The Case Against Peak Oil

John Cassidy has a message for the peak-oil crowd:

The tripling of oil prices since the summer of 2003 has unleashed forces that within the next two or three years will bring oil prices tumbling back down to below $50 a barrel. Looking even further ahead, prices could easily fall to $30 a barrel or even lower.

Cassidy goes into quite a lot of detail in his column as to why this should be the case, but basically it all boils down to supply and demand: right now, demand is high, while supply is constrained as a result of underinvestment by oil companies when oil prices were low. Within the next few years, however, supply will start rising: ExxonMobil (XOM) alone, writes Cassidy, has invested more than $60 billion into exploration and development over the past four years.

I'm quite sure that the peak-oil types will be entirely unconvinced by Cassidy's analysis, and in fact, Cassidy never quite comes out and says that oil production will actually rise significantly from its present 85 million barrels a day or so. He does, however, say that "an oil glut will emerge," which amounts to much the same thing.

I'm staying on the sidelines of this debate. I've never been convinced by the apocalyptic Malthusianism coloring most of the peak-oil theories, none of which has come true in the past. And the oil price right now does seem a little bubblicious. But at the same time I'm actually hopeful, for climate-change reasons, that things like tar sands in Venezuela remain untapped, and that supplies will remain constrained. High oil prices might serve as a brake on global economic growth in the short term, but they could also help save the planet in the long term.

Comments

[alphaman]

Global warming is not caused by man! The polar ice caps on mars are also melting. Do you think that there is a chance that the sun could be getting a bit warmer or that the earth's orbit could be moving slighlty closer to the sun? You socialists will try to use anything to increase my taxes and control my behavior.

2007 Dec 18 09:54 AM

[titopoli]

Google a bit for Roy Spencer from UAH, Nir Shaviv, University of Jerusalem or David Evans and you will learn, what drives the climate. The IPCC report from 2007 itself admitts that their scientific understanding of the sun's forces are low and they even don't mention water vapor in their graph, the main greenhouse gas, far more important than CO2. Look at the THEMIS results from NASA and you'll get an idea about the sun's forces: it is not only visible light as the old fashionend climate computer models think. Garbage in, garbage out.

Manufacturing windmills or solar cells ist very energy consuming and the more expensive the energy the later these technologies will appear in the market.

2007 Dec 18 03:38 PM

[titopoli]

Google a bit for Roy Spencer from UAH, Nir Shaviv, University of Jerusalem or David Evans and you will learn, what drives the climate. The IPCC report from 2007 itself admitts that their scientific understanding of the sun's forces are low and they even don't mention water vapor in their graph, the main greenhouse gas, far more important than CO2. Look at the THEMIS results from NASA and you'll get an idea about the sun's forces: it is not only visible light as the old fashionend climate computer models think. Garbage in, garbage out.

Manufacturing windmills or solar cells ist very energy consuming and the more expensive the energy the later these technologies will appear in the market.

2007 Dec 18 03:39 PM

[Scott Benson]

"ExxonMobil (XOM) alone, writes Cassidy, has invested more than $60 billion into exploration and development over the past four years." This doesn't mena they found anything. Most of the oil companies have invested a lot of money in finding new oil and the results have been disappointing. Not all peak oil people are nutcases. I hope there is another Prudhoe Bay or North Sea out there to save us again, but it isn't looking promising. All the new stuff costs a lot of money to extract.

2007 Dec 18 03:59 PM

[JYFROMTX]

EXXONMOBIL HAS DONE A GOOD JOB OF REPLACING THEIR ANNUAL PRODUCTION. CHECK IT OUT. AS TO GLOBAL WARMING, IT IS A LIBERAL SCHEME TO CONTROL AND TAX OUR EVERY DAY LIVES.

2007 Dec 18 04:16 PM

[twistandshout]

ah, them big bad liberals are going to come and eat your babies if your not careful.

peak oil? I have no clue, just have to try to be prepared for these possibilities and invest appropriatly.

2007 Dec 18 05:39 PM

[Ron Mahabir08]

Who knows when Peak Oil will hit, but I would review all of the IOC's production rates over the past 5 years. Not a good picture, though I do agree that the significant recent investment by the IOC's will show through in a short-term spike in supply.

2007 Dec 18 08:06 PM

[User 129440]

We don't know if the increased spending may be a symptom of oil being harder to find, leaving supply unchanged despite increased spending (that is, increased spending is necessary for constant supply).

That is the flaw in your argument, and requires a deeper analysis.

2007 Dec 19 08:41 PM

[Kunst]

You don't need peak oil to have a serious supply-demand imbalance. All the predictions, private and government, talk about demand increasing to 120-135 million barrels per day. That's a 50% increase over current production. Numerous major production areas (e.g., the North Sea) are in permanent decline. The US, the world's original oil superpower, has produced less and less oil since the early 1970s. This BS about not being allowed to drill is ridiculous. The easiest oil has been found and exploited long ago. Now we are talking about harsh environments, extremely deep wells, and deep-ocean drilling. Anyone who thinks global oil production is going to increase 50% belongs in the looney bin.

Regardless of when our finite supply of oil does start to run out, there is no way we can meet the unconstrained demand of insatiable America and the newly rising Asian economies.

2007 Dec 19 11:54 PM

[erniem]

Peak oil basically is a term that means a finite supply of something runs out, and if there is a large demand, it runs out fast at the end.

Unless you belive there is an infinite supply of oil, peak oil is a fact, not a fiction. If you believe in an infinite supply, you have more serious problems than peak oil.

2007 Dec 30 03:07 PM

[Joe Wolfe]

It really is amazing that some people continue to deny simple economic law; as China and India's economies continue to thrive (urbanization rates expected to double in the next 15 years), the strain on dwindling oil supply will rise, not fall. That leaves one revelation: oil is cheap at $100.

2008 Jan 06 06:58 PM