Peak Oil theory doesn't say we're about to run out of oil. It says that the remaining oil will be harder to find, more expensive to produce, and/or more difficult to extract for physical and political reasons. The end result is slower growth that doesn't keep up with spiking demand, and eventually leads to lower absolute total production.
Lukoil's Vice-Chair Lukoil's Leonid Fedun got a lot pf attention when he said that Russia's production was set to decline soon, as highly-productive fields in Siberia are slowly being exhausted and the search is driven to eastern Siberia's untapped and remote regions. He added that the current total of 10 billion barrels per year may be the highest production level he sees in his lifetime, and said $1 trillion would have to be spent on developing new reserves if current output levels were to be maintained. That development would have to go far beyond wells and exploration - Russia also has serious weaknesses in terms of pipelines and transport infrastructure that would need to be addressed.
With many forecasts predicting that liquid fuel demand world wide will rise from the present 80 million barrels per day to about 100 million barrels a day by 2015, this wasn't good news. Predictably, oil markets spiked.
These production issues can, of course, be magnified by poor policy...
Which seems to be the case in Russia. Experts are using terms like "high tax levels and a shortage of financial incentives to invest in exploration." That's is a pretty diplomatic way of saying Russia's government has a long track record of stealing production sites once others have invested millions to explore and develop them, without anything even remotely resembling the rule of law. Unsurprisingly, investors are hesitant to make the big bets that will be required. Why should they?
Which leads us to the bigger picture.
Russia isn't alone in pumping up its problems through poor policy. Chavez' gross mismanagement is running Venezuela's energy infrastructure into the ground, Iran is facing similar problems for similar reasons, Mexican production is headed for trouble, Nigeria's production is being wasted or stolen in bulk, etc. Whether Peak Oil is a physical reality over the next decade or 2 is an interesting question, but it's almost certainly going to be a political reality.
American Thinker thinks the way out may lead through an American recession. Maybe. For a while. But how long will that situation last - and what comes next?
I think if we look at the longer term trends of demand growth and supply instability, the way out for a number of players is going to look a lot less straightforward. And a lot more interesting - in a very Chinese sense.
From American Thinker:
We are not at peak oil yet, not even close. There are huge reserves in several places around the world including Africa, the Gulf of Mexico, Alaska, and South America. The problems today with high prices have much more to do with politics as they have to do with the world running out of oil [...]
The key is to dampen the speculators enthusiasm. Unfortunately, it may take a US recession for that to happen.
And a Chinese one.
Oil prices are set to drop if today's scenario does not change. China is overheating, America in recession and some European countries reducing their oil demand even though here retail prices haven't been increased so much due to a favourable exchange rate. Only declarations of oligarchs keep the market from tumbling as they wait for another crises (hurricanes in the Gulf, war in Iran, a coup in Venezuela...) to justify what simply has no longer justification.
The Peak Oil theory has been around for a long time. Unfortunately, we keep finding newer sources of oil, not all of which are hard to extract.
Davod, sure we are finding more oil. Unfortunately its not near the rate we are consuming the old one. If i remember correctly its like for every new barrel of oil we find we consume 8.
The Peak Oil theory has been around for a long time. Unfortunately, we keep finding newer sources of oil, not all of which are hard to extract.
Err, Peak Oil isn't only about finding new sources of oil - even at Peak (or Plateau Oil) it's assumed new discoveries will be made. Reserves will continue to grow for a while, even at the reduced rate we've been seeing for 20 years, but Reserves/Production is the important part to take note of.
Most of the growth in supplies - I think we're at between 2.2b BBL and 3.2b BBL, depending on your view has risen from changes in technology and pricing that pushed the mean out farther than it was 10, 20 years ago. Not even counting discussions which switch between the easy terms of Proven and Probable.
You should know that many of the Proven discoveries are laid out by edict, not independent review.
I think this DOE report uses P95, and does not include information from the USGS survey, as the USGS survey goes to undiscovered.
If you haven't read it, here's a brief primer on Peak Oil. There's generally a wide range of opinions on when it will occur, not if it will.
Well then there is this other shoe that is dropping.
I live in Mexico. Forget about getting much out of the Gulf without massive civil unrest here.
The Age of Oil is over. The sooner we realize that the better.
Am i the only one (besides the back to the stone age hippies) that thinks this is potentially a good thing?
The 'problem' with finding renewable/alternate energy sources has been that oil has been ridiculously cheap for so long. In real dollars oil declined in price since the 70s, which just kills innovation in the market. If you cant offer competitive pricing you have to rely on people's green hearts, and that has always been a losing formula.
BUT, if you give people the choice between foriegn oil and some domestic alternative at a competitive price, people will be willing to start jumping through a hoop or two to go green (or at least get out of foriegn oil).
The more expensive oil gets, the more competitive the alternatives get. And that creates a potential economy of scale (which petroleum enjoyed for decades) that will lower prices over time.
The truth of the matter is, we would and will NEVER replace oil so long as its significantly cheaper than the alternatives. The only realistic way to get off of foriegn oil is for the oil to rise in price, which it has. In my estimation this was an inevitable step, and ultimately a healthy one.
Dave and Mark, seem to have it right above.
The era of "cheap" oil is going, going, gone...but oil will still be around. Just more expensive, as China and India become more advanced, more 1st world-y.
So at some point, renewable energy will get competitive, with all the other various modes of energy.
Of course, the issue is, this makes everything more expensive, not just heating your house, or running your car.
So there is this massive infrastructure shift that has to happen - and if we were smart, we would make an Apollo Project out of the INFRASTRUCTURE shift - and retool the electric web, the energy stations to move your car, the investment into electric rail, etc - that is so necessary.
Shoot, if we pumped the kind of money into doing that, that we have done into the Iraq war, we would be prepping our economy for the next 100 years, instead of spending the last 5 years, defending the energy infrastructure of the last 100 years.
#6 from Mark Buehner at 4:54 pm on Apr 21, 2008
Oil will get more expensive over time because their will be more people using it. Since the Chinese and the Indians are entering the market for the commodity, then it follows that it will become more expensive. Add to that, the fact that oil Producing countries are taking more of the profit and the price for extracting oil is getting every higher, it only follows that the price will go up.
Anyone who thinks that alternative energy is not a viable solution is just plain wrong. The markets will make it viable as will national security issues, danting environmental concerns, fears of civil unrest, etc.
The Age of Oil is over and it is not going to come back.
*******************************************************
The world is in the process of creating a new multi-trillion dollar industry
- This industry is now in its infancy
- This industry will grow at so torrid a pace over the next few decades that it will not only dwarf the Information Technology and Computer businesses in terms of size, it will exceed the unprecedented and ever accelerating speed of customer acceptance that the Computer and IT businesses have enjoyed over the past 30 years.
We believe this because the growth of this industry is being driven by a confluence of tidal forces that have never come together before on a world wide scale and that these forces will provide the impetus for this massive and universal expansion. Among them, though not all of these forces are:
- Basic Economics - A growing need in the market for the industry's product at a time when present supplies are rapidly shrinking
- Economic Benefits that can be gleaned by everyone from the world's poorest individuals to its largest corporations
- Growing Tax Incentives
- Daunting Environmental Concerns
- Federal, State and Local Legislation
- International Treaties
- Government Fears of Conflicts and Social Unrest
The Industry is Alternative Energy.
We further believe that in the very near future:
- No new housing will be built without alternative energy sources being taken into consideration. Homes without these devices will decline in actual and relative value and will be increasingly seen as functionally obsolete.
- No new plants will be constructed without Alternative Energy Devices and those existing plants that do not have them will be retro-fitted to take advantage of the cost benefits they provide.
- Every business from the Largest Corporations to the Smallest Businesses will rediscover the wisdom of "The Boss always turning out the lights". Mainly because it reflects directly on the Bottom Line
"Shoot, if we pumped the kind of money into doing that, that we have done into the Iraq war, we would be prepping our economy for the next 100 years, instead of spending the last 5 years, defending the energy infrastructure of the last 100 years."
Except that we wouldn't have, under any conceivable administration.
We'd be sitting with troops in Saudi Arabia and Kuwait, most likely absorbing attack after attack, and undoubtedly at least as flat footed on our energy policy.
That doesn't make you wrong- just unrealistic in our recent and current political climate.
"Except that we would have"
Err. 'wouldnt have'
[Fixed. --NM]