[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