So Much For "Peak Oil?"

Within the last decade, technology advances have made it possible to unlock more oil from old fields, and, at the same time, higher oil prices have made it economical for companies to go after reserves that are harder to reach. With plenty of oil still left in familiar locations, forecasts that the world's reserves are drying out have given way to predictions that more oil can be found than ever before.

In a wide-ranging study published in 2000, the U.S. Geological Survey estimated that ultimately recoverable resources of conventional oil totaled about 3.3 trillion barrels, of which a third has already been produced. More recently, Cambridge Energy Research Associates, an energy consultant, estimated that the total base of recoverable oil was 4.8 trillion barrels. That higher estimate - which Cambridge Energy says is likely to grow - reflects how new technology can tap into more resources.

"It's the fifth time to my count that we've gone through a period when it seemed the end of oil was near and people were talking about the exhaustion of resources," said Daniel Yergin, the chairman of Cambridge Energy and author of a Pulitzer Prize-winning history of oil, who cited similar concerns in the 1880s, after both world wars and in the 1970s. "Back then we were going to fly off the oil mountain. Instead we had a boom and oil went to $10 instead of $100."

If this is true, if the whole concept of "peak oil" is faulty, there are enormous implications.  For starters, it means that oil consumption - and the carbon emissions emanating from that consumption - can keep increasing for many decades to come.  That's scary, considering the geopolitical implications (e.g., increased reliance on OPEC for the indefinite future).  That's also scary considering that there are 118 billion metric tons of carbon contained in the "1 trillion barrels of heavy oil, tar sands, and shale-oil deposits in places like Canada, Venezuela and the United States."
How much carbon is that?  In 2004, the world emitted 7.4 billion metric tons of carbon from the burning of fossil fuels.  Which translates as follows: 118 billion metric tons of carbon is equal to 16 more years of carbon emissions at the 2004 rate.  And that's just the carbon contained in heavy oil reserves. It does NOT count carbon contained in coal reserves, which are enormous, or in conventional crude oii reserves, which are also enormous.  In other words, given the overwhelming scientific evidence that carbon emissions from fossil fuels are causing global warming, unless we choose not to consume all those fossil fuel reserves, the planet is screwed. 

Fortunately, many people, cities, states and countries are now aware of this problem and are moving to do something about it.  Unfortunately, they are not moving nearly fast enough, with the U.S. Energy Information Administration forecasting world carbon emissions to increase nearly 75% by 2030.  The problem is, we need to be REDUCING carbon emissions not INCREASING them.  Yet current policy actions taken by governments, even the Kyoto Treaty which the United States has never ratified, let alone implemented, barely even make a dent in the problem. 

So here's the bottom line, the bitter pill to swallow: if we want to slow and ultimately stop global warming before we do horrendous damage to earth's ecosystems, we're going to need to transition rapidly away from a carbon-intensive economy.  And barring a miraculous technological breakthrough in carbon capture/sequestration, that means we're going to have to slash our fossil fuel consumption - a lot less oil, a lot less coal, a lot less natural gas. 

Can we do that?  Theoretically, it's possible, but practically it's going to be very difficult without major government action.  And by "major" I don't mean the tinkering around the edges we're engaged in now, I'm talking about a total national commitment to reducing fossil fuel consumption rapidly.  How could that possibly be accomplished?  Unfortunately, the most direct tool from an economics point of view would be a steep tax on carbon. 

Imagine $5 or even $10 per gallon gasoline.  Imagine winter heating bills many times what you pay now.  Imagine a political non-starter, as in "no way in hell will Congress ever pass something like this."  Which leaves only one other option: a crash program, along the lines of the Manhattan Project, to reduce fossil fuel consumption through energy efficiency and renewable energy sources.  

So let's get moving, right?  Seems like a no brainer, right?  Well yes, but...we're simply not doing it.  Even with Democrats in control of Congress, essentially nothing is happening.  Do NOT listen to rhetoric from the Bush Administration, or from Democrats for that matter, that we are taking serious action on global warming.  We aren't.  No sense of urgency.  No sense of leadership.  No nothing.

In conclusion - and I hate to end on such a downer - I believe that we are in deep, deep trouble.  Fossil fuel consumption and carbon emissions not only aren't peaking, they are increasing for the forseeable future.  Say goodbye polar bears - and many other species. Say goodbye coastal cities.  Say goodbye to a planet that we want to live on. 

That's the direction we're heading, inevitably and powerfully, unless we get serious right now.  And "geting serious" means no more talk of "peak oil," no more talk of "voluntary" efforts, and no more talk of growing enough corn to solve this problem. Until I stop hearing talk like that, I'll know one thing for sure - we are NOT moving to solve the problem of global warming.  So much for "peak oil."  So much for planet earth.

Comments

More nonsense from Yergin.... (ericy - 3/5/2007 11:40:04 AM)

There has been some interesting discussion recently over at www.theoildrum.com in relation to this.  The most recent one was here:

http://www.theoildru...

  A lot of people strongly suspect that the Saudi Arabia has already peaked and is declining.  North Sea (Britain & Norway) have peaked and are declining.  Mexico has peaked and is declining.  Yeah, there are a number of projects that are slated to come online soon, but when you ask the question whether they will be able to offset declines, the answer is probably not.

Here is a curve from theoildrum last week that starts to illustrate where things are now.  This is production for *all* of OPEC (total world production runs about 85million barrels/day):

Note that the Saudis have announced several production cuts in recent months - they claim that there are no markets.  Many suspect that the largest reservoir (Ghawar) in KSA has peaked and production is declining.

There are other graphs and curves in the discussion at theoildrum that show a huge increase in the number of drilling rigs in KSA:

so the declines in production show that despite heroic efforts to increase production elsewhere, overall production in KSA is still declining. 

The huge question for the future is whether we go forward by burning dirtier forms of fuel (into this I would lump coal, tar sands and oil shale), or whether we take this opportunity to move forward rapidly with renewable forms of energy coupled with strong conservation. 

Ultimately I am guessing that we are at a point where the seasonal demand for oil exceeds that which the world can supply in the summer when the demand is the highest.  In the winter when demand is lower, I suspect that production can keep up.  The outcome is that we will see wild price increases in the summer, and more moderate prices in the winter.