Why the “Peak Oil” Theory Falls Down (CERA Report)

Madpaddy · Expert Joined: Jun 25, 2004 Posts: 1988

I wonder could I convince my bosses at work that we need to buy that report as we are in the process of a major energy efficiecy awareness drive?

As Sun Tzu would say "know your enemy".
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jbeckton · Expert Joined: Jan 05, 2007 Posts: 1914

Less random gas shortage predictions might lend a little more creditability to the issue.

I remember a thread last March about how we would see major gas shortages across the US by summer. Well that came and went only to be followed up by another string of useless predictions for this summer.

The more people cry wolf, them less credibility this serious issue gets. People have been calling for energy shortages for 50 years, how do you convince people- Okay, NOW we are really serious, we have to do something?

Doomers hurt their own cause.

vision-master

The World has ended so many times. Makes ya wonder, huh?

Smudger

I do think this is a very good point. there is a lot of "we're doomed" and "I hope it happens quickly to smite those nasty people who have been successful/not listened/not agreed with what i said" or simply people that shelled out a lot of money for a bunker in the middle of nowhere and are now beginning to getting a slight uneasy feeling that they might just be wrong (again) but then quickly rationalise it that it was that damned capitalist who sold them the bunker fault.

The net result: even more ridicule from members of the public, slightly better in Britain as important to have at least one eccenticity! and even more extreme angry people who embarassed that they have been shown to obe wrong seem to adopt a double or nothing approach.

The reality: PO is a pretty serious issue which is going to be a big contributor to an energy price/source crisis over the next decade which will hit the US and Africa the hardest and probably cause a prolonged recession until Chindia dig us all out of it c. ten years later. The earlier and wider the message is believed the less extreme and more managed this period will be.

Ming · Heavy Crude Joined: Aug 26, 2005 Posts: 255

MrBill · Expert Joined: Sep 15, 2005 Posts: 5220 Location: Eurasia

Ming · Heavy Crude Joined: Aug 26, 2005 Posts: 255

pstarr

GreenOil08 · Coal Joined: Mar 14, 2008 Posts: 12

CERA is funny. They just don't get it. Do they? We're all ******. Every last one of us!

allenwrench · Intermediate Crude Joined: Apr 23, 2008 Posts: 728

Peak oil...it is just a theory. That is what my wife's lady friend stockbroker told her.

Dismissing peak oil as 'just a theory' is an easy and quick way to rebut PO.

If the question is when we will peak - yes we can only theorize.

If the question is if we will peak - then it is not a theory and only a question of time.

No one knows the exact peak date for world oil production, but we do know that time will come in the not so distant future. But finding the peak is not hard problem once we can look back on it by a few years...but we need some time to do it...again, only time will settle this debate.

And the possibility may be that we find another big discovery and the peak dates look more like a double top stock market chart than the drop over a cliff.

But all this does not really matter. The bottom line is we are running out of crude no matter how the hard the spin doctors try to masturbate the facts.

The fact that 'we have to estimate' reserves or useful life of anything says that the item in question does not have an infinite supply or life span.

I never argue with persons claiming that we have peaked already or others that claim the peak is 20 years away. To me they are both on the same page, just looking at different paragraphs.

But the person that thinks that the world can go on forever using 31,000,000,000 barrels a year of crude and never have to pay the bill with the eventual depletion of fossil fuels is just plain wrong.

"If the public does think briefly about future oil supplies, the question usually asked is, "How long will oil last?" This is the wrong question. Oil will be extracted in some insignificant quantity perhaps 200 years from now. The critical question is: When does the peak of world oil production occur?" ~ Richard C. Duncan

ROCKMAN

Allen et al,

Here's a thought which popped to mind while reading Saudi's latest press release. It goes to Allen consideration of the actually timing of PO:

I believe the most recent press releases from Saudi Arabia can be taken as an admission the kingdom now believes they have reached Peak Oil.

Consider the KSA’s base positions:

1)The market is adequately supplied.
2) Much of the price run up is due to speculation.
3)The KSA has sufficient excess capacity to deliver significantly more oil to the market should there be a demand for it.

Now consider the new press releases from the KSA:

1)Khurais Field will come online next June at 1.2 million bopd.
2)The plan is to increase their current 11 million bopd capacity to 12.5 million bopd.
3)The cost to build this expanded deliverability is $10 billion.

If the KSA believes the market will require an additional 1.2 mm bopd next June they currently have, by their own admission, the capacity to meet the demand: 11 mm bopd – 9.6 mm bopd (current production rate) = 1.4 m bopd. Thus why spend $10 billion to add unneeded capacity. Granted in time the extra capacity will be required but according to their statements current deliverability is more than adequate to meet any demand increase in the immediate future.

You’re really left with only two conclusions (but please off any others that pop to mind):

1)The KSA didn’t really have a better use for the $10 billion right now and doesn’t mind the new production facilities sitting there idle. (and that’s a really bad idea: such equipment doesn't “age” very well if it’s not being utilized)
2)The KSA knows their true production capabilities and decline rates better than anyone else and projects a real demand for the additional NET capacity in a year.

Even if there’s a significant global recession (as there was in the early 80’s) and the price of oil drops 75% (like it did in 1986) to $40/bbl then the new production would still earn the KSA about $13 billion net (I’m guessing lifting costs of around $10/bbl).

Hmmm….recover the new costs with less than a year’s production even if the global economy slumps and consumption drops (like it did in the early 80’s). And then the KSA can open the wells up and grab a bigger chunk of market share just like they did when they drove oil down to $10/bbl in 1986.

Double Hmmm…..if a global recession puts PO off a few more years than the KSA is in a great position to capture more of the market and still make a handsome return. And if the world figures how out to prosper (or at least survive) with high oil prices then the KSA is in a great position to capture more of the market and make an more handsome return.

Damn...those Swiss economist are smart.

MrBill · Expert Joined: Sep 15, 2005 Posts: 5220 Location: Eurasia

Good points. Either way they have a strangle hold on conventional oil production going forward as non-OPEC oil production is hardly growing at all, while we all know some older fields are already in steep decline.

Therefore, Saudi's real risk is energy conservation and a switch to alternatives that destroys 'potential' demand, and not the situation they faced a decade earlier when new non-OPEC supply came on-line.

And as the lowest cost producer, the price setter so to speak, they also control the economics of non-conventional oil production if future demand turns up weaker than expected. If not, then they share the total energy pie with non-conventional oil in a market with tight supply and growing demand.

That chart only goes up to 2006, and we all know what has happened to crude oil prices since then.

It is all about the money. A wealth transfer of unparalleled proportions. Or at least comparable with Spain's discovery of gold in the New World.

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The organized state is a wonderful invention whereby everyone can live at someone else's expense.

ROCKMAN

Spain's discovery of gold in the New World....a great analogy Mr. Bill. Works on quit a few levels when you ponder it.

nickynicky · Tar Sands Joined: Jul 15, 2008 Posts: 51

Let us say you succeed tomorrow in convincing the whole world of peak oil imminence. How will this help anything?

(I mean, this web site becomes worth 20 billion dollars, but other than that?)

ROCKMAN

It's easy Nicky: smart people make better decisions than stupid people. And since many of the worst aspects of life are caused by bad decisions the benefit is obvious.