Trust Me, I’ll Be Right Someday!
Cecil Adams (of The Straight Dope) about how the clock is ticking on the worldwide oil supply:
It’s not often that I stumble into anything on the Net that scares me, but this does. A large number of sites declare that we’re about to hit, or have hit, peak oil production and that our civilization is essentially on the clock and poised to implode in the next 40 to 60 years. Are these accurate assessments, or are they taking the worst-case scenario to extremes? –Scott Lumley, via e-mail
Sit down, Scott. What you’re describing isn’t the worst case; arguably it’s the best case. While it’s not clear when oil production will peak, or whether the peak is already past, no one doubts oil production is bound to decline–the only questions are how soon and how fast. Opinions vary (boy, do they), but my feeling is, 40 to 60 years? We should be so lucky.
Another doomsday scenario that is supposed to drive us into a frenzy of saving the world. Or something. Furrowed brows, serious tones, worried looks all around. You know the drill.
I’ve come to think of doomsday scenarios as if they were a financial instrument like cattle futures, to be bought and sold. The easiest way to get rich quick over the last 30 — or even 100 — years would have been to sell these Doomsday Futures short, so that pathologically pessimistic suckers like Paul Ehrlich could gleefully buy them up, only to watch the prices fall.
Because they never, ever come true.
So far, anyway. But even if this prediction is the one that finally comes true, I’ve no interest in joining a club that constantly gets things wrong by viewing the world through a pessimistic, static prism. Talk about tilting at windmills. Maybe they haven’t noticed, but things usually turn out sorta okay. When your economy is humming for decades, like the U.S. economy has done for 60 years now (outside of that nasty Nixon-thru-Carter era), problems get solved by innovation and profit motive.
Then there is the claim that production will peak at a certain time, and decline after that. Really? Are we sure about that? I’ve read other sources over the last few years — sources that know a lot more about this than either Cecil or I — that say known petroleum reserves today are BIGGER than they’ve ever been because the technology to both find them, and tap into them, is ever-improving. Wouldn’t this predict ever-increasing production, at least over the next 50-100 years?
And what about the effect of prices on production? Advances in technology extract more oil from the ground, and so increase the supply, pushing prices down, and encouraging restricted production in order to keep prices from dropping too low. I.e., an argument based on the premise that decreasing production is primarily caused by shrinking supply, everywhere and always, is flawed from the get-go.
Finally, let us not forget ANWR, which is one of the biggest known oil fields in the world, but is off limits for now because of environment demagoguery. If we ever get to the point where the American lifestyle of driving anywhere and everywhere is threatened, ANWR becomes a fountain of oil faster than Hillary Clinton falls asleep on camera during State of the Union address by Republican presidents.
So my advice is to go short on the Doomsday Futures. You’ll never lose.
From an article in the Boston Globe called “Oil Futures”:
ACCORDING TO ”The Prize,” Daniel Yergin’s Pulitzer Prize-winning 1991 history of the oil industry, the dawning of the automotive age was a time of deep pessimism about America’s oil supply. World War I had just ended and few new fields had been discovered. Crude was in such short supply that some refineries were running at half capacity. ”Leading geologists,” wrote Yergin, ”prophesied gloomily that the limits on US production were near.”
Instead, the fear of shortage and the resulting rise of oil prices spurred the use of experimental prospecting techniques. The use of seismographs, aerial photography, improved drilling technology, and specialized inventions like the torsion balance and the magnetometer ushered in a new era of oil exploration, and the 1920s saw a rush of major American oil finds.
Yergin, the founder and chairman of Cambridge Energy Research Associates, a leading oil consultancy based in Cambridge, likes to tell this story to people who are worried that we have entered the final, terminal phase of exhausting the world’s oil supply that we have passed the point of what experts call ”peak oil.”
You may want to read the whole thing.