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A new way of looking at ‘Peak Oil’

I was quite interested to read this article in The Times which suggested that the peak output of crude oil production would quite possibly be driven by the limits of consumer demand for the stuff, rather then the constraints of supply of oil. This idea, put forward by BP’s chief economist, Paul Davies, was that consumer demand would weaken, due to economic factors and also political factors as Western societies increasingly demand ‘cleaner’ energy solutions for their cars.

With car makers introducing alternative energy vehicles and these likely to be widespread by the end of the decade, it is quite understandable where Paul Davies is coming from. And given that the decline in existing oilfield production is less then had been thought, it is possible that supplies could continue to increase to meet the rising demand from the newly booming economies of India and China.

With alternative energy cars still very much at the prototype stage, it is unlikely that the current demand-driven spike in oil prices will slacken in the short to medium term. But I was curious to read the opinion of Times correspondent Carl Mortished. He suggested that to reach a peak in production would require global regulation, taxation, and other notions beloved of journalists. It seems to me that the reason why oil production is continuing to climb is the very global nature of the commodity; there is no government able to regulate it, and even the producer’s cartel OPEC is not very successful. It is, rather, the demands of the free market that drive the oil industry, just as it is the demands of the free market that drive auto makers to devise alternatives to gasoline powered cars.

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10 comments to A new way of looking at ‘Peak Oil’

  • Ian B

    *crossing fingers for Bussard fusion*

  • CountingCats

    The Stone Age didn’t end because of a shortage of stones: the oil age won’t end because of a shortage of oil.” (Sheik Yemani, Saudi Oil. Minister, 1973)

  • I suspect that your observation about the largest controlling factor of oil production, as well as pricing itself, is the marketplace. The second largest impact is the pricing manipulation levied by governments, in the form of the variety of taxation levied on the product during the production, refining and delivery process.

    Although there is lack of the all hallowed ‘concensus’, for whatever it’s worth, the model of petroleum origin, distribution (in nature), and long term availability is interesting, to say the least, and quite obviously a threat to the narrative of a finite resource (or, one much smaller than the russian model suggests). As such, it’s little wonder that the ‘conventional’ fossil explanation has such favor from those that find such narrative supportive of their agenda, from politicos to enviros to the petroleum industry itself.

    And speaking of the ‘energy independence’ agendas in various forms – the one rationale for doing the hard research, the commitment of resources, and the investment of treasure – overall efficiency made widely economically feasible – or in other words, better, faster, cheaper simply for the sake of better faster cheaper – just isn’t enough, I guess.

  • Alice

    Of course global oil production is going to peak.

    US oil production peaked. North Sea oil production peaked. We are dealing with finite resources. This is not a new observation. Charles Darwin (the grandson) wrote a book in 1952 about the long-term future of the human race — “The Next Million Years”. He pointed out that whether fossil fuels last 100 years or 1,000 years, humans are going to have to rely on some other source of energy for most of the next million years.

    The issues about oil (or gas, or coal) peaking are when & why. On those issues, there is no “concensus” at all.

    But given the unscientific vapidity of the “consensus” among the useful idiots about anthropogenic global warming, maybe we should look at the lack of “concensus” as a positive.

  • Gengee

    I work in the Oilfield, at the coalface so to speak. There is a large programme of New-Builds in the offing, most of which are designed to Drill in water depths exceeding 5000′. Peak Oil is here, not necessarily in volume but in easily accessible and therefore relatively cheap to extract and transport terms.
    The advent of FPSO’s has made it more viable to get the oil out of deeper water, where I am currently working we are drilling the development wells for such a beast.
    I really do not see much of a drop in oil prices even if we all start driving Hybrids, or the Bussard fusion System becomes viable and we have a relatively cheap source of electricity generation which does not rely on oil.

    Later

    Gengee

  • The Stone Age didn’t end because of a shortage of stones: the oil age won’t end because of a shortage of oil.” (Sheik Yemani, Saudi Oil. Minister, 1973)

    The stone age lasted some 1 million years … the oil age isn’t yet 150 years old. Long way to go…
    Whatever other sources of energy emerge, oil and coal will still be used in massive quantities for at least a couple of hundred years, probably more…

  • Whatever other sources of energy emerge, oil and coal will still be used in massive quantities for at least a couple of hundred years, probably more…

    Probably not. My guess is that oil will remain important for transportation for a while unless battery technology takes a big step forward but if fusion comes along, coal (and all hydrocarbon ‘grid’ generation) will vanish completely and utterly within 15-20 years tops.

  • Some physicist said once about fusion: “fusion is 50 years in the future, and always will be…”

    And batteries won’t drive planes, trucks and ships.

    Whatever innovations will appear, it will be a long time until coal and oil are completely replaced.

  • Some physicist said once about fusion: “fusion is 50 years in the future, and always will be…”

    Funny but eventually wrong.

    And batteries won’t drive planes, trucks and ships.

    Planes, no… trucks, probably… ships, well that wil also go for fusion when it happens,

    Whatever innovations will appear, it will be a long time until coal and oil are completely replaced.

    Again, not if fusion comes along… otherwise, yes.

  • I suspect that your observation about the largest controlling factor of oil production, as well as pricing itself, is the marketplace. The second largest impact is the pricing manipulation levied by governments, in the form of the variety of taxation levied on the product during the production, refining and delivery process.

    I disagree. The largest controlling factor of oil production is the political restraints on how much oil can get to the marketplace. The market is demanding a product, and politics is limiting the supply.