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Page added on October 20, 2011

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No Peak Oil to Yergin Who Sees Years of Rising Supplies

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Toward the end of “The Quest,” his sprawling book on energy, Daniel Yergin introduces an obscure 19th-century character named Sadi Carnot.

The son of one of Napoleon’s ministers of war, Carnot was convinced that an important reason for Britain’s victory over Napoleon was “its mastery of energy, specifically the steam engine.” In 1824 he published a study on this theme called “Reflections on the Motive Power of Fire,” which Yergin calls “almost certainly the first systematic analysis of how man had actually harnessed energy.”

For more than three decades, Yergin has been Carnot’s heir, cutting through fog and emotions to provide lucid analysis of energy issues. He emerged on the public stage in the wake of the 1973 oil embargo and its gas lines, which sparked a persistent feeling of unease about energy security in the U.S.

He has been a consultant to industry and governments, most recently as chairman of IHS Cambridge Energy Research Associates. At the same time he has continued to address a wider audience through his writing.

Yergin is best known for “The Prize” (1991), his Pulitzer Prize-winning history of the oil industry. “The Quest” is in some respects a sequel, but it’s not in the same league. The new book is too long and lacks a compelling narrative thread.

More worryingly, Yergin seems overly gentle with major oil- market players such as BP, which was at the heart of the 2010 Gulf oil spill. In a section on the feverish oil bubble of 2008, those analysts predicting ever higher prices aren’t identified in the main text, their names buried in footnotes. Perhaps Yergin’s business interests are conflicting with his reporting.

Peak Oil Theory

“The Quest” is still worth reading for Yergin’s erudition and insight. For instance, he debunks the peak oil theory, which says world gas and oil production may soon top out and then rapidly decline. (This idea helped lead to the price spike of 2008.) Yergin notes that such fears have cropped up before.

“This is not the first time the world has run out of oil,” he writes. “It is the fifth.”

Yergin is confident that the industry will be able to keep up with growing demand. He says an IHS CERA study of some 70,000 oil fields reveals that “the world is clearly not running out of oil. Far from it.”

Supply is growing, not shrinking, Yergin says. This is due not only to new discoveries but to an even more important source: additional oil found in existing fields. The big question, he implies, is not whether the oil is there but whether the political climate will foster the massive investment — $8 trillion is one estimate — that is needed to satisfy demand over the next quarter century.

Plateau, Not Peak

Yergin concludes that rather than collapsing, world production is likely to grow about 20 percent over the next two decades and that a plateau “is a more appropriate image for what is ahead than the peak.” Twenty years may not seem so far away, but Yergin believes that new energy sources such as shale oil will be found to keep pushing that expected plateau “into the horizon.”

The central message of Yergin’s book is reassuring. Yes, the world faces enormous challenges in finding ways to satisfy the demand for energy and tackling climate change. Yet human ingenuity offers hope.

Yergin tells the story of the determined experimenting by George P. Mitchell of Mitchell Energy, which eventually produced the shale gas revolution that has transformed the U.S. natural gas supply in the last few years. “Perennial shortage gave way to substantial surplus,” Yergin writes.

Hydraulic Fracturing

The hydraulic fracturing and horizontal drilling used in recovering gas from shale could also lead to huge new supplies of oil, despite environmental concerns, he says.

Other parts of the book are less satisfying. A chapter called “Supermajors” revisits the takeover wave of the 1990s that created Exxon Mobil, the current version of BP and France’s giant Total. Yet one longs for more analysis of whether these takeovers worked.

His writing on climate change, probably the biggest energy challenge, lacks a punch line. He capably surveys the world of renewables: Wind power, solar power, bio-fuels and what he calls “the fifth fuel”: efficiency. He is wishy-washy on whether investment in these areas will be enough to head off climate disaster.

With the caveat that “things can go seriously wrong,” Yergin places his bets on a “globalization of innovation” that will “fuel the insight and ingenuity that will find the new solutions.” There is an old saying that “oil is found in the minds of men.” Yergin is confident that the solutions to our energy conundrums will be found there also.

Business Week



6 Comments on "No Peak Oil to Yergin Who Sees Years of Rising Supplies"

  1. Anvil on Thu, 20th Oct 2011 5:48 pm 

    peak bullshit has arrived.

  2. sunweb on Thu, 20th Oct 2011 7:36 pm 

    Why give Yergin continued press?

  3. Johny K. on Fri, 21st Oct 2011 5:20 pm 

    What I’m thinking now – the stupid people is not the biggest problem in this world.
    The biggest problem is that there are people who are both “smart” (prestigious university etc.) and incredibly stupid at the same time. How’s that possible biologically. Maybe they are missing some part in their brain structure?

  4. Kenz300 on Fri, 21st Oct 2011 7:59 pm 

    Dreams and wishes do not make a solution..

  5. Analoggod on Fri, 21st Oct 2011 9:48 pm 

    It’s common sense all you have to do is look around,truck after truck,suv after suv,as far as the eye can see…. there’s nothing that could replace oil-if a scientist invented a replacement,it would require (chemicals,minerals,ect) there could never be enough.At the level of very obvious degeneracy rampant in industrial society,peak oil brings salvation and that should be cherished.

    The universe is nothing but unimaginable catastrophes,the challenge of the 21 century is letting go of conservative ideologies and building our lives around the notion that disaster is not the exception but the rule.planet earth is unsustainable

  6. Kenz300 on Sun, 23rd Oct 2011 3:19 am 

    The consolidation of the “MAJORS” into just a small number has contributed to the monopoly we all must deal with. For capitalism to truly work there needs to be competition. When there are too few suppliers it becomes a monopoly and the consumers get the shaft. As the number of oil exporting countries decline due to declining reserves and increasing national demand we will be down to a small number of suppliers with an enormous control over the market. Not a good outlook for oil prices. We need to diversify our energy sources and types before this happens.

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