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Peak Oil Is Dead
Posted on Jan 10, 2014
By Michael T. Klare, TomDispatch
This piece first appeared at TomDispatch. Read Tom Engelhardt’s introduction here.
Among the big energy stories of 2013, “peak oil”—the once-popular notion that worldwide oil production would soon reach a maximum level and begin an irreversible decline—was thoroughly discredited. The explosive development of shale oil and other unconventional fuels in the United States helped put it in its grave.
As the year went on, the eulogies came in fast and furious. “Today, it is probably safe to say we have slayed ‘peak oil’ once and for all, thanks to the combination of new shale oil and gas production techniques,” declared Rob Wile, an energy and economics reporter for Business Insider. Similar comments from energy experts were commonplace, prompting an R.I.P. headline at Time.com announcing, “Peak Oil is Dead.”
Not so fast, though. The present round of eulogies brings to mind the Mark Twain’s famous line: “The reports of my death have been greatly exaggerated.” Before obits for peak oil theory pile up too high, let’s take a careful look at these assertions. Fortunately, the International Energy Agency (IEA), the Paris-based research arm of the major industrialized powers, recently did just that—and the results were unexpected. While not exactly reinstalling peak oil on its throne, it did make clear that much of the talk of a perpetual gusher of American shale oil is greatly exaggerated. The exploitation of those shale reserves may delay the onset of peak oil for a year or so, the agency’s experts noted, but the long-term picture “has not changed much with the arrival of [shale oil].”
The IEA’s take on this subject is especially noteworthy because its assertion only a year earlier that the U.S. would overtake Saudi Arabia as the world’s number one oil producer sparked the “peak oil is dead” deluge in the first place. Writing in the 2012 edition of its World Energy Outlook, the agency claimed not only that “the United States is projected to become the largest global oil producer” by around 2020, but also that with U.S. shale production and Canadian tar sands coming online, “North America becomes a net oil exporter around 2030.”
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The release of the 2012 edition of World Energy Outlook triggered a global frenzy of speculative reporting, much of it announcing a new era of American energy abundance. “Saudi America” was the headline over one such hosanna in the Wall Street Journal. Citing the new IEA study, that paper heralded a coming “U.S. energy boom” driven by “technological innovation and risk-taking funded by private capital.” From then on, American energy analysts spoke rapturously of the capabilities of a set of new extractive technologies, especially fracking, to unlock oil and natural gas from hitherto inaccessible shale formations. “This is a real energy revolution,” the Journal crowed.
But that was then. The most recent edition of World Energy Outlook, published this past November, was a lot more circumspect. Yes, shale oil, tar sands, and other unconventional fuels will add to global supplies in the years ahead, and, yes, technology will help prolong the life of petroleum. Nonetheless, it’s easy to forget that we are also witnessing the wholesale depletion of the world’s existing oil fields and so all these increases in shale output must be balanced against declines in conventional production. Under ideal circumstances—high levels of investment, continuing technological progress, adequate demand and prices—it might be possible to avert an imminent peak in worldwide production, but as the latest IEA report makes clear, there is no guarantee whatsoever that this will occur.
Inching Toward the Peak
Before plunging deeper into the IEA’s assessment, let’s take a quick look at peak oil theory itself.
As developed in the 1950s by petroleum geologist M. King Hubbert, peak oil theory holds that any individual oil field (or oil-producing country) will experience a high rate of production growth during initial development, when drills are first inserted into a oil-bearing reservoir. Later, growth will slow, as the most readily accessible resources have been drained and a greater reliance has to be placed on less productive deposits. At this point—usually when about half the resources in the reservoir (or country) have been extracted—daily output reaches a maximum, or “peak,” level and then begins to subside. Of course, the field or fields will continue to produce even after peaking, but ever more effort and expense will be required to extract what remains. Eventually, the cost of production will exceed the proceeds from sales, and extraction will be terminated.
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