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Peak Oil Matters

A fresh perspective on the concept of peak oil and the challenges we face


Tag: Richard Heinberg





The essential problem is not just that we are tapping the wrong energy sources (though we are), or that we are wasteful and inefficient (though we are), but that we are overpowered, and we are overpowering nature – Richard Heinberg, from the Introduction to ENERGY

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If you read nothing else about peak oil in these next few days, Kurt Cobb’s article about/review of Richard Heinberg’s latest book* is the one: continue reading…






An observation worth noting … and pondering, from Richard Heinberg:

The oil problem can be summed up simply: Fossil fuel supply boosters know how to add, but they’ve forgotten how to subtract. Seeing new production coming on line from North Dakota, for example, they extrapolate this growth trend far into the future and forecast oil independence for the nation. But most US oilfields are seeing declining rates of production, and individual wells in North Dakota have especially rapid decline rates (up to 90 percent in the first year). Do the subtraction properly, and it’s plain that net supplies will continue growing only if drilling rates climb exponentially. That, again, spells higher production costs and higher oil prices. If the economy cannot support higher prices, and hence high drilling rates, then net total rates of production will drop. The one future that is impossible to achieve in any realistic scenario—low prices and high production rates—is precisely what is being promised by politicians and oil industry PR hacks.

Glossing over facts, details, reality … favored strategies for those whose livelihood depends on maintaining the illusion that our oil supply problems have gone the way of the dinosaurs. It succeeds in large part because we’re conditioned to diminish if not completely ignore/deny problems which don’t seem to be fully-formed today, or are simply too large with so much potential for havoc to wrap our minds around them.

Those advocates of nearly-unlimited oil abundance and energy independence at last mention the  high oil prices supporting the great shale/tight oil boom and then quickly zoom off into elaborate assessments of why the Peak Oil “theory” is still so much nonsense. But let’s back the bus up just a bit.

High oil prices are the very reason why the oil industry is going great guns in exploring and extracting the “vast” reserves here in the United States. How many of us non-oil industry officials are similarly delighted by high oil prices? For those of us who still consider basic math to be part of the world we live in and subject to exactly zero dispute about its usefulness, when we are allocating larger portions of a fixed budget on one necessity, less is available for everything else. This is a good thing for us?

Our standard response is that we all start cutting back here and there, including how much fossil fuel we use. And if you are are a seller, and fewer people are buying what you sell, keeping prices high isn’t exactly a winning strategy. So Mr. Seller drops his prices to entice more of you to buy his stuff, and the dominoes begin to tumble.

And when oil prices drop, Mr. Oil Seller stops investing and producing and extracting, just as Richard Heinberg explained. And when Mr. Oil Seller isn’t supplying the same amounts, oil abundance stops being oil abundance.

It’s really not that complicated once both sides of the story are offered to us for consideration. Who benefits when only part of the story is told? It’s not me, and I’m pretty damn certain it’s not you, either.

Perhaps some honest discussion and a bit of planning might be a good idea?

~ My Photo: Coffins Beach, Gloucester MA – 07.27.10





An observation worth noting … and pondering, from Richard Heinberg:

The Peak of Peak-Oil Denial
Costs of production are rising inexorably—and fairly rapidly—as a result of replacement of conventional crude with oil produced from horizontal drilling and hydro-fracturing, ultra deepwater drilling, and tar sands. … Today, most new projects look uneconomic if oil prices are anything shy of $85. Ironically, pundits often depict this shift as a miraculous new development that promises oil aplenty till kingdom come.
During the past few months, op-eds and talking heads have announced the death of ‘the peak oil theory’ even as actual world crude production rates remain stagnant and oil prices soar. The fallacy in this thinking arises from a confusion of reserves with production rates. With oil prices so high, staggering quantities of low-grade hydrocarbons become theoretically profitable to produce. It is assumed, therefore, that the scarcity problem has been solved. If we extract enough of these low-grade resources, that will bring oil prices down! But of course, if the oil price goes down then these unconventional sources become uneconomic once again and effectively cease to be countable as reserves.

That was written back in March, and not much has changed. Recent posts of mine have discussed this over-exuberant cheerleading and the reasons why the news about our “vast abundance” is not actually all that good in the long-term. Facts tend to change the dynamics of feel-good stories when those messages aren’t accompanied by … all the facts! What a concept….

The fact that oil prices are still high (recent drops notwithstanding) is usually positioned as good news by those in the industry and the gushing media personnel who are determined to tell a happy tale no matter what the truth. As Richard suggested in the quote above, high prices make it economically feasible for oil producers to invest in “advanced” technologies such as the not-so-new fracking efforts.

These good-news articles, however, never mention that high prices are not nearly such good news for consumers. So when we respond by cutting back, thus dropping prices in the market [Supply and Demand 101], the high prices that made drilling and exploration and production (and all the other aspects needed to get the fossil fuels from there to us and our automobiles) such a good deal for the oil industry are no longer such a good deal.

And just like us lowly consumers, when prices rise for goods, raw materials, etc., etc. needed by business and industry to do what they do, they stop doing as much of what they had been doing. And the other basic component of Supply and Demand 101 in this little story is that if the great god Oil Industry wants to keep its doors open, prices have to come down so we buy what they sell.

They can’t have it both ways: if high prices are good for them, low prices cannot also be good for them. And when they are in the low prices phase of this cycle, invest and production slows down or stops. And when that happens, guess what? There’s less for us to use until those prices kick into gear once more, and on and on it goes.

One problem rarely mentioned is that the investments and efforts needed to extract the already more-expensive unconventional sources don’t turn themselves back on at the flick of a switch. However ready the industry may be to rush back in and resume drilling and fracking and extracting, it takes some time, and more expense, which of course means….

And have I mentioned we’re dealing with finite resources to begin with, and/or that these vast and abundant reserves praised to the high heavens aren’t exactly located a couple of inches below some loose topsoil, all bundled up in neat little pods of oil pools? Think the facts about extracting these unconventional tight oil/tar sands reserves suggest some additional time, money, and effort might be required? None of that is free, either.

Is this is our best long-term strategy?

~ My Photo: Louisiana bayou – 03.17.10

Just want to pass along a quick note and a plug (unrequested) about one of the leading lights in the Peak Oil “movement”: Richard Heinberg. (He may not wish to be identified as such, given that his role is much greater than as merely a proponent of Peak Oil, but he is nonetheless a deservedly-influential advocate in energy-related matters.)

I had the pleasure of meeting him last week as he gave a presentation in a neighboring town. He was as informed, informative, and generous with his time as I had hoped/expected.

Mr. Heinberg offers a compelling message about the challenges we face, and a solid understanding of the facts that suggest we are in for some significant changes to how we lead our lives. Anyone who has the chance to hear him speak is strongly encouraged to take advantage of the opportunity.

I will be away most of these next two weeks (it’s time to re-locate our two out of state college-attending daughters), but hope to be back to multiple postings each week shortly after May 15th.