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This is a follow-up to my (only slightly) tongue-in-cheek post from last week regarding the Export Land Model [ELM) designed by petroleum geologist Jeffrey Brown and Dr. Samuel Foucher, a subject I first broached here.

Yet over and over again — on the radio, on TV, in print, in the blogosphere, and all over Washington — political ideology is   substituting for thought. [1]

And when our leaders and influential voices aren’t thinking, when facts and science become nothing more than carelessly-dismissed casual opinions, problems are sure to follow. The onset of Peak Oil and the mounting evidence of global warming are but two casualties to facts, evidence, and truth as partisan (ignorant) ideology trumps … well, you know … the facts!

ELM is a fairly straightforward and actually quite logical mathematical concept. One can quibble until the cows come home that this percentile or that mathematical construct is incorrect/fails to take into account/yadda yadda yadda. But the basic premise is little more than common sense, a point I tried to drive home using the only slightly-embellished water bottle analogy in the first part of this series.

An owner of a resource of any kind, one beneficial not only to buyers/users but to the owner itself, will of course make use of that resource to grow or otherwise benefit its own standing. Simple enough. Growth inevitably follows, and with growth comes an increase in demand, and thus an increase in the amount of the resource retained by that owner. First-grade math will then demonstrate that if I keep more of what I own rather than give to you, the end result is that you get less from me.

Not really all that difficult to follow … even the most mathematically-challenged denier shouldn’t have much cause for dispute. But then again, when reality doesn’t matter at all if it conflicts with one’s delusion and denials, then I guess I could be wrong about that! Facts are damned inconvenient at times….

Even more significant is a corresponding factor to the basic tenet of the ELM, as noted in this post.

An ELM Key Insight is that the domestic consumption of oil exporting nations will, over long time periods, tend to grow faster than the domestic oil consumption of oil importers because of the windfall effect of oil revenues, and will tend to continue to grow even past the   production peak, especially whilst net exports are positive.

In other words, in my example above, “owner’s” rate of consumption of the resource will be greater than the rate of growth exhibited by that of the established “buyers/users.” The more revenues “owner” acquires and plows back into growth or similar improvements to its own standing, the greater the “momentum” of that growth or increase … and thus the more of those resources “owner” must retain for itself to support the rapidly-expanding rates of growth. The end result is that the rate of export decline accelerates. Getting less, faster, is not good math.

A nation only exports the surplus of its vital resources. Following a peak in oil production, a nation is flush with capital after exporting more oil than ever in its history—oil that is often sold at previously unreached high prices as well–and its economy responds with growth. But with an expanding economy comes growing demand for oil, causing the nation’s domestic oil needs to cut into a supply that recently began a steady decline. These two sources of pressure on the nation’s oil surplus cause it to deplete at an ever-faster rate. Unless the nation does the unprecedented and keeps its rate of domestic consumption always at or below its exponentially declining rate of production, the surplus vanishes and exports stop. [2]

And so as our first-grade math quiz above convincingly demonstrated (complex though the concept may be), if owner keeps more for itself, less is available to everyone else, and “less” is proceeding along much quicker. Deniers should feel free to rest here if this is too much to absorb all at once.

So when this story appeared on news feeds recently (and has gotten precious little attention so far as best I can determine) and opened with this remark:

The world may have to live on a lot less Saudi Arabian crude towards the end of this decade as rampant internal demand eats into oil exports and the kingdom’s alternative energy plans may prove too little too late.

Followed a few paragraphs down by these tidbits:

‘Domestic consumption has been growing very fast as a result of rapid demographics, steady economic growth and heavy subsidies, with the latter leading to excess demand, said Ali Aissaooui, head of economic research at Arab Petroleum Investments Corporation in Saudi Arabia….

Excess demand could affect the capacity of some countries, such as Saudi Arabia, to maintain the spare capacity needed to provide flexibility to the global oil market.

The head of state oil firm Saudi Aramco admitted last year that unless internal demand is controlled the amount of oil left for export could fall by 3 million bpd to less than 7 million bpd by 2028.

But Jadwa expects exports to fall far more dramatically, with less than 5 million bpd escaping onto the global market by 2020, thanks to a 60-percent surge in internal demand to nearly 4 million bpd and barely enough new production to offset declines from older fields.

added these statistics:

According to analysts at Riyadh-based Jadwa Investment, oil demand in the kingdom rose by 22 percent between 2007 and 2010, out pacing the Chinese oil demand growth rate despite China’s economy expanding almost three times faster.

Official data shows Saudi oil consumption rose by more than 5 percent a year from 2003-2010 to an average of 2.4 million   barrels per day (bpd) in 2010. BP statistics put it closer to 2.8 million bpd last year, up 7.1 percent from 2009.

A simultaneous subsidy-driven fuel demand boom and natural gas shortage could see oil consumption hit 6.5 million barrels per day (bpd) by 2030, or over half Saudi’s current production capacity, according to a report by Jadwa published in July.

and finally offered this kicker:

The country’s domestic consumption of energy, especially oil, at very cheap prices, is also likely to rise rapidly, sharply reducing the amount of oil available for export.

It all adds up to a whooper of a problem, one surely not limited to this oil-producing nation. Any reason to think this isn’t happening in other exporting nations now seeking to provide greater opportunities for their own citizens? The end result (as that article noted) is not much of a surprise for those of who living in Fact-Land:

It’s because the decline in oil exports accelerates that the bottleneck in oil made available to importing nations occurs as a  ‘crash,’ not the steady decline, or ‘long gradual tail’ so often pictured by authorities like the IEA.

Hello!

For all the disputes and conflicts and name-calling and finger-pointing that dominates much of the (still-too-limited) public dialogue about our future supplies of fossil fuels, the clarity (and distress) of the Export Land Model is a bit much to ignore. When you add it to the mix of the other facts* suggesting we’re already past the peak in rates of oil production—the nonsense disputing evidence notwithstanding—(as I’ve discussed in recent posts), perhaps it’s time we start engaging in a much more serious, ongoing discussion about what we should be planning and thinking about and doing?

Now would be a very good time.

* As I noted in this post last December: “[E]xploration (deep water or tar sands, anyone?) and production has become more difficult and certainly more expensive, to say nothing of the resource quality. The primary exporters of oil are experiencing increasing domestic demand, and so naturally they are keeping more oil for their own national use. Hard not to understand that that just means less for everyone else. The majority of large producing oil fields are experiencing an inexorable decline in production. A poor worldwide economic environment has restricted investment in exploration and production, and there quite clearly will not be a ramp-up quickly or inexpensively. China is leading the way in higher demand for oil. On and on it goes….”

Sources:

[1] http://robertreich.org/post/11410402042; The Triumph of Dogma, and a Sad Goodbye to David Frum By Robert Reich – October 14, 2011

[2] http://www.heatingoil.com/blog/another-take-on-peak-oil-exports-not-production-indicate-crisis224/; Another Take On Peak Oil: Exports, Not Production, Indicate Crisis by Zoe Macintosh on February 25, 2010

About twenty months ago, I discussed the topic of the Export Land Model, one defined and credited to Texas petroleum geologist Jeffrey Brown and a colleague (Dr. Samuel Foucher). Its premise begins with a simple question: “What happens to oil exports in a world with constrained oil supplies?”

As I noted in that prior post: “As oil-exporting nations use the profits generated from their production and sale to grow their own economies and strengthen their industries and infrastructure—while raising the standards of living of their own citizens—they must necessarily increase the amount of oil they retain for themselves. It is, after all, their oil. (And they function with fossil fuel-based infrastructures just as the rest of us do.) Seems fairly straightforward….

“What we tend to overlook … is that as oil production begins its inexorable decline (as it already has in many instances), and as this domestic use increases, the amount of oil available to the rest of us decreases even more drastically than it does based on a straight oil production decline.”

Uh-oh!

Let’s take a look at how this might work, using very simplified math (trying to help out certain political “leaders” as much as I can), and a scenario most can relate to.

I have 1000 bottles of water available to me each day from a reservoir located entirely on my property. My family has owned this land for hundreds of years. To extract the water and bottle it costs me, on average, just ten cents per bottle. So every day, like clockwork, investing the time and money needed, I extract 1000 bottles of water from my self-contained reservoir. My cost is a measly $100.00 every day.

Unfortunately, in my little community, we never get rain … ever! (Work with me here. I’m adopting a Republican leadership strategy: facts and science are inconvenient for purposes of my story, so off they go!)

The reservoir initially held, according to most water-bottling experts, approximately 100 million bottles of water way back when. Now I’m down to about 50 million bottles. Not an insignificant amount, to be sure! The reservoir is no longer just one big lake any longer, however. Draining away all that water over all these years has of course run it down quite a bit, and now some of that water tends to slide off here and there into little seams and pockets and shallower areas. That stuff is gonna be tough to get to, let me tell you!

But so far, I don’t have a lot of trouble getting to most of the water. Some days I have to work a bit more. Truth be told, more days are like that now than ever before, but not a big deal. I’ve had to buy some fancy do-hickeys to help me pump out the water, but I’m not worried. Just wish those things didn’t cost so much! But I’ve still got a lot of water on my property! Taking a good guess about those underwater nooks and crannies and eyeballing how deep I think the reservoir is, I’m pretty damn confident that I’ve still got “quite a few years” left before squeezing out all those bottles of water gets to be a bit too much for me.

Of course, water is absolutely essential to my continuing health. I can’t do without, that’s for sure! Every single day for the last many years, I’ve needed 50 of those bottles myself for all kinds of things. But those 50 that I first take out bottles every day for myself have been more than enough. I’ve never worried that I should start skimping here and there.

Now, I do like the finer things in life. A nice riding mower sure does help me out on the property, for one! Lots of TVs, too … can’t have enough of those! I like to take trips now and then, and as for new cars—the expensive kind—well, they’re a are a real treat for me. A few years back, I bought this really terrific piece of property and built a house. I like to spend a lot of time during the summer there. Lots of nice things in that house, too. Stuff is getting expensive! So I need some revenue to make sure I have all the stuff I want.

The neat thing about all of this is that with so much water on my property, every single day I’ve been able to share my good fortune with all my neighbors. It’s a small community, and most of them, unlike me, don’t have a lot of possessions yet and not a lot of needs, but they do need their water. And wouldn’t you know that each and every day, I’ve been able to sell all my bottles of extra water to my neighbors, all of whom are delighted to pay the $1.00 per bottle I ask. Win – win!

But here’s the thing: now I’m married (time travel into the future is way cool)! And wouldn’t you know, my wife needs her own supply of water every day. Not a problem, honey! We’ve got a lot of water. But I’ve been noticing recently that I’m not always getting the full 1000 bottles out every day. (That whole “no rain” thing is damned inconvenient!) Actually, I can’t remember the last time I did, but hey! We have enough for us, so no worries!

Neighbors grumbled a bit when I had to let them know I couldn’t meet all of their demands any longer, and because it’s getting a bit more difficult for me to get the water each day (gotta do some climbing down to get to the water nowadays, what with the level dropping and all), I had to start charging them a bit more. Truth be told, I’ve been kinda raising the prices regularly for quite some time. Wish it were different, but you know how it is!

Every now and then I’ve dropped the price when it made sense to do so, but most days I just can’t. (I do like buying all that stuff, you know, and it’s not free!)

And since my neighbors all need the water and would prefer getting it from me rather than having to waste time and money and effort driving all over the place to find a few bottles here and there in some of the outlying areas of our county (and it’s usually more expensive stuff, too; and some of it tastes funny, by the way), they keep buying whatever I put out on the card table I have out in front of my house.

No need to put up any fancy store decorations or anything like that. They’re gonna show up every day no matter what, so why spend the money? You would be amazed at all the cool stuff I buy from catalogs with all the money I save by not having to do anything to get my neighbors to buy my water! I’m sure I’ll use at least most of that stuff eventually.

Good news! We have a new baby (this fact-and science-free living is just amazing)! The baby sure does demand a lot, and it turns out that Junior needs a lot of water too! Not so much right now, ‘cuz after all he’s just a baby, but it’s just common sense that once he starts to grow, I know he’ll be needing more. Not a problem, ‘cuz I got lots of extra water!

Of course, while the neighbors are happy for me and delighted that my child is getting lots of chances to do things on my dime (amazing the stuff you can buy from baby catalogs!), I don’t have quite as many water bottles available for them each day. And you know how neighbors are: they do need their water!

There’s been some additional grumbling, and a few of the neighbors are starting to add some soda or tea to their daily routines, but that only goes so far. Those Dr. Pepper baths aren’t nearly as enjoyable as you might think, so they are definitely feeling the pinch now and then, but everyone is managing so far. There’s still just about enough water in the county to take care of everyone. Don’t for how long, but we’re all good at least today.

Fact is, I’ve got too much to think about right now as it is, so I really can’t be bothered thinking about tomorrow or next week, or even next month. That kind of long-term thinking just doesn’t work for me.

Of course, I could just tell my wife and Junior that they should do without all the water each of them needs, but I’m not having that conversation! So the bottom line is that I’m going to keep keeping for myself all the water my family needs every day and sell the rest.

More good news. Baby # 2 has arrived! Junior is starting to need a bit more water now that he’s starting to grow and have friends over, and well, with another thirst to quench, it looks like my neighbors’ supply has just gotten a bit smaller. And you know, I’m climbing down a bit more these days to get at all that water, so … well, you know how it is with costs and expenses and all.

Turns out that my parents are moving in. I’ve got a lot a space, and we do have that nice big second home (and man, that’s getting expensive to maintain). I hate to do it to my good neighbors, but it looks like the price is going to creep up just a bit more, and sad to say they are all going to have to start driving a bit farther out to get all they need, cuz most of the other suppliers in the county are having their own troubles keeping up with demand. I heard that just last week twenty of our neighbors had new babies! Six more of them started up new businesses, too. Good for them! They do need some water for all those new and shiny things, of course, and well, I’ve got more mouths to feed first and foremost, so  … well, you know how it is….

In fact, we just had baby # 3! Go figure! And man, do the other two growing children have their needs. Amazing how much more water I’m having to keep for myself these days. They all take showers; friends are now coming over; they’ve got school projects and sports activities and just about all of those events require water; and … well, the truth is that I’m needing a whole lot more water for my family than ever!

Neighbors are saying the same thing about their families, too! Go figure! A few of them are lucky because they have some smaller pools on their property, so they can usually make up for the county-wide shortfalls. Quality is not always as good, of course, but they’re fine. They do complain about how hard it is to get to those other reservoirs and how much work they have to do to get their water bottles back home, but no one seems to be worrying. Of course, they don’t have as much time to do other things, because getting that water home is now a lot more time-consuming than they imagined. Some of the store owners in town are complaining too. “Everyone in town keeps telling me that they can’t buy as much from me as they used to. Excuse is that they have to spend more money on that damn water! I’ve got expenses, too!” I hear that more and more these days.

This is kinda sad, but my sister’s husband lost his job, and they are having a tough time. Since I have a lot of water, I’m helping them out by giving them all they need. That’s one less thing they have to worry about, thankfully! After all, I do have lots of water! And my nephew … wow! He goes through water likes it … water! “It’s free, Uncle, and you’ve got a lot, so what’s the big deal?” I hear that all the time now. And my own Junior has this annoying habit of not turning the shower off, either. What a dummy! Twice a day, I have to clomp up the stairs to shut the water off. Good thing I have a lot of water to waste.

I know the neighbors understand, but I know they’re not happy. What can they say, really? It’s my water! It’s costing even more to get their water from me, I’m working harder, and my own water needs just keep growing! So glad I have a lot of water! Family is getting a bit antsy, ‘though. I had to buy my parents some new furniture because they were complaining so much. I think they’re happy now. But the kids! Every day they want something else, and I know there’s gonna be hell to pay if I don’t give in now and then. Truth is, it’s a lot more now than then these days….What can I do?

How’s all this math working for you so far?

Let me run by you this opening sentence from a recent Reuters report. Might be a good idea to take two minutes and read the entire story.

The world may have to live on a lot less Saudi Arabian crude towards the end of this decade as rampant internal demand eats into oil exports and the kingdom’s alternative energy plans may prove too little too late

Welcome to the Export Land Model … the one we need to consider here in the real, fact-based world.

More to come.

[NOTE: Back in April, I followed-up on a series of posts which I first began a year ago and last discussed back in April ([links below*). In that series, I’ve discussed the apparently limitless ability of too many to either ignore facts about oil production entirely, or who instead resort to efforts where disingenuous arguments and/or half-truths serve as sole support for their positions. The net effect is that these attempts do little more than confuse their followers, who likely do not have the time, interest, or inclination to explore the truths on their own (perfectly understandable … life tends to interfere with lots of options). This post is a second another follow-up.

For starters, I’ll offer some familiar and popular contrasting views on the topic of Peak Oil and oil supply (the misleading, incorrect claim made in the first sentence below was addressed in the first of my two prior posts):

“The theory known as ‘peak oil’ has at its core the belief that we are rapidly running out of oil….

“When it comes to our day, the philosophy of scarcity comes full circle in the peak oil theory.  At its heart this philosophy of scarcity utterly fails to take into account human ingenuity, economics, technology and other important factors.  In other words, long before oil actually ran out, the price would go up so much that people would cut back on its use, find alternatives and seek out new sources of supply.” [1]

“Our abundant and rich lifestyle is all made possible from cheap and abundant energy. Our farmers use fertilizers made from natural gas. The tractors and combines burn diesel fuel as do the trucks that transport our food to either processing plants or the grocery store. Our stores are stocked with goods that are either made here or abroad. The goods arrive by planes, trains, boats or trucks that also burn fossil fuels. Everything we eat, consume, or enjoy is made possible through the production of energy. Liquid fuels have created new landscapes of concrete and asphalt highways, parking lots, shopping centers and endless urbansprawl.

“This is all made possible because of oil, the single most important source of primary energy in our world. Crude oil has changed the very tempo of modern life. Oil has increased the productivity of modern economies. It has accelerated as well as deepened the process of economic globalization….

“Oil has changed and transformed the landscape of the world.” [2]

As to the comments offered in the first quote above, I’m always struck by the glib dismissal of any consequences of declining oil production because of some combination of “human ingenuity, economics, technology and other important factors.” Economics has no impact on geology, so no matter how diligent one is in expounding economic principles, they will not create more fossil fuels. That supply is finite … period!

Certainly human ingenuity can always be counted on. Civilization has advanced to this date and in the manner it has because of that remarkable capacity demonstrated since the very dawn of mankind. And we cannot rationally dismiss the tremendous impact of technology working hand-in-hand with human ingenuity to create the marvels of this day and age.

But it is the author’s follow-up comment, repeated by too many others who discount the reality of our finite supply of economically feasible fossil fuel resources, which continues to astound me. “In other words, long before oil actually ran out, the price would go up so much that people would cut back on its use, find alternatives and seek out new sources of supply.”

The statement or a close approximation thereof is almost always uttered with the same assurance one has in stating that the sun will rise in the East tomorrow morning. Basic economic theory is absolutely correct that when the price of something goes up, almost always demand decreases until some other price equilibrium is reached or a less expensive substitute is found to be adequate. That’s not the bone I’m picking.

It’s the same glib certainty that “… people would find alternatives and seek out new sources of supply.” Just like that? I’ve yet to see any person challenging the reality of Peak Oil make a similar if not identical pronouncement who then explains in any detail whatsoever just how we go about finding these alternatives in any manner such that a transition from fossil fuel usage to the “alternatives” is achieved without considerable disruptions to our ways of living and producing.

Given the truthfulness of the second quote I offered above, do these dissidents have any conception at all of what kind of massive, monumental, nearly-inconceivable (take your pick) effort will be required to even approximate a seamless transition away from fossil fuels? Costs? Time? Research? Production to scale? Testing? Marketability? Resources? Expertise? Public understanding? Infrastructure? Pricing? Supply? Demand considerations? Just a few of the many questions that must not just be asked, but answered, before we’re all comfortably making use of “alternatives” and “new sources of supply.” And let’s not forget one of our major political parties’ relentless, shortsighted, narrow-minded efforts to cut back on investments in our future and in those very alternatives. Apparently waiting until we’ve fallen over the cliff before addressing the problem on the scale needed is the strategy du jour for some of our “leaders.” Great!

This flippant assertion that we’ll just simply move on to something else just like that does as much disservice to the future well-being of our citizens as anything I can think of. And in a too-crowded field of nonsense, that’s quite a determination! Listeners who have neither the time, nor interest, nor awareness, nor inclination to examine the matter further are then left with the “comfort” of knowing there’s nothing to be concerned about now, or any foreseeable point in time because some combination of magic “out there” by “others” will take care of this challenge before we know it! Does anyone on that side of the Peak Oil fence have any concept about the necessity of long term planning, integrity, or honesty in dealing with a challenge that will take us decades to fully adjust to? Is “get-what-I-can-today-consequences-tomorrow-be-damned” the strategy?

One final observation on this author’s recent post: “Just in the years 2007 to 2009, for every barrel of oil produced in the world, 1.6 barrels of new reserves were added.” Wonderful, except that those are not the same issues. Produced oil is not replaced by an accounting adjustment. An explanation of that accounting “trick” which created the “new reserves” is conveniently omitted from discussion. Of course, if you are going to make an argument in which truth will disprove your points as soon as the words start flowing, it sounds better if you skip the facts entirely! (See this explanation and refutation of this misleading “new reserves” meme; and read Mason Inman’s entire series on the Daniel Yergin essay in the Wall Street Journal—links provided in the article I’ve just referenced—it is well worth the read.)

The real issue is much simpler:

“… our Peak Oil problem is a case of simple mathematics.

“We stopped finding large oil fields 40 years ago. The production from those fields decreases every year and we simply can’t bring enough smaller fields on fast enough to offset those declines and grow daily oil production….

“The demand side of the equation is no help either. Population grows every year. And the most populous countries in the world grow per capita oil production every year as well. When you consider how many people are in China, India and other emerging countries and then consider how little oil each of them uses, it isn’t hard to see that changes in their lifestyle to include more oil consumption will make a big difference.” [3]

And if that won’t convince you, here’s a bit more:

“Global oil production (crude + condensate + natural gas liquids: C+C+NGL) has been on an 82 million barrel per day plateau for 7 years despite record high oil price, deployment of technology such as horizontal wells and 3D seismic, the development of new oil provinces such as offshore Angola and unconventional play concepts such as the Bakken shale in North Dakota. Oil production rose during the great oil bear market from 1980 to 1998 but has largely stagnated during the great bull run ever since….

“Any discussion about peak oil should begin with decline rates. Yergin’s organisation CERA is well aware of this fact having produced an excellent report on the subject a few years ago.

“Decline is the natural process whereby production rates fall as a result of depressurisation of the reservoir combined with water ingress into the oil-bearing strata. Oil production companies go to great lengths to mitigate for decline by injecting water or gas to maintain pressure, well maintenance programs (work overs) and by drilling new wells. Observed declines are therefore much less than natural declines but nevertheless run at a globalised average of around 5% per annum.

“With global C+C+NGL production running at 82 mmbpd, 5% observed net declines will wipe out 4.1 mmbpd capacity every year. What this means is that the oil industry must add 4.1 mmbpd new capacity every year from new field developments just to stand still. And this new capacity has to be derived from a stock of second-tier assets such as deep water Gulf of Mexico, heavy sour oil in Saudi Arabia, Arctic oil or the Bakken Shale since most of the favoured tier-one assets have already been produced.”

Just when ya think you’ve got the “farce” of Peak Oil pinned down, more of those damned facts pop up at the most inconvenient time!

* http://peakoilmatters.com/2010/10/18/more-on-the-message/

http://peakoilmatters.com/2010/07/12/peak-oil-more-fuzzy-math/

http://peakoilmatters.com/2010/11/22/still-dealing-with-peak-oil-denying-nonsense/

http://peakoilmatters.com/2010/12/20/the-stubbornness-of-denial/

http://peakoilmatters.com/2011/02/03/the-never-ending-efforts-to-skate-past-the-facts-of-peak-oil/

http://peakoilmatters.com/2011/02/10/more-never-ending-efforts-to-skate-past-the-facts-of-peak-oil/

http://peakoilmatters.com/2011/04/27/even-more-never-ending-efforts-to-skate-past-the-facts-of-peak-oil/

http://peakoilmatters.com/2011/09/26/still-more-never-ending-efforts-to-skate-past-the-facts-of-peak-oil-pt-1/

http://peakoilmatters.com/2011/10/03/still-more-never-ending-efforts-to-skate-past-the-facts-of-peak-oil-pt-2/

~~~

Sources

[1] http://blogs.marketwatch.com/fundmastery/2011/09/19/peak-oil-daniel-yergin-impending-doom/; Peak Oil, Daniel Yergin & Impending Doom By Kurt Brouwer

[2] http://www.financialsense.com/contributors/james-j-puplava/peak-oil-chronicles-when-giants-run-dry; The Peak Oil Chronicles, Part I: When The Giants Run Dry by James J Puplava CFP 02/04/2011

[3] http://seekingalpha.com/article/295546-hess-ceo-an-oil-insider-not-willing-to-sugarcoat-our-peak-oil-problem; Hess CEO: An Oil Insider Not Willing To Sugarcoat Our Peak Oil Problem by Devon Shire, September 23, 2011

[4] http://www.theoildrum.com/node/8391; Peak Oil – Now or Later? A Response to Daniel Yergin – Posted by Euan Mearns on September 21, 2011

[NOTE: Back in April, I followed-up on a series of posts which I first began nearly a year ago and last discussed back in April ([links below*). In that series, I’ve discussed the apparently limitless ability of too many to either ignore facts about oil production entirely, or who instead resort to efforts where disingenuous arguments and/or half-truths serve as sole support for their positions. The net effect is that these attempts do little more than confuse their followers, who likely do not have the time, interest, or inclination to explore the truths on their own (perfectly understandable … life tends to interfere with lots of options). This post is another follow-up.]

Another in a seeming endless list of far-Right websites recently posted their own take on what the writers called the “farce” of Peak Oil. That they later cheerfully admitted to being believers of the wacky notion of “abiotic oil” (the long-ago discredited notion offered by Russians some fifty plus years ago and heralded by apparently one academic here in the U.S. that oil essentially replenishes itself underground—perhaps via the Petroleum Fairy) is in and of itself the only reason needed to place them in the “loon” category of deniers.

Nonetheless, I found another example of the Right’s also seemingly endless capacity to twist facts into some delusional substantiation of the nuttiest perspectives, one which they no doubt hope readers will not contemplate at all. This website recently offered their take on an article by a Venezuela-based New York Times journalist—the paper’s Andean bureau chief. Raymond Learsy from the Huffington Post—whose opinion pieces will never find their way into the “open-minded” indices—not only echoed those same claims, but introduced us to the concept of “an amplitude of oil” … much more impressive than the increasingly boring “vast” or “massive” quantities, doncha think?

For reasons entirely unclear, the opinions offered were premised on the inane and entirely fact-free determination that the publication of this single article about oil exploration and production represented a dramatic reversal of “editorial policy” on the part of the Times, which has now apparently joined the club of Peak Oil deniers by virtue of this one article. Somehow, the discussion of efforts being undertaken in South America morphed into a final debunking of the “farce” of Peak Oil by a full leap into nonsense—while attributing an incredible amount of journalistic power to a gentleman in Caracas. Cool, huh? “Well, gee, if the Times is now disputing Peak Oil, then of course….” Nice try!

That the article made no attempt to debunk Peak Oil does not matter in a world where facts are only useful when convenient to an otherwise entirely dumb argument. Apparently, the mere fact that exploration is taking place is in and of itself another sufficient reason to completely discredit Peak Oil. This approach does simplify the entire concept of thinking!

Sad to sad, this is not a tactic unique to these two authors.

The Times article begins as follows, (as does the DailyBell piece):

“Brazil has begun building its first nuclear submarine to protect its vast, new offshore oil discoveries. Colombia’s oil  production is climbing so fast that it is closing in on Algeria’s and could hit Libya’s prewar levels in a few years. ExxonMobil is striking new deals in Argentina, which recently heralded its biggest oil discovery since the 1980s.”

A couple of questions jumped out at me as soon as I read that. What does it mean that Columbia “is closing in on” Algeria? Does spending an amplitude of money by “striking new deals” mean that Peak Oil is indeed a “farce?” Kinda think it proves no such thing. That oil companies are now spending so much more in so many more difficult to reach places suggests at a minimum an alternative, common sense explanation. Like basic math, facts, truth, reality, and science, however, this concept seems elusive still to too many. But if reasoned and fact-based opinion is not your thing, then that argument works!

Although facts can be so damned annoying when reality is not a concern, I nonetheless spent nearly thirty seconds on the internet to find the Energy Information Agency’s list of the top oil producers in the world. (Yes, I rested after locating an answer. Whew!)

Let me modify that introductory paragraph by inserting some [bracketed] facts and added bold/italic emphasis to lend some relevance to the article’s opening statements:

“Brazil has begun building its first nuclear submarine to protect its vast (there’s that word again!), new offshore oil discoveries. Colombia’s oil production [currently ranked 29th in the world] is climbing so fast (Wow!) that it is closing in on (look out!) Algeria’s [ranked 15th in the world at a whopping, vast, massive, amplitude-iful two whole million barrels of oil per day,  meaning that it could soon supply approximately 1/40th of the world’s daily production … pass out the smelling salts, Mildred!] and could hit Libya’s [# 17] prewar levels in a few years (which of course is easily quantified as maybe, possibly, potentially happening … uh, um, in a few years). ExxonMobil is striking new deals in Argentina [# 24], which recently heralded its biggest oil discovery since the 1980s [which, according to a Bloomberg article, is the equivalent of about 150 million barrels of shale oil ].”

Two comments on that last point. Shale oil is a wee bit different than your conventional, drill-a-hole-in-the-ground-and-out-it-comes oil. (See here and here, just for the hell of it—not the final and definitive take on shale exploration, but not to be ignored or dismissed, either.)

World production is somewhere around 85 million barrels of oil per day, so “about 150 million barrels” of an inferior substitute is in the neighborhood of not quite two entire days’ worth of annual production (“annual” is 365 days for those interested in facts. Two days is thus less than 365—if you use Planet Earth’s version of math—and by an amplitude of days.)

But if that’s not enough to convince you, the DailyBell also indicated that “One of the Forbes brothers (of magazine fame) was quoted some months ago as saying the US itself, even in the lower 48, might contain enough oil (not to mention coal and natural gas) to provide for its needs for the next 1,000 years. And that’s with the current technology.” Wow! One entire Forbes brother! Who needs proof when a Forbes brother (“of magazine fame” which is almost identical to being a petroleum expert), says we have enough fossil fuels to last a bazillion years?

Seriously? This is what passes for an intelligent contribution to our understanding of a not-easily-understood challenge everyone will be affected by (yes, even the far Right)? To what end? When do we reach Peak Nonsense?

Consistently missing from all of these supposed rebuttals to the validity of Peak Oil are two more of those pesky mathematical facts. First up: Oil fields deplete as oil is extracted. (I know! Amazing concept, isn’t it?) The consensus offered by those in the know suggest that the depletion rates of existing oil fields is anywhere from 4% to 7% per year. Ballpark, this means that any and all new discoveries must first produce about 4 – 5 million barrels of oil per day just to keep pace with depletion.

Another argument frequently advanced (as was the case in the Daniel Yergin Wall Street Journal article which prompted these posts) is that U.S. oil production has increased in recent years, from which we’re apparently expected to deduce as another refutation of Peak Oil. American production peaked four decades ago. That production has increased in the last couple of years (and not by any amplitude, by the way, although noteworthy nonetheless) should be understood in the appropriate, fact-based context. We’re nowhere near the production level which peaked some forty years ago. Good that more is being produced (although it should be noted that we’re not producing much more of the conventional oil … most of the increases are due to production of the more costly and difficult unconventional sources). Still have a long way to go….

Let’s say you were an unmarried single for a decade. From 1990 – 1999 you earned a bit more each and every year, topping out at $100,000 in 1999. Now we turn the corner into 2000, and you’re married! Unfortunately, your income has dropped to $60,000. Five years later, you’ve also got two new mouths to feed, a mortgage, a couple of car and credit card bills, and assorted other expenses unknown to you in the decade before. But let’s inject a ray of sunshine in this example and say that in the last five years, your income increased to $65,000 per year (but baby # 3 has arrived, along with a bigger mortgage and some unanticipated medical expenses tossed in for good measure). Problems solved? Income has increased, so what’s the beef? You’re making more recently than you did just a few years ago, so what exactly is your problem?

Peak oil is kinda like that in its simplest, simplest form.

I’ll let you ponder that. More still to come.

* http://peakoilmatters.com/2010/10/18/more-on-the-message/

http://peakoilmatters.com/2010/11/22/still-dealing-with-peak-oil-denying-nonsense/

http://peakoilmatters.com/2010/12/20/the-stubbornness-of-denial/

http://peakoilmatters.com/2011/02/03/the-never-ending-efforts-to-skate-past-the-facts-of-peak-oil/

http://peakoilmatters.com/2011/02/10/more-never-ending-efforts-to-skate-past-the-facts-of-peak-oil/

http://peakoilmatters.com/2011/04/27/even-more-never-ending-efforts-to-skate-past-the-facts-of-peak-oil/

http://peakoilmatters.com/2011/09/26/still-more-never-ending-efforts-to-skate-past-the-facts-of-peak-oil-pt-1/