Last modified: 7:58 AM Saturday, 14 January 2017

“An ‘unregulated’ marketplace is like an ‘unregulated’ football game — chaos. And
chaos is a state perfectly exploited by sociopaths, be they serial killers, warlords, or CEOs.”

Thom Hartmann

Considering the source

We’ve all heard of peak oil: the point beyond which further petroleum exploration and development will yield steadily declining returns. But the phrase has mostly been used by environmentalists and scientists, two groups that industry has been largely successful in caricaturing in the American public mind as impractical and conspiratorial control freaks who are determined to manufacture a rationale for more government regulation, with an underlying assumption that there’s big money for them in this putative hoax.

Aerial view of an oil refinery

Aerial view of an oil refinery, some elements of which look
surprisingly like a computer circuit board.
[ Image Source ]

Now, thanks to WikiLeaks’ publication of a diplomatic cable from the U.S. embassy in Saudi Arabia, we discover that another cabal of wild-eyed Marxists must be included in this plot: oil company executives.

According to former Saudi Aramco chief of exploration Sadad al-Husseini, speaking to embassy personnel in 2007, the Saudi oil monopoly has deliberately overstated its reserves by 40 percent to attract investment. Not only will Saudi oil production therefore plateau considerably sooner than expected, said the embassy’s report, but it may do so still faster than would otherwise be predicted, thanks to a 10-percent annual increase in Saudi electricity consumption.

All of this raises another concern: If Saudi Arabia has so overstated its reserves, who else may have done so, possibly with similar motives? And what is likely to be the cumulative effect on global peak oil?

Unsurprisingly, there are varying opinions on this. As of 2010, for example, National Geographic reported:

The year 2006 may be remembered for civil strife in Iraq, the nuclear weapon testing threat by North Korea, and the genocide in Darfur, but now it appears that another world event was occurring at the same time — without headlines, but with far-reaching consequence for all nations.

That’s the year that the world’s conventional oil production likely reached its peak, the International Energy Agency (IEA) in Vienna, Austria, said Tuesday.

According to the 25-year forecast in the IEA’s latest annual World Energy Outlook, the most likely scenario is for crude oil production to stay on a plateau at about 68 to 69 million barrels per day.

In this scenario, crude oil production “never regains its all-time peak of 70 million barrels per day reached in 2006,” said IEA’s World Energy Outlook 2010.

In previous years, the IEA had predicted that crude oil production would continue to rise for at least another couple of decades.

Now, because of rising oil prices, declines in investment by the oil industry, and new commitments by some nations to cutting greenhouse gas emissions, the new forecast says oil production is likely to be lower than the IEA had expected.

[...However, t]he projected flat crude oil production doesn’t translate into an immediate shortage of fuels for the world’s cars and trucks. IEA actually projects that the total production of what it calls “petroleum fuels” is most likely to continue steadily rising, reaching about 99 million barrels per day by 2035.

This growth in liquid fuels would come entirely from unconventional sources, including “natural gas liquids,” which are created as a by-product of tapping natural gas reservoirs.

More recently, however, the reports of peak oil have been clouded by unexpected massive cuts in oil prices in conjunction with comparable accelerations in production (particularly in Saudi Arabia), starting last year and still extant as of this writing. This has led some optimists to accuse those discussing peak oil of “fear-mongering,” with one Huffington Post contributor even opining that no practical limit to oil production will be reached.

But another HuffPost writer yesterday offered a different and more existential perspective that calls into question whether peak oil is really our greatest concern:

The fact is that markets price energy wrong. They price oil and gas based on current demand and supply, and not based on the costs to the planet in pollution, global climate change, sea level rise, and more. This is, as Lord Nicholas Stern famously put it, history’s greatest case of market failure.

Recent events demonstrate the sheer radicalism of the necessary cure. Business as usual is just too convenient, too easy, and incremental change will not save the planet.

Sure, oil production will peak at some point. But by then the earth could be a very unpleasant place. Sorry, folks, but the argument that we are running out of oil just doesn’t cut it. If only things were that simple.

Sometimes we get what we think we want, only to find that it is more curse than blessing. Peak oil or no peak oil, the longer we delay breaking our addiction and moving on to saner energy options, the greater the damage we will do and the harder it will be to repair.

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