Has “Peak Oil” Peaked?

It is always interesting to watch what happens when the media latches onto a given issue and then, as the reality on the ground evolves — sometimes radically — the media fails to catch up to, or even monitor, the changes. This means the public is stuck with an outdated version of conventional wisdom which, even if it were true in the first place, is no longer so.

With oil prices falling by more than two-thirds last year before a slight rebound, the “peak oil” frenzy seems to have abated for now. Even its proponents must admit that high oil prices were driven in large part by a huge spike in demand (which has now fallen) and not just scarcity (whether real or sinisterly implied by those who hold oil reserves).

But even though the hysteria has died down, new technologies march on, quietly changing the rules of the debate (if, that is, there still were a debate).

Consider, for instance, this fascinating article by Guy Chazan from the Wall Street Journal‘s special report yesterday on energy. It’s called “Squeeze That Sponge.” Highlights:

Despite the engineering advances of the past century, nearly two-thirds of crude still gets left in the ground. So oil companies are raising the ante, investing billions of dollars in cutting-edge technology to increase the amount of crude they can tap. The potential rewards are huge: Raising the average recovery rate world-wide to 50 percent from 35 percent would boost the world’s recoverable oil by about 1.2 trillion barrels — equal to the whole of today’s proven reserves, the International Energy Agency says.

Such recovery measures aren’t pie-in-the-sky, either. Chazan’s article brims with specific examples; for instance:

One method of improving oil recovery could become a vital weapon against global warming: Some companies are pumping carbon dioxide into reservoirs to flush more oil out of the ground. The technique could become increasingly attractive as the world seeks to reduce greenhouse gases. Why not put the carbon dioxide to work, the thinking goes, rather than simply storing it in disused oil reservoirs, as is also done currently.


BP is also experimenting with microbes that reduce the viscosity of heavy oil and help trapped oil move more freely. Another new technology: LoSal, a flooding technique that uses water with reduced salinity, unlike the salt water many oil companies use. BP has discovered that less salinity in the water can improve recovery rates.

This isn’t to say that oil is inexhaustible, nor that energy companies shouldn’t be pursuing more diverse and cleaner energy solutions. But they are. Consider two other articles in the Journal‘s special section: this one on tidal and wave power and this one on ultra-high-voltage power lines, which can move electricity further and with less line loss than regular power lines.

So many contemporary debates about energy are lame because the issue is a) heavily politicized; and b) fraught with too many adjectives and not enough numbers. That’s the very wise claim of a British physicist named David J.C. MacKay, whose new book Sustainable Energy — Without the Hot Air is a must-read for cutting through both the jargon and the pap. For instance:

People who want to promote renewables over nuclear, for example, say “offshore wind power could power all U.K. homes”; then they say “new nuclear power stations will do little to tackle climate change” because 10 new nuclear stations would “reduce emissions only by about 4 percent.” This argument is misleading because the playing field is switched half-way through, from the “number of homes powered” to “reduction of emissions.” The truth is that the amount of electrical power generated by the wonderful windmills that “could power all U.K. homes” is exactly the same as the amount that would be generated by the 10 nuclear power stations! “Powering all U.K. homes” accounts for just 4 percent of U.K. emissions.

So here’s a cheerful prayer for the future: let all our future energy debates be infused a bit more with the precision of MacKay and Chazan and a bit less with the effluvia of politicians and screaming headlines.

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  1. intricatenick says:

    The improved oil recovery technologies have been around for quite some time. The fact that they are becoming more newsworthy and worthy of more economic investment actually tells you something about peak oil. These new technolgies only pay out well in times of high oil prices, since most of the companies selling this technology do it on the basis of a probalistic ROI.

    I am interested in these microbes that make oil LESS viscous. How are they going about that when most microbes make oil heavier since the bugs usually go after the n-alkanes first and leave the more recalcitrant hydrocarbons alone?

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  2. Skip says:

    “Even its proponents must admit that high oil prices were driven in large part by a huge spike in demand”

    Really? Petro demand and population growth remained steady a 2-3% until the financial; crisis hit. That destroyed petro demand. New humans continue to accrue which may actually create a demand spike if the global economy recovers.

    If you have a citation for the pre-financial crisis huge spike in demand it would interesting to see it.


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  3. miro slodki says:

    stephen, the other factor in the peak oil spike of last year
    was the flow of money looking for a place to invest
    which at its peak was a marketplace of buyers where 80% of oil speculators were competing/driving up the prices for the 20% who actually needed the stuff to turn the wheels of commerce.

    as covered in this post

    What goes Up …sometimes takes a different path coming Down

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  4. jonathan says:

    One reason they’re investing in methods to get more out of what they already have is that prices aren’t high enough to justify the massive costs of exploration.

    And good luck with making the debate rational. That would be a first.

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  5. Bill says:

    Not to mention that nuclear power plants run 24/7 and are remarkably reliable, while wind power’s output is unpredictable and much higher off-peak (at night) when the energy is not as needed.

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  6. John says:

    Ditto with Skip. The ‘huge spike in demand’ is just population growth and maturation of developing markets, factors that won’t go away.

    Oil is obviously peaking. But if people react by weaning themselves from it (which they actually seem to for this brief moment) then no big deal if it does. I feel pretty confident that when demand starts to rise again, when we recover from the present crisis, prices will go right back to the stratosphere, though I remain confident that people will adjust. Our lifestyles waste a lot of oil; we’ll just have to change them.

    Peak oil assumes people will spend more on exploration and technological advances as the oil starts to run out. The point is just that, to paraphrase Wesley Snipes, you’ll be ice-skating uphill.

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  7. Grant says:

    This is a more general problem with the predominance of journalists and other non-experts as leading public intellectuals these days. A prime example is Thomas Friedman’s bliovating about globalization. If you ask many historians and sociologists who study global economies and trade throughout human history you get a much different picture than Friedman would have you see. I recommend the work of people like Giovani Arrighi and Andre Gunder Frank as a counterweight to this idea that global economic interconnectedness is a recent phenomenon associated with neoliberal capitalism.

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  8. G Lazman says:

    Being a scientist myself (Biotech), I’m always impressed but never amazed by scientific advances, since they have been occurring at an ever-increasing pace over the course of my lifetime (49 years). And though I commend those responsible for the advances, it is still somewhat beside the point. However you slice it (and I’ll leave the environment/climate change argument out of this for the moment), the longer the US and its peaceful allies remain dependent upon oil as our main source of energy, we continue to cede a great deal of power to dictators (Putin included) and religious extremists, thus granting a few enemies the potential to wreak havoc on our economies and security. The breakthroughs described in the article above will only prolong this situation.

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