Guest Post: Peak Denial About Peak Oil

Tyler Durden's picture

Submitted by Jim Quinn of The Burning Platform

Peak Denial About Peak Oil

It is par for the course that with oil hovering between $70 and $80
per barrel Americans have continued to buy SUVs and Trucks at a rapid
pace. Politicians don’t have constituents screaming at them because gas
is $4.00 per gallon, so it is no longer an issue for them. They need to
focus on the November elections. It is no time to discuss a difficult
issue that requires foresight and honesty. It is no time to tell the
American public that oil will be over $200 a barrel within the next 5
years. Anyone who would go on CNBC today and declare that oil will be
over $200 a barrel would be eviscerated by bubble head Bartiromo or
clueless Kudlow. Bartiromo filled up her Escalade this morning for $2.60
a gallon, so there is no looming crisis on the horizon. The myopic view
of the world by politicians, the mainstream media and the American
public in general is breathtaking to behold. Despite the facts slapping
them across the face, Americans believe cheap oil is here to stay. It is
their right to have an endless supply of cheap oil. The American way of
life has been granted by God. We are the chosen people.

A funny thing happened on our way to permanent prosperity and
unlimited cheap oil. The right to prosperity was yanked out from
underneath us by the current Greater Depression. The worldwide economic
downturn has masked the onset of peak cheap oil. Therefore, when it hits
America with its full fury, it will be a complete surprise to the
ignorant masses and the ignorant politicians who run this country. A
Gallup Poll in August asked Americans about our most important problems.
Where is the concern about future energy supplies? It isn’t on the
radar screens of Americans. They are probably more worried about whether
The Situation will hook up with Snookie on the Jersey Shore reality


It is not surprising that the American public, American politicians,
and the American media don’t see the impending crisis. The organizations
that have an interest in looking farther than next week into the future
have all concluded that the downside of peak oil will cause chaos
throughout the world. The US Military, the German Military, and the UK
Department of Energy have all done detailed studies of the situation and
come to the same conclusions. Social chaos, economic confusion, trade
barriers, conflict, food shortages, riots, and war are in our future.

The U.S. was warned in 2005. Its own Department of Energy
commissioned a report by Robert Hirsch to examine peak oil and its
potential consequences to the US. The introduction stated:

“The peaking of world oil production
presents the U.S. and the world with an unprecedented risk management
problem. As peaking is approached, liquid fuel prices and price
volatility will increase dramatically, and, without timely mitigation,
the economic, social, and political costs will be unprecedented. Viable
mitigation options exist on both the supply and demand sides, but to
have substantial impact, they must be initiated more than a decade in
advance of peaking.”

The main conclusions reached by the experts who worked on this report were:

  1. World oil peaking is going to happen, and will likely be abrupt.
    World production of conventional oil will reach a maximum and decline
  2. Oil peaking will adversely affect global economies, particularly the
    U.S. Over the past century the U.S. economy has been shaped by the
    availability of low-cost oil. The economic loss to the United States
    could be measured on a trillion-dollar scale. Aggressive fuel efficiency
    and substitute fuel production could provide substantial mitigation.
  3. The problem is liquid fuels for transportation. The lifetimes of
    transportation equipment are measured in decades. Rapid changeover in
    transportation equipment is inherently impossible. Motor vehicles,
    aircraft, trains, and ships have no ready alternative to liquid fuels.
  4. Mitigation efforts will require substantial time. Waiting until
    production peaks would leave the world with a liquid fuel deficit for 20
    years. Initiating a crash program 10 years before peaking leaves a
    liquid fuels shortfall of a decade. Initiating a crash program 20 years
    before peaking could avoid a world liquid fuels shortfall.
  5. It is a matter of risk management. The peaking of world oil
    production is a classic risk management problem. Mitigation efforts
    earlier than required may be premature, if peaking is long delayed. On
    the other hand, if peaking is soon, failure to initiate mitigation could
    be extremely damaging.
  6. Economic upheaval is not inevitable. Without mitigation, the peaking
    of world oil production will cause major economic upheaval. Given
    enough lead-time, the problems are soluble with existing technologies.
    New technologies will help, but on a longer time scale.

The Hirsch Report clearly laid out the problem. It urged immediate
action on multiple fronts. It is now 5 years later and absolutely
nothing has been done. In the meantime, it has become abundantly clear
that worldwide oil production peaked between 2005 and 2010. The Hirsch
Report concluded we needed to begin preparing 20 years before peak oil
in order to avoid chaos. We are now faced with the worst case scenario.

The US Military issued a Joint Operating Environment report earlier
this year. They have no political motivation to sugarcoat or present a
dire picture. This passage is particularly disturbing:

A severe energy crunch is inevitable
without a massive expansion of production and refining capacity. While
it is difficult to predict precisely what economic, political, and
strategic effects such a shortfall might produce, it surely would reduce
the prospects for growth in both the developing and developed worlds.
Such an economic slowdown would exacerbate other unresolved tensions,
push fragile and failing states further down the path toward collapse,
and perhaps have serious economic impact on both China and India. At
best, it would lead to periods of harsh economic adjustment. To what
extent conservation measures, investments in alternative energy
production, and efforts to expand petroleum production from tar sands
and shale would mitigate such a period of adjustment is difficult to
predict. One should not forget that the Great Depression spawned a
number of totalitarian regimes that sought economic prosperity for their
nations by ruthless conquest.

Here is the summary of their analysis:

To generate the energy required worldwide by the 2030s would require us to find an additional 1.4 MBD every year until then.

the next twenty-five years, coal, oil, and natural gas will remain
indispensable to meet energy requirements. The discovery rate for new
petroleum and gas fields over the past two decades (with the possible
exception of Brazil) provides little reason for optimism that future
efforts will find major new fields.

present, investment in oil production is only beginning to pick up,
with the result that production could reach a prolonged plateau. By
2030, the world will require production of 118 MBD, but energy producers
may only be producing 100 MBD unless there are major changes in current
investment and drilling capacity.

2012, surplus oil production capacity could entirely disappear, and as
early as 2015, the shortfall in output could reach nearly 10 MBD.

production and distribution infrastructure must see significant new
investment if energy demand is to be satisfied at a cost compatible with
economic growth and prosperity. Efficient hybrid, electric, and
flex-fuel vehicles will likely dominate light-duty vehicle sales by 2035
and much of the growth in gasoline demand may be met through increases
in biofuels production. Renewed interest in nuclear power and green
energy sources such as solar power, wind, or geothermal may blunt rising
prices for fossil fuels should business interest become actual
investment. However, capital costs in some power-generation and
distribution sectors are also rising, reflecting global demand for
alternative energy sources and hindering their ability to compete
effectively with relatively cheap fossil fuels. Fossil fuels will very
likely remain the predominant energy source going forward.

Just this week, the German magazine Der Spiegel obtained a
confidential study about peak oil that was done by the German military.
According to the German report, there is “some probability that peak oil
will occur around the year 2010 and that the impact on security is
expected to be felt 15 to 30 years later.” The major conclusions of the
study as detailed in Der Spiegel are as follows:

  1. Oil will determine power: The Bundeswehr
    Transformation Center writes that oil will become one decisive factor in
    determining the new landscape of international relations: “The relative
    importance of the oil-producing nations in the international system is
    growing. These nations are using the advantages resulting from this to
    expand the scope of their domestic and foreign policies and establish
    themselves as a new or resurgent regional, or in some cases even global
    leading powers.”
  2. Increasing importance of oil exporters: For
    importers of oil more competition for resources will mean an increase in
    the number of nations competing for favor with oil-producing nations.
    For the latter this opens up a window of opportunity which can be used
    to implement political, economic or ideological aims. As this window of
    time will only be open for a limited period, “this could result in a
    more aggressive assertion of national interests on the part of the
    oil-producing nations.”
  3. Politics in place of the market: The Bundeswehr
    Transformation Center expects that a supply crisis would roll back the
    liberalization of the energy market. “The proportion of oil traded on
    the global, freely accessible oil market will diminish as more oil is
    traded through bi-national contracts,” the study states. In the long
    run, the study goes on, the global oil market, will only be able to
    follow the laws of the free market in a restricted way. “Bilateral,
    conditioned supply agreements and privileged partnerships, such as those
    seen prior to the oil crises of the 1970s, will once again come to the
  4. Market failures: The authors paint a bleak picture
    of the consequences resulting from a shortage of petroleum. As the
    transportation of goods depends on crude oil, international trade could
    be subject to colossal tax hikes. “Shortages in the supply of vital
    goods could arise” as a result, for example in food supplies. Oil is
    used directly or indirectly in the production of 95 percent of all
    industrial goods. Price shocks could therefore be seen in almost any
    industry and throughout all stages of the industrial supply chain. “In the medium term the global economic system and every market-oriented national economy would collapse.”
  5. Relapse into planned economy: Since virtually all
    economic sectors rely heavily on oil, peak oil could lead to a “partial
    or complete failure of markets,” says the study. “A conceivable
    alternative would be government rationing and the allocation of
    important goods or the setting of production schedules and other
    short-term coercive measures to replace market-based mechanisms in times
    of crisis.”
  6. Global chain reaction: “A restructuring of oil
    supplies will not be equally possible in all regions before the onset of
    peak oil,” says the study. “It is likely that a large number of states
    will not be in a position to make the necessary investments in time,” or
    with “sufficient magnitude.” If there were economic crashes in some
    regions of the world, Germany could be affected. Germany would not
    escape the crises of other countries, because it’s so tightly integrated
    into the global economy.
  7. Crisis of political legitimacy: The Bundeswehr
    study also raises fears for the survival of democracy itself. Parts of
    the population could perceive the upheaval triggered by peak oil “as a
    general systemic crisis.” This would create “room for ideological and
    extremist alternatives to existing forms of government.” Fragmentation
    of the affected population is likely and could “in extreme cases lead to
    open conflict.”

Even the International Energy Agency, which has always painted a rosy
picture of the future, has even been warning about future shortages due
to lack of investment and planning.

Americans think that the discovery of oil on our soil in 1859 has
entitled us to an endless supply. It is not so. We account for 4.3% of
the world’s population but consume 26% of the world’s oil. As China,
India and the rest of the developing world become economic powerhouses,
they will consume more and more of the dwindling supply of easily
accessible oil. As the consumption curve continues upwards, the
production curve will be flat. The result will be huge spikes in prices.
It will not be a straight line, but prices will become progressively
higher. As the studies referenced above have concluded, the result will
be economic pain, social chaos, supply wars, food shortages, and a
drastic reduction in lifestyles of Americans. They won’t see it coming,
just like they didn’t see the housing collapse coming or the financial
system collapse coming. They’ll just keep filling up those Escalades
until the pump runs dry.


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DiverCity's picture

Bingo with respect to humanity's survival. But there's a catch -- humanity survives but how many humans can survive without petroleum based agriculture on its current scale?  Bunk with respect to AGW.

Greater Fool's picture

Yes, well basically "burn the plants" is an excellent capsule summary of a million years or so of human energy technology. Sort of makes you feel proud to think that what we're all discussing here is different in degree, but not kind, from our ancestors on the savannah looking for some nice, dry wood lying around so they can make a fire.

Aside from the clever use they make of solar power via transpiration, plants do an interesting thing with sunlight: They use it to create a proton gradient. Proton gradient + electron reservoir + molecular oxygen turns out to be the recipe for a proton exchange fuel cell....

Obviously, nobody knows what the exact solution looks like. But since the sun is the main (pretty much the only) actual energy input into the system we inhabit, and since the amount of energy would appear to be more than adequate, this seems like a pretty sensible direction to investigate....


Citxmech's picture

The "exponential function" videos on Youtube are a great teaching tool for this concept. 

Pretty well answers the question of whether people are smarter than yeast...

trav7777's picture

can't be bothered w/ that, man, too busy watching Jersey Shore.

Actually, I've never watched that's on MTV or somethin?  The Yo Ghetto channel?

Anyhow, so my accountant answers 6 o'clock like everyone else does.  I was like yeah um lemme make sure to check those tax numbers.

Imagine a smart bacterium.  He's at 10 minutes to midnight looking at rapidly impending doom.  Would the Dunning-Kruger bacteria listen?  Nope.  They'd say nigga pleeze, this bottle only 1/1024th full!  We got miles and miles of space left, stop DOOMING and being played by "TPTB" who just want to deprive all of us of our god-given right to large SUVs and granite countertops.  And if you spoke too loud, they'd band together and kill you.

Then 2359 comes and they'd hate you ^2 for being right when they weren't.  I've noticed another effect where abruptly or rudely awakened idiots react violently to the intrusion of reality onto their faux self-concepts.  They start trying to get rid of the people who tried to warn them (good fucking idea, eliminate the few who were smart enough to anticipate the problem).  The mediocre in my experience very steadfastly resist acknowledgement of reality even when it has them tied down and is bitchslapping them.


LOL..watching the exponential youtubes now, I use these SAME FREAKING analogies- you can see my 10 minutes to midnight bacteria bottle in one of the preceding paragraph.

This is a very good series...should be REQUIRED viewing for all people

Bold Eagle's picture

Now we just have to figure out how to grow solar panels without using fossil fuels. Maybe Leo has some seeds?

Joe Sixpack's picture

"Now we just have to figure out how to grow solar panels without using fossil fuels..."


...or rare earth metals. Oh, of course in the near future you can buy solar panels from the Chinese (but no longer rare earths)...

mauistroker's picture

You'll need a REALLY big battery though - it's dark at night remember.

For kicks and giggles, why don't you rework the calc to include the BTU equivalent associated with US annual oil usage - household eletricity usage is only part of the equation.

Hulk's picture

a bit high on the solar flux. desert tortoise voted no on the desert panels.Also, not enough Windex... leo's solar portfolio decimated by the desert tortoise and lack of windex...

Marley's picture

You haven't lived until you get to sit in 120 F weather behind a pickup truck protecting an endangered tortoise crossing a road.

We didn't wash the mirrors since the winds would knock most of the dust off.

Joe Sixpack's picture

We just bought a Volkswagen TDI Sportswagen. SUVs are just to gas hungry to drive- even the smaller ones.


A few points:


"A funny thing happened on our way to permanent prosperity and unlimited cheap oil. The right to prosperity was yanked out from underneath us by the current Greater Depression. "


Was this by policy? I ahve been wondering for some time if the financial crash was not created to turn down the oil flow.


Second point: If the Chinese economy crashes, we will get some temporary relief (maybe 2-4 years cheaper gasoline). With India's Nano production ramping up, even this will not help for long.


Third point: I'm not necassarily on the peak oil bandwagon, but eventually (and it could be soon) we could start running out. Abiotic oil anyone?



QQQBall's picture

Pretty amusing comments here... As fields mature, you have to pump the oil UP outta the ground and that is expensive. Some fields pump way more water than oil, so you have chemical costs to cull out the oil. Its expensive and the net "add" is a lot less than one might think. Plus the oil is low quality. Sure, you might add "X" number of bbls to overall production, but the net energy "add" is much, much less. When gasoline is $5/gallon, these same idjits will be screaming that its goldie's fault. World of hurt coming dead ahead.

michael.suede's picture

I really don't see what the big deal is about peak oil.

If its true, then eventually the price of oil will rise above alternative fuel sources and consumers will move to acquire energy from those sources.

If its not true, then consumers will continue sucking down oil.

Worrying about it as if this is some kind of massive problem that is going to send us back to the dark ages is ridiculous.

The market WILL find alternative sources of energy as the cost of oil becomes prohibitively expensive.  We SHOULD NOT take public funds and hand them to alternative energy speculators.  We SHOULD allow everyone and their brother to drill for as much oil as possible and break the government granted monopoly big oil has on drilling rights.


knukles's picture

I'm with you.  It'll all take care of itself.  Not gonna worry about it.  Gonna cuddle up with a big open gas flame in the fire pit outside and watch Snooki on JerseyShore while I bemoan Global Warming.

mauistroker's picture

Hey Knuckles. There's a Darwinian event coming and you're going to be on the wrong end of it. From a species perspective, that's probabaly a good thing. Enjoy what remains of your ignorant bliss dickhead.

ANewUSA's picture

If "socialism" means we lock up Insurance Exec's for Insurance FRAUD: RESCISSION, then I'm All For SOCIALISM.

If "Socialism" means we can CONTROL Wall Street Fraud, them I'm all for "Socialism".

If "Socialism" means we can stop the top 1% from robbing the middle class of ALL it's benefits, then "Socialism" is Gods Revenge Against the Wall Street Mafia.




Japhy Ryder's picture

I highly recommend reading this report by Feasta.

It is the most comprehensive (and readable) report which studies how higher energy costs combined with the Global debt problem will lead to disaster.



mauistroker's picture

Thanks for bringing this to our attention. Very important piece of work. Most of the advanced material I've read on the subject (Greer, Kunstler, TAE, TOD, Orlov et al) is, let's call it 'Grad' level. This is definitely 'Post Grad', taking the other material forward and connecting some dots. 

CrashisOptimistic's picture

Lots of comments, almost everything already mentioned.  I'll try a few things I didn't see, and I didn't scan every single post in careful detail.


1) Do not get excited about news of new discoveries.  The depletion rate of field PRODUCTION (not reserves) past peak is about 5.5%/yr.  The vast majority of present production is from the old supergiants at Ghawar, the rest of the middle east and Russia.  So take the 85 million bpd and reduce it by 10 mbpd (for the fields not yet post peak) and you have 75 mbpd, which is then reduced 5.5%/yr for a total of about 4 mbpd of new production that has to be added each year Just To Break Even.  That's 1/2 of a Saudi Arabia that has to come on line, Each Year, just to break even on production..

2) Forget transitioning transport to electricity.  The horsepower to watts conversion is just too devastating, especially for large trucks and agricultural combines, that need 450+ horsepower engines that run all day on maybe 2 tanks of fuel, loaded in 10 minutes.  Remember, you can't feed 7 billion people with old 100 acre family farms.  Those idyllic wistful bits of nostalgia worked in a world of 2-3 billion.  Now you have 10,000 acre farms and they have to get planted before planting season is done.  Oxen won't do it.

3) The population of NYC was 1 million in 1910.  It took hundreds of thousands of horses to haul food in from the farm suburbs (that are now concrete) to feed that million every day.  There are now 8 million in NYC and the average calorie travels 1500 miles to feed each of them.  This will never work on anything but infinite oil, and that doesn't exist.

4) Don't presume there is an answer.






JuicedGamma's picture

Great article, love the picture of the ice storm, but what does it have to do with peak oil.  Oh I get it, that's how you see the end.  I prefer Road Warrior.


Youri Carma's picture

NWO is organizing Peak Oil probably to concur with WOIII is my idea.

The Energy Non-Crisis by Lindsey Williams - Lindsey Williams talks about his first hand knowledge of Alaskan oil reserves larger than any on earth. And he talks about how the oil companies and U.S. government won't send it through the pipeline for U.S. citizens to use. Hear Reverend Lindsey Williams tell the real TRUTH about Alaskan oil and gas:

Der Spiegel 1 September 2010: Military Study Warns of a Potentially Drastic Oil Crisis - 'Peak Oil' and the German Government,1518,715138,00.html


Dr. Sandi's picture

After reading as much of this thread as my various spincters can handle, I think it's safe to say that the headline is bang on:

Peak Denial About Peak Oil

CrashisOptimistic's picture

Thorium does nothing.  It doesn't fuel transport trucks that bring you food.



VK's picture

Oh lord, not Thorium again. That article was thoroughly debunked in the comments on the Telegraph site. Please, please, please read the science behind it. 

Hunch Trader's picture

No amount of energy is enough as long as people think they can afford hauling their lardy asses around in 1-3 ton trucks, whereas a bicycle with an assistant motor would suffice.


DosZap's picture

Two things, HUGE SUV's are starting to not be in demand.

Next, with the figures given,Peak Oil may be on the horizon......

But, not for the USA, if, and a huge IF, some Pols grow a set, and allow the development of our OWN reserves.

The amounts are mind boggling...OIL.

Not counting if we wised up, and started adding an LPG conversion option to our gas powered vehicles.

We have more Natural Gas than all the Middle east combined.

Our KNOWN Oil Reserves are unreal........not to mention what is suspected, but not yet explored.

We could be totally energy independent within less than 5yrs, if we got rid of the Eco Nazi's.

dukeness's picture

This is why we don't drill as we could domestically.  Someday, we'll need OUR oil to pay OUR debts.

CrashisOptimistic's picture

The US does not have mind boggling amounts of oil.  Period.

The whimsical wave of the hand and claim that technology improvements will solve the problem by increasing the amount of oil recoverable from any one place just doesn't work.  It's not a technological problem.  It's a physics problem.  Read about the two relevant parameters: Permeability and Porosity.

Bakken will likely never produce more than 600K barrels per day.  Think carefully about that.  It Doesn't Matter How Much Is There.  It only matters how fast it can come out, and permeability and porosity determine that.

You simply have to understand how the oil business works.  Exploration companies are NOT necessarily production companies.  Explorers buy leases and drill and hopefully find something.  They then make a press announcement of ENORMOUS SIZE and ask for bidders from the producers.  They want to sell those leases for 100X what they paid for htem.  The producers, if any of them believe the hype, then find themselves committed and They, Too, will claim big numbers lest they be fired if they overpaid.  In the end you will not know anything until you see the barrels per day production figures.  All the other hype must be ignored.

For Bakken, that's never going to be more than a few hundred K bpd.  That will ramp up and get ballyhooed while the wells in Texas, California and Oklahoma are quietly P&Aed (plugged and abandoned).  Please understand this because your life DOES depend on it.  You can't just find new production.  You have to find production in quantities greater than the production decline each year of the dying, pumped out fields.

Calmyourself's picture

Pardon me for asking so bluntly but how the hell do you know?  I have seen enormous figures from multiple independent sources for the bakken and adjoining formations and I live here, so again how do you know this?

CrashisOptimistic's picture


Have you seen numbers on their projected production?  Not reserves.  Production.  Look for production expectations.

Hephasteus's picture

God damn you people know too much about oil. It's like you are cult of oil drillers. LOL

palmereldritch's picture

It's ironic that on ZH, one of the most amazing sites on the web for skeptical insight into the murky world of finance and politics, that there would be so much resistance to skepticism about the dogma of Peak Oil scarcity which only serves to advance the restriction and control of energy, resources and finances by the same old cartel of malignant Malthusian bandits.

Can you name another industry anywhere that attracts and determines a greater military/political action to preserve control of global financial and industrial policy other than the petroleum industry?  Another business, other than the military or global finance and that is as guarded, secure, capital intensive and focussed?  Why would you expect them to tell the truth if there was an abundance of oil? 

There is no real leverage in energy if you don't multiply the power in it through the process of artificial scarcity when the endgame is social engineering.  Remember this is an industry that provides the commodity that makes real industrial production possible and as a critical commodity traded primarily in fiat ponzi USD and GBP debt notes makes the fake financial cogs turn.  It is a critical commodity to the crim class and its access must be physically and geographically controlled by their military and scientifically suppressed by their media and legends if power is to be effectively projected over global resources (which especially includes the sheeple).

Everything they say is a lie so why not Peak Oil?  Does the science support an alternative?  And if it does would it be widely discussed or dismissed by the comfort bad religion offers? If abundant oil was available at depth throughout the world and technology developed to safely extract it and better consume it would it not nurture wide-spread economic and energy independence around the planet?  You have to ask yourself, who would gain from that scenario?

When science is heresy, your mind is a prisoner and your body will surely follow.

Let's see what the real science says instead of the faithful propaganda...

CrashisOptimistic's picture

Here is the trump card for all those cornucopian claims, which, btw, do not come from as respected a source as the CEO of Chevron in the OP photo, but have a look very simply at this graph.  Nothing more, and remember that the price of oil is now 50% higher than in 2005: 

Saudi Arabia claims to have 4 mbpd excess production capacity and they hold it back because "there is no demand for it".  Odd how the Russians found demand for theirs, isn't it?  How very nice of the Saudis to just let the Russians have that 50% increase in sales revenue per barrel out of the generosity of their hearts.


Oh, and btw, the old fields of western Siberia are declining 12%/yr in production.  They drill 5000, repeat, 5000 wells per year to hold their production up.  They are scheduled for a fall off next year.  I won't call it "peak".  You can look that up yourself.  Russia's oil production peak was back in the 1980s.  They did 12+ mbpd in 1988.  THAT was their peak.  It's been all down from there, with huge numbers of wells being used to slow the collapse.

As for the abiotic silliness, if oil can be created out of nothingness underground, then why drill in 5000 feet of water?  No, don't wave your hands about environmental policies.  They don't apply in Brazil, and their offshore drilling is also hyper deep.  If abiotic oil is everywhere, why not drill in downtown Havana?  US environment regs have no effect there, but have you noticed, perhaps, that there is no drilling in downtown Havana?


palmereldritch's picture

Russia is selling its capacity because it needs cash.  But not to worry tho:

Saudi Arabia says not worry about Peak Oil:


China passes U.S. for Saudi Oil consumption; no peak oil

China has passed the United States in consumption of Saudi Oil, now at over a million barrels a day, according to Aramco CEO Khalid al-Falih. This milestone was expected someday as China’s growth and consumption increases on a dramatic scale, report Arif Sharif and Rob Verdonck in Reuters. There is still plenty of oil in the ground and the world should put aside fears about "peak oil", said Khalid al-Falih at the Davos forum, Gerard Wynn (Reuters) reports.


Unlike Chevron, Russia has the benefit of having refined a more productive and accurate exploration regimen based on abiotic oil formation.


Saudi Arabia just had the dumb luck of being located at a point on the planet where the Earth's crust is thinnest and being closer to the Upper Mantle has the benefit of productive reservoirs being continually replenished as documented.


The low hanging fruit that are the shallow structural captures have been mostly harvested and in that respect Peak Oil maps a possible outcome if deeper sources are not targeted and exploited.  Saudi Arabia proves that it is just not everywhere, location is still important and if it is not bubbling up under your feet you will have to look for its new deeper pools.


Maybe it is in Havana and maybe not.  You don't know until you look with a new set of eyes and a new potential understanding.


Last time I checked the Sun was not the centre of the universe but rumour has it that it is no longer the greatest influence on the planet's warming.

Gimme some of that old time religion...


trav7777's picture


You actually believe it's possible there is abundant oil under downtown Havana?

Uh, and maybe there's a continent the size of australia out there that we haven't discovered yet, right?

BTW, the Saudis are liars.

CrashisOptimistic's picture

You misunderstood.  I was ridiculing the idea that abiotic oil exists in any meaningful quantities.  If it did, it could be found anywhere at all, and if anywhere at all, and you were concerned about US environmental regs, you could drill in Havana.


The fact that Cuba doesn't drill in Havana is more or less conclusive proof that abiotic oil is not everywere, as it would have to be if it was indeed abiotic.

Calmyourself's picture

You seem to KNOW many things.  The earth's crust is an open book to you.

"The fact that Cuba doesn't drill in Havana is more or less conclusive proof that abiotic oil is not everywere, as it would have to be if it was indeed abiotic."

So the cap structures of impermeable rock would not matter to the abiotic oil theory.  The oil would not then collect under their strata because it is special right?  Of course you must then know where the concentration of plants and other oil producing organisms were heaviest over the Earth during the Mesozoic era and hence where to drill.  But if large parts of the Earth were covered in these organisms for millions of years ( as most land was concentrated in the equatorial regions)what happened to the oil that did not collect under these geologic cap structures or did it all just migrate there for us to find?

palmereldritch's picture


Ad hominem, conflation, non sequitur, proof by assertion, straw’re a regular titan of logic and the polemic aren’t you?

Oh, and charming...I forgot charming


THE 4th Quadrant's picture

How very nice of the Saudis to just let the Russians have that 50% increase in sales revenue per barrel out of the generosity of their hearts.

If you sold a product that was in high demand and you were flush with cash and knew that your product was going to sell for at least double it's current price in 5 years.....

What would you do?

Yea, me too.

CrashisOptimistic's picture


No, sorry, that doesn't fly.  They have said explicitly that the reason they do not produce more is "because there is no demand".  This is a proven lie.  The Russians clearly have demand.  

Look, this is not really very much in the world of conjecture.  Some is, for sure, but really not very much.  OPEC is 12 countries (down from 13 last year when Indonesia became an importing country as their fields depleted).  9 are producing flat out.  They don't even claim to have spare capacity.  The UAE, Kuwait and KSA do claim to have spare capacity, but that graph above suggests they do not.

And before you dismiss it as "a conspiracy with too many people in on it", remember that Lee Raymond at Exxon was sure, and assured the government, that it didn't matter if OPEC put on an embargo.  He felt he could ramp up Texas production any time he wanted to.

He tried.  He failed.  The embargo smashed economies and spiked oil prices.  Only the surge in production from Alaska and the North Sea undid it.  Both of those sources are now way past peak.

Anyway, KSA's alleged excess capacity should NEVER be considered to be anything other than alleged.  The graph is highly suggestive that they don't have it.


palmereldritch's picture

Cass Sunstein, is that you?

THE 4th Quadrant's picture

Jim Quinn your articles always produce provocative discussions.

Thanks for the post.

tom's picture

Peak oil is a non-issue for at least the next decade for supply/demand reasons, not political reasons.

Look, I'm a conservationist, I would be happy if peak oil would save our coral reefs from the next major El Nino. I would be happy if oil went to $200, in inflation-adjusted dollars, in the next five years. But it's not going to happen.

Opec is still producing less than published capacity. The Saudis have 2mpbd of ready-to-go capacity in addition to their published capacity. It's the peak oilers who are simply reading sensationalist books and articles and not reading any serious research.

Besides, near-term peak oil depends on V-shaped global recovery. That's just not going to happen. Most of you peak oilers know that very well, but you still cling to near-term peak oil theory because you want to believe that peak oil will save us from global warming, or because you want to believe that SUV drivers will be punished by some kind of oil market karma. Get real. It's not going to happen.

CrashisOptimistic's picture

I don't think you quite understand what's happening here.

It doesn't matter what you think motivations are.  It doesn't matter that you think global warming will subside, or not.  It doesn't matter what the oil market does.  And most of all, it doesn't matter what politics does.

This is a planet killer.  The estimates are that this planet, without oil fueling tractors, making insecticide, making fertilizer, fueling refrigerated transport, and transport itself, can feed 900 million people.

There are presently 7 billion people on the planet.

There is no law of the universe that says this population reduction happens slowly.  There is absolutely zero reason to believe that 20 year olds will intellectually evaluate the situation and choose to abstain from sex and procreation.  There is no reason to believe that a miracle technology is going to arrive in the handful of years available for it to do so.

There is no reason to believe this story has a happy ending.  It's not about trading oil.  It's not about buying guns.  It's not about storing food.  Odds are extremely high that of that 900 million, the US won't be much of a %.  Maybe not China, either, whose rice has to travel 800 miles from Bali.  

African farmers have good odds.  Brazillians, who can get 3 crops a year with no winter and offshore oil, have good odds.  Americans have very poor odds.  

Most people reading these words will not die of natural causes.

Uncle Remus's picture

Way to go Tyler. Between peak oil and anything Israel, ZH gets a hit fest and proof positive we are freakin' doomed.

mkkby's picture

Great discussion. Zero hedge is so full of religious nuts with no science/math background, and no interest in facts. But then, that is the human condition.

Thank you trav777! On almost every thread, I quickly scan for your comments and ignore everything else.

I am a chemical engineer. So I understand this issue. The entire history of human society is based on continuous growth and cheap energy. Make energy more expensive and marginal businesses and farmland have to be taken offline. Peak oil means economies shrink. Economies shrink, debt can't be repaid. Which shrinks the economy again. And so on.

However I don't fear peak oil and debt. I welcome it. I want to live in a world that is not overcrowded and polluted with fossil fuel chemicals. I believe continuous growth and over population are the root cause of virtually every other problem facing mankind. Peak resources is what will force crazy apes to live sustainably.

HungrySeagull's picture

Have we forgotten the Arab Oil Embargo in the mid 70's so soon? We had Odd and Even days at the time for weeks as it took hours sitting in line to get a rationed amount of gasoline and even then no gaurantee that the station will still have fuel when you do finally pull to the pump.

We have a great oppertunity to take on a different fuel and possibly even a entirely new system of transport other than the obselete Interstate Highway System. Houses and Commercial Buildings can provide for most own needs harvesting off the sun and the wind assisted by Nat Gas or other alternative at nighttime.

Or even driving copper or other metal rods far enough underground to generate a change in heat and use the very earth itself to quietly provide heat and cooling.

Consider the following. A gas station with tanks for three grades of fuel. About 10,000 gallons in total or more. That works out to about 1000 cars taking 8 gallons assuming 4 cars fueled every 15 minutes at 4 pumps it will be all gone in 36 to 50 hours give or take a few for a 24.7 station.

Truck stops have the ability to deliver 300 gallons of fuel to each 18 wheeler in a few minutes time. Some stops have as many as 50 pumps going 24/7 and each 18 wheeler will consume 300 gallons in approx 1200 (One 24 hour day or less for two drivers team) miles or about 3 days if single different parts of the nation deliver different performance to the trucks.

In my 30+ years being involved with big rigs I have seen fuel mileage increase from about 4 to only 8 or so with spikes close to 10 mpg depending on specific situations and as much as 20 gallons per hour in mountain climbing or 10 gallons overnight sleeping for 8 hours at fast idle.

Ships consume a horrendous amount of fuel, however they have engines so big that they can cross whole oceans hauling cargo cheaper than a equivilent number of trucks can carry coast to coast.

You can put 400 loads onto a train and ship it coast to coast in 10 days or less with less fuel.

River barges as well as maritime shipping can haul more with less fuel.

Course we can always go back to the Steam Technology for vehicles, ships and trains when the oil finally does run out. There is plenty of coal, just not the kind that EPA wants anyone to use.


Now the big problem is this. China and other Nations produce the stuff. We dont. So.

We need to create a entirely new domestic industry that will provide everything we use, consume and provide for parts as well as make adjustments in technology and ways of going to work, doing work and phasing out obselete models of industry.

For example. Why have 1000 people commute to work to sit in a cubicle for a set number of hours? That is a waste. My temp work has consistently shown to prove to my employer that a task or mission of the day can be completed in a certain amount of time (Usually way less than 8 hours) and we go home when finished. That is the end of it. No need to sit fighting a 3 PM Crash or the 4 AM slows waiting for the authorized time to clock out and finally go home.

And what is the small business to do when the taxes are raised next year? I cannot rely on them being open to provide me with bolts, wood, tools and other necessary items so I may maintain my home or whatever from time to time. If these small businesses are crushed then I must travel further and further consuming fuel in greater quanity to get the things I need to finish necessary projects about the home.

Or simply stay home, order it online tax free and pay the shipping and have a brown truck show up (I have done quite alot of specific buying with no problems online these last few years)

Or have a professional show up with the necessary parts and make it finished and pay a price so that professional can enjoy feeding his family and perhaps someday retire with a little bit of money in the bank.

What is debt?

Is it the ability of a teenager to get a cell phone without worrying too much about what it will actually cost to feed or finance such a monster?

Will it lead to young adults waving fresh credit cards saying to each other, I can carry a higher minimum balance than you can so I can buy more stuff than you can, nyah nyah.

Now I see these young adults unable to get work in some areas. The lucky few become trained and do a good job. The rest sit on the street corner and smoke or trade underground out of sight of the Economy at large.

They do alot of walking with a occasional ride on the subway or a carjacked (Stolen) vehicle. What do you think will happen if everyone is stuck on foot, bikes and horses?


Life will become much slower and possibly no more nighttime workers except for those jobs which are vital to the Nation such as power plants.


So. A slower nation getting a good night's sleep and resting on Sunday will consume less fuel and buy more time to convert over to something else to keep things going.

Moonrajah's picture

Don't want to rain on the gloom parade, but what about synthetic oil made from gas? GTL technologies, based on Fischer-Tropsch process, has been around for ages, and recently we are seeing commercialization of this technology. Once natural oil is sustainably 100+ USD/b then we can see more of those units pop up around the world.


Suddenly all the recent tensions with Iran look much more logical. The US could soon start an operation to liberate the good people of Iran from under their current oppressive regime. The new peace-loving democracy in Iran will be executed by Halliburton and Exxon, all sponsored by the generous US taxpayers.