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Looks like peak oil after all

Kevin Drum:

In just the past ten years, capital spending by major oil companies on exploration and extraction has tripled. And the result? Those same companies are producing less oil than they were in 2004. There's still new oil out there, but it's increasingly both expensive to get and expensive to refine.

(And all the hype to the contrary, the fracking revolution hasn't changed that. There's oil in those formations in Texas and North Dakota, but the wells only produce for a few years each and production costs are sky high compared to conventional oil.)

In a hypertechnical sense, the peak oil optimists were right: New technology has been able to keep global oil production growing longer than the pessimists thought. But, it turns out, not by much. Global oil production is growing very slowly; the cost of new oil is skyrocketing; the quality of new oil is mostly lousy; and we continue to bump up right against the edge of global demand, which means that even a small disruption in supply can send the world into an economic tailspin. So details aside, the pessimists continue to be right in practice even if they didn't predict the exact date we'd hit peak oil. It's long past time to get dead serious about finding renewable replacements on a very large scale.

Yes, market timing is hard, and by hard, we mean impossible.

And so Obama's "all of the above" strategy was worse than useless -- at least when taking public purpose into account -- because we nuked renewables. Even leaving aside the polluted water and giving us the politics of a petrostate, it was worse than useless. Shocker!

NOTE Thank heavens Maine doesn't have oil, because we don't have the oil curse. But we still have global overlords and their compradors trying to ram pipelines through the state, or build LNG ports. So far, they've been stymied, but as the price of oil increases... And in addition, we're more dependent on heating oil than any other state, eeesh.

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CMike's picture
Submitted by CMike on

Paul Krugman and James "Cluster F Nation" Kunstler. I'm going with latter pair, the gloom and doom boys, not the "if we can just get the derivatives market under control" duo.

(By the way, I'll hedge a little and define "peak oil" not as the point at which oil will never again be pumped at a peak production level as occurred according to the Hubbert prediction in the United States in 1970 but rather, the point at which global production can not be increased without a significant increase in the adjusted for inflation price of oil even after removing any political noise, the key here being that the modern industrial economy grew with the price of oil remarkably steady, though being consumed in ever greater aggregate quantities, for the first eighty years since oil transitioned from being being burned in lamps for lighting to its widespread use beginning in the 1890s as a source of machine power (especially in applications related to transportation by land, sea, and eventually air).

CMike's picture
Submitted by CMike on

1910, I didn't realize it was that late when oil production for gasoline first surpassed that for kerosene. According to Wikipedia:

Consumption of incandescent light bulbs grew rapidly in the US. [after Edison launch his first electric power station in 1882]. In 1885, an estimated 300,000 general lighting service lamps were sold, all with carbon filaments. When tungsten filaments were introduced, about 50 million lamp sockets existed in the US. In 1914, 88.5 million lamps were used, (only 15% with carbon filaments), and by 1945, annual sales of lamps were 795 million (more than 5 lamps per person per year).

Big Oil, Gaia found a Daedalus to stab it with a steely knife but that didn't even phase the beast.

Here's the spectacular year to year rise in oil production through most of the twentieth century on display. I just can't imagine there can be any sort of continuation of this astounding trend decades into the twenty-first century at $20 per inflation adjusted barrel of oil or at $100/bbl. or even at $250/bbl. Hope this LINK works.

mellon's picture
Submitted by mellon on

They want to 1.) Oversell and overhype the size of the resource..

2.) Lock the USA into a unreverseable, unreasonable EU energy deal using ISDS

3.) they invest a few hundred million in two or three terminals (somewhere on each coast)

4.) they pump for a few years, energy prices double or triple and the US at the same time, loses 40 or 50 million jobs (instead of the 20 million it would otherwise)

5.) The whole country blames the whole job loss on the energy cost (instead of realizing its also automation, because then they would have to admit its permanent. )

6.) the US petitions to stop exporting LNG but- oops, there's that pesky TTIP, we're going to have to pay the EU, a trillion dollars now. (the potential worth of the resource if it wasnt actually about to run out (Shhhh!)

7.) because of the huge fine, we're going to have to put off single payer for another 20 years and instead offer assisted suicide or cryosleep for people who can't afford insurance in case their families come up with the dough.. Storage will only be a few hundred bucks a month.

8.) The Free Market System triumphs again!

9.) The US and EU energy companies split the take.

BruceMcF's picture
Submitted by BruceMcF on

... all they have to do is to "push to have their interests represented" and then follow their interests at each step of the way, and given our thoroughly corrupted political system, Grand Scams are a "natural" self-organizing outcome.

In a less corrupted system, it would take a massive criminal-mastermind conspiracy to pull off what is just the outcome of hundreds of run of the mill business conspiracies under our status quo establishment.

CMike's picture
Submitted by CMike on

in all of this but your 4) and 5) sure do appear to be where we're headed. Ultimately, automation will be the dominant factor contributing to your predicted outcome but in the meantime the consequences of anti-protectionism vis a vis labor in the U.S. will be playing a significant role in bringing about this state of affairs.

(Jeremy Rifkin since forever -i.e. the mid-90s- and, of all people, David Atkins at Hullabaloo in the last year or so are two people who are writing about these subjects. Is there a particular book you would recommend reading or commentator you would recommend following on the subject of the coming impact of automation and other technologies on the demand for labor?) [LINK]

Submitted by lambert on

California is the trendsetter so if CA Democrats are focusing on automation that is so not good news

BruceMcF's picture
Submitted by BruceMcF on

And note that the argument is excessively generous to the peak oil optimists, since it accepts in passing redefining terms to "win" a debate ... the "slow growth in oil production" is based on adding into "oil production" energy resources that were not part of the technical analysis underpinning the peak oil prediction. When the terms are restricted to the actual oil that "peak oil" was referring to, its not growing at all.

Getting people to buy into shifting the goal posts may be "winning the debate" in a public relations sense, but it is most clearly not "winning the debate" in a "hypertechnical" sense.