….blah blah blah blah blah.

    Seeing as you are incapable of understanding what bob is saying Plant, please refrain from the childish comments.

  19. steve on Sun, 25th Jan 2015 1:42 pm 

    My father was drafted into vietnam and served two tours there the last being in Cambodia…he had a tough transition back into life in America….I was raised by my grandfather who had survived the depression and WW2. He always told me that there would be another great depression and never trust the Germans…they will be back..I used to laugh at the second one but I have always kept my eye on the horizon for the depression. We lived in South Florida with no air-conditioning drying clothes on the line re using everything…I see Americans today and sometimes think how wasteful they are…frankly it disgusts me but it is programmed into them to consume massive amounts of energy..I am angry for the path we have been put on by our so called leaders. When the masses find the truth out it will get ugly…

  20. Northwest Resident on Sun, 25th Jan 2015 1:45 pm 

    Earth’s organisms always expand beyond sustainability when the energy is available to do so. Humans are no different. Then when the excess energy that enabled population growth is all used up, the population very quickly resets to a sustainable level and the cycle begins all over again. That’s what we have to look forward to.

    I have read studies of wildlife which suggest that a steady state population of any given species is possible, for a while, perhaps even a long time. Animals and organisms adapt over time to reproduce at a rate that maintains equilibrium with their environment — not a “quick” adaptation, however. Or those organisms and animals resort to other means to control their population count and the amount of energy available to any given member of the community. Infanticide, war, cannibalism, all kinds of grim and gruesome methods are available for a given population to maintain a relatively stable state.

    This pansy-assed life of luxury, pleasure and comfort that humans have enjoyed during the age of oil is about to come to an end. And when it does, we’ll have to deal with it, unpleasant as it may be. Just one question: Did God make it this way on purpose, or was it a mistake?

  21. steve on Sun, 25th Jan 2015 1:46 pm 

    I am afraid that population will end by massive war it is what we humans do…

  22. steve on Sun, 25th Jan 2015 1:53 pm 

    Leviticus 25:23-24 – The land must not be sold permanently, because the land is mine and you are but aliens and my tenants. Throughout the country that you hold as a possession, you must provide for the redemption of the land. (NIV)

  23. GregT on Sun, 25th Jan 2015 2:06 pm 

    Chief Seattle:

    “The President in Washington sends word that he wishes to buy our land. But how can you buy or sell the sky? the land? The idea is strange to us. If we do not own the freshness of the air and the sparkle of the water, how can you buy them?”

    “Every part of the earth is sacred to my people. Every shining pine needle, every sandy shore, every mist in the dark woods, every meadow, every humming insect. All are holy in the memory and experience of my people.”

    “If we sell you our land, remember that the air is precious to us, that the air shares its spirit with all the life that it supports. The wind that gave our grandfather his first breath also received his last sigh. The wind also gives our children the spirit of life. So if we sell our land, you must keep it apart and sacred, as a place where man can go to taste the wind that is sweetened by the meadow flowers.”

    “Will you teach your children what we have taught our children? That the earth is our mother? What befalls the earth befalls all the sons of the earth.”

    “This we know: the earth does not belong to man, man belongs to the earth. All things are connected like the blood that unites us all. Man did not weave the web of life, he is merely a strand in it. Whatever he does to the web, he does to himself.”

    “One thing we know: our God is also your God. The earth is precious to him and to harm the earth is to heap contempt on its creator.”

  24. marmico on Sun, 25th Jan 2015 2:56 pm 

    EIA International stats are out for September, 2014. Crude + condensate production surpasses 78 mb/d for the first time, being a new all time record.

    Looks like the bumpy plateau starting in 2005 of 72-74 mb/d has become a bumpy plateau of 76-78 mb/d starting in 2012.

    Oh, Hofmeister predicted $5 gasoline in 2012 back in December, 2010. Google it.

    Oh, while Hofmesiter was still in the oil biz as president of Shell U.S.A. in 2008 he smacked about that Twilight in the Desert peaker. Google it.

  25. rockman on Sun, 25th Jan 2015 3:12 pm 

    Forget the future: there’s is a huge shortage of oil in the word today. There is a tremendous demand for oil not being met right now. That is an undeniable fact. There is a huge demand for $25/bbl oil today. Consider how desperate our Greek cousins are today for such a supply.

    And, of course, the is a huge glut of oil today that has no market. There are tens of millions bbls alone sitting in tankers looking for $100/bbl. And will remain there as long as there is more $100 bbls out there with no buyers. A terrible glut for sure.

    And, of course, the current oil supply current matches demand perfectly. There is neither a shortage nor glut of oil: every bbl available for purchase is being acquired at the current price.

    So, in keeping to such simple minded rhetoric the current oil market is in a glut/is in a shortage/is balanced.

    Glad we’ve finally gotten that clear. LOL.

  26. Davy on Sun, 25th Jan 2015 3:28 pm 

    Notice how Marm had to mention condensates to fluff up his corn porn. Marm, another thing, your corn porn comment may just be the last Hurrah of the U.S. oil sector retirement party. Party is over and the old men are heading to bed.

  27. Go Speed Racer on Sun, 25th Jan 2015 5:01 pm 

    Take your Corolla to the steel crusher.
    Buy a Ford Excursion.
    Gasoline is cheap again !!

  28. shortonoil on Sun, 25th Jan 2015 5:12 pm 

    Goldman Sachs has stated that $70 oil would leave the petroleum industry with $1 trillion in stranded assets. We can only guess at the outcome of $60, $50, or $40 oil, but the industry is finding that much of the wealth that they thought they held, they don’t. Those were the assets the industry would have used to back up the loans to develop new supply. Much of that new supply will now never come on line.

    Shale, bitumen, ultra deep water, and extra heavy are now facing the end of their usefulness. Many other highly depleted fields will soon follow. There will be no funds for EOR, or infill drilling to continue their lives. They are dead men walking in a world that is starved for cheap, high quality petroleum. Petroleum that has long since been extracted, and burned. The petroleum that at one time could power enough economy to buy $100 oil is gone. It will never return. Without it economies will crash, and burn.

    The industry can no longer deliver what the world needs; what the world needs is no longer there to be delivered. We are on the last march. It will end in an abyss that is so deep we may never find the bottom.

  29. Makati1 on Sun, 25th Jan 2015 6:56 pm 

    The great leveling has begun…

  30. dashster on Sun, 25th Jan 2015 7:22 pm 

    “Unfortunately the same people who are dreaming about a steady state economic system are often the exact same one who would never countenance taking steps to curtail global population growth”

    Ain’t it the truth. Even Peak Oilers who are talking nothing but doom and gloom like the Archdruid guy, won’t say a peep about popolulation growth.

  31. Perk Earl on Sun, 25th Jan 2015 7:26 pm 

    “It will end in an abyss that is so deep we may never find the bottom.”

    The contrast of what is to come and what we have now will be so starkly different, generations that lived during the oil age will try to explain it to those generations that come after the collapse, with little effectiveness unless there are still systems to play DVD’s. Probably what is online on utube should be saved on to DVD’s and stored in a bunker somewhere with DVD player’s, solar, inverter and batteries for future generations.

    I like that early part in Mad Max Thunderdome when the young girl is describing the oil age. It’s partly accurate and partly mythologized, which is most likely what will happen in hindsight.

    One thing is for certain; people will be tougher, thinner and less forgiving of stupid mistakes.

  32. Plantagenet on Sun, 25th Jan 2015 8:07 pm 

    Thanks dashter

    You are exactly right. Most folks lack the imagination to link economic growth with population growth. They want to pretend we can have zero economic growth without actually making the sacrifices necessary to live with zero economic growth.

  33. redpill on Sun, 25th Jan 2015 8:57 pm 

    Well, thankfully this is all going on while climate change and overpopulation are still “debatable”.

    And Lordy but the planet has been nice by not having had a major volcanic eruption or some such natural misbehavior whilst we debate on how we shall debate.

  34. GregT on Sun, 25th Jan 2015 9:00 pm 


    Most folks are still talking about economic growth. Zero economic growth is not even accepted as a possibility in the main stream. I am sure that the extremely tiny minority of people that understand the implications of the end of economic growth, are very well aware of what that will entail for our population numbers. A topic that is brought up all of the time here on peak

  35. Go Speed Racer. on Sun, 25th Jan 2015 11:32 pm 

    If you want the population to shrink, stop handing out welfare checks and food stamps. Instead give them guns & ammo each month. All the losers will sboot each other and the winners will have less tax to pay.

  36. peakyeast on Sun, 25th Jan 2015 11:55 pm 

    I wonder how you can have a steady state economy when nothing in the real world is steady.

    I also wonder how you politically can for example reduce the strain on the wildlife – fish for example while 1000 million people are starving.

    @GSR: The losers wont shoot each others – but find those that have something to lose and shoot them. – Which means the middleclass who has something, but not enough to make them safe.

  37. Revi on Mon, 26th Jan 2015 7:16 am 

    Food stamps have been cut and that signals that it has begun. We are going to see what life over the peak is like.

  38. ghung on Mon, 26th Jan 2015 9:50 am 

    peakyeast: “I wonder how you can have a steady state economy when nothing in the real world is steady.”

    I’ve reached the same conclusion. Since all processes are subject to entropy (waste), and many resources are finite, modern humans and a true steady-state economy aren’t compatible.

  39. Davy on Mon, 26th Jan 2015 10:23 am 

    G-man. Small hunter gather bands are the ideal. The traditional Native American nation structure pre whites is one better related to our situation. Anything above that including pre industrial revolution Asia and Europe is not satisfactory. Maybe pre-industrial revolution Africa sub Sahara might work. I am not up on that history enough. There is nothing about complex society I can see points to resilience, sustainability, and ecological harmony. Anything modern has a limited life span because of irreconcilable attributes to natural ecosystem harmonies.

  40. marmico on Mon, 26th Jan 2015 1:01 pm 

    the last Hurrah of the U.S. oil sector retirement party

    Just like the old time circle jerkers around 15000 posts over 10 years and still praying for the apocalypse.

    At least Pops has taken the quart shy of oil dude (another talking head Hofmiester in my opinion) out to the woodshed and smacked him good.

    The EIA data does not separate crude from condensate. Rather than bifurcating paradigm shifts why don’t you figure out what proportion of shale oil is camel piss (condensate).

  41. Davy on Mon, 26th Jan 2015 1:09 pm 

    Marm, just ask short he will tell you all you need to know about oil. It seems you never drivel Short with your corn porn. Are you afraid of what short has to say? Come on Marm be a big boy and roll up your sleeves play with the big boys. You just like playing with small time doomers like me who opine with word salad. Which is fine because word salads need a good washing. I guess you just can’t digest the Hills Groups data so you conveniently avoid a blistering.

  42. marmico on Mon, 26th Jan 2015 1:45 pm 

    just ask short he will tell you all you need to know about oil

    He’s an effing moron. His September 2014 ex-post model is already busted. The QuartShyModel (QSM) ex-post predicted 2015 WTI @ $76. January is $48. That means that in the next 11 months WTI must average $79. Good luck a busted model.

    Listen, I give Pops kudos for calling out crap when he reads it. So far QSM has not responded. Pops has street cred on this blog. I don’t. But I (and others) called out QSM PDQ before Pops.

    So on a monthly basis is September 2014 oil production the peak? Wanna bet that January 2015 is higher?

  43. bobinget on Mon, 26th Jan 2015 2:13 pm 

    Shortonoil, Rockman, according to EIA, the planet
    still uses around 92 million BB p/d.
    It didn’t surprise US (at Google Oily Google Eyes)
    Actual consumption for 2014 grew by 1.4 % when oil was $98.00.

    This link is good for a laugh;

    EIA will soon raise 2015 consumption numbers;

    How many links does one need to post in order to
    differentiate between actual growth and RATE of growth? I realize how difficult is is to visualize 20 million barrels of oil the US consumes daily.

    Try instead to imagine how many pipelines, tanker ships, cars and trucks it takes just to REFINE and DELIVER, such an intricate, complicated, labor intensive feat as 20 million barrels… Rinse and repeat the following days, over and over.
    Adding just one million more will not break the system. What will?

    WE American’s aided and abetted a phony oil ‘glut’. Marketeers did it for profit, as did individual
    ‘players’, Former OPEC swing producer, Saudi Arabia, they say, did it for ‘market share’.
    ( everyone here knows my opinion)

    We all listened rapt at tales of hundreds of oil tankers, cargoes sloshing over, sitting at anchor..
    Orphaned oil. No prospect of parent. Sad.

    The facts however, get in the way of Wall Street
    opinion. Books will be written about this, one of the first major, world wide super cons of this young century.

    When consumption gets ahead of even Saudi flooding, markets will adjust.

    One more parallel, if you please.

    The fact is glaciers, with only a very few exceptions, are melting like crazy fast. This will result in flooding (water glut). Once that particular glacier melts through, (you’ve all seen the pictures)
    melt water will slow, eventually stop) Irrigation dependent farming comes to an end.

    In many cases scientists know when a particular glacier poops out. With flood control a big problem,
    what government will listen to talk of drought long after their retirement?

    When Saudi Arabia opened the flood gates, we, for a few months, endured lower prices, eventually
    rising demand. Like farmers don’t complain about
    too much water. economists, consumers aren’t whining about low gasoline prices.

    The ice in that glacier is over ten thousand years old.

  44. bobinget on Mon, 26th Jan 2015 2:46 pm 

    Cry babies will say Venezuela (and all Ven’s client states)_ are obvious oil flood victims.

    All that changed when China stepped up to the plate. While the US was preoccupied with over 7,500 airstrikes in Iraq and Syria, China’s future as the world’s biggest economy was secured as China effectively colonized Venezuela for the next fifty years.

    Unless Venezuela starts to pay its oil workers world class pay, production will continue to fall.
    One million barrels p/d that fed Gulf refineries
    now goes for Chinese debt service.

    Watch for three Citgo refineries, soda pop and Twinkly stores to be sold. When deal(s) close, good by Venezuelan oil.

    You may say: “so what? the US is already the world’s biggest oil producer”… Besides, there’s always Canada.. they have lots of oil”.

  45. Davy on Mon, 26th Jan 2015 3:02 pm 

    There you go again Bobby worried about China. China has no future in a collapsed BAU. Further much of China’s vast resource grabs are going to be mal-investments just like much of it high growth rate has been mal-investments. China has no military projection to speak except near its shores. When the global economy starts shrinking China is likely in the worst position with an export driven economy with few countries that can import. When all those vast factories shut down there will not be much need of all the resources they have cornered globally.

  46. shortonoil on Mon, 26th Jan 2015 3:38 pm 

    Rather than bifurcating paradigm shifts why don’t you figure out what proportion of shale oil is camel piss (condensate).

    RBN Energy puts LTO production with an API above 50 at 1.2mb/d. That is 37% of all tight oil production. Our estimate is 1.35mb/d. An API of 50 is where the oil has become too light to be used for the production of transportation fuels.
    Splitters can be used to convert 50+ API hydrocarbons into gasoline and distillates, but the yield is low (36%) and the process requires a huge amount of energy to complete. Obviously, with 37% of LTO removed from the energy production process (combustion) it is a net negative energy source.

    Unfortunately the RBN link is behind a pay wall. If you have a subscription with them it can be found here:

    For those who are reading impaired, our projection at the link below gives the maximum price that the economy can afford to pay for oil. It is not saying what the price will be. It just says that it can not exceed what is shown by the plot.

    Because our analytical technique is thermodynamic, rather than volumetric, the results produced give constrained boundary conditions. This subtlety may challenge the intellectually deficient.

  47. farmlad on Mon, 26th Jan 2015 5:35 pm 

    “So atleast 37% of all tight oil is 50 api or higher” Wow thats something that makes the PO picture so much clearer in my mind.

    I appreciate you sharing that Short, since i’ve still been to cheap to order your full report.

    But since WTI is the price for 37.5 API I would assume that the refiners would pay way less for the 50+ API”Camel piss”

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