Guest Post: A Long Way From Reaching Our Peak

Tyler Durden's picture

From Sean Corrigan

A Long Way from Reaching Our Peak

Inspired, among others, by the typically apocalyptic, ecological maunderings of Jeremy Grantham (the renowned investor here providing us with classic evidence of the general non-transferability of specific expertise from one metier to another), the recent overwrought oil market has brought the Exhaustionists out in full force, each plaintively wailing of the dangers of Peak Oil (as well as Peak Copper, Peak Corn, etc.—though never, thankfully, Peek Freans).

As is always the case at such times, the name of M. King Hubbert has been given a great deal of air, as if the old rhetorical trick of argumentum ad verecundiam should be decisive in this matter.

Yes, to give this particular devil his due, he did accurately predict that US onshore oil production would top out in the late 60s/early70s, so assuring his prophethood for ever, especially since the validity of the estimate became recognised amid the traumas caused by the first Oil Shock.

His other glances in the crystal ball have, alas, not borne out quite so well, however. 

World oil production was to reach its apex in 1995, he foretold in 1974: so far he is 16 years and 30% out. Nuclear energy would provide most of America’s need by around the turn of the new century, he assured us: as of 2009 the proportion was under 9%. Solar power was next seen to be the answer: 1970s technology was already deemed to be good enough to serve the entire world’s industrial needs within ‘a couple of decades’ - Oops! US production of natgas would also peak in 1970 at 14 Tcf a year: four decades on and we are rising through almost double that and with no apparent end in sight. 

Even more startling, this worthy was indeed a leading light of the crank-ridden Technocratic School which, with an almost Marxian degree of stubborn denial, has been predicting the demise of the Price System—i.e., the repudiation of the process of market exchange—since the mid-1930s and pushing for an unit of energy effort expended to replace money in our reckoning, plainly not realizing that this breakthrough concept is not much more than the long-discredited labour theory of value, albeit at one remove.

At the height of their brief sway, the grey-and-scarlet clad acolytes of this Utopian movement were heard clamouring that they would sweep away ‘production for profit’ in favour of ‘production for use’ (a slogan that also has a certain familiar ring to it) and to cast out the moneylenders and politicians in favour of a rational government conducted by a Platonic elite of scientists and technicians, naturally trusting that one of these latter could ever turn out to be either Pol-Pots or peculators and confident that the world and all its people’s needs and aspirations are no more than a big, juicy simultaneous equation just begging to be solved by an inner sanctum of assiduous eggheads.

No wonder that other twisted genius, H.G. Wells took to Hubbert so avidly.

By now you may be thinking that the US Peak  thing was a stopped-clock-right-twice-a-day fluke committed by a man who seems to have personified what Hayek called the ‘Fatal Conceit’ of the planners, namely that they—and they alone—can truly know how best to order production and distribution, replacing grubby commercialism with an exact calculus of abstract mass utility as carried out by a hushed order of white-coated Olympians in complete defiance of the individual subjective ordering of wants which each iota of a teeming humanity uniquely seeks to express.

But Hubbert was not the only public figure to try to apply a false, pseudo-scientific rigour to the issue of human fulfilment, nor the only one to declare that ’soon all the oil is going to be burned and all the metals mined and scattered’ or to insist that the only way out of an putative exponential growth trap of our own making is to stop people (in the impersonal abstract, of course) from having too many babies.

But, surely, your author has been recently asked, you can’t see Peak Oil theory as contentious? Is it not a mathematical inevitability, for goodness’ sake? How can you find it within yourself to demur at such trendy millennialism?

Because - oh, let me see - the planet has not yet been fully explored, much less exploited—only those bits of it which have showed the most promise given the prospect of profit (that dirty word!) and the constraints of existing technology? Because reported ‘reserves’ are, in any case, largely an accounting identity, not a hard, geological limit?

Because there is increasing evidence that abiotic, deep oil generation may be a thermodynamic reality, implying, if so, that at least some hydrocarbons would not be just a ‘fossil’ fuel, but an ongoing planetary process, i.e., ‘renewable’ in the real sense of the word?

Because it is not physical oil we want, in any case, but the energy services it provides and the state of the art today—much less that which we can realistically expected to hold good in the future—is such that, where it becomes cost-effective to do so, oil use can be cut dramatically in providing those very same services (think what the widespread US adoption of diesel cars would achieve, or the greater application of light plastics, advanced ceramics, and special alloys in their fabrication)? Indeed, we have already proved this in living memory for the West and Japan did exactly this for nigh on two decades after the second oil shock, all without the need for Green Soviet directives on what sort of light bulb we are permitted to use.

Because, that art will itself advance, the moreso that we allow market incentives to direct resources towards doing just that, meaning we might expect similarly exciting developments to continue in the fields of exploration, production and refining, not to mention in combustion, transmissions, aerodynamics, and tyre hysteresis, etc.?

Because of the phenomenon of shale gas with its enormous potential to confine oil to a narrow, mobile fuel role and even to substitute for it there, given sufficient means and motivation? (Which of the wild-eyed Doomsayers predicted its advent, by the way?)

Because, ditto—and I know no-one will want to hear this after Fukushima (despite the as-yet unquantified nature of the damage wrought there, which may even – so it please the Gods! - turn out to be as limited as it ultimately was at Chernobyl)—we can readily build a great number of new generation, uranium-cycle nukes and, better yet, fail-safe, non-pressurised, smaller-scale, non weapons-producing, thorium ones instead?

Because (admittedly in extremis, given today’s matrix of possibilities), there exist unimaginably vast, ocean-floor deposits of bacterially-generated methane clathrates all over our continental shelves (by one guess, equivalent to twice the known conventional hydrocarbon resource): when needs must, does anyone want to bet on our not being able to find a way to use them?

But, even having made all these objections – none of them exactly exercises in hare-brained futurology – there comes next the stock response: aaah, so you may deny Peak Oil, per se, but what you are admitting at least is the end of cheap oil?

Well, only to a certain point, for the laws of economics surely do apply to oil as they do to everything else to which we attach a value.

But I have yet to have someone tell me that, because an unforeseen burst of demand may require previously unprofitable, less cost-effective productive means to be temporarily applied to satisfy it, we have reached the end of ‘cheap beer’, or ‘cheap socks’, or ’cheap toilet rolls’ and that civilisation is therefore in imminent danger of collapse!

Even were we to close our eyes and allow for a moment that this most improbable of ‘certainties’ does indeed eventuate, we must beware of carrying an engineering argument over to the realm of economics where it is of no actual relevance. The putative end of ‘cheap oil’ does not mean we will henceforth have to live for ever using ‘dear oil’, just that a new dynamic will take over which will rapidly begin to compensate for the change.

After all, we don’t still fill our cars at a mark-up to the price of whale oil, or dispel the darkness from our homes on a beeswax-linked electricity tariff, now do we?

Nor does this possibility of having to find either a complete or partial substitute for oil at some indeterminate future date imply that it is at all sensible to prepare for it by squandering our scarce, present resources on such pitiable, non-sustainable, non-renewable, sub-optimal boondoggles as wind and solar.

Contrary to the Ecostormtrooper hype, we categorise them as such because - apart from the societal blight inherent in the flagrant rent-seeking and fledgling dictatorship which their forcible imposition entails - does anyone really believe that the equipment for collection, distribution, and storage of what piffling and unreliable amounts of energy are captured from such diffuse sources does not need manufacture, maintenance, repair, and replacement, in addition to the provision of a necessarily under-utilised, conventionally-powered back-up capacity and an intrusive infrastructure of access? Are we to ignore the fact that these infernal engines come complete with a huge, environmentally-significant ‘footprint’ themselves – whether it be in the concrete foundations, the rare earth magnet components, the polysilicon, or the composite materials of which each is built?

Nor should it go unrecognised that the subsidy glut in which they wallow actually prevents genuine progress being made, rather than advancing it, by making it highly lucrative for companies to swill deep and long from the public trough in return for churning out these economically sub-marginal and energetically dubious contraptions in vast profusion here, today, instead of them spending time and money seeking ways to make these systems - or any other alternatives which human genius can meanwhile discover – truly competitive and therefore unequivocally beneficial.

If, seized by a sudden fear that the world will one day lack for sufficient bicycles, our rulers summarily decide to tax both their existing makers and their heretofore satisfied users and to funnel the resulting booty to some favoured corporate giant which promises to equip us with a modestly-rejigged shopping trolley and a bargepole to propel it, we have hardly made progress, now have we?

Nor if we cut off every man’s right leg and then set up shop to sell him a prosthetic replacement can the resulting ‘Green jobs’ be said to have advanced the common weal. No. actually, we do not want another bloody Manhattan Project or any Apollo mission phallicism: we want a few more Rockefellers, Fords, and Teslas, left alone to work out how to enrich themselves by serving us instead!

To return to our original theme, the happenstance of a higher price for some good (and actually only a higher relative price, at that) should—if the market is being allowed to work properly—set in train the iterative search for a new balance which we have previously characterised as I²E²S² - that is to say, Innovation, Economisation, and Substitution, followed by Investment guided by Entrepreneurship, funded by Savings.

In this way, if left to their own devices, those despicably venal profit grubbers whom our lofty Philosopher Kings so despise will soon be busily arbitraging away their fleeting excess returns, reducing costs and increasing satisfactions for us, their customers, as they do.

Why do we think that oil—or, more broadly, energy—should prove an exception to this rule? Only, in truth, because the market is NOT being allowed to work.

Because, rather than being a true indicator of genuinely, increased scarcity or a mark of dwindling physical reservoirs, expensive oil may be nothing other than an artefact of the policies of the many governments who routinely suppress, penalize, or clumsily monopolize its production; who simultaneously subsidize its consumption—whether directly, or through general, Provider State, soft-budget outlays, or via the over stimulus of what passes for economic ‘growth’; and who—above all—routinely debase the numeraire in which the price of the stuff is reckoned.

All of these latter are, indeed, compelling reasons to invest in oil (and in any other raw materials where similar arguments apply), but they are in no way a vindication of Hubbert or Grantham or any other latter-day Malthus, crying that poor old Mother Gaia is being despoiled in the pursuit of filthy lucre!

It is much better to forget all that Sierra Club/WWF elitist, anti-mankind, horse manure about ‘the call on the planet’ exerted by us members of the ‘plague species’ and to take a little Bjorn Lomberg, a smattering of Julian Simon, and a riffle-through of Matt Ridley, regarding the minuscule size of the impact which our tiny little ilk – unimaginably outweighed by living forms we cannot even see - can really expect to exert on the vast, negatively-feedbacked rock which we inhabit—and to glory in the sustained quality of our response to the challenges which confront us, even under the far-from-ideal conditions under which we are usually asked to make it.

For example, just as an exercise in contextualisation, consider the following:-

The population of Hong Kong: 7 million. Its surface area: 1,100 km2
The population of the World: nigh on 7 billion, i.e., HK x 1000
1000 x area of HK = 110,000 km2 = the area of Cuba or Iceland

Approximate area of the Earth’s landmass = 150 million km2
Approximate total surface area = 520 million km2

So, were we to build one, vast city of the same population density as Hong Kong to cover the entirety of Fidel’s little fiefdom (not necessarily a Blade Runner vision of hell), this would accommodate all of humanity, and take up just 0.07% of the planet’s land area and 0.02% of the Earth’s surface.

Add in another patch or two for energy generation and maybe another few for growing food – perhaps by building super-efficient, CO?-enriched, drip-irrigated, skyscraper hydroponics factories, by exploiting the potential of the surrounding oceans more fully, or by bioengineering photosynthetic bugs to grow us pure nutrients –  and this would partition dear old Spaceship Earth thus: six or seven bits for us weakling, co-operative mutualists and 4,720 bits for all the unimaginable cornucopia of other species to wax and wane at each other’s red-in-tooth-and-claw expense, undisturbed by human hand.

Not such a bad ratio, you might think, even if you are a Marquis de Sade, equal-rights-for-plants-and-animals (plague bacilli and malarial parasites?), super-egalitarian nutcase.

So, rather than pestering the shoppers outside Oxford Street tube as you pace up and down with your ‘End is Nigh’, FSC-approved, sandwich board about your neck, you should ponder the innate ability of an unhampered, entrepreneurially-biased humanity to discover solutions to its problems.

Nor is this to indulge in some unswerving, fingers-crossed optimism: it is a realistic philosophy based on sound (Austrian) economics and one endowed with a pretty good empirical/historical track record, into the bargain    

Yes, if our political institutions were better and ideally much, much less intrusive in their scope –and, yes – if the intellectual gurus who help shape them were not so (a) conceited; (b) statist; (c) given to quack economics; (d) devoted to fashionable, Bloomsbury pessimism; and (e) prone to practice Munchausen-by-proxy denialism on the masses to whom they condescend, we would be much further along this track than we are now.

Indeed, this is the crux of the matter for if there is even a scintilla of truth to the scare stories with which the sinister SPECTRE of today’s Bio-Blofelds bombard us, what we lack is not space or resources but capital, time, property rights, and the free market exchange networks within which to exercise them.

The most pressing of our problems are not climatological or ecological, certainly not geological, but political and we will find no answers to these by dreaming wet dreams of a multi-billion genocide so the blessed residuum can potter about building composting toilets, permanently at danger of seasonal starvation, death by tooth decay, and high childbirth mortality in a cod Iron Age village (as half the Greens do), or of instituting a globally-monitored, strictly-rationed, top-down, totalitarian tyranny (what the other half get off on).

By way of contrast, consider instead that every member of that seven billion strong ‘drain on the planet’ is hard-wired with the best computer in the known Universe, one which its individual possessor is both incentivised and enabled to link up in a massively parallel, distributed process of discovery and improvement as long as he or she has even the smallest vestiges of a market structure to guide them and a certain minimum of property rights to protect them.

Consider, too, that if the proportion to the whole of Mozarts, Michelangelos, and Maxwells is even roughly constant, their likely incidence is greater now than ever it was.

That means that we might even look forward to being liberated from a tedious diet of hip-hop, installation art, and string theory, as well as to paying less to travel more miles at a faster pace in the fabulously-equipped and remarkably inexpensive, new set of wheels, sold to us by the recently–empowered entrepreneurial gentleman to our right.

And some people think we Austrians can never look on the bright side of anything!

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HamyWanger's picture

Must agree with Corrigan on this one. 

Peak oil is a fantasy. Good when you are a doomer who wants to experience wet dreams, but it stops there. 

Our reserves of oil are good up to 2050. 

equity_momo's picture

Cool , so we are good for 38 years and change and then we just start walking everywhere?  Awesome.

Please dont talk to me about alternative energy.

 

Who is Sean Corrigan?

 

edit : i googled him and i see this blowhard on cnbc FAR too much.   he's another pro establishment , pro system , pro fiat , pro status quo moron.  he doesnt possess an ounce of critical thinking ability , he is a slave to his PAYE pay packet.

HamyWanger's picture

Horse shit can be transformed into oil with a species of bacteries. In fact, nearly every organic matter can be artificially processed into petroleum. It's costly for now, but it will become more affordable when natural reserves deplete themselves and scientists are forced to develop alternative ways. 

So we'll never run out of oil. 

Flakmeister's picture

It is not about running out of oil, dip shit. It is about the maximum flow rate.

Imminent Crucible's picture

What the Corrigans and Wankers don't get is this: It really doesn't matter whether Peak Oil is correct in absolute terms.

What matters is that the global demand curve is ramping up to meet the global supply line. Whether supply actually falls from here out or not, is immaterial. The moment that world demand rises above sustainable supply, someone doesn't get their oil.

Price will necessarily explode because price is the rationing mechanism. War is the alternative mechanism, and that also guarantees exploding prices and unstable supplies.

JeffB's picture

Exactly right.

Steven R. Kopits does a good job of discussing why it was "peak oil" that caused our problems in 2007 - 2008 rather than those dirty "speculators":

Whether Hubert &/or his followers were wrong on one or another or even virtually all of his/their predictions, and whether or not one believes in abiotic oil or scientific breakthroughs that will come to our rescue in the nick of time, there's really no denying that we ran into a brick wall in 2008 when the world could not supply enough oil on a daily basis to meet the burgeoning demand. Mr. Koppits:

http://www.aspousa.org/index.php/2009/05/peak-oil-not-speculation/

"...After many years of solid growth, oil production plateaued in October 2004. Regardless of the price level, the oil supply simply stopped responding, and from then on, the world had to make do with broadly flat supplies. Ordinarily, the expansion of the world’s economy would be accompanied by increased energy consumption and an inelastic oil supply might have been expected to hinder economic development.  It didn’t. In the four years to mid-2008, the world economy expanded by 18%. The global economy boomed, even without new oil.

However, this came at a price. In the absence of oil supply growth, demand accommodation was required. This was achieved by secular prices rises averaging 25% per annum from 2003 to the end of 2007. In other words, the price of oil went up, and this constrained consumption by causing the marginal consumer to drop out of the market. This proved a workable solution for a time, but the global economy could not sustain 25% annual price increases indefinitely, and by second half 2007, the situation was becoming critical. Consumption was being maintained by continuing draws on inventories averaging 1.4 million b/d, and virtually every producer, with the possible exception of the Saudis, was running flat out. By early 2008, even the Saudis were throwing the kitchen sink at the market - all to no avail. On paper, it looked like a peak oil nightmare.

Of course, consumers were responding. From 2005, the EU and Japan began to shed consumption and, from late 2007, US consumption also began to decline as the US consumer sought to escape high oil prices. Notwithstanding, developed economy consumers were not abandoning the market as fast as Chinese consumers were entering it, and prices continued to rise. In early 2008, prices took off and some argue that speculation took over. Still, as inventories continued to fall until May 2008 and all the oil producers were running at full output, the case for market manipulation at that time is hard to make. Indeed, the market was in backwardation most of this time. In backwardation, futures prices are lower than spot prices, the equivalent of the market saying, “Well, prices are high now, but they’ll be lower later.” The market - those very speculators - believed that oil was over-priced but was continually surprised as demand kept pushing up prices.

Prices did ultimately fall, but not because the supply situation eased, nor because speculators fled the market, and not because inventories were released. Prices fell because the global economy collapsed.

This period then shows us two of the possible adjustment mechanisms in the era of peak oil: oil-less growth characterized by increasing prices and continuous, incremental adjustment; and recession accompanied by a dramatic steep drop in consumption and a collapse of oil prices. The lesson to be drawn is that conservation can work within limits, but at some point, there is a straw that breaks the camel’s back and the whole system collapses. ..."

 

 

Joe Sixpack's picture

JeffB:

 

What you describe does not prove peak oil. What you are describing could be a temporary capacity issue (perhaps driven by unrealistic demand caused by an exponentially increasing derivatives bubble, and a false wealth effect). You could have a proven 10,000 years supply of oil, but if you cannot pump it fast enough this will occur. In industry, when a company runs into this issue, they create a new production line. As the prices go higher, the economic justification for the new capital is justified. The problem is it takes time. I agree the consequences of what you are describing could be as bad as peak oil, but it is not peak oil.

Flakmeister's picture

Correct, the 2008 collapse does not "prove" Peak Oil occurred There is no ultimate proof except by looking in the rear view mirror.

What we do have is clear evidence that Net Exports have peaked (2005), a clear plateauing of the net liquid Energy produced (starting 2005). We also know that since 2005 the number of wells has increased by 20% while the flow per well has commensurately decreased. We know that the North Sea has peaked (2000), Alaska (1990s) the GOM (1990s) have also peaked. The US peaked in 1970 and is down ~30% since then. We also know that decline of existing fields requires us to find the equivalent of a new Saudi Arabia every 4 years... 

BTW, the rear view mirror tells us that we drilling like crazy to stay in the same supply regime.

It is very clear that growth in supply of liquid fuels is not matching growth in demand.

blunderdog's picture

"Peak oil" means "peak production rate" of oil.  If the production rate is falling, it doesn't matter if there's an unlimited supply.  All that matters is production rate is falling. 

If you're saying that this isn't peak oil because the production rate is going to resume climbing soon, fine, but that does not refute the "peak oil" claim.  It's just speculation. 

Production has started declining.  Until it starts climbing, that WAS "peak oil."

JeffB's picture

Exactly. If production peaked in 2004 despite year over year price increases of 25% until 2008 when prices exploded, then I would not consider that "a temporary capacity issue". Saying that it was "perhaps driven by unrealistic demand" makes no sense in the context of trying to say that we weren't experiencing a peak oil issue. The fact of the matter is that the producers could produce no more oil on a daily basis OVER A FOUR YEAR PERIOD despite ongoing major price increases. The *cause* of the demand is irrelevant. The problem is that they could produce no more regardless of the price.

Saying you have a lot of reserves (but you just can't get to them) reminds me of the Moron's Lottery. You could win $5 million paid out at $1 per year for 5 million years. Unfortunately, even if you won it probably wouldn't be prudent to think about retiring any time soon. Having $5 million in reserves probably wouldn't pay your monthly bills, much less your kid's tuition, and I doubt the cruise director would give you boarding passes based on those reserves. Similarly, having a bunch of oil in the ground doesn't do you much good if you can't get millions of barrels to market on a daily basis.

 

Quintus's picture

"Horse shit can be transformed into oil with a species of bacteries"

Well then Hamy, you should prepare yourself for your new role as the Saudi Arabia of the 21st Century supplying the worlds energy needs in the form of Horse Shit.

Milestones's picture

How many acres will we need to set aside to feed and care for the  vast number of horses required? Certainly much, much bigger than Hong Kong Hamy.? And water and lawn care for food?Hell, go for the gusto!!     Milestones

Guarded Pessimist's picture

"It's costly for now, but it will become more affordable when natural reserves deplete themselves and scientists are forced to develop alternative ways."

That's about the most idiotic statement I've ever read. Just because a problem is presented does not guarantee an easy cheap (like oil is easy and cheap, or was cheap) solution will be found. This is simply wishful (or hopeful) thinking. Get real.

LawsofPhysics's picture

Yes it can, of course it requires ENERGY to do so and it can not be done at the SCALE required to meet demand.  I see we are trolling again today hamy.

Peter_Griffin's picture

Farm water run-off and other debris in the Mississippi create algae which can be turned into crude oil.  I haven't figured out a way to harvest algae from the river without creating a diversion and holding area of some sort.  It would be nice to figure out a way to actually filter the Mississippi to reduce the dead zone in the gulf...

 

But I wonder if a swimming pool would be a big enough area to harvest a sufficient amount of algae to produce oil at home?  Brewery fermenters, from what I understand, can be used to speed up and increase the harvest of algae.  I would imagine prices on fermenters will fall with the economy at first.  BTFD?!?!

 

Anyone made any attempts at DIY oil and fuel production they would like to share?

VyseLegendaire's picture

I'm not sure where we're gonna get hundreds of millions of barrels a day of fresh, ready-to-eat horse shit. 

 

Oh wait, we have your posts. 

Herne the Hunter's picture

We'll never run out of oil because at some point it will become too expensive to pump. See 2008 where $150/bbl caused demand to implode. Now if we can increase efficiency as fast as oil production declines, it's going to be a different story. But as long as we cling to our F-150s to drive 10 miles to Wal-Mart for a 40oz bottle of Mountain Dew, we at least SHOULD be doomed.

Blindweb's picture

I'd argue that the only technology and systems that have a chance of being that efficient are organic in nature.  It aint easy to beat the efficiency of billions of years of evolution with bits of metal and silicone.

LowProfile's picture

I'd argue thorium reactors powering the grid and synfuel plants (coal to liquid fuel) would provide enough electricity and fuel for a millenium, and it would be orders of magnitude safer & many orders cleaner.

Actually, far longer than that, but I don't want to be seen as unreasonable.

samsara's picture

And You were a geology/physics major?

Ah,  didn't think so.  Earth Science wasn't good to you was it hamy.

Drag Racer's picture

here is something from the geologists.

Yesterday I was listening to an MIT lecture and the 'insider' giving the lecture stated that BPs estimates are we have used 0.16 of known reserves.

Flakmeister's picture

Wow, we must be all saved now. Can you quantify what consitutes these reserves?

Herne the Hunter's picture

Also, reserves are a useless metric. It's about flow rates.

xPat's picture

Quite right. More specifically, it's about the flow rate that can be sustained at an economically viable cost. There's plenty more oil under the deep oceans, but it would cost $200+/bbl to extract it, and the economy can't afford that kind of energy price without serious risk of economic collapse and recession or depression.This author completely misses the point, and seems to be on an adolescent mission to deliver ad-hominem assaults on M. King Hubbert. The guy just doesn't get it.

 

Here's a video for investors about peak oil: http://www.eriktownsend.com/video-1-peak-oil-explained-for-investors.html

 

The video gets it right. The author of this article has a very creative and persuasive writing style, but the evidence simply doesn't support his perception of the world around him.

 

xPat

Urban Redneck's picture

Your argument assumes that the OWNER of the oil is willing accept less than 200 pieces of Bernanke fiat per barrel to have his wealth extracted from his land and made available on the open market.  Maximum Flow Rate Reductions can occur much faster as a result of economic or political decisions than as a result of geology and physics.

JeffB's picture

Thanks, xPat. I really appreciated the video. He does a very good job in putting it all together in a very straightforward and easy to understand manner.

 

xPat's picture

Glad you enjoyed it. Check out Chris Martenson too, also excellent. www.ChrisMartenson.com. Watch chapters 17a/b/c from his free video crash course for a broader primer on energy economics.

 

xPat

JeffB's picture

I will check it out. I'm a big fan of Chris Martenson and of his "Crash Course", but haven't watched his videos on "Peak Oil". I was already a believer and skipped over those videos. I guess I was a little glassy eyed by the time I got to the #17 videos in the series. ;)

 

legal eagle's picture

Certainly, the now Ex IMF chief has seen his peak, unless CNN decides to intervene and give him a talk show like Spitzer. I am calling peak IMF!

Inspector Bird's picture

The issue isn't whether we'll run out of oil or not.  In fact, that's the least of our worries.  We'll, in fact, probably have enough oil to supply whatever needs we have for as long as we need it.

 

The "question" in the discussion of peak oil isn't oil.  It's pricing of energy as a whole.  We have options, lots of them.  All are viable at a certain price.  For some of those options, the price is falling while for others it is rising. 

 

The likelihood of "peak oil" being true or real is slim - because it all depends on how you define what you need and how you choose to get it.  If your assumptions are based on needing the amount of oil we used today simply because that's what today is guding you on, then let's review history:

 

If this was 1000 extended out many years, then "peak wood" would be the point of discussion. 

If this was 1800 extended out many years, then "peak whale oil" would be an imminent problem

If this was 1860 extended out, then "peak coal" would have been a discussion (sure, there's loads of coal, but assuming something else hadn't come along....which is my point)

 

Fact is, we're going to have options, we always do.  We can't sit here and declare that "peak oil" is a problem simply because that's what we believe - we have to have situations which warrant that discussion (so many dry wells and delays in delivery and exorbitant prices ramping up faster than we can imagine).  We have none of this.  Even the price ramp ups are primarily driven by the magnification process of speculative fever driven by excessive monetary stimulus.

So sorting through the wreckage, let's be happy that prices for oil are rising, because THAT is what drives the shift to other technologies.  Were it not for the expense of coal, and the relatively sudden creation of easy oil collection and refining and it's relatively low cost versus energy released, it's likely our cars would be coal driven Stanley Steamers of some sort, our skies would be permanently black, and people would be concerned about "peak coal".

 

 

 

Flakmeister's picture

If you notice, each transistion that you described was a migration to higher energy density substance. So, oh sage guru, what is next? Let me guess, if we would just let the "Free Market" work, we would all have Mr. Fusions...

Quintus's picture

He's just recycling the same tired old 'Free Market will solve everything regardless of the surrounding world' claptrap that would have us believe that if you locked a dozen economists in a room, over time their collective demand for food would give rise to the spontaneous creation ex-nihilo of a tray of sandwiches to meet that demand, because demand for things always results in more supply right?

malek's picture

Now imagine yourself inthe year 1000, 1800, or 1860 as mentioned above.
And then you'd also ask "So, oh sage guru, what is next?"

Something dawns on you?

 

Flakmeister's picture

As to what is next, well... you can simply look at energy density. The logical progression was nuclear, we managed to fuck that up. The other way is to look at it to concentrate the flow from low flux sources, that is called solar, and it is not quite ready for primetime...

Your cute riposte missed something rather obvious about coal and oil, the world economy and population was in relative equilibrium at the onset of the hydrocarbon age, ~1800 It is through those hydrocarbons that we have increased the population 7-fold.... If the population was 1 billion and everybody consumed oil at current US rate, this pesky problem of peak oil would years away... 

malek's picture

Well it clearly didn't dawn on you: Such questions are useless.
Note that energy density is only important in some applications, most obvious example are planes.

And who declares it impossible the population is not approaching a new relative equilibrium at 9 billion?

Flakmeister's picture

Energy density is extremely important.... try powering a semi or a street car on coal...

Those 9 billion require will require ~20 mmbbd of oil for agriculture... Not saying its impossible, just highly unlikely... 

Navigator's picture

<<<The likelihood of "peak oil" being true or real is slim - because it all depends on how you define what you need...>>>

The term "Peak Oil" is a contraction for "Peak Oil Production".  It has absolutely nothing to do with "need"...in fact...if the world's "need" for oil decreased because aliens brought us unlimited free portable energy, oil production would plummet and we would (still) be past the point of world peak oil production.

You may want to study a little before you write in public Mr. Bird...it's less embarrassing that way.

dttmei's picture

Who is Sean Corrigan?

Not a very convincing argument.  It fails to take into account the politics of transitioning to new energy fuels.  Of course civilization will survive, it is the transition that will be dislocating for all.  And, the negotiation over the rise of winners and losers will determine whether there can be a rational and acceptable agreement over these issues.

RafterManFMJ's picture

I agree. Hydrocarbons are found on other planets and moons. Since we can safely assume they had a low population of ferns and dinosaurs, where did such oil come from?

Oil is continuously generated. See Deep Hot Biosphere by Gold

Herne the Hunter's picture

What is the point of this article?

snowball777's picture

We now know Sean had a hard time with PDE in school and carries a grudge over it?

Flakmeister's picture

Hell, he had a hard time with ODEs

Navigator's picture

 

 

This article is junk...but at least it'll be good for a giggle at the comments of the inevitable science deniers who will be duped into thinking it's genius.

Sofa King's picture

Science deniers, is that like a holocost denier...are we now going to make it a crime to dispell a hypothesis.  Dude, statistical speculation is not science, it's a social engineering tool...much like hope and fear.   Peak oil hasn't been proven and can't be proven which is why it will always remain a theory.  Me, I just trade the trends and make some extra bank so I can drive my gas guzzler around town just for the hell of it.