5 ms·

What happened to "Peak Oil"? Was there some assumption in those projections that proved to be wrong?

ipython 7y ago
A near-instantaneous drop in global demand almost 50 years later?
evjrob 7y ago
Extracting oil from shale reservoirs was though to be too difficult and expensive to ever really flood the market like this. Turns out it wasn't.
- empath75 7y ago
  It is too difficult and expensive for this. Most of them are taking a loss at this price.
  - evjrob 7y ago
    True, but tight oil production that was previously though to be impossible to extract economically has more than offset losses in conventional production. Peak oil predictions of decades past presumed this could only happen when oil prices rose so high that alternative energy sources would be competitive. Therefore these reservoirs would remain uneconomic. Instead fracking got really cheap.
api 7y ago
I think there is/was validity to the concept of EROEI: energy return on energy invested. The EROEI of oil has decreased over time. What they got wrong was the overall estimate of how much of this stuff there is to be extracted. The easy oil is indeed being used up, but as you invest more and more energy (EROEI decreases) the amount of oil available actually increases. Look at how much tar sands, oil shale, offshore, and heavy crude there is, but all that requires more energy to get. We would eventually run out of oil to be had at a reasonable energy (and thus economic) cost, but after that if we still needed it we could get it by converting coal. That assumes we decide we don't need the ice caps, or the coastal cities. We probably have enough carbon to destroy the world.
- drewm1980 7y ago
  I also wonder if the peak oil computations included oil discoveries as the arctic melts.
  - api 7y ago
    They didn't, and if we go there we definitely have enough carbon to go back to the Pleistocene epoch. Antarctica is believed to contain large coal and oil fields but they have not been thoroughly mapped as they are not economic to reach at the moment. I recall watching an old 50s documentary on Antarctica when I was bored years ago and they mentioned that there was enough fuel there to satisfy our energy needs for hundreds of years. This was before anyone was very worried about CO2.
Synaesthesia 7y ago
Turns out the world has loads of oil, and is still discovering more, and even more natural gas, coal and so on. We’re not running out anytime soon, which is actually a problem.
- crimsonalucard 7y ago
  I've read we're right at the peak with shale. If we continue normal usage/production sans the effects of covid-19, we would've hit the drop off (for shale) of the Hubbard curve some time before 2025. source: https://www.bloomberg.com/news/articles/2019-10-14/peak-shale-how-u-s-oil-output-went-from-explosive-to-sluggish https://www.bloomberg.com/news/articles/2019-10-14/peak-shal...
- wazoox 7y ago
  Nope, discoveries worldwide peaked 4 decades ago. Production follows discoveries with a 4 to 5 decades delay. For scale, we need to find out about a new Saudi Arabia every year. We simply don't.
wazoox 7y ago
Peak Oil (conventional) happened in 2008 (see World Energy Outlook 2018 from the IEA). Tight oil came to the rescue. Tight oil and shale oil industries are all built on a huge amount of debt and never were cash-positive in the past 12 years. That's the part that wasn't anticipated. However shale oil requires constant drilling because production rises then falls very quickly (18 months to 2 years). With low oil prices, drilling will dry out and oil will dry out soon, too. Plus total oil production (conventional + non conventional) will probably peak anyway in the next decade (see WEO 2018, once again), and this may be quickened by the coming lack of investment due to low oil prices. What could happen? With low demand and low price, the non conventional oil industry is deemed to go bankrupt, and the US banks will have to part with trillions of debt. That won't be pretty. Until this industry is rescued and starts pumping again, there could be a severe crunch of oil production, initiating an oil shock and a huge recession, sometimes in the coming next few years.
- perl4ever 7y ago
  "However shale oil requires constant drilling because production rises then falls very quickly" You seem to interpret this as a problem. However, I've read many times that it's basically a solution, because what it means is that production is responsive to demand in a far shorter timeframe than conventional oil. On top of that, supposedly you can drill a well and not complete it until a price war is over. So I'm not sure why you think "non conventional oil industry is [doomed] to go bankrupt" when not only do people in the industry say it is relatively easy and cheap to put resources on hold, but obviously the sources of conventional cheap oil tried their best to kill the newcomers and failed, only a few years ago. According to both theory and recent history, your prediction doesn't make sense to me. However, I have no experience whatsoever in the industry, so maybe you have some expertise?
  - wazoox 7y ago
    Yes, currently the tight oil industry could be in a good shape, because drilling a well is very cheap (about US$ 5 millions), without the trillions of debts it amassed. The problem may unroll like this: - demand is destroyed by coronavirus - prices go down (maybe as low as $10 a barrel according to some analysts) - existing wells maybe kept pumping, or not - new drilling stops, ditto exploration, etc. - cash flow in tight oil industry falls to about zero - huge debt (trillions) can't be paid back, companies go belly up, banks must be rescued by the Fed... several scenarii open up from there: would the Fed rescue the oil companies? may the government nationalise the oil industry? What can be the impact on US$? On US debt? financial markets? Who knows, all bets are off at this point. The crucial moment will be there: in the few months between this moment when the shale oil industry defaults on its debt, and when it's bought back (debt free, therefore in a sane situation), there may be a large gap in production, that could kill world oil demand by sending prices through the ceiling ($100 barrel? $120? $150?) because normal demand can't be fulfilled by conventional production anymore. Lots of graphs here: https://jancovici.com/en/energy-transition/oil/when-does-the-world-oil-production-peak/ https://jancovici.com/en/energy-transition/oil/when-does-the... I myself have no particular expertise, but I've been following quite closely oil and energy since 2005.
trentnix 7y ago
"Peak Oil" was the idea that the demand for oil would exceed the supply we are able to access. Yet we keep finding more and increasing our ability to access more thanks to technological progress. But mostly, "Peak Oil" fears were ginned up by a press who love to promote tales of doom and destruction. Those trumpeting the threat of "Peak Oil" demanded broad governmental and social intervention to avoid what was assured to be a massive economic disaster. There were assertions that those denying the threat of "Peak Oil" were the Neville Chamberlains of their time or villagers refusing to vacate under the imminent threat of volcanic eruption. No mistake - oil has a fixed supply. It will run out. But it turns out that won't happen for some time. https://www.forbes.com/sites/michaellynch/2018/06/29/what-ever-happened-to-peak-oil/ https://www.forbes.com/sites/michaellynch/2018/06/29/what-ev...
- lstodd 7y ago
  No, it's a mistake - oil most certainly does not have anything like a fixed supply that is going to run out. The supply grows alongside with the price people are willing to pay for it. As you yourself pointed out. Nowadays the demand falls, the prices fall, this would be followed by a fall in production. But whatever happens oil will be available at an affordable price because world just doesn't work without it. If oil gets too pricey, reserarch into digging up more oil more cheaply will be funded. As it happened with shale. And it will end up in one more oil price crisis same as the one we're witnessing. And the one after it.
  - krapp 7y ago
    Obviously oil has a fixed supply... there is by definition only a finite amount of it, given that we live on a spheroid with a finite volume out of which to extract it. Supply doesn't grow with demand, as that would imply new oil is somehow being created with demand and that, given infinite demand, there would also be infinite supply. What does grow with demand is technological innovation and effort, and while we were not as close to the actual limit as we assumed with "peak oil", that doesn't mean the limit itself was fictional.
    - 7y ago
lordgrenville 7y ago
My impression is that there are vast amounts of oil at increasing levels of extraction cost. As cheap oil is used up, the price rises and it becomes financially viable to extract more expensive reserves. Eventually, the remaining oil may be so costly to extract that renewable energy will be cheaper, but it seems unlikely that we will ever extract the last drop of fossil fuels. (Ignoring all the other reasons for cost fluctuations.)
- JoeAltmaier 7y ago
  Not to mention if Methane Hydrate comes online - endless natural gas for the price of a drill and pipeline.
  - ReptileMan 7y ago
    In that case also invest in beachfront properties in northern russia and Antarctica. The weather there will be awesome
    - howlin 7y ago
      You'd need a matching property in the southern hemisphere for the dark winters.
    - JoeAltmaier 7y ago
      Do so then, because Japan is already tapping it. Estimated 6X the energy there, than all the oil reserves we ever discovered. Seems inevitable.
- hexedpackets 7y ago
  Renewables are already cheaper - solar in the US is the cheapest form of energy in the world. The remaining challenges are improving batteries for storing it, and continued panel efficiency to reduce the amount of space needed for generating solar power.
deleted 7y ago
[deleted]
mberning 7y ago
I love it. All the hysteria about peak oil from 15-20 years ago never happened and now we have a bunch of hand wavy explanations as to why. People just can’t admit it was BS and a lot of us bought into it.
marcosdumay 7y ago
Peak oil is the moment in history where people have the most oil available. It came, and past. Production is down from the peak, and down from last month too.

A near-instantaneous drop in global demand almost 50 years later?

Extracting oil from shale reservoirs was though to be too difficult and expensive to ever really flood the market like this. Turns out it wasn't.

empath75 7y ago
It is too difficult and expensive for this. Most of them are taking a loss at this price.
- evjrob 7y ago
  True, but tight oil production that was previously though to be impossible to extract economically has more than offset losses in conventional production. Peak oil predictions of decades past presumed this could only happen when oil prices rose so high that alternative energy sources would be competitive. Therefore these reservoirs would remain uneconomic. Instead fracking got really cheap.

api 7y ago

I think there is/was validity to the concept of EROEI: energy return on energy invested. The EROEI of oil has decreased over time. What they got wrong was the overall estimate of how much of this stuff there is to be extracted. The easy oil is indeed being used up, but as you invest more and more energy (EROEI decreases) the amount of oil available actually increases. Look at how much tar sands, oil shale, offshore, and heavy crude there is, but all that requires more energy to get. We would eventually run out of oil to be had at a reasonable energy (and thus economic) cost, but after that if we still needed it we could get it by converting coal. That assumes we decide we don't need the ice caps, or the coastal cities. We probably have enough carbon to destroy the world.

drewm1980 7y ago
I also wonder if the peak oil computations included oil discoveries as the arctic melts.
- api 7y ago
  They didn't, and if we go there we definitely have enough carbon to go back to the Pleistocene epoch. Antarctica is believed to contain large coal and oil fields but they have not been thoroughly mapped as they are not economic to reach at the moment. I recall watching an old 50s documentary on Antarctica when I was bored years ago and they mentioned that there was enough fuel there to satisfy our energy needs for hundreds of years. This was before anyone was very worried about CO2.

Synaesthesia 7y ago

Turns out the world has loads of oil, and is still discovering more, and even more natural gas, coal and so on. We’re not running out anytime soon, which is actually a problem.

crimsonalucard 7y ago
I've read we're right at the peak with shale. If we continue normal usage/production sans the effects of covid-19, we would've hit the drop off (for shale) of the Hubbard curve some time before 2025. source: https://www.bloomberg.com/news/articles/2019-10-14/peak-shale-how-u-s-oil-output-went-from-explosive-to-sluggish https://www.bloomberg.com/news/articles/2019-10-14/peak-shal...
wazoox 7y ago
Nope, discoveries worldwide peaked 4 decades ago. Production follows discoveries with a 4 to 5 decades delay. For scale, we need to find out about a new Saudi Arabia every year. We simply don't.

wazoox 7y ago

Peak Oil (conventional) happened in 2008 (see World Energy Outlook 2018 from the IEA). Tight oil came to the rescue. Tight oil and shale oil industries are all built on a huge amount of debt and never were cash-positive in the past 12 years. That's the part that wasn't anticipated. However shale oil requires constant drilling because production rises then falls very quickly (18 months to 2 years). With low oil prices, drilling will dry out and oil will dry out soon, too. Plus total oil production (conventional + non conventional) will probably peak anyway in the next decade (see WEO 2018, once again), and this may be quickened by the coming lack of investment due to low oil prices. What could happen? With low demand and low price, the non conventional oil industry is deemed to go bankrupt, and the US banks will have to part with trillions of debt. That won't be pretty. Until this industry is rescued and starts pumping again, there could be a severe crunch of oil production, initiating an oil shock and a huge recession, sometimes in the coming next few years.

perl4ever 7y ago
"However shale oil requires constant drilling because production rises then falls very quickly" You seem to interpret this as a problem. However, I've read many times that it's basically a solution, because what it means is that production is responsive to demand in a far shorter timeframe than conventional oil. On top of that, supposedly you can drill a well and not complete it until a price war is over. So I'm not sure why you think "non conventional oil industry is [doomed] to go bankrupt" when not only do people in the industry say it is relatively easy and cheap to put resources on hold, but obviously the sources of conventional cheap oil tried their best to kill the newcomers and failed, only a few years ago. According to both theory and recent history, your prediction doesn't make sense to me. However, I have no experience whatsoever in the industry, so maybe you have some expertise?
- wazoox 7y ago
  Yes, currently the tight oil industry could be in a good shape, because drilling a well is very cheap (about US$ 5 millions), without the trillions of debts it amassed. The problem may unroll like this: - demand is destroyed by coronavirus - prices go down (maybe as low as $10 a barrel according to some analysts) - existing wells maybe kept pumping, or not - new drilling stops, ditto exploration, etc. - cash flow in tight oil industry falls to about zero - huge debt (trillions) can't be paid back, companies go belly up, banks must be rescued by the Fed... several scenarii open up from there: would the Fed rescue the oil companies? may the government nationalise the oil industry? What can be the impact on US$? On US debt? financial markets? Who knows, all bets are off at this point. The crucial moment will be there: in the few months between this moment when the shale oil industry defaults on its debt, and when it's bought back (debt free, therefore in a sane situation), there may be a large gap in production, that could kill world oil demand by sending prices through the ceiling ($100 barrel? $120? $150?) because normal demand can't be fulfilled by conventional production anymore. Lots of graphs here: https://jancovici.com/en/energy-transition/oil/when-does-the-world-oil-production-peak/ https://jancovici.com/en/energy-transition/oil/when-does-the... I myself have no particular expertise, but I've been following quite closely oil and energy since 2005.

trentnix 7y ago

"Peak Oil" was the idea that the demand for oil would exceed the supply we are able to access. Yet we keep finding more and increasing our ability to access more thanks to technological progress. But mostly, "Peak Oil" fears were ginned up by a press who love to promote tales of doom and destruction. Those trumpeting the threat of "Peak Oil" demanded broad governmental and social intervention to avoid what was assured to be a massive economic disaster. There were assertions that those denying the threat of "Peak Oil" were the Neville Chamberlains of their time or villagers refusing to vacate under the imminent threat of volcanic eruption. No mistake - oil has a fixed supply. It will run out. But it turns out that won't happen for some time. https://www.forbes.com/sites/michaellynch/2018/06/29/what-ever-happened-to-peak-oil/ https://www.forbes.com/sites/michaellynch/2018/06/29/what-ev...

lstodd 7y ago
No, it's a mistake - oil most certainly does not have anything like a fixed supply that is going to run out. The supply grows alongside with the price people are willing to pay for it. As you yourself pointed out. Nowadays the demand falls, the prices fall, this would be followed by a fall in production. But whatever happens oil will be available at an affordable price because world just doesn't work without it. If oil gets too pricey, reserarch into digging up more oil more cheaply will be funded. As it happened with shale. And it will end up in one more oil price crisis same as the one we're witnessing. And the one after it.
- krapp 7y ago
  Obviously oil has a fixed supply... there is by definition only a finite amount of it, given that we live on a spheroid with a finite volume out of which to extract it. Supply doesn't grow with demand, as that would imply new oil is somehow being created with demand and that, given infinite demand, there would also be infinite supply. What does grow with demand is technological innovation and effort, and while we were not as close to the actual limit as we assumed with "peak oil", that doesn't mean the limit itself was fictional.
  - 7y ago

lordgrenville 7y ago

My impression is that there are vast amounts of oil at increasing levels of extraction cost. As cheap oil is used up, the price rises and it becomes financially viable to extract more expensive reserves. Eventually, the remaining oil may be so costly to extract that renewable energy will be cheaper, but it seems unlikely that we will ever extract the last drop of fossil fuels. (Ignoring all the other reasons for cost fluctuations.)

JoeAltmaier 7y ago
Not to mention if Methane Hydrate comes online - endless natural gas for the price of a drill and pipeline.
- ReptileMan 7y ago
  In that case also invest in beachfront properties in northern russia and Antarctica. The weather there will be awesome
  - howlin 7y ago
    You'd need a matching property in the southern hemisphere for the dark winters.
  - JoeAltmaier 7y ago
    Do so then, because Japan is already tapping it. Estimated 6X the energy there, than all the oil reserves we ever discovered. Seems inevitable.
hexedpackets 7y ago
Renewables are already cheaper - solar in the US is the cheapest form of energy in the world. The remaining challenges are improving batteries for storing it, and continued panel efficiency to reduce the amount of space needed for generating solar power.

deleted 7y ago

[deleted]

mberning 7y ago

I love it. All the hysteria about peak oil from 15-20 years ago never happened and now we have a bunch of hand wavy explanations as to why. People just can’t admit it was BS and a lot of us bought into it.

marcosdumay 7y ago

Peak oil is the moment in history where people have the most oil available. It came, and past. Production is down from the peak, and down from last month too.