Probing Question: Is peak oil a myth?

Aug 14, 2008
Probing Question: Is peak oil a myth?
Image: Jason Jones

Unprecedented summer gasoline prices are squeezing Americans' wallets and also expanding their vocabularies, as terms like "peak oil" gain common usage.

Peak oil, economists say, is the point at which oil production maxes out: The easily available reserves are gone, and the cost of extracting and refining the remaining stuff exceeds the price it fetches on the open market. After the peak, the theory goes, production starts to fall.

Experts worry that if such a decline in production happens too rapidly, it could outpace the development of viable energy alternatives, resulting in a drastic spike in prices. Others believe that peak oil is a myth, that we could never drain the world's oil supply to the point of such a crisis.

Tim Considine, a former professor of natural resource economics at Penn State, falls somewhere in the middle.

"In any geographic area, it's a natural phenomenon for oil to peak at some point," Considine said. He pointed to the United States reaching its own oil peak in 1971. From the late 19th century until that year, the United States was the world's largest producer of crude oil, he noted. But in 1971, U.S. oil production peaked at 10 million barrels per day, and it has been dropping ever since, to a current level of 5 million barrels per day. "The peak oil theory looks at the U.S. experience and believes the world will peak also," explained Considine. "The biggest question is when."

Some economists predict the peak has already occurred; Princeton's Kenneth Deffeyes says it happened in 2005. Other experts, like Matthew Simmons, chairman of Simmons & Co. International, an energy investment company, estimate that the world is peaking right now. Exxon Mobil and other oil companies have projected a peak at 2030 or beyond.

According to Considine, the world's oil peak can be hastened or delayed by market forces and geopolitics. Lifting the U.S. ban on offshore drilling, producing oil from shale in the Green River Basin of Wyoming, allowing oil production in the Arctic National Wildlife Refuge, and coal-to-liquids production, he noted, could dramatically increase U.S. liquid fuel production, boosting it beyond the peak reached in 1971. But such a change is unlikely, he added, because a political consensus for aggressive energy production does not exist.

Today, with Saudi Arabia as the world's largest oil producer and a turbulent Middle East providing most of the world's oil, politics will undoubtedly play a role, as will economics. As rapidly developing giants like China and India require more energy to fuel their economies, the world demand for oil continues to outpace the growth in supply .

But that doesn’t necessarily mean we're going to run out of oil, Considine said. "Peak oil is a moving target," he notes. "As demand increases, prices increase. And when prices increase, companies develop and produce more oil, which can slow the peak. We're getting better at finding oil and more efficient at drilling it."

Peak oil prediction is also elusive, he added, because though oil producers announce how much oil they are putting onto the market, they don't announce when the supply from a given oil field is drying up.

When the peak hits, will a crisis ensue? Not necessarily, said Considine. "I don’t believe in the cataclysm. If you have a sharp drop in production and prices increase, you will get major substitutions in the demand for oil," he suggested.

The United States has already begun to see these substitutions, he noted, as American motorists scrap their SUVs for smaller cars in an attempt to cut down on their gasoline costs. But what would have still greater impact is a shift to energy sources beyond oil.

"The problem with the transportation sector is that oil supplies 97 percent of its energy, and there's no viable substitute -- unless the price of oil gets high enough. It's knocking at that door now, and we're starting to see tangible indicators of a switch," said Considine.

Unconventional sources of oil, such as Canadian tar sands, ultra-deep-water drilling and natural gas and coal-to-liquid plants, Considine suggested, also will help offset peak oil and help meet energy needs after the peak is hit. Among renewable energy sources, solar power, wind power, hydropower, biomass and geothermal also could lessen the world's need for oil and push the peak farther away.

No matter what alternatives emerge, he stressed, there will be an ever-increasing global demand for resources, which will impact the American lifestyle. "Americans are competing with Asia and the rest of the world not just for fuel, but for materials and food as well. That’s the world we're in," he noted.

With the world economy shifting and gasoline prices surging, Americans may find themselves asking, "when will peak oil hit, if it hasn’t already?"

"As was the case with the U.S. oil peak -- we won’t actually know until it is in our rearview mirror," said Considine.

Source: By Bethany Parker, Penn State

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User comments : 9

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guiding_light
4.8 / 5 (5) Aug 15, 2008
Petroleum is used for more than just fuel. It is a source for key industrial materials, like plastics, polymers, photoresists, pharmaceuticals, etc. In the end, it is fuel for the economies of the world.
Sepp
4.2 / 5 (6) Aug 15, 2008
Why wait until peak oil hits us (if it indeed does)?

We should be looking around for valid alternatives to oil, and converting to get off of liquid hydrocarbons.

There is a lot of natural gas in the world, but we have to convert cars to use it.

Hydrogen as a fuel is 'around the corner' and could be brought on line.

Electricity from other sources than oil or coal is possible as well. Solar could do it - the magnitude is right - and hydroelectric could be expanded to use thousands of rivers that cannot today be used. All we need to do is get off the idea that a dam is the only way to use hydro-power.

Check out this run-of-the-river experimental plant in Austria:

http://blog.hassl...lan.html

But here we are - sitting and waiting for peak oil to come along.
Soylent
5 / 5 (4) Aug 15, 2008
Petroleum is used for more than just fuel. It is a source for key industrial materials, like plastics, polymers, photoresists, pharmaceuticals, etc. In the end, it is fuel for the economies of the world.


Natural gas is as important if not more than oil as an industrial feedstock.

The technology to turn carbon monoxide and hydrogen gas from any source into petroleum products has existed since the 1920's. High value plastics, pharmaceuticals, pesticides can easily afford to pay however many hundreds of dollars per barrel it takes.

There's no particular reason we can't use lipids from plants as an industrial feedstock; they're essentially hydrocarbons with a carboxyl group stuck on the end. There's no reason you can't produce low value plastics from plant resins. There's no reason you can't use more natural fibres in clothing.

In the end, it is fuel for the economies of the world.


Is it? It's been replaced by natural gas for electricity generation, it's been replaced by natural gas for process heat, it's been partially replaced by heavy insulation, NG and electric heat pumps for home heating, it's been replaced by electric power on many railroads(particularly in Europe), we're starting to see hints of it being replaced by electric vehicles for commuting.

Oil is nowhere near as important as it once were and we're much more efficient at using it than we once were.
sendoilplease
3.3 / 5 (4) Aug 15, 2008
"The peak oil theory looks at the U.S. experience and believes the world will peak also"

Only a novice who completely misunderstands oil geology would say something so silly.

Likewise there is not a single credible source on either side of this debate that believes the US could post a new peak in oil production using any and all of the sources your "expert" sites.

You should be ashamed of yourselves Physorg. This article is full of errors and terribly wrong assumptions because you did not interview someone competent. There are plenty of a bona fide skeptics who at least actually understand the subject of oil geology. Please find one next time.
JonathanCallahan
5 / 5 (2) Aug 15, 2008
If Peak Oil is defined as 'maximum oil production' then it will, of course, arrive at the global level just it has come and gone at the US level or the level of individual fields.

For US consumers the more relevant question is when will Peak Oil Export arrive? Various producing nations are consuming more and more of this resource internally, leaving less for export markets. As the US imports 2/3 of it's oil we are very sensitive to the availability of oil in open market.

For nice visualizations of the historical trends of production, consumption, import and export in all the major producing and consuming nations you should have a look at the Energy Export Databrowser:

http://mazamascie...lExport/
guiding_light
not rated yet Aug 15, 2008


Natural gas is as important if not more than oil as an industrial feedstock.

The technology to turn carbon monoxide and hydrogen gas from any source into petroleum products has existed since the 1920's. High value plastics, pharmaceuticals, pesticides can easily afford to pay however many hundreds of dollars per barrel it takes.

There's no particular reason we can't use lipids from plants as an industrial feedstock; they're essentially hydrocarbons with a carboxyl group stuck on the end. There's no reason you can't produce low value plastics from plant resins. There's no reason you can't use more natural fibres in clothing.


I agree completely. Oil is just legacy.

In the end, it is fuel for the economies of the world.


Is it? It's been replaced by natural gas for electricity generation, it's been replaced by natural gas for process heat, it's been partially replaced by heavy insulation, NG and electric heat pumps for home heating, it's been replaced by electric power on many railroads(particularly in Europe), we're starting to see hints of it being replaced by electric vehicles for commuting.


I meant 'fuel' in a more figurative sense than actual fuel to be burnt.

Oil is nowhere near as important as it once were and we're much more efficient at using it than we once were.


Again, oil is legacy, but a dwindling one for the future no doubt. Need to get all the industries to become oil-independent, in their own ways.
guiding_light
not rated yet Aug 15, 2008
Also we need to be careful about the supply/demand issues applied to peaking natural gas and coal.

http://www.lifeaf...ash.net/
http://www.richar...tter/179
http://www.altern...e=entire
Gregor985
5 / 5 (2) Aug 15, 2008
Two comments: 1) This assumes the price will remain stable, which it does not. If demand remains relatively constant as supply dwindles, prices will rise, at which time they can exceed the cost to pump more out of the ground. Capped wells can then be re-opened. Classic case of a conclusion drawn from a static analysis... And two, pebble-bed nuclear reactors.
Sanescience
2.6 / 5 (5) Aug 15, 2008
Nature has known for millions of years that Hydrocarbons are the best and safest energy storage and transportation chemical for the Earth's environment.

The last thing we need is a bunch of science snobs again coming up with an overly complex and unnatural technology scheme. This time called HYDROGEN. Aside from hydrogen's inherent inefficiency issues, all the leaks and spills of hydrogen will rise to the upper atmosphere and react with the ozone layer. Not only will that deplete the layer, but it will inject the byproduct water into our upper atmosphere which is far more powerful green house gas than co2!

Wake up people, we need to grow our hydrocarbons with non-food crops like algae in hydroponic plants in the desert and converting green waste with modified e-choli

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