Monday, January 02, 2006

Peak Oil: Is the debate over?

Vaclav Smil, a professor of energy issues at the University of Manitoba, is a smart man. I've read many of his books and articles for papers I've written for school, and the one thing you can't say about him is that he's dumb, or ill-informed.

He is, however, one of those unfortunates who are blinded by the undeniable power of the market, which can lead to an unfortunate tunnel vision. In this article (PDF) this tunnel vision causes him to make possibly the worst rebuttal of the peak oil argument, ever.

Essentially, Smil's arguments amount to: 1) Peak oil predictions have been wrong before, so they will continue to be wrong in the future. 2) Despite new information and new models that make recent predictions more credible, Peak predictions should still be ignored because of the unreliability of past predictions. 3) Increasing prices will drive new energy sources and efficiency, or The Market Will Save Us!

There's a bit more to his article, but that's about it. The funny thing is that while attempting to rebut all the theories underlying Peak Oil predictions, Smil ignores all the mounting data that suggests the Peak is closer than we'd like to think. It reads kind of like an old Aristotelian spewing bile on some hapless Copernican for the slopiness of his theories, meanwhile ignoring the actual, you know, evidence.

Meanwhile, there are other predictions that have been proved wrong - the optimistic ones. From Vital Trivia, we learn that the US Department of Energy made the following predictions about various oil-producing regions: North Sea peak in 2006 (actual peak: 1999), Mexico peak after 2020 (Actual: June 2004). We've also seen the peaking of the Kuwaiti Burgan oil field, which was not predicted to peak until 2020 or so.

There's also the uncomfortable numbers coming out of OPEC - also from Vital Trivia - that suggest world production of light sweet crude (the most attractive form of oil) has peaked and is in decline. Call it the PrePeak.

Aside from the theoretical sloppiness of the Peak Oil crowd (and admittedly, there is some) these are data. We either have an explanation for them or we don't. I'm personally convinced that we will see the first of two peaks before 2010, possibly in the coming year. But I'm willing to admit that might be pessimistic on my part. What I'm not seeing - anywhere - is the kind of explosion in new oil discoveries that would be necessary to rebut the Peak Oil hypothesis.

From the beginning of the oil industry to the 1980s, we discovered more oil every year than we used in that year. However, by 1990 or so that stopped. We began using more oil than we discovered, and that trend has accelerated in the last decade and a half. If we're to believe that there's some respite from Hubbert's Peak, we need to find large, Saudi-sized finds somewhere. There is no evidence that these fields exist to be found.

As for prices, there are two uncomfortable facts that Smil ignores. First of all, oil demand is notoriously unresponsive to price increases. Despite the oil crises of the 1970s, which saw the price of oil quadruple in 1973 and climb still further in 1979, oil consumption dropped only about 15%. Yes, car mileage went up. But a 15% drop isn't much considering how quickly and sharply the price increased. (There are a number of reasons for oil's inelasticity, mainly because we tend to use oil for things like driving and heating which we can't just stop doing.) The second fact that Smil ignores is that even if we were able to respond instantaneously with more efficiency, all that would do is encourage more consumption, not less. People in the developed world would drive more, and the developing world would buy more cars.

It's not that prices are unimportant, or that prices don't matter. But prices aren't all-important either. People need to buy food, regardless of the price of oil that goes in to it. People will continue to drive to work, even as gasoline costs close to $10/gallon, like in Europe. We use oil for some pretty important stuff, and we can't just stop, regardless of the price.

So the question for me is this: Can we stop having the debate over if Peak Oil is happening, and can we move on to the far more important question - what now?

(You'd think that at least one of our major parties would be talking about this, but no.)


liam said...

there are a lot of things the major parties aren't talking about. Sadly enough it seems that the conservatives are doing the most talking and the other parties are just responding... I could be wrong though. By and large people get spoon fed the issues. If the media says health care is a big problem, then that will be the issue.

With all that said, I think Martin and maybe Stephen Harper both talked about using corn for ethanol production and making it law for gas to have 5% ethanol. I'm guessing this isn't huge, but I'm sure it helps.

I just wish Layton got more press...

John Murney said...

No one wants to admit there is a problem - that would create public panic. The politicians won't be able to ignore Peak Oil for much longer.

Chris Vernon said...

I believe the debate is over - there's no evidence for peak oil not happening within the next 10 years. However others remain blind (at least in public)

Green Party MEP Caroline Lucas has asked the EU Commission directly about peak oil:

"What is the Commission’s position on this debate? When does the Commission anticipate that peak production will occur? What is its strategy for responding to the challenges posed by peak oil?"

Full question: here

And now we have their response where the Commission dismisses peak oil as "no more than a theory" and as such the Commission has no plan to address it.

Full reply: here

This is a disappointing response, I am left with the impression that the Commission anticipates peak oil to be decades away and as such doesn't see the need to plan for it, both assumptions incorrect in my opinion.