I think this is the beginnings of an economy based on perpetual growth and fossil fuel energy running headlong into geological energy constraints. Basically I see an undulatory downward path for the rest of my life. From here out, I think any rallies in our economic condition are going to be met with spiking commodity prices that knock us right back down.
Joined: Oct 28, 2004 Posts: 294 Location: SoWashCo, Minnesota
Posted: Wed Dec 08, 2004 2:31 pm Post subject:
One possibly stupid question:
If you believe in abiotic oil, the earth somehow generates oil, and it fills up the reservoir over time. Let's assume this is true.
If oil reserves build up at a suitable rate to handle the world's ever-growing appetite for petroleum, wouldn't you expect to see an 'oilcano' resulting from a previously untapped reservoir finally hitting it's max capacity and rupturing due to the pressure?
It happens with volcanos on a regular basis, so why not abiotic oil?
I'm obviously not a geologist, so maybe I'm talking complete nonsense... I've wondered about that, though.
It accepts the ODAC analysis but counters, without significant analytical backing I admit, that peak will not happen this decade and perhaps not even next decade. I think this line of argument should be incoporated into the ODAC numbers. ODAC should not just be consider the BIG projects. Even Youngquist, who wrote Geodestinies--which argues that geology is tightly tied to the destiny of a country--even he admits that a significant amount of oil comes from small fields that produce very little.
Oil prices are increasing. Even a little demand destruction and a little production increase, combined with depletion, may prevent a catastrophic problem in this decade and perhaps well into the next.
This does not negate dollar problems and other associated issues, but those who believe peak or a crash is imminent may be wrong.
[snip...]
Oil prices are increasing. Even a little demand destruction and a little production increase, combined with depletion, may prevent a catastrophic problem in this decade and perhaps well into the next.
This does not negate dollar problems and other associated issues, but those who believe peak or a crash is imminent may be wrong.
I hated this piece even though anyone who does believe in an imminent peak may be wrong. I am firmly in the Matt Simmons camp. We won't know until after it happens. It may have already happened and it may not happen for a decade.
The part I really dislike about the article and the part I consider intellectually dishonest is that his view is not falsifiable. Suppose he is right, more or less, and demand slows while production continues to climb for the next ten years. Ten years from now he will be able to write exactly the same story. His argument can be used to put peak off forever. It can't be right if it can do that. He will be correct right up until the moment he is wrong and he must be wrong one day.
He makes an error on both the demand and supply sides, in my opinion. Higher prices will knock back demand somewhat, but he skates past the implication of demand destruction. We can't have both continued global growth and demand destruction because demand for oil is not very price sensitive, at least not in the short run.
On the supply side, the technology improvements are also a given in the Campbell models. It is part and parcel of exploiting the second half of the resource. The challenge is not merely to get more oil out of the ground. We have to get it out of the ground faster and faster forever. If the methods to get it out faster cost a lot of energy, well then, we have to get it out still faster, eh?
It just isn't possible. It may very well be that we can continue to accelerate production for a few more years, but beyond that it becomes increasingly difficult to believe. When I see someone suggest things might be okay through the end of the decade and beyond, I don't dismiss it out of hand. We don't have good enough data. But it will happen and then we will know.
This argument is a bogus sidestepping of the real issue for economists. They aren't qualified to tell us when oil production will peak. They aren't qualified to criticise the work of the geologists or the engineers. They are qualified to answer some other questions, though, and I wish someone would ask them:
"Okay, for the sake of argument, oil production peaks at 95 million barrels a day in 2015. That is only ten years away. What are the implications of peak oil on the economy? What should we be doing today to mitigate the impact? Can the economy continue to grow with an energy supply in decline? How?"
"Okay, for the sake of argument, oil production peaks at 95 million barrels a day in 2015. That is only ten years away. What are the implications of peak oil on the economy? What should we be doing today to mitigate the impact? Can the economy continue to grow with an energy supply in decline? How?"
"Why worry about it now? It'll be someone else's problem then. Pass me a brew and let's crank this party up!"
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