Criticisms: Does Peak Oil Really Exist?

As there are those who agree with the peak oil theory, there are those who very much disagree. Most of the despondents of peak oil are economist and even some energy associations like USGS and the DOE who state that the worry about peak oil is exaggerated to say the least and that there will be a big abundance of oil in the world (Cinti, pg. 15). One of the greatest critics of peak oil is Michael Lynch. He argues that Hubbert and others like him are wrong in their assumption in the fixity of recoverable oil reserves and that they underestimate the power of new technology and price volatility. "Instead he considers central in the possibility of recoverable resources the presence of dynamic variables as
infrastructure, technology, and price, and not only the fixed geological factor of the quantity of oil" (Cinti, pg. 16). The following is an excerpt from his op-ed piece in The New York Times.

"A careful examination of the facts shows that most arguments about peak oil are based on anecdotal information, vague references and ignorance of how the oil industry goes about finding fields and extracting petroleum. And this has been demonstrated over and over again: the founder of the Association for the Study of Peak Oil first claimed in 1989 that the peak had already been reached, and Mr. Schlesinger argued a decade earlier that production was unlikely to ever go much higher... Another critic, a prominent consultant and investor named Matthew Simmons, has raised concerns over oil engineers using “fuzzy logic” to estimate reservoir holdings... A related argument — that the “easy oil” is gone and that extraction can only become more difficult and cost-ineffective — should be recognized as vague and irrelevant. Hundreds of fields that produce “easy oil” today were once thought technologically unreachable... In the end, perhaps the most misleading claim of the peak-oil advocates is that the earth was endowed with only 2 trillion barrels of “recoverable” oil. Actually, the consensus among geologists is that there are some 10 trillion barrels out there. A century ago, only 10 percent of it was considered recoverable, but improvements in technology should allow us to recover some 35 percent — another 2.5 trillion barrels — in an economically viable way. And this doesn’t even include such potential sources as tar sands, which in time we may be able to efficiently tap. Oil remains abundant, and the price will likely come down closer to the historical level of $30 a barrel as new supplies come forward in the deep waters off West Africa and Latin America, in East Africa, and perhaps in the Bakken oil shale fields of Montana and North Dakota. But that may not keep the Chicken Littles from convincing policymakers in Washington and elsewhere that oil, being finite, must increase in price."

 -Michael Lynch, August 24, 2009

Figure 2

Source: theoildrum.com

Figure 3

Source: theoildrum.com

Michael Lynch makes many valid points that should not be quickly dismissed as cynical optimism. The first point he makes is that the peak oil theory is based off of many speculative and "distant future" facts and projections. It is difficult to produce empirical data for future reserves, supply, and consumption. Even more difficult to predict is any future developments in oil extracting technology that might make oil reserves that are unreachable or economically inviable to produce, actual possibilities in the future. As shown in figures two and three there is great variations in the prediction of future production possibilities. But even the median prediction (Figure 2) shows a overall downward trend. That brings me to the next point and quite possibly the soundest counter argument against peak oil, the fact that current crude oil production possibilities does not take into account future innovations.

The more research I do on peak oil and possible solutions the government might be preparing for, the more disillusioned I get. The United States government has been made aware of the peak oil theory but so far its reaction has been delayed if not non-existent. Its energy plan for the future is basically to wait for the great minds of America to find innovations in new crude oil extraction methods.

"Another bright spot for production comes from our neighbors to the North. Many oil resource tabulations exclude 'unconventional' resources or sources of oil other than conventional crude. The Canadian tar sands are considered an 'unconventional' resource. Yet there is nothing wrong with oil being recovered unconventionally, and because of research and investment into this 'unconventional' resource, a once 1.3 million barrels per day area is projected to become a 5 million barrel per day by 2030. Thats a record I am very proud of..." 

- Hon. Joe Barton, Chairman, Committee On Energy and Commerce. 

Many peak oil arguments are based off of reserve amounts and recoverable amounts of crude oil but what many people do not realize is that, firstly, national reserve amounts many times are national secrets. Also, the term recoverable amounts of crude oil has changed over the years. When oil was first discovered, recoverable oil was only that which you could drill into the ground and extract but today we can extract oil through fracking, tar sands, gas-to-oil, etc. With future innovations comes more recoverable amounts of oil. These new methods of oil extraction, although are some of the most polluting are energy intensive processes ever. Recoverable amounts are also based on the price of oil, the higher the price the more potential profits oil companies can hope to seek from that production method. Oil companies will only continue to extract oil as long as it is profitable, as soon it becomes more costly to extract a barrel of oil than it sells for, that form of oil will not be considered a resource. If it takes more energy to extract a certain amount of crude oil than that particular amount of oil produces than oil can no longer be considered a practical form of energy and can no longer be considered a resource.

Unfortunately, if that is the plan that is going to be put into action, it will not be enough to prevent not only the economic equivalent of Armageddon but also the gradual decline in any type environmental justice. These impacts although, I will further outline in my next blog entry.