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Page added on June 24, 2010

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There is no ‘peak oil.’ But there is supply and demand

There is no ‘peak oil.’ But there is supply and demand thumbnail

In a paper published last year, Prof. Boyce offers a devastating analysis of peak oil theory. Obviously, he wrote, any finite commodity can ultimately “peak,” assuming accumulative consumption exceeds accessible reserves and keeps rising. But crude oil itself has already peaked – at least five times since 1950, Prof. Boyce says – without beginning to approach the demise of oil anticipated by peak oil theory’s famous Bell curve. Indeed, crude oil reserves have doubled roughly every 15 years since 1850 and the world now has more proven reserves than it has ever had in the ensuing 150 years.

“The data,” Prof. Boyce wrote, “resoundingly rejects … peak oil.” Why? Peak oil, he says, is one-dimensional and mechanical. It omits human behaviour and human choice. It is mere extrapolation from arbitrarily selected statistics: Peak oil analysis “is not an economic model.” Thus it rests upon an assumption that people don’t make decisions – don’t make choices.

Based on his study of oil discovery and oil production in 44 countries and 24 U.S. states, Prof. Boyce concludes: “In all aspects, I find the peak oil model an inadequate empirical representation of historical patterns. This is not to say that oil production may eventually peak. It does say that the peak oil model will have little, if anything, to say about it.”

Further, if you insist on a Bell curve for oil, Prof. Boyce says, you must logically use a Bell curve for peak aluminum, too. And peak iron ore. And, for that matter, peak cement. Yet the per-capita consumption of 80 minerals increased throughout the 20th century even as prices for almost all of them fell. As with oil, so with minerals: Technological advances, driven by price incentives, produce the paradox of rising production at falling costs. The exploitation of methane gas and shale gas will take place, Prof. Boyce suggests, in the same way.

Prof. Boyce takes a long view of these things – a perspective that tends to level off all the different energy peaks. He notes that Britain experienced peak coal and then (according to some peak oil theorists) peak oil, too – apparently without missing a beat. From 1820 through 1913, the age of coal, Britain recorded an average annual per-capita increase in GDP of 1.14 per cent. From 1913 through 2003, the age of oil, it recorded an average annual per-capita increase in GDP of 1.63 per cent – which, rather eerily, is almost precisely the same annual increase (1.67 per cent) in global oil production.

Globe and Mail



4 Comments on "There is no ‘peak oil.’ But there is supply and demand"

  1. SilentRunning on Thu, 24th Jun 2010 6:48 am 

    Yawn – another Peak Oil Denier – could we please relegate such stories to a separate forum?

    “Dr Boyce” has no explanation why the US oil production has been falling since 1970 – when according to his model oil production in the USA should be soaring as the barrel price climbs. Nor can Boyce’s idea explain Mexico, or almost every other country on the planet at the moment that is post-peak in their own production curves.

    Boyce is a classical economist who lives on a fantasy planet where supply always rises to meet demand. Trouble is, we don’t live on that planet. That’s why you can’t buy passenger pigeon at your local restaurant any more – they are gone.

  2. Peak Oil is you on Thu, 24th Jun 2010 6:08 pm 

    Funny.

  3. Edpeak on Sun, 27th Jun 2010 12:42 am 

    He seems to be yet another person using the wrong definition of peak oil. The right one is, “maximal rate of extraction” and NOT “when supply doesn’t keep up with demand”…that he and the author are using this latter “definition” is suggested by statements like

    ” ‘is not an economic model.’ Thus it rests upon an assumption that people don’t make decisions – don’t make choices.”

    But it’s also the Globe and Mail, so history should not just record all the false predictions and false statement by authors but also the names of the EDITORS of the Globe and Mail and other publications who repeatedly, time and again, publish nonsense claiming either global warming or peak oil are not real when both are very real, will not ‘cancel’ out and will both bite us. the Editors/Publishers of publications who repeatedly hire folks or interview folks to claim either isn’t real, THEIR names need to be exposed to history’s judgment.(and it’s a “contradiction” that that consumption incraesed while prices fell for other minerals? a contradiction because the idiots assume we have to be at the same point on the same graph for all minerals? unbelievable)

  4. SamPow on Sun, 4th Jul 2010 6:38 am 

    Boyce doesn’t understand – simple as that! Peak Oil is not an economic model. Nor does it seek to explain anything about supply and demand or indeed reserve growth. It is simply a model of extraction capacity – how fast or how easily a resource (in this case, oil) can be got out of the ground. Peak oil is a fact. It has now occurred many times at regional and national scales. It appears to be occurring right now on a global scale. It matters not one wit that new discoveries happen every day or that reserves may be growing. It’s all about production rates and the energy required and where that’s going to come from and at what cost!

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