It's been a while since I've written about Peak Oil, but while I was busily engaged on a consulting project last week, the New York Times published a lengthy editorial on the subject, framing it as one of the two biggest risks, along with climate change, to our energy status quo. Unfortunately, the editorial itself is locked up inside Times Select, which I hope the Times will eventually realize is a lousy way to make money but a great way to reduce the influence of their editors and columnists such as Tom Friedman.
In terms of content, the editorial lays out its case in some detail, and fairly understandably. It would have been even better if it had been proofread by someone who knew when they should be saying billion instead of million or trillion, or that a human generation spans 20-25 years, not 60. But these are quibbles; otherwise, it's a useful compendium of Peak Oil thinking, referencing M. King Hubbert, Kenneth Deffeyes, and Matthew Simmons--plus skeptics such as CERA's Daniel Yergin. It touches on the year 2000 USGS study of the earth's total oil endowment and describes the uncertainties about the ability of Saudi Arabia to sustain, let alone increase their production. It also makes the key point that the critical moment is not when the earth's last barrel of oil is extracted, but when the growth of oil supply can no longer keep pace with the growth in demand. In short, if you previously knew nothing about Peak Oil, it would be a good, concise place to start.
Despite this, it includes one assertion of fact that I believe to be totally incorrect and misleading. While striking an appropriate note of skepticism about the short-term impact of hydrogen fuel cells and other advanced technologies that will take years to percolate into the system, it mistakenly lumps unconventional hydrocarbons such as oil sands into the same pot and claims, "Unconventional oil won't be available in large enough quantities to make a real difference until well down the road." In fact, Canada's oil sands operations are expected to add their second million barrels per day of output over the next five years, an increment larger than the entire current production from the Alaskan North Slope. That makes them significant in my book. Together with gas-to-liquids plants that turn natural gas into high-quality synthetic diesel, these unconventional hydrocarbons may not save us, but they have the potential to alter the Peak Oil equation in ways that Hubbert's disciples seem to have underestimated.
That doesn't mean we should be profligate in our use of oil. I have my own skepticism about the industry's ability to keep pace, but this owes little to uncertain geological timetables and more to entirely comprehensible problems of geopolitics and capital allocation. Everything I see says that, if oil supplies fall short within the next decade, it won't be because the oil isn't in the ground. It will happen because the people who own it didn't want to invite in the companies with the capital and expertise to bring it to market, or they didn't like the rule of law and split of earnings necessary to attract international investment. The consequences of that scenario would be every bit as disruptive to the global economy as Peak Oil, but they would have their roots in markets and governments, not in mysterious and intractable forces of nature.
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