Read This If You Believe in Peak Oil …

… and there’s a chance you no longer will. In a trenchant Times Op-Ed, Michael Lynch explains, point-by-point, why the “peak oil” concept is so wrong. This comes one day after we wondered about the oily future of Brazil, where a massive underwater petroleum find is reshaping that country’s energy thinking. After his takedown of the peak oil argument, Lynch makes perhaps the most important point: that just because oil isn’t running out any time soon is no reason not to develop alternatives.


Nosybear

So... Oil is an infinite resource? If it is not, there will come a time when half of it is consumed, peak oil. So again, the debate is not if, but when.

Kevin H

I think you have a mischaracterization of the argument that a lot of people do and strongly degrades the quality of discussion.

Peak oil at it's most reduced is a very modest proposition. There will be a peak in oil _extraction_ someday. You would pretty much need to bend the rules of physics to escape this. When people say peak oil exists or doesn't exist, they should be dealing with this most conservative and literal definition.

It is slightly debatable if this peak will be reached because of falling supply or falling demand, but the known evidence is pretty strong on the supply side of things.

The highly debatable point is when peak oil will be, which is what this op-ed is really about. He, and unfortunately you, put up a straw man of the peak oil argument saying that if it isn't happening today, there is no 'Peak Oil'.

Professor 101

Lynch's arguments are as full of holes as a Texas oilfield. Despite his unsupported claims, it is evident that production is falling in field after field. The fact that we can suck the very last drop out of old fields by using technology undreamed of in the past, (and at undreamed of cost) can not be held up as evidence that more and more technology will continue to rescue us. Yes, oil prices moderated in recent months - but what did it take to make that happen - not new technology or new finds, but the worst world wide economic downturn in many decades. It was not increased supply that rescued us from high oil prices.

Lynch, and other pollyannas can sing 'Don't worry, be happy! Nothing will ever stop the flow of oil.' while giving the merest faint lip service to alternatives. But a better theme would be 'Let the sun shine'

Mike

Michael Lynch clearly has no idea what he is talking about. Technologicial advances can (and do) result in more oil being pumped out of the ground than if those advances never occured. The rate of technological advances can alter the shape of the oil production curve. One can find many arguments to argue one way or another on what year the peak will hit, but since oil is a finite resource there will be a peak. Maybe it will be a gradual plateau. Maybe we keep increasing production until we get the last drop and the shape is more like a cliff. But either way there is a peak.

His statement "peak oil theory has been promoted by a motivated group of scientists and laymen who base their conclusions on poor analyses of data and misinterpretations of technical material." has no basis in world where the rate of oil creation (from natural processes) is negligible compared to the rate at which oil is consumed.

As a side note: The best reason to invest alternative energy? To keep oil cheap. Since OPEC is essentially a monopolistic cartel, they will always sell oil for just less than it costs to use an alternative. By lowering the costs of alternatives they have to sell us oil for cheaper.

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Skip

So Hubbert's accurate projection of the '70's US peak was, um right but actually wrong? 2005 looks like the global peak to me and is within a decade of Hubbert's prediction of the global peak. Geologically speaking, a decade is a nano second...

And the IEA's depletion projections and warnings are also wrong?

And even though Chantrell production is dropping it is not actually in depletion?

And the depletion trends showing up in BP's Annual Year in Review are also well, wrong?

To Nosybear's point, what in the world makes people believe oil is an infinite reserve?

Michael Lynch states in his article current reserves will last another 100 years. That's a misleading statement because he doesn't describe how production will drop year after year for that 100 year period.

Peak Oil is not about the end of oil, it is about the end of cheap oil. Remember $4 gas and the ensuing economic collapse - that was a bad thing, right?

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John S.

Oil could be an infinite resource, in the sense that as supplies get scarce, the price will go up and the demand will go down. At some point, it won't be economically feasible to extract the remaining oil, so it will remain in the ground forever.

Jon

Nosybear,

Oil isn't infinite, but it's not quantitatively finite either. There are more and more oil discoveries all the time, mostly discovered using new technology. There are also older oil fields which are now becoming economical to exploit based on the future price of oil.

So, as we "run out" of oil, the price goes up, allowing for new and better exploration techniques, which then increases the amount of oil available.

Eventually this will become quantitatively finite, but for now we don't know so much that its foolhardy to choose a peak.

Joewp

Let them think what they want. If they all went out and bought preparations, the prices of them would skyrocket. I'm fed up with trying to convince people of the obvious. If they want to continue constant growth in a finite environment, let them.

Logical Extremes

Couldn't have been written better by Exxon-Mobil itself. Development of alternatives is a vague afterthought. Nosybear is right that it's when, not if, and even if it's decades or centuries from now, we are still faced with too few entities controlling a valuable resource with unstable supply... a recipe for periodic hardship for many consumers. The status quo hasn't kept us out of trouble in the past, and I wouldn't expect it to in the future.

Daniel

In the mean time - major sugar shortages in India and Pakistan, due to rising demand for sugar as ethanol

Fat Bob

It's nothing to do with when half is consumed, the peak could come after that point - just with a rather sharper decline than the initial rise.

Peak oil is inevitable, it's finite after all - but that doesn't mean it's any time soon, and it doesn't mean that it'll really affect anyone when it happens.

The important question is really about the price - if it rises when production peaks, we're going to have to scramble. If it falls, it'll be the case where we just found alternatives and demand has dropped. Either could happen.

CK

Actually Peak Oil usually refers to the production level peaking, not consumption. But you're still right, that at some point Production will Peak. It's a fact. For instance, Oil Production in the US peaked around 1970, right around where Hubbert predicted? And yes, Lynch is very much against this theory- htttp://en.wikipedia.org/wiki/Hubbert_peak_theory

Obviously there is a lot of guess work involved and that's why people's predictions vary. But the point remains, that Production simply has to peak at some point in the (near?) future given that oil is a non-renewable resource.

And that article doesn't contain any more facts then the 'vague arguments' he rails on. He is a well know anti-peak oil guy. And he really loses credibility near the end: "Oil remains abundant, and the price will likely come down closer to the historical level of $30 a barrel" Really? I wouldn't bet on it.

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NM

?Oil isn't infinite, but it's not quantitatively finite either»

Does. Not. Compute.

?There are more and more oil discoveries all the time,»

Of ever smaller and dirtier nature.

You used to be able to just drill a hole in Saudi Arabia and sweet light crude would erupt. Now you have to mine tar sands, and expand lots of energy to thaw it and refine it, for example.

Peak oil is not about the end of oil, it's about the end of cheap oil. There will always be some type of oil somewhere, because it will be so expensive and dirty that people not touch it until they have no other choice.

MikeM

They had this exact same debate when all our cities were lit by whale oil.

Norm

I'm certainly confused. Peak oil, as I understand it, marks the point at which oil production will begin to decrease. He doesn't believe there will be a point at which oil production will begin to decrease? That's.. I don't know what to say... amazing...

Min

#7
I think that's the point: it's not known when it will happen, but unless it's discovered that oil is naturally created at a much higher rate than previously thought, there WILL be a point when oil extraction will have to start going down, and to a point that is very close to zero.

So yeah, maybe it won't happen in the next ten years or even the next 100 or 1000 years. But it will happen, humanity will have to deal with it eventually, so why not start now? Especially when, as pointed out above, it's politically and economically beneficial for the US to do so.

Jared

Econ 101, as demand rises, prices go up, as prices increase, supply increases.

While oil is not "manufactured", if the price is higher more and more supplies that were at one price cost prohibitive will become cost effective. Lifting costs are set for each field (though they do tend to fall with better tech over time). As the price of oil rises, more and more fields become cost effective and the supply increases...

I find it silly that people argue about "peak oil". There will always be oil so long as we are willing to pay the going rate. Price mechanisms are very efficient allocators of resources. At some point an alternative to petroleum will be cheaper than petroleum and we will move to that alternative...

"The Stone Age came to an end not for a lack of stones and the oil age will end, but not for a lack of oil. " -Sheik Ahmed Zaki Yamani (former Saudi Oil Minister)

dg

Jon,

I can't point to any flaws in your logic, since you didn't use any logic.

Nosybear is right. The amount of oil on the planet is finite. Therefore, we will reach a point where more than half of it is used up. This is not a "theory" as Michael Lynch would have you believe (did you even read the Lynch article?), it's a cold, hard fact.

Not if, but when.

End of discussion.

dg

Jared @ 14 wrote: "I find it silly that people argue about "peak oil". There will always be oil so long as we are willing to pay the going rate."

What part of "finite" don't you understand?

Joffré

Interesting that the Times says:
"Michael Lynch, the former director for Asian energy and security at the Center for International Studies at the Massachusetts Institute of Technology, is an energy consultant."

It might be informative to specify that he's much more accurately described as a petroleum consultant than an energy consultant:
"Mr. Lynch has over twenty years of experience analyzing international energy, particularly oil and gas markets. He has numerous publications in four languages and speaks regularly at international conferences. He is the primary author of Global Petroleum SEER and Global Petroleum Outlook, which provide short- and long-term oil market analyses."

That doesn't discredit what he wrote per se, but I do think it should've been made clear.