The Wallstreet Journal and Peak Oil
Russell Gold is a regular contributor to the Wallstreet Journal on the topic of peak oil and fracking. Although he avoids taking an explicit stand himself, reading between the lines, mr Gold admits that fossil fuel is a finite resource, but that we should not worry too much or unnecessarily speed up the energy transition. Mr Gold refers to predictions in the past, that did not materialize (M. King Hubbert) and he points at a few alternative scenarios, as proposed by others, like petroleum economist Philip Verleger, who believes in technology pushing boundaries. An other techno-optimist is George King, who thinks that technology and economy are the real constraints, not geology, but that the petroleum industry is very inventive. There are others who think that peak demand will precede peak oil. Yes, there will be enough oil, but it will remain in the ground, because people are no longer able to afford it. The late economist Morris Adelman was such a person. And then there is the climate change angle. The possibility that consumption of fossil fuel will need to decrease to combat run-away climate change, for instance in the form of a carbon tax. Michael Shellenberger, president of the Breakthrough Institute, is a representative of that group of people.
Editor: we have a confession to make. When we started this blog in January 2012, we were Richard Heinberg / ASPO groupies and believed that peak oil was immanent, as depicted in the graph above and that the industrialized world would be sliding from an energy cliff in, say 2015, with an annual decrease in oil production of 3%. Now we have to admit, that the more we study the subject, the more we realize how unpredictable the future of fossil fuel actually is. Yes, we believe the USGS when they claim that the US alone has a shale oil reserve to the tune of 2.2 trillion barrel, without suggesting that these reserves are actually economical recoverable, yet. We also acknowledge that technology is an uncertain factor and that new developments could change the picture. Apart from shale oil & gas, there is another huge potential source of fossil fuel: methane hydrates, with reserves worth many trillion of barrel of oil equivalent.
So what do we (DeepResource) believe now, after the demise of the naive ASPO worldview?
– First of all, ASPO was essentially correct about peak oil, but only for conventional, easy oil, Richard Heinberg’s ‘low-hanging fruit’: drill a hole and extract the oil, like the cola from a glass with a straw. But the rise of new extraction techniques have indeed invalidated the ASPO view, at least for a decade. And a ‘third carbon age‘ a la Michael Klare is also very well possible, an age of unconventional oil and gas that could last decades.
– Secondly, we tentatively believe that relatively high fossil fuel prices are here to stay, albeit with high degree of uncertainty. This opens the possibility that some sort of smooth transition will be possible after all, especially for advanced, but resource starved economies like Europe. As we speak, renewable energy and fossil fuel prices have reached a break even point, enabling and encouraging the transition.
– Thirdly, there is a very real possibility of sudden supply disruptions because of political turmoil (Middles East, ISIS). Europe, Japan and China are most vulnerable in this respect. This is another strong motivating factor for Europe and China to be serious about the renewable energy transition and they are.
All in all, we have become less concerned than we were in 2012 about the geological aspects of fossil fuel and more about geopolitical and financial developments and to a lesser extent, climate.
[wsj.com] – Why Peak-Oil Predictions Haven’t Come True