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Tom Whipple: Whatever Happened to Peak Oil?

General Ideas

It is now over 20 years since a pair of European geologists set forth the concept of “peak oil” in Scientific American. When the idea that the world’s oil supply might soon hit a peak was first developed, the world consumed about 63 million barrels of oil per day, and consumption was rising. Official projections at the time forecast that world consumption would rise to 110-120 million b/d in the first decades of the 21st century. These forecasts were based on the idea that oil would be available for the foreseeable future and nobody worried about how much CO2 going into the atmosphere.

An important, but ill-understood, part of the peak oil thesis was the cost of producing the oil. As cheap-to-produce oil was running out in the latter decades of the 20th century, new production sources would have to come from deep under the sea or under the polar ice cap at much higher costs of production.

The technology of fracking horizontal wells for shale (tight) oil had not yet been discovered, so those who understood the problem believed that finding and producing millions of barrels per day of crude at a profit would be difficult.

As oil prices rose from $30 to $140 in the mid-’80s, innovative drillers experimented with better ways of horizontal drilling and fracking. They found success, and with oil prices at around $100 a barrel, the shale oil revolution, which by 2019 was producing nearly 8 million b/d, was underway. Other countries tried to follow the US but for various reasons such as unsuitable geology, the remoteness of deposits, and in Europe, reluctance to clutter up the pristine countryside with oil wells, have been unable to do so.

Shale or “tight” oil from horizontal wells, however, has some significant downsides in comparison with conventional crude. The “oil” from fracked wells is much lighter than most conventional oil and is not suitable for some products or profitable processing in many American refineries.

Moreover, the more important trait of tight oil wells is that they are much more expensive to drill and frack than conventional wells, and then only produce for a few years. It is very easy to lose money on a fracked well that does not yield as much as expected.

Thousands of new wells must be drilled each year to maintain production and, in the US, the total count of horizontal wells now exceeds 110,000. As shale oil turned out to be generally unprofitable during times of low prices, drillers were forced to rely on a constant stream of new investment from banks and other investors who, after absorbing tens of billions in losses, are losing interest.

In 2012, when shale oil started to make a significant contribution to the world’s oil supply, total world oil production was about 91 million b/d. By late 2019, however, when world oil production hit the pre-Covid-19 peak, the world was consuming about 100 million b/d. This means that nearly all the growth in the world’s oil supply between 2010 and 2020 came from fracked oil wells in the US and Canada plus an increase in Canadian tar sands production. “Conventional” oil that comes from vertical wells, both on land and at sea, did not increase very much in the last decade.

After the coronavirus hit last winter, everything changed. Oil demand dropped from 100 million b/d to about 80 million and then climbed to stabilize at about 92 million. Prices, which briefly fell below zero, rose to stabilize at about $40 a barrel in recent weeks. The shale oil industry contracted, shutting down hundreds of the drilling rigs needed to maintain shale oil production. Unless there is a radical change in the pandemic and economic situations, shale oil production is likely to drop further in the next year or so. Without an economic recovery in the next year or two, there will be minimal shale oil production ahead.

For now, world oil production has peaked, but this is because of low demand, not supply shortages. The global economy’s poor state means that capital expenditures of finding and exploiting new oil have dropped around the world. There are too many factors in play to foretell the future — the virus, the global economy, and the world’s reaction to climate change, to name a few.

The demand side will control the oil markets for the immediate future.
However, eventually, the gradual depletion of oil from existing wells and reduced drilling because of low prices or climate change regulations will lead to problems on the supply side. The peak oil story is not over yet.

Tom Whipple FCNP



28 Comments on "Tom Whipple: Whatever Happened to Peak Oil?"

  1. Theedrich on Thu, 8th Oct 2020 4:36 am 

    What happened to Peak Oil was indiscipline. The oil industry does not exist in a vacuum, but in a maelstrom of civilizational excess.  Too many low IQs being allowed to reproduce due to Christian demands to love criminals, primitives and Mongoloid idiots — the “Albert Schweitzer” complex.  Ingrained American œdipalism and White genosuicidism.  Ideological insanity about creating workers’ paradises and reforming humanity according to the Yankee model by military force.  Consuming the resources of the global Petri dish by overexploitation of natural riches such as aquifers, ruining the oceans by overfishing and pollution with garbage, including radioactive poisons from various sources.  Ecological devastation of Asia by Communist dictatorships with deranged expectations of what is possible through “science.”  And Ponzi schemes of every sort.  Plus much more.

    In other words, ignoring the limits to growth.

    Yes, lack of demand is debilitating the oil industry.  But again:  petroleum is only one part of the civilizational story, which will not have a happy ending.  Tainter has already explained that complexification is the unexpected fifth and most deadly horseman of the Apocalypse.  No civilization yet has escaped its scythe.

    Oil is just the canary in the coal mine.

  2. Abraham van Helsing on Thu, 8th Oct 2020 5:52 am 

    Sign of the times:

    https://cleantechnica.com/2020/10/07/jpmorgan-chase-worlds-biggest-funder-of-fossil-fuels-commits-to-paris-aligned-financing/

    “JPMorgan Chase, World’s Biggest Funder of Fossil Fuels, Commits to “Paris-Aligned” Financing”

    More cracks in the home turf of the Seven Sisters.

    The future is wind, solar, hydrogen, gradually replacing fossil and nuclear. EU-2050, China-2060. The EU and China will own the major industries of renewable technology.

    #SevenBrothers

    (Vestas, Siemens-Gamesa, van Oord, SiF, ITM-power, NEL-hydrogen and all these Chinese panel-producers. Sorry America)

    The Covid-dip is going to be a great help in throwing a monkey-wrench into the globalist economic machine of perpetual growth.

  3. Abraham van Helsing on Thu, 8th Oct 2020 5:57 am 

    Fortunately the Dutch are standing by to give their American friends a kontje (“arsy”, leg-up)

    https://cleantechnica.com/2020/10/07/having-killed-coal-trump-admin-lobs-green-hydrogen-brick-at-natural-gas/

    “With Coal Dead, Department Of Energy Lobs Green Hydrogen Brick At Natural Gas”

    With the US coal industry collapsing, we now turn our attention to natural gas. Yesterday the Department of Energy announced a major new green hydrogen initiative with The Netherlands, which builds on a raft of other international collaborations aimed at squeezing natural gas out of the H2 market. Wait — why the Netherlands?

  4. let china take taiwain master race chinese deserves it for harvesting master cult muzz U.S. warns China against Taiwan attack, stresses U.S. 'ambiguity' on Thu, 8th Oct 2020 9:06 am 

    US won’t defend taiwan

  5. only master race china could harvest master muzz cult Norway: Former member of neo-Nazi group converts to Islam, joins the Islamic State on Thu, 8th Oct 2020 9:36 am 

    I’ll buy this whitey muzz for 10 cents amputated
    5 cent unamputated

  6. zero juan on Thu, 8th Oct 2020 9:47 am 

    idiolt widdle juanPPee

    only master race china could harvest master muzz cult Norway: Former member of neo-Nazi group converts to Islam, joins the Islamic State said I’ll buy this whitey muzz for 10 cents amput…

    let china take taiwain master race chinese deserves it for harvesting master cult muzz U.S. warns China against Taiwan attack, stresses U.S. ‘ambiguity’ said US won’t defend taiwan

  7. hair plugs in search of a brain on Thu, 8th Oct 2020 11:20 am 

    The trick to predicting the future is covid fart and shart analysis.
    The death of millions in their own stinky and sticky filth will provide our glorious leaders with great amounts of awesome knowledge.
    That is why I can sleep, even if I have the sharts !. I know our great leaders are soo smart!

  8. Fat bastard in the front bar of The Slaughtered Lamb Inn on Thu, 8th Oct 2020 11:25 am 

    Such wisdom is sooo awesome in its wonderfulness!
    Go Earth!

  9. Lord Buckethead on Thu, 8th Oct 2020 11:30 am 

    I farted and accidently sharted myself earlier 🙁
    Does this mean I’m a contributor to the global warming?
    Should I still be on my meds?
    What year is it?
    Why is the Cookie Monster such a bastard?

  10. zero juan on Thu, 8th Oct 2020 11:43 am 

    LMFAO, dumbfucks used his JuanP to talk to he Bo chen on the moderated side. What a lunatic with personality disorders.

    Lord Buckethead said I farted and accidently sharted myself earlier D…

    Fat bastard in the front bar of The Slaughtered Lamb Inn said Such wisdom is sooo awesome in its wonderfulness!…

    hair plugs in search of a brain said The trick to predicting the future is covid fart a…

    bochen787 » Thu 08 Oct 2020, 11:36:35

    JuanP wrote:
    “China’s ‘revenge consumption’ in Golden Week signals strong recovery”
    https://www.globaltimes.cn/content/1202921.shtml

    “Despite shocks brought on by the COVID-19 in the first half of the year, China’s consumption market has steadily improved. The country’s total retail sales grew 0.5 percent year-on-year in August, returning to the expansion territory for the first time this year, data from the National Bureau of Statistics showed.”

    https://mobile.twitter.com/SenMikeLee/s … 7875371008

    So much for the glory of Rome, its been a good experiment…

    Image

    It is a battle of systems, and Chinese governance has proven to be better suited for the 21st century… so either America adapts to compete or it perishes… so in that light the good Senator has finally realized the American Experiment and the Constitution has failed

  11. zero davy on Thu, 8th Oct 2020 11:51 am 

    Idiolt widdle daVVee:

    only master race china could harvest master muzz cult Norway: Former member of neo-Nazi group converts to Islam, joins the Islamic State said I’ll buy this whitey muzz for 10 cents amput…

    let china take taiwain master race chinese deserves it for harvesting master cult muzz U.S. warns China against Taiwan attack, stresses U.S. ‘ambiguity’ said US won’t defend taiwan

  12. REAL Green on Thu, 8th Oct 2020 12:06 pm 

    dumbfuck ididolt daVVee obv. had a real hard time figgerin out JuanP and Bo Chen are too different guys.

    LOFDAO!

  13. zero juan on Thu, 8th Oct 2020 12:59 pm 

    Fuckface is REAL Triggered. LMFAO

    REAL Green said dumbfuck ididolt daVVee obv. had a real hard time…

    zero davy said Idiolt widdle daVVee: only master race china could…

    on the moderated side:

    Re: China is finished… This is the End of China
    Postby REAL Green » Thu 08 Oct 2020, 12:57:38

    bochen787 wrote:
    Oh and your zerohedge fake news article references the work of shills on Steve Bannon’s payroll…

    REAL Green:
    Zero hedge has been out in front of all the shit being dug up recently her and abroad. It is usually wokesters and Sinophiles that hate Zero Hedge, you know, becuase they can’t handle the truth. Bo Chen Juan is definitely not into the truth becuase of how bad the truth displays China. IMA, Bo Chen Juan, many of your links are awful and fraudulent. In fact they are most often tabloid and gross CCP dumps. Disgusting!

  14. Duncan Idaho on Thu, 8th Oct 2020 1:58 pm 

    Elliott Broidy indicted

    https://www.dailykos.com/stories/2020/10/8/1984799/-Elliott-Broidy-indicted

    Will a cabinet position prevent this?

  15. Duncan Idaho on Thu, 8th Oct 2020 2:05 pm 

    Help Fight Stupid
    http://www.smirkingchimp.com/thread/jeff-tiedrich/93248/help-fight-stupid

  16. black lives dont matter Nigeria: Muslims kill two young Christian women, six-year-old boy, and 64-year-old man, kidnap other Christians on Thu, 8th Oct 2020 2:13 pm 

    master race china sends one division to harvest master cult muzz, loaned to uncle same for a month.

    all harvest operations starts with top muzz. thereafter it’s light work.

  17. only master race chinese can harvest master cult muzz The principle is always and everywhere the same: in Muslim countries, one must conform one’s behavior to Islamic sensibilities on Thu, 8th Oct 2020 2:15 pm 

    And in non-Muslim countries, one must conform one’s behavior to Islamic sensibilities. And here we go again: Macron’s plan to fight ‘Islamist separatism’ amounts essentially to making France more Islamic, with more Arabic in schools and […]

  18. FamousDrScanlon on Thu, 8th Oct 2020 2:23 pm 

    Fortunately the REAL Dutch are standing by to give their American Canadian liberator friends another well deserved round of applause.

    Crowds fill Apeldoorn to honour Canadian liberators

    Parade in the Netherlands marks 70 years since the liberation of Holland from Nazi occupation

    https://www.youtube.com/watch?v=YFgW0AYydww

    Cheap legal weed & cheaper Dutch whores are the only things that interest your American ‘friends’.

  19. FamousDrScanlon on Thu, 8th Oct 2020 2:29 pm 

    Krystal Ball: The Ugly Truth Is That Trump Is As American As Apple Pie

    Krystal Ball discusses the impacts of late-stage capitalism and how Donald Trump is not cut from the same cloth as dictators.

    https://youtu.be/0_MFRgej5EI

  20. Duncan Idaho on Thu, 8th Oct 2020 3:35 pm 

    Help Fight Stupid!
    https://peakoil.com/generalideas/tom-whipple-whatever-happened-to-peak-oil/comment-page-1#comment-813829

    Ban Davy
    Ban Cloggie

  21. Abraham van Helsing on Thu, 8th Oct 2020 4:08 pm 

    “Cheap legal weed & cheaper Dutch whores are the only things that interest your American ‘friends’.”

    There are no cheap Dutch whores, just sad ones from the Ukraine, the shabby country where you originally come from.

    Ban Davy
    Ban Cloggie

    Hey, Duncan, who principally has no opinions on oil or energy, or anything else, fights back. Just kick him long enough and get him irritated and stopping this one-trick pony from dissing Trump.lol

    Whatever, dunkan/scamlion/apneaman, as long as we can push you in a civil war, I don’t give a damn about your ramblings. A civil war that inevitably will draw in China as it smells blood.

    Hundreds of bed time videos!

    https://parisberlinmoscow.wordpress.com/2020/08/10/the-unraveling-of-the-united-states/

  22. zero davy on Thu, 8th Oct 2020 4:24 pm 

    Fuckface daVVee is REAL Triggered.

    LOFAO at the lunatic!

  23. ANSEL RAPER only master race chinese can harvest master cult muzz why we just negotiate with china on Thu, 8th Oct 2020 4:50 pm 

    let them have taiwan and send a division to harvest our muzz

    harvest top muzz first of course, always harvest top muzz like we went after baghdadi who is not a muzz but it’s a muzz

    a muzz is not a muzz but it’s a muzz

  24. zero juan on Thu, 8th Oct 2020 6:04 pm 

    More egotistical asshole JuanP:

    ANSEL RAPER only master race chinese can harvest master cult muzz why we just negotiate with china said let them have taiwan and send a division to harves…

    zero davy said Fuckface daVVee is REAL Triggered. LOFAO at the l…

    FamousDrScanlon said Thanks techno-clog. We’ll file you green tec…

    FamousDrScanlon said Krystal Ball: The Ugly Truth Is That Trump Is As A…

    FamousDrScanlon said Fortunately the REAL Dutch are standing by to give…

    only master race chinese can harvest master cult muzz The principle is always and everywhere the same: in Muslim countries, one must conform one’s behavior to Islamic sensibilities said And in non-Muslim countries, one must conform one’…

    black lives dont matter Nigeria: Muslims kill two young Christian women, six-year-old boy, and 64-year-old man, kidnap other Christians said master race china sends one division to harvest ma…

    zero juan said Fuckface is REAL Triggered. LMFAO REAL Green said…

    REAL Green said dumbfuck ididolt daVVee obv. had a real hard time…

    zero davy said Idiolt widdle daVVee: only master race china could…

  25. zero davy on Thu, 8th Oct 2020 7:49 pm 

    More egotistical asshole Davy:

    ANSEL RAPER only master race chinese can harvest master cult muzz why we just negotiate with china said let them have taiwan and send a division to harves…

    zero davy said Fuckface daVVee is REAL Triggered. LOFAO at the l…

    FamousDrScanlon said Thanks techno-clog. We’ll file you green tec…

    FamousDrScanlon said Krystal Ball: The Ugly Truth Is That Trump Is As A…

    FamousDrScanlon said Fortunately the REAL Dutch are standing by to give…

    only master race chinese can harvest master cult muzz The principle is always and everywhere the same: in Muslim countries, one must conform one’s behavior to Islamic sensibilities said And in non-Muslim countries, one must conform one’…

    black lives dont matter Nigeria: Muslims kill two young Christian women, six-year-old boy, and 64-year-old man, kidnap other Christians said master race china sends one division to harvest ma…

    zero juan said Fuckface is REAL Triggered. LMFAO REAL Green said…

    REAL Green said dumbfuck ididolt daVVee obv. had a real hard time…

    zero davy said Idiolt widdle daVVee: only master race china could…

  26. Duncan Idaho on Fri, 9th Oct 2020 1:43 pm 

    Whatever Happened to Peak Oil?
    It is in the past..
    November of 2018 was global peak oil.
    It is disappearing in the rear view mirror.

  27. Anonymous on Mon, 12th Oct 2020 12:30 pm 

    The peak oilers ran for the hills when fracking crushed their hopes and dreams. ASPO and TOD shut down. Staniford and Hamilton shut up. A WSJ reporter tried tracking down a lot of the old peak oilers and they refused to talk to her.

    Then again, they always were more advocates than analysts. No wonder, they ran away when things didn’t go the way they predicted/hoped.

  28. Davy on Mon, 12th Oct 2020 3:10 pm 

    Welcome back Nony, hey, why don’t you join the group on the moderated side. We could use your expertise on the oil complex.

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