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Page added on May 25, 2017

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What Happened to Peak Oil?

General Ideas

About a decade ago, the peak oil concept was very popular. The argument went that oil was a finite resource and that the peak output level and decline was shortly to arrive as demand exceeded supply. A number of people even expanded on this basically accusing the Saudis of ‘lying’ about their reserves and painting a very dim picture of future supply/demand. At the time, I argued and wrote that this peak oil theory was simply nonsense as it neglected two very important things – economics and human ingenuity.

On the former point, the peak of oil recovery will show a relationship to the price of oil and on the second, we humans have a habit of being opportunistic and inventive so that I expected new recovery methods and new plays to be found offsetting and delaying any potential peak for an unlimited amount of time into the future. I was even laughed at for my views. For example in his book The Entropy of Capitalism, Robert Biel writes the following…”It is amusing to observe a leading defender of energy hedging strongly affirm the existence of an energy crisis while denying the reality of peak oil (Vasey, 2005) his vested interest is….” I have to say, I find it rather amusing to read the rambling thoughts of an anti-free marketeer attempting to cover a topic he doesn’t understand and his assumption that an industry analyst has a vested interest….

However, I was right. Peak oil was nonsense that wouldn’t hold up when set against economics and human ingenuity. There is going to be a peak but when that occurs is anyone’s guess. It simply isn’t going to occur in the near future.

Today, the argument for peak oil is rarely heard of course but there are many shrill voices looking to drive up the price of crude oil as I recently wrote. Again, I simply cannot see this occurring without some fundamental change in the fundamentals and I made my own arguments in my recent blog. Today, I stumbled across a really well thought out and well written Forbes article however that I would encourage you to read. The U.S.-OPEC Oil War Takes Another Turn by James Conca makes some very interesting points about both economics and human ingenuity as it relates to US production and concludes with the following statement – “Maybe this Oil War is not over, but the U.S. seems to be holding the bigger stick.

Amen to that!

By the way, I made a very comprehensive argument against peak oil in the book – Energy & Environmental Hedge Funds – Fusaro & Vasey, 2006 if anyone is interested in reading them.

CTRM Center



41 Comments on "What Happened to Peak Oil?"

  1. joe on Thu, 25th May 2017 8:34 am 

    Peak oil is everywhere, its in the extraordinary measures of oilistans not even official opec members joining forces to stop price destruction, its in the low global growth rate and low interest rates, peak oil is in the drive for electrical cars and in the continuous invasions of oilistans by western powers. What happened? Peak oil went main stream, peak gave tight oil a purpose! It’s the false accounting of tight oil as ‘conventional’ which allows idiots to deny reality.

  2. Cloggie on Thu, 25th May 2017 8:44 am 

    What Happened to Peak Oil?

    Very simple:

    – new technology enabling a “third carbon age”
    – renewable technology creating energy sources cheaper than fossil, that now form that largest share of new installed capacity. On a “moral plane”, renewable energy also won (#Paris)

    Peak oil was always peak conventional oil. Peak conventional oil in hindsight was irrelevant.

    Solar economy is next. Period, over and out. There is no fundamental energy problem.

    Worry instead about climate change, declining biodiversity, nuclear proliferation, geopolitical upheaval or civil war in the West as a result of mass migration.

  3. Dennis Coyne on Thu, 25th May 2017 8:56 am 

    A common mistake made in the peak oil discussion is that some believe that prices do not matter. This is not a very good assumption.

    Peak Oil is not about supply and it isnot about demand. It is about the maximum amount of oil (crude plus condensate) produced and will be the peak of supply and demand.

    The story is about both geology and technology, not one or the other.

  4. Southwest_PA on Thu, 25th May 2017 9:19 am 

    The author (Gary Vasey) says in two adjacent sentences: “Peak oil was nonsense” and “There is going to be a peak”. He reconciles these opposing statements by saying improved recovery and discovery will delay that peak “for an unlimited amount of time into the future.”

    Unlimited??? Sorry, I stopped reading there. Except the last line: “buy my book.”

  5. rockman on Thu, 25th May 2017 9:19 am 

    “Maybe this Oil War is not over, but the U.S. seems to be holding the bigger stick.”

    And apparently that Big Stick is importing 3.6 BILLION bbls of oil per year sending about $160 BILLION of our capital to foreign oil producers. Apparently the problem is we’re masochists: we are beating the crap out of ourselves with our own Big Stick. LOL.

  6. Jerry McManus on Thu, 25th May 2017 9:49 am 

    Well, credit where it is due I guess, the man clearly knows how to sell books to “free-market” acolytes.

    He’s probably even convinced himself that conjuring “wealth” (read: worthless tokens called money) out of thin air is a suitable alternative to the laws of thermodynamics.

  7. Jerry McManus on Thu, 25th May 2017 9:56 am 

    And then there is this, as seen on r/collapse:

    Peak Shale? Monstrous Declines May Kill US Energy Independence

    https://www.marketslant.com/article/peak-shale-monstrous-declines-may-kill-us-energy-independence

    If you believe the recent surge in U.S. oil production suggests that good times are here once more, think again. While the U.S. oil industry continues to increase production by adding a great deal more drilling rigs, there is serious trouble taking place in the shale patch that very few are aware. This has to do with the rapid deterioration of oil and gas economics as horrendous decline rates eat into company cash flows.

  8. Go Speed Racer on Thu, 25th May 2017 10:26 am 

    Must be fun to be a business major,
    Don’t have to learn any laws of physics,
    and don’t have to obey those laws either.

  9. Bob on Thu, 25th May 2017 10:41 am 

    Our legacy wells are declining at 4 to 6% a year. Project this forward 20 years and tell me what the world will look like. Hint: it won’t be a happy motoring paradise. This is the bedrock rule in the oil business today; the one no one will talk about. To say that technology will overcome this problem just will not work.

  10. deadlykillerbeaz on Thu, 25th May 2017 11:20 am 

    If a farmer plants a field of sweet corn, there will be only so much of the stuff. Seems limitless until people and pheasants and raccoons start eating all they can, then the corn will be gone and you’ll wish you had more. Goes from abundance to dearth in no time. Peak Corn translates to Peak Supply then to Peak Demand which annihilates the supply. Happens every time. Demand doesn’t go away. Same goes for oil.

    You gotta get it while you can, it won’t be long and it’ll all be gone, so you gotta get it while you can.

    Better get it while you can.

    https://www.youtube.com/watch?v=VZ9NrEHSxK8

    Bakken production in December of 2014 (highest ever) was 25 percent higher than February of 2017. In December 2014 had 2070 more wells. In other words, the number of wells increased by more than 20 percent and produced 25 percent less oil.

    Can’t deny the decline, natural, and looks like a peak. Peak Oil will never go away, it will just be ignored for now.

    There is an excuse for ignorance, but not for stupidity.

    For the record:

    2014 12 36083889 1163996 8950 4032 130

    2017 2 27491269 981831 11020 2495 89

    https://www.dmr.nd.gov/oilgas/stats/historicalbakkenoilstats.pdf

  11. newfie on Thu, 25th May 2017 11:20 am 

    One thing for sure, no sign yet of peak idiocy.

  12. Plantagenet on Thu, 25th May 2017 11:31 am 

    Peak Oil has been replaced with an oil glut for the next few years.

    Cheers!

  13. deadlykillerbeaz on Thu, 25th May 2017 12:18 pm 

    Correction:

    December of 2014 had 2070 fewer wells,not more.

    Dyslexic or something.

  14. Revi on Thu, 25th May 2017 1:47 pm 

    We will have to see, but I am betting on a finite planet eventually being finite. Maybe I’m not optimistic enough…

  15. tahoe1780 on Thu, 25th May 2017 1:47 pm 

    Agree with joe. We defined it away.

  16. Dave Thompson on Thu, 25th May 2017 2:53 pm 

    Some just do not get it, refuse to get it,or just plain do not want to get it. Peak oil.

  17. Dredd on Thu, 25th May 2017 4:11 pm 

    What happened to peak oil?

    Wayne Tracker absconded with it:

    “The investigation has already led to one public revelation: that Secretary of State Rex Tillerson, who until December was chief executive of Exxon, used a separate email address and an alias, “Wayne Tracker,” to discuss climate change-related issues while at the company.”

    (State appeals court rules Exxon must give records to NY prosecutor)

  18. Apneaman on Thu, 25th May 2017 5:13 pm 

    Just stumbled across this – for your viewing pleasure. The things I do for you people. Bunch A Barrel counting junkies.

    Energy Return on Investment of Canadian Oil Sands Extraction from 2009 to 2015

    Ke Wang 1,2, Harrie Vredenburg 2, Jianliang Wang 1, Yi Xiong 1 and Lianyong Feng 1,*
    1
    School of Business Administration, China University of Petroleum (Beijing), Beijing 102249, China
    2
    Haskayne School of Business, University of Calgary, Calgary, AB T2N1N4, Canada
    *
    Correspondence:
    Academic Editor: Mark J. Kaiser
    Received: 24 January 2017 / Accepted: 24 April 2017 / Published: 2 May 2017

    Abstract: Oil sands, as unconventional oil, are so essential to both Canada and the world that special attention should be paid to their extraction status, especially their energy efficiency. One of the most commonly used methods to evaluate energy efficiency is the Energy Return on Investment (EROI) analysis. This paper focuses on EROI analysis for both in situ oil sands and mining oil sands over the period of 2009 to 2015. This time period represents an extension to periods previously considered by other analyses. An extended Input-Output model is used to quantify indirect energy input, which has been ignored by previous analyses of oil sands extraction. Results of this paper show that EROI of both mining oil sands (range of value: 3.9–8) and in situ oil sands (range of value: 3.2–5.4) display an upward trend over the past 7 years; EROI of mining oil sands is generally higher, but is more fluctuating than the EROI of in situ oil sands. Compared with EROI of other hydrocarbons, the EROI of oil sands is still quite low, despite the fact that it is increasing gradually.

    http://www.mdpi.com/1996-1073/10/5/614/htm

  19. Anonymous on Thu, 25th May 2017 9:00 pm 

    The Oil Drum is shut down. ASPO’s last conference was 5 years ago. Simmons died from drowning (while drunk) in a tub. Ruppert blew his brains out. Savinar took his ball and went home with it and now operates an astrology blog.

    Face it. Peakers are nutters. And got butt spanked by events. Spank spank.

  20. Apneaman on Thu, 25th May 2017 11:13 pm 

    Anonymous, a peaker web site shut down, therefore peak oil is not real. That’s your standard of evidence? If they start it back up, I guess that means it’s real again eh? Hey if I find a climate change web site that shut down, I guess AGW is canceled too. Old sock puppet nony-marmi-papasmurf used to try and sell that horseshit too. A dead web site is a dead web site and a dead web site is evidence of fuck all.

  21. Apneaman on Thu, 25th May 2017 11:29 pm 

    Human life is doomed unless we take care of dying earth

    http://www.theswcsun.com/human-life-is-doomed-unless-we-take-care-of-dying-earth/

    Good luck with that humans.

  22. Apneaman on Thu, 25th May 2017 11:31 pm 

    Mapping 50 Years of Melting Ice in Glacier National Park

    “The flowing sheets of ice scattered throughout the Montana park shrank by more than a third between 1966 and 2015…”

    “Ice extent for every glacier in Glacier National Park in 1966 and 2015

    Lost 50 percent or more coverage area”

    https://www.nytimes.com/interactive/2017/05/24/climate/mapping-50-years-of-ice-loss-in-glacier-national-park.html?ref=oembed

  23. Apneaman on Thu, 25th May 2017 11:42 pm 

    Frozen Rain Bombs are falling on their heads.

    Insurance News: Colorado Hailstorm on Pace to be Most Expensive in State History

    “With more than 150,000 car insurance claims and 50,000 homeowners insurance claims estimated to be filed—the monster hailstorm that pounded Colorado’s Front Range on May 8th is on pace to be Colorado’s most expensive insured catastrophe. The Rocky Mountain Insurance Information Association is estimating the preliminary insurance losses for the hailstorm at approximately $1.4 billion.”

    http://www.rmiia.org/news_room/catastrophe_news/2017_05_23_Insurance_News_Colorado_Hail_Storm_Breaks_Records.dwt

  24. Apneaman on Thu, 25th May 2017 11:44 pm 

    Here’s how much climate change can cost homeowners in damages

    http://globalnews.ca/news/3434210/climate-change-cost-homeowners-damages/

  25. makati1 on Fri, 26th May 2017 2:05 am 

    https://www.youtube.com/watch?v=hziG9Nr6KHU

    “B.J.Thomas – Raindrops Keep Fallin’ On My Head ”

    “Rainy weather has also slowed early harvesting of winter wheat in Texas and Oklahoma. In central Kansas, some low-lying fields have drowned-out spots and wetness may increase pressure from rust diseases, said Erick De Wolf, a wheat-disease specialist at Kansas State University. Western Kansas production remains “a question mark,” as crops that endured a crushing April snowstorm are also battling a worse-than-normal outbreak of wheat streak mosaic virus. Thirty-two counties face high or extreme intensity of the disease, which can cut yields 70 percent or more.”

    https://www.bloomberg.com/news/articles/2017-05-22/u-s-corn-fields-turn-into-lakes-as-spring-deluge-floods-midwest

    And by August, it could all be dust.

  26. Davy on Fri, 26th May 2017 5:59 am 

    Many people can’t handle doom. It is not easy to stay there and function normally in an insane status quo. The conflicts are numerous. If one goes into a depression then doom can be quite dangerous. Loss of hope and optimism is a huge danger to us personally and collectively. That does not mean we should reject it. The truth exists at a higher standard above human concerns. Some of us have to search for it and go where it takes us.

    I in no way want to see general affluence and comfort dissolve into pain and suffering. I do not want to see people starve and communities destroyed as the planet becomes unrecognizable. The thought of earth becoming a Venus is terrible for someone like me that is a tree hugger. Yet, the truth is higher and must take priority. We cannot make wise choices in a sober wisdom without following the true way. If that means we are in the vicinity of a collapse and our planetary system is nearing abrupt change into an altered likely uninhabitable world then so be it.

    The truth demands obedience above society’s standards. This is not for all of us. Many in our community of humans are not capable of the truth. Many must live on a lower level because of nature or nurture has not allowed them to a higher level. This higher level is one of responsibility not power. In days of old it meant being a shaman or prophet. Many can’t handle it. Those of us who can must because so few can. Our society and our personal locals depend on a rational voice even when that voice is not what they want to hear.

    I am seeking the truth and I feel I am getting closer to it in doom. That does not mean I have anything as one possesses a physical item. Nor can I stay where I am now because the sacred is not static. The best we can do is get nearer to it. Maybe I am delusional and deceived but my intent is not. I really have nothing not even my sanity so this place I am at is just a temporal thing. I will get older and lose my mind or die from so many unfortunate but routine things that get any of us. This is not going to save me and there is no transcendence because of it.

    Our species relies on honest and sustained search for the truth because we are Homo Sapiens who are self-conscious and possess higher levels of intelligence in relation to other species. This means our evolution is partly based on sapience. We survive more because of sapience then instinct. If Sapience corrupts then we are like the animal with an evolutionary dead end appendage.

    Today the truth is telling us we are facing problems and predicaments that are traps. Honest science is flashing a warning light but the status quo is saying in a techno optimistic way we will power our way through this with techno development. It does not matter that this is what got us here and likely we are now too far into a mess to clean it up through techno development. Those of us that are awakened and enlightened must except that society has no choice but to follow this path. The system is constructed in such a way that only optimistic growth based narratives maintain the status quo that feeds and shelters us. The foundation of our civilization is based on this and any narrative in opposition is considered fringe and not the truth.

    It appears through honest science and common sense we are far into overshoot and near a systematic break to lower populations and lower economic activity. This is a classic die down equation. Society’s narrative cannot go there and survive. The first order of the search for truth for us individually is to understand this. This means right is wrong and wrong is right or IOW you will dwell in the surreal of paradoxes living in today’s civilization. You will be on the knife edge of insanity for following the truth in today’s world of denial. Some of us must go here so we can at least find meaning.

    Humans need meaning and the truth is that. Society needs optimistic growth. The problem develops when the reasons for optimistic growth are not the truth. At this point all kinds of dysfunctions and irrational behavior develop. It is a small minority of the wise that must confront the loss of truth and through monasteries of honesty and knowledge maintain it. This is the classic case of heroics. This does not have to be grandiose and great. It can be in a small little world of a family and community. These people must maintain meaning in the face of ridicule and irrelevance. Society’s successful are not what you must become. The lies the status quo operates under will one day shatter and dissolve and a truth based meaning will be needed to fill the void. This truth is saying society’s foundation is built on lies and has no future. Of course this message will be rejected and so will you.

  27. Hello on Fri, 26th May 2017 6:51 am 

    Davy,

    I don’t think there is any doom, currently.
    There’s simply more of the same as it always has been. People who make it and people who don’t. People who loose everything due to incompetence and/or bad luck, and people who find a niche or the next big thing and strike it rich. People who fall ill, people who make it to old age, people who make war.

    It’s important but sometimes difficult to distinguish ‘doom’ from ‘change’ or from failure to ‘adapt and change’.

  28. Davy on Fri, 26th May 2017 7:17 am 

    “I don’t think there is any doom, currently….It’s important but sometimes difficult to distinguish ‘doom’ from ‘change’ or from failure to ‘adapt and change’.”

    So are you saying we moderns are different from every previous civilization that collapsed? Sounds exceptional to me and just more of the same. Dismissal of profound change is your “There’s simply more of the same as it always has been”. You are talking about change but deceiving yourself this is of the wrong kind and very different. This is systematic unraveling and the breaching of thresholds of stability not the traditional growth into new worlds we have habitually seen for 200 years.

    We have seen significant destructive change recently. Economist calls this innovative and transformative. You know the usual optimism of we are set to substitute and innovate ourselves into a new green world. Development will level off population and clean up our dirty cities. You know the comfort of thinking smart women don’t have big families. All will be well if you are just patient crap. Your argument would have worked 20 years ago but today the science is overwhelming. The social turmoil and dysfunction is beyond denial. To call this just more of the same in a cavalier statement. This symbolizes the status quo and that is extend and pretend and dismissal of doom as nutter.

  29. Hello on Fri, 26th May 2017 8:07 am 

    Yes, Davy, that’s correct.
    In the end it all comes down to what ‘doom’ is.

    For me doom is the fact that I’m a tourist among foreigners in my own home town. For you, it’s something else.

    So unless we define doom, there’s no point in arguing. Certainly you will agree that not all ‘change’ is ‘doom’.

  30. onlooker on Fri, 26th May 2017 8:15 am 

    “I don’t think there is any doom, currently”

    I don’t think that anybody reasonable would deny that the prospect of Billions of people dying prematurely and in a relatively short span of time is Doom. This is certainly not the ebbs and flow of change or some repeating cycle. Thus is a uniquely epic disaster

  31. Hello on Fri, 26th May 2017 8:26 am 

    “the prospect of Billions of people dying prematurely”

    So the billions of people are not even dying. There’s only ‘prospect’. Well, as said. Doom is in the eye of the beholder.

    People are dying all the time. On one of my trips to the US I visited an old cemetery in a small rural farm town. It was full of people who died ‘prematurely’ before even reaching adult hood. Is that doom? Or is that a normal pre-technology pre-medicine life?

  32. onlooker on Fri, 26th May 2017 8:50 am 

    Maybe, I should have said realistic prospect. But yes the more general point is true doom like many other things tends to be in the eye of the beholder. In the main forum,a few think, billions dying and a new more pristine world would be a good thing. I guess again from whose perspective?

  33. Davy on Fri, 26th May 2017 9:11 am 

    You have a point Hello. Ultimately doom is local and personal. We are all going to die and everything we have and have done will turn to dust.

  34. Apneaman on Fri, 26th May 2017 9:23 am 

    doom
    do͞om/
    noun
    noun: doom

    1.
    death, destruction, or some other terrible fate.
    “the aircraft was sent crashing to its doom in the water”
    synonyms: destruction, downfall, ruin, ruination; More
    extinction, annihilation, death
    “his impending doom”
    archaic
    (in Christian belief) the Last Judgment.
    synonyms: Judgment Day, the Last Judgment, doomsday, Armageddon
    “the day of doom”

    verb
    verb: doom; 3rd person present: dooms; past tense: doomed; past participle: doomed; gerund or present participle: dooming

    1.
    condemn to certain destruction or death.

  35. rockman on Fri, 26th May 2017 10:56 am 

    Joe – “Peak oil is everywhere”. Which is why I tossed out the POD here long ago. Every here the Peak Oil Dynamic has had limited use. And is not seen anywhere else. But some do use lo g texts to describe the com!Plex interactions of the various components of the energy scene.

  36. Anonymous on Fri, 26th May 2017 8:16 pm 

    I remember all this Peak Oil in the 70s. We were supposed to be out of oil by 2000 according to Jimmy Peanuthead. Didn’t happen.

  37. Green People's Media on Fri, 26th May 2017 10:39 pm 

    “The argument went that oil was a finite resource…”

    Author goes on to say, ” I expected new recovery methods and new plays to be found offsetting and delaying any potential peak for an unlimited amount of time into the future.”

    In other words, author is asserting that oil is in fact not at all a finite resource, but is unlimited (into the future!)

    So futurist.

  38. Green People's Media on Fri, 26th May 2017 10:51 pm 

    Found myself agreeing mostly with Davy’s long post about “Doom.” We communists, you know, insist that capitalism, the economic system, is doomed. That it’s a self-dooming system, which is to say, the internal dynamics of its functioning lead to its eventual demise.

    Oddly enough, though, most Marxists tends to be “Cornucopians,” asserting abundance in the production system without accounting for the physical limits to all of this abundance. So, your Doomer Marxists tend to be few and far between.

    I assert that the numbskulls who come a’trolling in this web forum and asserting that there are no Limits to Growth, that exponential economic growth can continue unabated forever; that petroleum’s geology is no longer a limit either, because presumably the frackers now know how to not only extract every drop of oil for just $20 a barrel, but actually can spontaneously generate oil abiotically using some sort of funkatronic nuclear transmogrification of elements to turn out fresh carbon where none now exists!

    Peak Oil Message Boards are so fun hey?

  39. Green People's Media on Fri, 26th May 2017 10:53 pm 

    didn’t complete my long run-on sentence–these numbskulls, are still numbskulls nonetheless.

  40. Apneaman on Sat, 27th May 2017 8:48 am 

    I remember going wayyyy back to the 1970’s “sports experts” and fans were predicting the Boston Red Sox’s and Chicago Cubs would never ever ever win another world series – dey was cursed N stuff – and they were right….until they did win.

    Yep, the very best way to conclude the likelihood of an event happening, all events really, is to go by others failed predictions . Dat is de bestes form of logic, cause the humans only make 50000000000000000000000000000 gazillion predictions a day (either way) on every topic imaginable (pick the one that makes you feel best and call it logic).

  41. DerHundistlos on Sat, 27th May 2017 3:34 pm 

    Anonymous Sock Puppet

    Show me where President Carter stated thr world would run-out of oil by 2000. Instead, Carter tried addressing the American people as adults about the need to transition away from FF as quickly as possible or suffer the inevitable consequences. Reagan proved the people do not want to know the truth- just it’s morning in America crap.

    And Carter is right.

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