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ASPO-USA : DOE Oil & Gas Forecasts Are Dangerously Misleading

Public Policy

A group of distinguished energy experts representing academia, industry, think tanks, and non-profit organizations will meet Wednesday, October 26, 2011 at 10:30 am in front of the U.S. Department of Energy (DOE) to call for “Truth in Energy”regarding the possibility of a near-term oil crisis and long-term oil shortages.  Following the news conference, the group will deliver a letter to DOE Secretary Steven Chu calling for urgent action to address this potentially critical threat to America’s economy and national security. The Association for the Study of Peak Oil & Gas USA (ASPO-USA, organized the news conference.

Projections of future oil and gas supply from the DOE’s Energy Information Administration (EIA) are misleading, overly optimistic, and foster a dangerous complacency about the nation’s energy challenges, according to the group.  Such rosy forecasts are typical of industry sources.  For example, a recent draft study conducted by the National Petroleum Council (NPC), in cooperation with DOE, claims that development of controversial “shale plays” could make the United States self-sufficient in oil and gas. Petroleum companies with direct interests in shale gas development have played lead roles in the study.

EIA, however, is a taxpayer-funded government agency with a mandate to provide “independent and unbiased… information.”  Speakers will charge that EIA has failed to fulfill that mission in its oil and gas projections and needs to provide more transparency and explicit explanations about how their forecasts are developed.  The group will ask Secretary Chu to answer seven specific questions concerning issues that EIA has failed to critically examine.

The potential for oil shortages, now or in the near future, is rarely if ever mentioned in DOE or EIA’s public statements, despite the fact that many other prominent sources warn of the possibility. The International Energy Agency (IEA), of which the United States is a cooperating member, indicates that global conventional oil production may have reached its peak, and has been on a steady plateau since 2005. The U.S. Department of Defense, in its bi-annual JOE report, has identified constrained world oil supply as a major challenge for U.S. military planning.  The Government Accountability Office (GAO) also conducted a study in 2007 that highlighted the issue and recommended concrete actions that DOE should take to respond.

Tad Patzek, professor and chair of the Department of Petroleum and Geosystems Engineering at the University of Texas, and a signatory of the letter to Chu, says that EIA is a valuable source of information on past oil and gas production;  their forecasts of future supplies, however, need much improvement.  “Their own historical data shows that world oil production has remained essentially flat since 2005, despite a large increase in oil prices, yet they see no problem.”  EIA predicts that unconventional sources of oil, such as Canadian tar sands, will offset depleting conventional supplies.  According to Patzek, however, comparing alternative to conventional sources is “like comparing apples and oranges; there is great uncertainty about the rate and costs at which these sources can be produced on a global scale.”

In addition to more transparent and reliable information, ASPO-USA is calling for DOE to develop a National Oil Emergency Response Plan which would engage government agencies, industry, outside experts, and concerned citizens to assess the consequences of and responses to supply disruptions.  The group will request a meeting with Secretary Chu to address their concerns and discuss how such a plan can be developed.

“America is wholly unprepared for a near-term oil crisis or persistent oil shortages,” says Jan Mueller, ASPO-USA’s Executive Director, “we need reliable information and a plan for how we will adapt to the end of cheap, abundant oil.

Jim Baldauf, President and Co-Founder of ASPO-USA, adds, “The risk/benefit ratio is out of balance. If these exuberant predictions are wrong, the consequences could be catastrophic.  We need to be conservative and prudent in planning for the future.  We can’t bet America’s economy and national security on Pollyanna predictions.  Exuberance about cheap energy may serve the short-term interests of Wall Street, but it threatens the future of our country.”



One Comment on "ASPO-USA : DOE Oil & Gas Forecasts Are Dangerously Misleading"

  1. Btritt on Wed, 26th Oct 2011 3:08 am 

    What surprise? That the spin has reached tornado speeds? What truth comes out of any corporate linked study or poll? NONE!

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