Energy Department changes tune on peak oil

It’s official—the era of cheap oil is over 44

This was originally published on TomDispatch and is republished here with Tom’s kind permission.

Every summer, the Energy Information Administration (EIA) of the U.S. Department of Energy issues its International Energy Outlook (IEO)—a jam-packed compendium of data and analysis on the evolving world energy equation.  For those with the background to interpret its key statistical findings, the release of the IEO can provide a unique opportunity to gauge important shifts in global energy trends, much as reports of routine Communist Party functions in the party journal Pravda once provided America’s Kremlin watchers with insights into changes in the Soviet Union’s top leadership circle.

As it happens, the recent release of the 2009 IEO has provided energy watchers with a feast of significant revelations.  By far the most significant disclosure:  the IEO predicts a sharp drop in projected future world oil output (compared to previous expectations) and a corresponding increase in reliance on what are called “unconventional fuels”—oil sands, ultra-deep oil, shale oil, and biofuels.

So here’s the headline for you:  For the first time, the well-respected Energy Information Administration appears to be joining with those experts who have long argued that the era of cheap and plentiful oil is drawing to a close.  Almost as notable, when it comes to news, the 2009 report highlights Asia’s insatiable demand for energy and suggests that China is moving ever closer to the point at which it will overtake the United States as the world’s number one energy consumer. Clearly, a new era of cutthroat energy competition is upon us.

Peak Oil Becomes the New Norm

As recently as 2007, the IEO projected that the global production of conventional oil (the stuff that comes gushing out of the ground in liquid form) would reach 107.2 million barrels per day in 2030, a substantial increase from the 81.5 million barrels produced in 2006.  Now, in 2009, the latest edition of the report has grimly dropped that projected 2030 figure to just 93.1 million barrels per day—in future-output terms, an eye-popping decline of 14.1 million expected barrels per day.

Even when you add in the 2009 report’s projection of a larger increase than once expected in the output of unconventional fuels, you still end up with a net projected decline of 11.1 million barrels per day in the global supply of liquid fuels (when compared to the IEO’s soaring 2007 projected figures).  What does this decline signify—other than growing pessimism by energy experts when it comes to the international supply of petroleum liquids?

Very simply, it indicates that the usually optimistic analysts at the Department of Energy now believe global fuel supplies will simply not be able to keep pace with rising world energy demands.  For years now, assorted petroleum geologists and other energy types have been warning that world oil output is approaching a maximum sustainable daily level—a peak—and will subsequently go into decline, possibly producing global economic chaos.  Whatever the timing of the arrival of peak oil’s actual peak, there is growing agreement that we have, at last, made it into peak-oil territory, if not yet to the moment of irreversible decline.

Until recently, Energy Information Administration officials scoffed at the notion that a peak in global oil output was imminent or that we should anticipate a contraction in the future availability of petroleum any time soon.  “[We] expect conventional oil to peak closer to the middle than to the beginning of the 21st century,” the 2004 IEO report stated emphatically.

Consistent with this view, the EIA reported one year later that global production would reach a staggering 122.2 million barrels per day in 2025, more than 50% above the 2002 level of 80.0 million barrels per day.  This was about as close to an explicit rejection of peak oil that you could get from the EIA’s experts.

Where Did All the Oil Go?

Now, let’s turn back to the 2009 edition.  In 2025, according to this new report, world liquids output, conventional and unconventional, will reach only a relatively dismal 101.1 million barrels per day.  Worse yet, conventional oil output will be just 89.6 million barrels per day.  In EIA terms, this is pure gloom and doom, about as deeply pessimistic when it comes to the world’s future oil output capacity as you’re likely to get.

The agency’s experts claim, however, that this will not prove quite the challenge it might seem, because they have also revised downward their projections of future energy demand.  Back in 2005, they were projecting world oil consumption in 2025 at 119.2 million barrels per day, just below anticipated output at that time.  This year—and we should all theoretically breathe a deep sigh of relief—the report projects that 2025 figure at only 101.1 million barrels per day, conveniently just what the world is expected to produce at that time.  If this actually proves the case, then oil prices will presumably remain within a manageable range.

In fact, however, the consumption part of this equation seems like the less reliable calculation, especially if economic growth continues at anything like its recent pace in China and India.  Indeed, all evidence suggests that growth in these countries will resume its pre-crisis pace by the end of 2009 or early 2010.  Under those circumstances, global oil demand will eventually outpace supply, driving up prices again and threatening recurring and potentially disastrous economic disorders—possibly on the scale of the present global economic meltdown.

To have the slightest chance of averting such disasters means seeing a sharp rise in unconventional fuel output.  Such fuels include Canadian oil sands, Venezuelan extra-heavy oil, deep-offshore oil, Arctic oil, shale oil, liquids derived from coal (coal-to-liquids or CTL), and biofuels.  At present, these cumulatively constitute only about 4% of the world’s liquid fuel supply but are expected to reach nearly 13% by 2030.  All told, according to estimates in the new IEO report, unconventional liquid production will reach an estimated 13.4 million barrels per day in 2030, up from a projected 9.7 million barrels in the 2008 edition.

But for an expansion on this scale to occur, whole new industries will have to be created to manufacture such fuels at a cost of several trillion dollars.  This undertaking, in turn, is provoking a wide-ranging debate over the environmental consequences of producing such fuels.

For example, any significant increase in biofuels use—assuming such fuels were produced by chemical means rather than, as now, by cooking—could substantially reduce emissions of carbon dioxide and other greenhouse gases, actually slowing the tempo of future climate change.  On the other hand, any increase in the production of Canadian oil sands, Venezuelan extra-heavy oil, and Rocky Mountain shale oil will entail energy-intensive activities at staggering levels, sure to emit vast amounts of CO2, which might more than cancel out any gains from the biofuels.

In addition, increased biofuels production risks the diversion of vast tracts of arable land from the crucial cultivation of basic food staples to the manufacture of transportation fuel.  If, as is likely, oil prices continue to rise, expect it to be ever more attractive for farmers to grow more corn and other crops for eventual conversion to transportation fuels, which means rises in food costs that could price basics out of the range of the very poor, while stretching working families to the limit.  As in May and June of 2008, when food riots spread across the planet in response to high food prices—caused, in part, by the diversion of vast amounts of corn acreage to biofuel production—this could well lead to mass unrest and mass starvation.

A Heavy Energy Footprint on the Planet

The geopolitical implications of this transformation could well be striking. Among other developments, the global clout of Canada, Venezuela, and Brazil—all key producers of unconventional fuels—is bound to be strengthened.

Canada is becoming increasingly important as the world’s leading producer of oil sands, or bitumen—a thick, gooey, viscous material that must be dug out of the ground and treated in various energy-intensive ways before it can be converted into synthetic petroleum fuel (synfuel).  According to the IEO report, oil sands production, now at 1.3 million barrels a day and barely profitable, could hit the 4.4 million barrel mark (or even, according to the most optimistic scenarios, 6.5 million barrels) by 2030.

Given the IEA’s new projections, this would represent an extraordinary addition to global energy supplies just when key sources of conventional oil in places like Mexico and the North Sea are expected to suffer severe declines.  The extraction of oil sands, however, could prove a pollution disaster of the first order.  For one thing, remarkable infusions of old-style energy are needed to extract this new energy, huge forest tracts would have to be cleared, and vast quantities of water used for the steam necessary to dislodge the buried goo (just as the equivalent of “peak water” may be arriving).

What this means is that the accelerated production of oil sands is sure to be linked to environmental despoliation, pollution, and global warming.  There is considerable doubt that Canadian officials and the general public will, in the end, be willing to pay the economic and environmental price involved.  In other words, whatever the IEA may project now, no one can know whether synfuels will really be available in the necessary quantities 15 or 20 years down the road.

Venezuela has long been an important source of crude oil for the United States, generating much of the revenue used by President Hugo Chávez to sustain his social experiments at home and an ambitious anti-American political agenda abroad.  In the coming years, however, its production of conventional petroleum is expected to fall, leaving the country increasingly reliant on the exploitation of large deposits of bitumen in the eastern Orinoco River basin.  Just to develop these “extra-heavy oil” deposits will require significant financial and energy investments and, as with Canadian oil sands, the environmental impact could be devastating.  Nevertheless, successful development of these deposits could prove an economic bonanza for Venezuela.

The big winner in these grim energy sweepstakes, however, is likely to be Brazil.  Already a major producer of ethanol, it is expected to see a huge increase in unconventional oil output once its new ultra-deep fields in the “subsalt” Campos and Santos basins come on-line.  These are massive offshore oil deposits buried beneath thick layers of salt some 100 miles off the coast of Rio de Janeiro and several miles beneath the ocean’s surface.

When the substantial technical challenges to exploiting these undersea fields are overcome, Brazil’s output could soar by as much as three million barrels per day.  By 2030, Brazil should be a major player in the world energy equation, having succeeded Venezuela as South America’s leading petroleum producer.

New Powers, New Problems

The IEO report hints at other geopolitical changes occurring in the global energy landscape, especially an expected stunning increase in the share of the global energy supply consumed in Asia and a corresponding decline by the United States, Japan, and other “First World” powers.  In 1990, the developing nations of Asia and the Middle East accounted for only 17% of world energy consumption; by 2030, that number, the report suggests, should reach 41%, matching that of the major First World powers.

All recent editions of the report have predicted that China would eventually overtake the United States as number one energy consumer.  What’s notable is how quickly the 2009 edition expects that to happen.  The 2006 report had China assuming the leadership position in a 2026-2030 timeframe; in 2007, it was 2021-2024; in 2008, it was 2016-2020.  This year, the EIA is projecting that China will overtake the United States between 2010 and 2014.

It’s easy enough to overlook these shifting estimates, since the reports don’t emphasize how they have changed from year to year.  What they suggest, however, is that the United States will face ever fiercer competition from China in the global struggle to secure adequate supplies of energy to meet national needs.

Given what we have learned about the dwindling prospects for adequate future oil supplies, we are sure to face increased geopolitical competition and strife between the two countries in those few areas that are capable of producing additional quantities of oil (and undoubtedly genuine desperation among many other countries with far less resources and power).

And much else follows:  As the world’s leading energy consumer, Beijing will undoubtedly play a far more critical role in setting international energy policies and prices, undercutting the pivotal role long played by Washington.  It is not hard to imagine, then, that major oil producers in the Middle East and Africa will see it as in their interest to deepen political and economic ties with China at the expense of the United States.  China can also be expected to maintain close ties with oil providers like Iran and Sudan, no matter how this clashes with American foreign policy objectives.

At first glance, the International Energy Outlook for 2009 hardly looks different from previous editions: a tedious compendium of tables and text on global energy trends.  Looked at another way, however, it trumpets the headlines of the future—and their news is not comforting.

The global energy equation is changing rapidly, and with it is likely to come great power competition, economic peril, rising starvation, growing unrest, environmental disaster, and shrinking energy supplies, no matter what steps are taken.  No doubt the 2010 edition of the report and those that follow will reveal far more, but the new trends in energy on the planet are already increasingly evident—and unsettling.

Michael T. Klare is a professor at Hampshire College and an author, most recently, of Rising Powers, Shrinking Planet: The New Geopolitics of Energy.

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  1. aletho Posted 1:37 pm
    11 Jun 2009

    How long can this blowhard alarmist keep taking advantage of people's fear. Over the next 20 years non-conventional oil will increase from 4% to 13% of total consumption. Non-conventional oil includes offshore oil that costs under $20/barrel to produce. There are many times more non-conventional oil reservs than all conventional oil producesd to date. There's no crisis other than eventually people will catch on and stop buying Klare's books.

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  2. lynda9254 Posted 2:24 pm
    11 Jun 2009

    I think your right.  Oil will continue to go up here again.  And yes, who would have thought that China would outrank us in the need for oil....  It's here and supply is diminishing.  I sure hope the alternatives are in place in time before the outrage of prices go up again. Lynda

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  3. Clifford Wells's avatar

    Clifford Wells Posted 4:50 pm
    11 Jun 2009

    Great story-line and thanks.  I'm a little confused why deepwater oil & gas is considered "unconventional" but whatever, it seems to be the wave of the future.  Major finds Cuba, interestingly, are in the works in addition to Brazil, the new Thunderhorse rig of New Orleans, and even some finds in Mexico deepwater that PEMEX might seek some financing.  I know it is taboo to mention such a thing here, but the Russians are convinced there is a vast pool of oil under the North Pole somewhere.In am no defender of Big Oil but the technology is incredible, such as using robots miles deep in the ocean to lay pipes and weld them together.  It's just the price that has to be right.  As long as there are fools who will pay upwards of $80 per barrel, these deepwater projects will do well, since they are massive findings.  The only solice is whether clean energy can price the deepwater oil and gas out of the market.  I mean, that's pretty much what it comes down to.Why did I mention Cuba?  They might have reserves of TWICE as much oil as all of the current US estimates.  Interestingly, one reservoir is about 100 miles off Florida, where there is a moratorium against any drilling in US waters.  Due to embargo issues, US companies cannot participate in these deals.  Suffice it to say, the North Cuban Basin has rocked the globe from energy and policy perspectives. Fittingly, there are large reservoirs in the deepwaters of the Eastern Gulf off Florida, but Congress won't all the MMS to lease and tracts there either.  One looks very promising, to the northwest of Cuba which could be shared by the US and Cuba because of the was the EEZ line is mapped.  In a major boondoggle, Cuba could end up flooding the market with cheap oil that we can't even drill, and make a heck of a lot of money off it.  If China bids up the price for oil, they will get it and not us.  It almost sounds existential, like 'Waiting for Godot.'In sum, I agree with the EIA and international reports to a cretain extent, although the elasticity between actual production, price, suplly, and demand seem all speculative to me.  The world does not work like a steady-state model with today's assumptions all the time.  But it is obvious that if you consider Beep Oil and Gas as "conventional," we just might have a short-term glut of it!

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  4. Bart Anderson's avatar

    Bart Anderson Posted 9:48 pm
    11 Jun 2009

    Look at the numbers, my friends, and you will see why many oil companies and investors have accepted the peak oil thesis. The oil monitoring agency, the IEA, has begun to sound the alarm. The only question is exactly when oil production will peak.  Some argue that it has already peaked, but we won't know for several years.Mexican oil production has peaked, as has North Sea oil production. There are new discoveries but they aren't on a scale to materially affect the situation.Yes, there are non-conventional sources but they are MUCH more expensive to exploit, and they typically have very harmful environmental impacts (like the Canadian tar sands).   Much of the technology will not increase the amount of oil, only the speed with which the oil is extracted.Klare is only one of many researchers and analysts who espouse peak
    oil. The coverage of peak oil by the media and on the web has grown
    exponentially so that now there are 2,360,000 Google hits on "peak
    oil." When I started monitoring peak oil five years ago, there were only a few
    hundred.
    The awareness of peak oil does lag behind climate change. However, high oil prices attract people's attention in a much more immediate way. I've found that environmentalists are often not very educated about peak oil, but thinkers like Joseph Romm, James Hansen and David Suzuki understand that peak oil and climate change are inter-connected. As Tom Engelhardt wrote in his introduction to Klare's article at TomDispatch: Buckle your seatbelt, you may be going nowhere -- and it could be a very bumpy ride.Bart Anderson / Energy Bulletin 

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  5. BlackbirdHighway Posted 4:04 am
    12 Jun 2009

    Interesting read, as I'm about to unplug my electric car and drive to work. The weather is forecast to be a mostly sunny day, I should get close to 30KWH out of my solar panels today. Enough to power the car and the house. I'm not as lucky in the winter, since I don't have space for a windmill. Sure wish the utility would get their act together and switch from coal to something cleaner.We really, really need to get away from burning things for energy. It's not that hard, just a bit expensive. It's not even that expensive, really, when you consider the ultimate costs of all this ultra-deep, tar sands, processing thick, viscous stuff. Not to mention the environmental cost of dumping all this pollution into the air. Hey, I'm trying to breath that air! Would you mind not polluting it, please? 

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  6. aletho Posted 6:17 am
    12 Jun 2009

    Bart Anderson,You are irresponsibly promoting disinformation put out by scare mongers with an agenda that includes a new generation of nukes. The fact that these high priests of doom have a few kooks that are rabid followers is not impressive. Your shrill claim that nonconventional oil is "MUCH" more expensive than conventional is empty of meaning ($20/barrel is much more than $2/barrel, so what?)

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    1. ejbiederman Posted 7:54 am
      12 Jun 2009

      Aletho,You're a troll. Go away. Your shrill comment about Bart's "shrill claim" has no backing, nor credibility.  If you can explain how unconventional sources that produce at as low as 1.5-1 (ratio for say, ethanol) BOE  are not "MUCH" more expensive than conventional sources that pump oil at 100-1(ratio of a good field) barrels of oil, then by all means....

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      1. Clifford Wells's avatar

        Clifford Wells Posted 8:56 am
        12 Jun 2009

        Well this article wasn't about Bart, but anyone worth his or her salt knows that "peak oil" is an abstract but real phenomena that described exactly what we're seeing today - the reduction in traditional, shallow drilling technologies, declining "easy" reserves, brine intrusion into oil fields, the preponderance of very high-sulfur crude, nationalizing of energy stocks, and "whacky economics" for lack of a better phrase.  Peak oil doesn't mean we're out of oil, it's just that we can't get to what is left.  So I didn't mind Bart's comments so much.Take that in context with what is happening today.  There are about 5,000 huge ship tankers that are mothballed because the recession has caused a dramatic reduction in oil demand.  Some tankers are being used to simply store crude oil and oil products because there is a glut.  A reduction in production, with increasing storage, has driven oil futures from the high $40s to the low $70s today, a freaky thing but it is true.  That means that there is an expectation that the the global glut of oil might be over.Or is it?  China has been hoarding and storing strategic commodities such as crude at an alarming rate, which tends to artificially prop up the cost of crude oil.  An equal number of economists think that this is a inherently risky move, since one day they won't be able to store much of anything - and the global recession is expected to continue for quite a while, shrinking economies about -3 percent per year for the near-term.  That's the micro-scale analysis, if one can call it that.The EIA and International Energy Agency forecasts are not as concerned with these near-term blips, but planning horizons maybe 2025 and thereafter.  I'd call that more of a macro-scale view.  The extent to why that troubles me is because crude oil is, after all, highly volatile, strategic, and by necessity, political.  A war could stand all our logic on its head.  Another bubble such as in Treasury Bonds could have rather nasty effects - or all that debt that could cause a "debt bubble."  Of course, you can't base future projections on such "what-if" things, so you do the best you can. And folks, it's not a pretty picture.  If you want to call that "peak oil," I second that motion.

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  7. aletho Posted 8:54 am
    12 Jun 2009

    EJ can't engage in intelligent dialog. Oh well, that's typical of those who rely on dogma. I never referenced ethanol nor do I promote it's development. Plentiful reserves of offshore oil around the world are being explored and developed by Petrobras which has been investing tens of billions of dollars on these new projects over a time when oil prices struggled to stay above $30/barrel. Draw your own conclusion. Grow up EJ. Learn to do a reasoned analysis. Telling those who don't share your faith to "go away" only suggests that you fear knowledge or worse that you are attempting to stiffle open debate.

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  8. aletho Posted 10:34 am
    12 Jun 2009

    In response to Clifford Wells I would just remind him that there are several times as many exploitable nonconventional reserves as all conventional oil that has been produced to date. That means well over a century, perhaps more than seven generations of present consumption. I would also remind that until the commodity and asset price bubble in the spring of 08' caused leasing rates on rigs to briefly skyrocket offshore oil has for decades been produced at a cost of $10 -$14 dollars per barrel. High sulfer oil costs a few dollars more to process and refine. It's not "easy" niether are most things. That never stopped anyone yet.

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  9. Bart Anderson's avatar

    Bart Anderson Posted 11:39 am
    12 Jun 2009

    Are with an oil company, Aletho? It looks like you just began posting comments with this article.I'm not sure what Aletho's credentials are (he doesn't have anything on his profile).  But I'll go with the researchers from multiple disciplines, from multiple parts of the political spectrum.For example, this article that appeared in a recent issue of American Scientist: Revisiting the Limits to Growth After Peak Oil (full text as PDF is here). Or you might look at the recent report from the International Energy Agency (IEA), reported on here).Contrary to what Aletho maintains, the peak oil thesis is really not controversial. Aletho's facts about nonconventional reserves and the prospects for finding new reserves are rather strange, and not widely shared. Some of the oil industry PR people make similar claims.Bart Anderson / Energy Bulletin

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    1. ejbiederman Posted 9:19 am
      15 Jun 2009

      Bart,To be fair, I only opened an account to call the poster a troll =)At first I thought, why bother.  There is absolutely no point arguing about something like this, given Aletho's first comment.  Then the idea of merely posting "troll" proved too tempting.

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  10. aletho Posted 11:50 am
    12 Jun 2009

    Bart,You make an allegation, of my being "with an oil co." that you would think most could not readily disprove in an online forum. However I can direct readers to my blog which does take an interest in environmental issues, primarily anti-nuclear.http://obamboozled.blogspot.com/As to the assertion that the establishment "credentialed" scientists are on board with Klare's disengenuous interpretations, I would refer reader's to CERA, the Cambridge Energy Research Associates are the most widely cited and accepted experts in the field and certainly would not endorse the nutty conclusions Klare draws from this report.

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  11. Bart Anderson's avatar

    Bart Anderson Posted 12:04 pm
    12 Jun 2009

    >> You make an allegationI asked a question, Aletho.  That is not an accusation. And actually some of my best friends work for oil companies! (many of the technical guys are behind the peak oil thesis, as vs the PR people).Would you be willliing to provide some background on yourself? It's not necessary, but it helps give one credibility.  I don't see much bio on your blog.CERA are actually consultants to the oil industry. They published a skeptical report on peak oil which was not made publicly available.  They do not make the data available on which they base their forecasts. So although CERA's opiinions are frequently mentioned in the media, they do not qualify as a scientific source.Incidentally, a CERA spokesperson just admitted the existence of peak oil - although he said it was because of peak demand rather than for geological reasons.  See CERA Official Acknowledges “Peak Oil is Here” There is a full discussion here: Peak oil = peak demand?. Both articles are published by ASPO-USA, a non-partisan group which includes people from industry, academia and the activist communities.Bart Anderson / Energy Bulletin

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  12. aletho Posted 12:48 pm
    12 Jun 2009

    "a CERA spokesperson just admitted the existence of peak oil" (Peak Oil Demand)Well Bart, you even admit that demand for oil may not grow exponentially forever as the alarmist projections always assume. The fact is that the fearmongers have found that by citing data that excludes nonconventional oil they can achieve the appearance of impending crisis, so they just pretend that nonconventional oil is not part of the picture and discount it altogether. This alone accounts for the deception peddled by Klare and Kuntsler. By the way, Matt Simons was on CNBC July 13, 2008 when oil prices peaked saying that oil was going "higher, maybe way higher, it's not going to collapse, it's not a bubble, not a tempory spike".How's that for credibility?As for my own credibility, which you seem to be compelled to question, I think readers can view my site and draw their own conclusions.By the way, I agree with you that oil industry folks are interested in promoting the "peak oil" myths, it's good for share prices after all.

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  13. Bart Anderson's avatar

    Bart Anderson Posted 1:38 pm
    12 Jun 2009

    Your site was started in April, Aletho, and seems to be composed mostly of complete re-posts of articles from other sources. As far as I can see, you are anonymous and have just started commenting at Grist with this article. It is legitimate to ask you for your credentials, if you want to be taken seriously.Several errors in fact:1. Peak oilers do not claim that demand for oil will grow exponentially forever. They don't particularly focus on demand, except to note the many uses oil has in our current civilization and that cheap oil is very addictive. These points aren't not unique to peak oil, but are generally accepted.2. Peak oil analysis does include nonconventional oil.  However, we do deal with it separately since exploiting nonconventional oil is a different kettle of fish from easily accessible, high quality crude.  BTW, does this mean that you and I agree with the thesis of a peak in the production of conventional oil?3. Different peak oil people say different things about the price of oil.  I think it's a sucker's bet for anyone to make short-term predictions about oil. Long-term, I think we're safer to predict rising prices ... though an economic meltdown does put a crimp in the rise.4. As a whole, the oil industry and oil-exporting countries are no fans of peak oil theory. For one thing, it means the end of their industry and encourages people to find alternatives.  Secondly, as several people in the industry have told me, it just goes counter to the can-do mentality.  // So officially, the oil companies have a line similar to yours, that fossil fuels will be the predominant fuels for the foreseeable future, and that the peak in conventional oil production will be offset by unconventional sources and new technology.  Unofficially, the geologists and engineers tend to be much more open to peak oil than the PR departments.Bart / Energy Bulletin

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  14. aletho Posted 1:55 pm
    12 Jun 2009

    Bart, Are you really so afraid of arguing the issue of peak oil that you need to redirect the discussion to ad hominem attacks?There is nothing "anonymous" or mysterious about someone that offers 300 internet postings as a point of reference.1) Many alarmists have based their fearmongering on just such erroneous assumptions.2) As long as the market value of oil exceeds the marginal cost of the preponderance of nonconventional oil there is no honest rationale for treating it differently. However the alarmists do anyhow, which makes them scammers or dupes themselves.3) Standard commodity market principles find that prices may fluctuate around the marginal cost of production, within a sometimes wide range. The price does eventually return to earth though and temporarily may result in prices below rthe cost of production for the marginal producer. Bart has not offered any reason for us to think that the cost of marginal production will soar.4) Oil industry people are generally quiet about "peak oil", they are happy to let the shills such as yourself Bart do their dirty work. Why should they sully themselves?

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  15. Bart Anderson's avatar

    Bart Anderson Posted 2:16 pm
    12 Jun 2009

    Anybody can get a blog account and copy posts from other sources. This tells us nothing about you, Aletho. On Grist, people can be anonymous - it just doesn't do much for one's credibility.The reason the cost of marginal production will rise is covered in economic geology courses. As a resource continues to be exploited, the quality of the ore or raw material declines, since we access the cheap and easy supplies first.  You will notice that the deposits that are now mentioned are in deep water, in the polar regions, or in very difficult unconventional sources like tar sands and oil shale. We are not discovering any more huge oil fields like those in Saudi Arabia. The reason to suspect that oil prices may shoot way past the cost of marginal production is because of increasing demand for oil, for example from India and China, as well as its addictive nature. When you have an infrastructure based on oil, you don't lightly switch to other energy sources.Oil has another appeal that makes it less sensitive to price increases than other commodities -- and that is its utility in making war.   A big motivation behind World War II was to get access to oil supplies. Klare's special interest (the original point of this discussion) is that rising prices and declining supplies will increase tension and possibly lead to wars. Again, this is not a particularly controversial point.

    Bart / Energy Bulletin

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  16. aletho Posted 2:50 pm
    12 Jun 2009

    Bart,Is your deception intentional or have you simply never learned that production costs generally decrease in real dollars over time due to improvements in technology?Whether or not we find new fields like the Saudi fields is of no consequence to the market price of oil. if it were, why isn't oil selling at under $2/barrel - the Saudi cost? In fact their low cost simply results in their own high level of return on investment, it has almost no impact on market pricing which is determined by the cost of the marginal producer.Your contention that pricing could vastly exceed the cost of marginal production is entirely illogical. Venezuela's Orinoco heavy oil could meet global demand all by itself if necessary, it would only be a matter time til they invest in ramped up production. The resource is proven and available just below the surface. Any long term global price hike would result in increased output from the marginal source. Because produced oil is expensive to store, production generally follows demand rather than vice versa.Your reference to oil as a "motive" for WWII is disengenuous also. While oil may have become strategic during the conflict, it certainly wasn't the motive for the war. This is utter nonsense. The allies didn't embargo oil shipping to Japan because they wanted to keep the oil for themselves but rather as a means of harrassing the Japanese because of their expansion in China and Indochina.Gosh, the people that follow along with your arguments must not be well read nor critical thinkers.

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  17. Bart Anderson's avatar

    Bart Anderson Posted 3:35 pm
    12 Jun 2009

    Signing off. See the various peak oil sites for conversation with a more respectful tone.Bart / EB

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  18. aletho Posted 3:50 pm
    12 Jun 2009

    Bart's respectful tone: "Are with an oil company, Aletho?"Nice way to open a discussion there Bart. It made it obvious that you were more interested in diverting attention than finding truth. My guess is that you and Energy Bulletin are either financed by the oil industry or the military industrial complex, they just love it that you folks are out there creating bogus rationales for endless aggressive wars. Of course I didn't let my guess get in the way of dealing with the actual issue of oil supply because that would have been a diversion from getting to the matter at hand.

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    1. Bart Anderson's avatar

      Bart Anderson Posted 4:24 pm
      14 Jun 2009

      I've discussed peak oil and energy issues for years on Gristmill.  Almost always I've ended by learning something new, and having respect for other people on the thread whether or not we agree.There are toxic styles of argumentation which destroy the possibility of mutual respect and community. They leave people feeling hopeless and confused.The best thing to do is to avoid conversation with such people. Any intereaction will be txoic.. Lesson learned.

      Permalink

      1. aletho Posted 5:30 pm
        14 Jun 2009

        Bart Anderson you should be ashamed of yourself. You peddle snake oil. You don't deserve to be treated as well as you have been on this thread. There is no honest mistake in your presentation.

        Permalink

    2. Brudaimonia Posted 5:33 pm
      14 Jun 2009

      Aletho,Where's the evidence that unconventional liquids can be produced cheaply?  I'm not saying it doesn't exist, but you have made that point several times without backing it up with evidence.If unconventional liquids are so abundant and cheap to produce, why does their production only increase to 13% of total liquids production by 2030?  Why not more?  According to IEO2009, this modest production increase is not nearly enough to meet demand, since price is projected to more than double from $61/barrel in 2009 to $130/barrel in 2030.  If unconventional is so cheap and abundant, why doesn't the EIA expect production to skyrocket at a price of $130/barrel?Or is the IEO wrong?  If so, what is your counter-evidence to support that conclusion?  What flaws in the IEO's reasoning make its conclusions about oil prices and unconventional production incorrect?Please try to avoid making claims without backing them up.  It will help the comments section to have a more informed and reasoned discussion.

      Permalink

      1. aletho Posted 6:30 pm
        14 Jun 2009

        Brudaimonia,"If unconventional liquids are so abundant and cheap to produce, why does their production only increase to 13% of total liquids production by 2030?  Why not more?"That's easy, as I pointed out earlier some conventional oil can be produced at just $2/barrel. More expensive sources will always cede as much of the market to those more economical suppliers as they can satisfy. This same dynamic applies to mining also. As demand rises, less economical mines see their production intensified to meet the marginal demand. The fact that the report that Klare cites sees non-conventional filling 13% of demand by 2030, though based on probably rosy estimates of economic growth and demand, is not alarming in the least. Put in different terms, if Venezuela were to overinvest in production, it would expose itself to the probability that Saudi Arabia would undercut it in the marketplace. Shipping a commodity like oil is a factor which allows Venezuela some space for itself, it can move product to Texas alot quicker.The answer to the second part of your question also rests on these same factors. Canada and Venezuela will always be vulnerable to having their investments become redundant in any downturn of demand. This is why Venezuela and China are cooperating in long term development that is financed by both the producer and the user. The same phenomenon explains why it took some time for global producers to replace Iraqi production, if the occupation had ended and Iraqi production could have quickly been restored they would have been left with a bad investment in infrastructure. The fact that Russia and several Central Asian Republics have just entered into ten year sales contracts with China should deflate any notion of impending production shortfalls or price spikes caused by supply problems. Or maybe the Russians have no idea how much oil there is. Nah.The question you pose is not absolutely quantifiable in any event. Proven reserves require witnessed drill results. That's very costly. Surely, the only exploration worth investing in, is to cover the needs you know about, at a price you can predict?

        Going any further - for instance, to investigate and quantify all findable reserves - would be a misapplication of resources.What would you do if you were Hugo Chavez? Prove to the world how much more oil you have than they could possibly want?You may find this table of interest:Table 3: The "O-15": Top Sources of Growth in Net Production Capacity to 2015

        (million barrels per day)

        Saudi Arabia *
        12.7-----2005
        14.3----- 2015
        1.6------------change 2005-2015




        Russia
        9.6-----2005
        11.5----- 2015
        1.9------------change 2005-2015




        Iran
        4.3----2005
        5.7----- 2015
        1.4--------change 2005-2015




        Iraq
        2.6-----2005
        5.5------2015
        2.9----- --------change 2005-2015




        Canada
        3.5----2005
        5.3----- 2015
        1.8--------change 2005-2015




        Venezuela
        3.0----2005
        4.5----- 2015
        1.5-------change 2005-2015




        UAE
        3.1----2005
        3.9----- 2015
        0.8-----------change 2005-2015




        Kuwait *
        2.9----2005
        3.7----- 2015
        0.8---------change 2005-2015




        Nigeria
        2.9----2005
        3.6----- 2015
        0.7----------change 2005-2015




        Kazakhstan
        1.2----2005
        3.1----- 2015
        1.9---------change 2005-2015




        Algeria
        2.3-----2005
        2.9----- 2015
        0.6-----------change 2005-2015




        Libya
        2.0-----2005
        2.8----- 2015
        0.8--------change 2005-2015




        Brazil
        1.8----2005
        2.6----- 2015
        0.8---------change 2005-2015




        Angola
        1.2----2005
        2.3----- 2015
        1.1---------change 2005-2015




        Azerbaijan
        0.5----2005
        1.0----- 2015
        0.5---------change 2005-2015




        O-15 totals
        53.6----2005
        72.7----- 2015
        19.1----------change 2005-2015




        Share of World Liquid Capacity
        61%
        69%



        *Includes 50 percent of the Neutral Zone.

        Source: Cambridge Energy Research Associates.

        March 2007
        http://www.cera.com/aspx/cda/public1/news/articles/newsArticleDetails.aspx?CID=8689#_ftnref2

        Permalink

      2. aletho Posted 6:30 pm
        14 Jun 2009

        Brudaimonia,"If unconventional liquids are so abundant and cheap to produce, why does their production only increase to 13% of total liquids production by 2030?  Why not more?"That's easy, as I pointed out earlier some conventional oil can be produced at just $2/barrel. More expensive sources will always cede as much of the market to those more economical suppliers as they can satisfy. This same dynamic applies to mining also. As demand rises, less economical mines see their production intensified to meet the marginal demand. The fact that the report that Klare cites sees non-conventional filling 13% of demand by 2030, though based on probably rosy estimates of economic growth and demand, is not alarming in the least. Put in different terms, if Venezuela were to overinvest in production, it would expose itself to the probability that Saudi Arabia would undercut it in the marketplace. Shipping a commodity like oil is a factor which allows Venezuela some space for itself, it can move product to Texas alot quicker.The answer to the second part of your question also rests on these same factors. Canada and Venezuela will always be vulnerable to having their investments become redundant in any downturn of demand. This is why Venezuela and China are cooperating in long term development that is financed by both the producer and the user. The same phenomenon explains why it took some time for global producers to replace Iraqi production, if the occupation had ended and Iraqi production could have quickly been restored they would have been left with a bad investment in infrastructure. The fact that Russia and several Central Asian Republics have just entered into ten year sales contracts with China should deflate any notion of impending production shortfalls or price spikes caused by supply problems. Or maybe the Russians have no idea how much oil there is. Nah.The question you pose is not absolutely quantifiable in any event. Proven reserves require witnessed drill results. That's very costly. Surely, the only exploration worth investing in, is to cover the needs you know about, at a price you can predict?

        Going any further - for instance, to investigate and quantify all findable reserves - would be a misapplication of resources.What would you do if you were Hugo Chavez? Prove to the world how much more oil you have than they could possibly want?You may find this table of interest:Table 3: The "O-15": Top Sources of Growth in Net Production Capacity to 2015

        (million barrels per day)

        Saudi Arabia *
        12.7-----2005
        14.3----- 2015
        1.6------------change 2005-2015




        Russia
        9.6-----2005
        11.5----- 2015
        1.9------------change 2005-2015




        Iran
        4.3----2005
        5.7----- 2015
        1.4--------change 2005-2015




        Iraq
        2.6-----2005
        5.5------2015
        2.9----- --------change 2005-2015




        Canada
        3.5----2005
        5.3----- 2015
        1.8--------change 2005-2015




        Venezuela
        3.0----2005
        4.5----- 2015
        1.5-------change 2005-2015




        UAE
        3.1----2005
        3.9----- 2015
        0.8-----------change 2005-2015




        Kuwait *
        2.9----2005
        3.7----- 2015
        0.8---------change 2005-2015




        Nigeria
        2.9----2005
        3.6----- 2015
        0.7----------change 2005-2015




        Kazakhstan
        1.2----2005
        3.1----- 2015
        1.9---------change 2005-2015




        Algeria
        2.3-----2005
        2.9----- 2015
        0.6-----------change 2005-2015




        Libya
        2.0-----2005
        2.8----- 2015
        0.8--------change 2005-2015




        Brazil
        1.8----2005
        2.6----- 2015
        0.8---------change 2005-2015




        Angola
        1.2----2005
        2.3----- 2015
        1.1---------change 2005-2015




        Azerbaijan
        0.5----2005
        1.0----- 2015
        0.5---------change 2005-2015




        O-15 totals
        53.6----2005
        72.7----- 2015
        19.1----------change 2005-2015




        Share of World Liquid Capacity
        61%
        69%



        *Includes 50 percent of the Neutral Zone.

        Source: Cambridge Energy Research Associates.

        March 2007
        http://www.cera.com/aspx/cda/public1/news/articles/newsArticleDetails.aspx?CID=8689#_ftnref2

        Permalink

      3. aletho Posted 6:30 pm
        14 Jun 2009

        Brudaimonia,"If unconventional liquids are so abundant and cheap to produce, why does their production only increase to 13% of total liquids production by 2030?  Why not more?"That's easy, as I pointed out earlier some conventional oil can be produced at just $2/barrel. More expensive sources will always cede as much of the market to those more economical suppliers as they can satisfy. This same dynamic applies to mining also. As demand rises, less economical mines see their production intensified to meet the marginal demand. The fact that the report that Klare cites sees non-conventional filling 13% of demand by 2030, though based on probably rosy estimates of economic growth and demand, is not alarming in the least. Put in different terms, if Venezuela were to overinvest in production, it would expose itself to the probability that Saudi Arabia would undercut it in the marketplace. Shipping a commodity like oil is a factor which allows Venezuela some space for itself, it can move product to Texas alot quicker.The answer to the second part of your question also rests on these same factors. Canada and Venezuela will always be vulnerable to having their investments become redundant in any downturn of demand. This is why Venezuela and China are cooperating in long term development that is financed by both the producer and the user. The same phenomenon explains why it took some time for global producers to replace Iraqi production, if the occupation had ended and Iraqi production could have quickly been restored they would have been left with a bad investment in infrastructure. The fact that Russia and several Central Asian Republics have just entered into ten year sales contracts with China should deflate any notion of impending production shortfalls or price spikes caused by supply problems. Or maybe the Russians have no idea how much oil there is. Nah.The question you pose is not absolutely quantifiable in any event. Proven reserves require witnessed drill results. That's very costly. Surely, the only exploration worth investing in, is to cover the needs you know about, at a price you can predict?

        Going any further - for instance, to investigate and quantify all findable reserves - would be a misapplication of resources.What would you do if you were Hugo Chavez? Prove to the world how much more oil you have than they could possibly want?You may find this table of interest:Table 3: The "O-15": Top Sources of Growth in Net Production Capacity to 2015

        (million barrels per day)

        Saudi Arabia *
        12.7-----2005
        14.3----- 2015
        1.6------------change 2005-2015




        Russia
        9.6-----2005
        11.5----- 2015
        1.9------------change 2005-2015




        Iran
        4.3----2005
        5.7----- 2015
        1.4--------change 2005-2015




        Iraq
        2.6-----2005
        5.5------2015
        2.9----- --------change 2005-2015




        Canada
        3.5----2005
        5.3----- 2015
        1.8--------change 2005-2015




        Venezuela
        3.0----2005
        4.5----- 2015
        1.5-------change 2005-2015




        UAE
        3.1----2005
        3.9----- 2015
        0.8-----------change 2005-2015




        Kuwait *
        2.9----2005
        3.7----- 2015
        0.8---------change 2005-2015




        Nigeria
        2.9----2005
        3.6----- 2015
        0.7----------change 2005-2015




        Kazakhstan
        1.2----2005
        3.1----- 2015
        1.9---------change 2005-2015




        Algeria
        2.3-----2005
        2.9----- 2015
        0.6-----------change 2005-2015




        Libya
        2.0-----2005
        2.8----- 2015
        0.8--------change 2005-2015




        Brazil
        1.8----2005
        2.6----- 2015
        0.8---------change 2005-2015




        Angola
        1.2----2005
        2.3----- 2015
        1.1---------change 2005-2015




        Azerbaijan
        0.5----2005
        1.0----- 2015
        0.5---------change 2005-2015




        O-15 totals
        53.6----2005
        72.7----- 2015
        19.1----------change 2005-2015




        Share of World Liquid Capacity
        61%
        69%



        *Includes 50 percent of the Neutral Zone.

        Source: Cambridge Energy Research Associates.

        March 2007
        http://www.cera.com/aspx/cda/public1/news/articles/newsArticleDetails.aspx?CID=8689#_ftnref2

        Permalink

      4. aletho Posted 6:30 pm
        14 Jun 2009

        Brudaimonia,"If unconventional liquids are so abundant and cheap to produce, why does their production only increase to 13% of total liquids production by 2030?  Why not more?"That's easy, as I pointed out earlier some conventional oil can be produced at just $2/barrel. More expensive sources will always cede as much of the market to those more economical suppliers as they can satisfy. This same dynamic applies to mining also. As demand rises, less economical mines see their production intensified to meet the marginal demand. The fact that the report that Klare cites sees non-conventional filling 13% of demand by 2030, though based on probably rosy estimates of economic growth and demand, is not alarming in the least. Put in different terms, if Venezuela were to overinvest in production, it would expose itself to the probability that Saudi Arabia would undercut it in the marketplace. Shipping a commodity like oil is a factor which allows Venezuela some space for itself, it can move product to Texas alot quicker.The answer to the second part of your question also rests on these same factors. Canada and Venezuela will always be vulnerable to having their investments become redundant in any downturn of demand. This is why Venezuela and China are cooperating in long term development that is financed by both the producer and the user. The same phenomenon explains why it took some time for global producers to replace Iraqi production, if the occupation had ended and Iraqi production could have quickly been restored they would have been left with a bad investment in infrastructure. The fact that Russia and several Central Asian Republics have just entered into ten year sales contracts with China should deflate any notion of impending production shortfalls or price spikes caused by supply problems. Or maybe the Russians have no idea how much oil there is. Nah.The question you pose is not absolutely quantifiable in any event. Proven reserves require witnessed drill results. That's very costly. Surely, the only exploration worth investing in, is to cover the needs you know about, at a price you can predict?

        Going any further - for instance, to investigate and quantify all findable reserves - would be a misapplication of resources.What would you do if you were Hugo Chavez? Prove to the world how much more oil you have than they could possibly want?You may find this table of interest:Table 3: The "O-15": Top Sources of Growth in Net Production Capacity to 2015

        (million barrels per day)

        Saudi Arabia *
        12.7-----2005
        14.3----- 2015
        1.6------------change 2005-2015




        Russia
        9.6-----2005
        11.5----- 2015
        1.9------------change 2005-2015




        Iran
        4.3----2005
        5.7----- 2015
        1.4--------change 2005-2015




        Iraq
        2.6-----2005
        5.5------2015
        2.9----- --------change 2005-2015




        Canada
        3.5----2005
        5.3----- 2015
        1.8--------change 2005-2015




        Venezuela
        3.0----2005
        4.5----- 2015
        1.5-------change 2005-2015




        UAE
        3.1----2005
        3.9----- 2015
        0.8-----------change 2005-2015




        Kuwait *
        2.9----2005
        3.7----- 2015
        0.8---------change 2005-2015




        Nigeria
        2.9----2005
        3.6----- 2015
        0.7----------change 2005-2015




        Kazakhstan
        1.2----2005
        3.1----- 2015
        1.9---------change 2005-2015




        Algeria
        2.3-----2005
        2.9----- 2015
        0.6-----------change 2005-2015




        Libya
        2.0-----2005
        2.8----- 2015
        0.8--------change 2005-2015




        Brazil
        1.8----2005
        2.6----- 2015
        0.8---------change 2005-2015




        Angola
        1.2----2005
        2.3----- 2015
        1.1---------change 2005-2015




        Azerbaijan
        0.5----2005
        1.0----- 2015
        0.5---------change 2005-2015




        O-15 totals
        53.6----2005
        72.7----- 2015
        19.1----------change 2005-2015




        Share of World Liquid Capacity
        61%
        69%



        *Includes 50 percent of the Neutral Zone.

        Source: Cambridge Energy Research Associates.

        March 2007
        http://www.cera.com/aspx/cda/public1/news/articles/newsArticleDetails.aspx?CID=8689#_ftnref2

        Permalink

  19. Clifford Wells's avatar

    Clifford Wells Posted 8:42 pm
    12 Jun 2009

    Hey ugh you fellow Gristians - rhymes with Christians I suppose - was that exchange of piss and vinegar between Bart and "Aletho" cool with you or what?  It's almost like they were trying to run up the hit count for this posting by (scroll way to the top) a guy named Michael Klare.  Poor Mr. Klare seems to have been forgotten by the side-smoke and friendly fire, no?I think Mr. Klare's point was that dealing with an economy dominated by peak-oil issues will be "some really freaky pizza" and that even the most stolid and solid objectors to Peak Oil Theory are starting to cave in and say ... "aw heck, it is certainly complicated and unknowable, you're probably right - pass the pizza." Sorry, I'm a part-time comedian and wannabe professor, although I've been in Texas and national energy issues since 1991, mostly the emissions side.So I might comment, if I was dealling with some undergrad kids, would be that you never know what you're going to get with freaky pizza, unstable industries, huge geo-political considerations, and a notoriously colatile market anyway.  More pizza please.  OK, to make it simple, during a period of Peak Oil, it is very difficult to predict what will happen.  Things are not so linear, plausible, correlated, or predictable, other than some wild-catters will find some big "non-conventional oil" and after a decade or so that will play out too.& & &So at the risk of sounding totally unprofessional, let me go way back to my undergrad days when I did what I thought was a masterpiece on the"Frontier Thesis" by Frederick Jackson Turner.  His theory was basically that America depended on some kind of frontier to make realize its dreams and make a buck.  By the 1900s, we can conclude that most all of the frontier has been explored and from then it was a matter of exploitation.  Former land-men turned to locomotives and other technologies - no different than the computer stuff we have today.  If we didn't have a frontier here we just borrowed one from overseas, so problem, outsourcing and offshoring worked for a while.  As we bump up against these limits, now global, the American Dream needs something else to keep it going, at least in between the droughts, depressions, wars, and so forth. The Frontier Thesis is exactly the same as what we have today with crude oil and probably explains it better than any purely economic or engineering model:  the frontier is closed.  That frontier is closed except for the most daring and dirty feats of mankind to find more and more oil, with diminishing returns as a last ghasp.  As Thomas Kuhn explained, there needs to be a "paradigm shift" to new ways of thinking about things and we hope to God the transition is smooth, although it rarely is.We certainly don't have a "new frontier" even though some ardent greens would like to think we do.  Amazingly, public opinion does seem to want something workable that is different from the crude oil model, but nothing has captivated the American Spirit.  Instead we have ardent greens screaming at people like we were a bunch of dumb freshmen in a really boring classroom.  How does one open that new frontier of knowledge, money potential, and another Amercian Dream?  In these dark, Medieval times of Peak Oil, our generation might never know - unless we get our act together real quick. 

    Permalink

  20. javaplace Posted 4:10 pm
    14 Jun 2009

    Aletho has it exactly right - conventional oil is being replaced by unconventional oil - why all the hysteria?The 'peak oil' movement is a movement that has little credibility - they've been making the same argument since the Club of Rome first made it almost 40 years ago, and a lot of water has gone under that bridge, or cheap (and not cheap) oil consumed since then.Why not a movement to price oil sustainably?  Put some economic and environmental savvy into a questionable movement makes more sense than trying to defend it. 

    Permalink

  21. Brudaimonia Posted 10:28 pm
    14 Jun 2009

    Aletho,I'm not sure which of those four identical comments I'm replying to, but let's just say all of them.The table you pasted, while interesting, does not serve as evidence that unconventional liquids belie peak oil.  All it shows is one consulting firm's projections of total liquids production for 15 countries.  The projections themselves are somewhat rosy compared with the IEO's projections (xls).  For example, CERA shows a 2005 production figure of 12.7 mmbd for Saudi Arabia, compared with the IEO's 10.7.  Similarly, CERA shows 14.3 mmbd in 2015, while the IEO shows 10.9.  Given that the CERA link is congressional testimony of one person over two years ago, and the IEO is a comprehensive document released a few weeks ago, what makes you believe the former is more convincing?The CERA testimony says little about unconventional liquids, except stating that "the cost for developing new oil and gas projects increased more than 50 percent over the last two years".  Far from offering evidence for your point, you seem to be offering evidence for the opposite: the economic unfeasibility of much new oil and gas projects.Speaking specifically of unconventional liquids, most of the increased production will come from either biofuels or tar sands.  But production of biofuels raises clearly raises food prices.  And production of tar sands relies on substantial amounts of natural gas (as this report shows), for which there are only 9 more years of production at current levels given Canada's reserves.  Tar sands are using an unsustainable amount of natural gas.So it seems unlikely that unconventional liquids alter the conclusion that peak oil is imminent or already upon us.  And as Michael Klare mentions in the article, there are all the negative externalities associated with biofuels, tar sands, oil shale, etc: air pollution, climate change, etc., for which the production of these sources should pay.

    Permalink

    1. aletho Posted 7:34 am
      15 Jun 2009

      Brudamonia,You seem to have missed the recent collapse of leasing rates for rigs and the end of price gauging on equiptment. What a silly thesis you present for scarcity; "there was once a price spike in exploration and development costs including high wages for skilled personel, ergo we will no longer ever be able to produce oil". I suppose you missed the fact that Petrobras just hired 20,000 engineers and has a twenty billion dollar line of credit from China for development of new offshore fields over the next decade. "Those silly Chinese, always chasing their tail" Eh?A further silly argument you present is that biofuels and tar sands are primary components of nonconventional sources. The fact is that offshore and heavy oil such as Venezuela's Orinoco field are where nonconventional production is increasing.The biggest pollution threat comes from the nuclear industry which probably put Klare up to his disinformation campaign.

      Permalink

      1. Brudaimonia Posted 8:57 am
        15 Jun 2009

        Aletho,Please don't quote me with things I never said.  I just pointed out what your own link said -- that capital costs for new oil and gas development had skyrocketed at the time of Yergin's testimony.  It's a reminder that capital costs are a significant issue for unconventional liquids production.What you still haven't done is offer any evidence to back up your main point: that unconventional liquids production will save the world from a peak oil crisis.  The fact that you still haven't done so is indicative that you don't know where that evidence is, and that perhaps it doesn't exist.Please stop throwing out unsupported hiring figures from one oil company to try and prove your point.  It may be true that Petrobras has been hiring a lot, but a) please show where you found this figure, and b) more importantly, this doesn't prove your point.  Just because there is some increase in investment towards deeper off-shore oil from a few companies (and clearly that seems to be the case) doesn't mean peak oil isn't either upon us now or coming up very soon.As far as what "unconventional" means, I am using the IEO's categories.  If you look at Table G3 of the IEO, "World Unconventional Liquids Production by Region and Country, Reference Case", you'll see that the primary components are indeed biofuels and tar sands, which, as I stated above, have their own associated economic, environmental, and social issues, in addition to their supply coming into question.Whether you call off-shore production conventional or unconventional, you still have yet to prove your point -- that it will mitigate the impending peak oil crisis.Please offer evidence for your claims.

        Permalink

      2. ejbiederman Posted 9:35 am
        15 Jun 2009

        Wow! If you are going to use "quotations," you should at least use them correctly.That table is rediculous.  It's from CERA.  Now you're just havin a laugh aren't ya?  CERA's track record over the last decade has been wrong, wrong, wrong.  Well, maybe in between one of those wrongs they were right.
        If you can quote CERA, I can quote Bill and Jim's Discount Oil Analysis Service. "Tell us how much oil you need, and we will get you a report that says so!"

        Permalink

  22. aletho Posted 9:30 am
    15 Jun 2009

    Brudamonia,Below are some current reports you may have missed, as I pointed out earlier it is highly fantastical for you to expect producers to spend billions on completing exploration just to mollify your insecurity:Angola's Subsalt Oil Reserves May Resemble Brazil'sDow Jones Newswires
    03/19/2009 11:59March 11, 2009Russia’s fuel reserves will be enough for 100 years, Putin says11.03.2009###"God put the oil that China needs for the next 200 years in Venezuela. Before, the United States took our oil like a 'vampire," Chavez told the Communist Party leaders to rousing applause.Ahmadinejad: Home-run King:

    July 7, 2008 · The global market is “full of oil” and rising crude prices are being artificially driven by forces trying to further their geopolitical aims, Iranian President Mahmoud Ahmadinejad said on Tuesday. “While the growth of consumption is lower than that of production and the market is full of oil, prices continue to rise and this situation is completely manipulated,” Ahmadinejad said in his address to a U.N. food summit in Rome.

    Without naming countries, the Iranian leader said “hidden and unhidden hands are at work to control the prices mendaciously to pursue their political and economic aims.”William Engdahl:As much as 60% of today’s crude oil price is pure speculation driven by large trader banks and hedge funds. It has nothing to do with the convenient myths of Peak Oil. It has to do with control of oil and its price. . . . Since the advent of oil futures trading and the two major London and New York oil futures contracts, control of oil prices has left OPEC and gone to Wall Street. It is a classic case of the ‘tail that wags the dog.’

    Permalink

    1. Brudaimonia Posted 9:59 am
      15 Jun 2009

      Aletho,Your post further confirms that you don't have solid, quantitative evidence for your main point.  Why is it so difficult to offer counter-evidence to the IEO?You also continue to try to put words in my mouth, a sign that your argument is fueled more by desperation than by rationality."Angola's Subsalt Oil Reserves May Resemble Brazil's"Did you even read this article?  It doesn't report on any proven reserves; it simply says that there may be some oil given the geology.  The article mentions that exploratory drilling hasn't yet begun, and that exploration and production are "challenging and expensive" -- further proof that some amount of off-shore oil production may not be economically feasible.The credibility levels of your other sources need no further elaboration: Vladimir Putin, Mahmoud Ahmedinejad, and a guy who thinks that oil magically seeps up from the Earth's core.Where is a peer-reviewed paper, government report, or credible report from a consortium of firms or organizations that shows that unconventional liquids will save the world from an impending peak oil crisis?

      Permalink

    2. ejbiederman Posted 10:12 am
      15 Jun 2009

      Does the extraction rate of new discoveries of deepwater oil offset the decline rate (in a net barrels/day figure) of existing conventional (onshore and off) oil fields?  I don't care if there are 10 trillion barrels off the coast of angola and in Putin's back yard.  If you can only get decent production for a couple-few years from Deepwater fields (as is historically the case) before experiencing seriously troubling decline rates -see cantarell, north sea, etc.- then your case for deepwater offshore not only replacing conventional onshore depletion but also meeting growing demand doesn't hold much water... err, oil.

      Permalink

  23. aletho Posted 10:38 am
    15 Jun 2009

    Brudamonia,As I pointed out earlier it is highly fantastical for you to expect producers to spend billions on completing exploration just to mollify your insecurity. Your possition on this subject is similar to someone saying that there is an iron crisis because nobody has proven that there is an endless spring of iron. Absolute lack of judgement on your part, silly expectation.I doubt that you have the openmindedness to take in reality but here are some more things to digest:New techniques revitalize old oil wells

    BAKERSFIELD, Calif., March 5 Old oil fields in California and elsewhere are the petroleum industry's version of the fountain of youth thanks to new extraction technology.

    The Kern River field at Bakersfield, Calif., has produced oil for 108 years and now kicks out 8 1/2 times the oil it did in the 1960s thanks to high-pressure steam injection systems. In Texas, carbon dioxide will be used to force more oil out of the 1930s-era Means field.

    Yes, there are finite resources in the ground, but you never get to that point, Chevron engineer Jeff Hatlen said. That's why peak oil is a moving target. Oil is always a function of price and technology.But some petroleum geologists believe the peak is just about here, The New York Times said Monday. I am very, very seriously worried about the future we are facing, said Kjell Aleklett of the Association for the Study of Peak Oil and Gas. It is clear that oil is in limited supplies. Still, the Cambridge Energy Research Associates recently placed recoverable oil resources at 4.8 trillion barrels, up from the 3.3 trillion barrels estimated by the U.S. Geological Survey in 2000.

    Copyright 2007 by UPI

    http://www.earthtimes.org/articles/show/36971.htmlIn fact proven oil reserves have increased in nine out of the ten most recent years, hardly a sign of a crisis. Furthermore the industry has done a spectacular job of consistently producing at levels that are adequate to meet demand. Academic studies have confirmed that last years bubble was caused by market manipulation not supply problems.As to EJs concern, perhaps he should consider that 2/3 of the earth is covered in water and almost all of it is unexplored for oil.

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    1. Brudaimonia Posted 10:57 am
      15 Jun 2009

      Aletho,You continue to fail to offer evidence for your main point, and, out of what appears to be desperation, you continue to misrepresent what I say.Just because a few old wells in North America can extract a little bit more due to pumping in water or CO2 to increase pressure doesn't mean unconventional liquids production will prevent a peak oil crisis.Far from the CERA figure of 4.8 trillion barrels of recoverable reserves (and several commenters have noted CERA's well-known bias and over-optimism), the IEO reports (xls) only 1.342 trillion proved oil reserves.I will ask, for the last time: where is your evidence for your major claim?  Please don't copy and paste any more full news articles from obscure sources several years ago.  A link to a peer-reviewed paper or credible government report specifically dealing with how unconventional or off-shore liquids production will substantially delay a peak oil crisis will do.  In all of your many comments, you have failed to produce this.  Why?Why do you continue to refuse to offer evidence for your point?  If you cannot back up what you say, I will assume that you don't disagree (for any good reason) with the fact that the world is facing an impending peak oil crisis.

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  24. aletho Posted 1:12 pm
    15 Jun 2009

    Brudamonia,You seem to be stuck in a rut. Refusing to acknowlege authoritative sources while demanding them at the same time and insisting on someone having drilled into every potential source. I suppose in your doom filled world Chavez and the US DoE are conspiring to fool us all:http://news.bbc.co.uk/2/hi/americas/4871938.stm
    BBC Newsnight
    Analysis by the US Department of Energy (DoE) - seen by Newsnight - shows
    that at $50 a barrel Venezuela - not Saudi Arabia - will have the biggest
    oil reserves in Opec.
    Venezuela has vast deposits of extra-heavy oil in the Orinoco. Traditionally these have not been counted because at $20 a barrel they were too expensive to exploit - but at $50 a barrel melting them into liquid petroleum becomes extremely profitable.
    The DoE report shows that at today's prices Venezuela's oil reserves are
    bigger than those of the entire Middle East - including Saudi Arabia, the Gulf states, Iran and Iraq.

    The US agency also identifies Canada as another future oil superpower.
    Venezuela's deposits alone could extend the oil age for another 100 years.
    The DoE estimates that the Venezuelan government controls 1.3 trillion
    barrels of oil - more than the entire declared oil reserves of the rest of
    the planet.
    Mr Chavez told Newsnight that "Venezuela has the largest oil reserves in the world. In the future Venezuela won't have any more oil - but that's in the 22nd Century."
    He will ask the Opec meeting in June to formally accept that Venezuela's
    reserves are now bigger than Saudi Arabia's...
    ---
    As you can see;
    1- If heavy oil reserves in the middle east do turn out to exceed
    Venezuela's, we have centuries of current consumption available, not
    counting the post peak (balance) of light oil. Add to that Canada's tar
    sands and the Colorado/Utah shale. Admittedly the N. American production
    would be metered by replenishment rates for required fresh water and the environmental consequences in the Rockies are enormous.
    2- Costs of production are a fraction of current market rates.
    3- There seems to be a blackout of these facts, which substantiate
    petro-abundance, in the non-financial domestic media.
    I followed "peak oil" from the begining. If you read the work from five years ago, the writers rely on the assumption that the production cost of heavy oil would be catastrophic for developing economies and result in a global crisis. As oil quadrupled from $12 to $48/barrel, I expected to read commentary acknowledging that this prediction had proven alarmist. Instead we were presented with a new generation of "peak oil" theories that simply ignore the reality of heavy oil altogether.

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    1. Brudaimonia Posted 3:59 pm
      15 Jun 2009

      Aletho,Do you seriously believe Mahmoud Ahmedinejad is an authoritative source?The Venezuelan heavy oil figure is an estimate of total reserves.  No legitimate discussion of peak oil is based on total reserves.  The question is: what is economically recoverable?Even going on what is technically recoverable, the figure for Orinoco Belt oil -- where most of the heavy oil is situated -- is only 100 to 270 billion barrels.  How much of these reserves are economically recoverable, especially given their extra heat and refining requirements, is another question.  What we do know, according to the USGS, is that:"Compared to light oil, these resources [heavy oil and natural bitumen]
      are generally more costly to produce and
      transport. Also, extra-heavy oil and natural
      bitumen must usually be upgraded by
      reducing their carbon content or adding
      hydrogen before they can be used as feedstock
      for a conventional refinery.[...]...to
      sustain commercial well production rates,
      heavy and extra-heavy oil production
      almost always requires measures to reduce
      oil viscosity and to introduce energy into
      the reservoir.[...]Extra-heavy oil commonly requires the
      addition of diluents (gas condensate, natural
      gas liquids, or light crude) to enable the oil to
      be transported by pipeline. Extra-heavy oil
      must also be chemically upgraded to reduce
      density and remove contaminants before it
      can be used as refinery feedstock. In recent
      projects in the Venezuelan Orinoco heavy oil
      belt, 1 barrel of diluents is required for every
      3 or 4 barrels of extra-heavy oil produced."So, as it turns out, the figure you cited -- 1.3 trillion barrels of oil -- is not applicable to our discussion.  You need to discount it by what is economically recoverable -- and, of course, consider all the feedstock, production, and environmental costs.Evidence that economically recoverable unconventional liquids will avert peak oil continues to elude you.

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  25. aletho Posted 4:11 pm
    15 Jun 2009

    "Compared to light oil, these resources [heavy oil and natural bitumen] are generally more costly to produce and transport."I guess in your demented view that settles that eh?Of course they refer to recoverable sources, who are you trying to fool and what is your agenda?

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  26. aletho Posted 4:17 pm
    15 Jun 2009

    Ahmadinejad:

    July 7, 2008 · The global market is “full of oil” and rising crude prices are being artificially driven by forces trying to further their geopolitical aims, Iranian President Mahmoud Ahmadinejad said on Tuesday. “While the growth of consumption is lower than that of production and the market is full of oil, prices continue to rise and this situation is completely manipulated,” Ahmadinejad said in his address to a U.N. food summit in Rome.###Matt Simons on CNBC July 13, 2008 when oil prices peaked:"oil is going higher, maybe way higher, it's not going to collapse, it's not a bubble, not a tempory spike"Who should we listen to? Hmmm... I wonder which one is reliable. Could it be the one with the STUPID track record? Oh well the faithful doomers will always know what to believe.

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