11 ms·

Peak Oil Perspective

61 points by devbug 13y ago

ChuckMcM 13y ago
Note this is from 2011 (pre fracking) so it misses quite a bit. And it doesn't plot home prices post mortgage crisis. Generally the whole 'peak oil' thing is of interest perhaps to people trading oil driller stocks (or not) but I have yet to see any way to apply any of the insights into something remotely interesting or predictive.
- jofer 13y ago
  First off, 2011 was most definitely not "pre-fracking". The majors moved into unconventionals in a big way starting around 2006-2007, and the independents were doing it well before that. However, unconventional gas resources don't particularly play into this calculation. Gas (as in methane) is a completely different resource in this context. The markets are different and the reserves are very different (there's a lot more methane). The "peak oil" debate focuses on liquid hydrocarbons. There are several liquids-rich unconventional "fracking" plays (e.g. the Bakken in North Dakota), but they're not particularly common. Oil shale is a much bigger player in terms of volume, but again, you're looking at slow, expensive, environmentally costly production. It's certainly more of a long-term problem, but it is something to be worried about. It's hard to replace liquid fossil fuels in terms of energy-density per unit volume. It's a problem that we as a society need to be working a _lot_ more on.
- thrownaway2424 13y ago
  You're kidding, I'm sure. The end of the Oil Interval is the most interesting, possibly the ONLY interesting historical event that will take place in our lifetimes.
  - glenra 13y ago
    > The end of the Oil Interval is the most interesting, possibly the ONLY interesting historical event that will take place in our lifetimes. That seems like a bizarre thing to believe. When humanity switched from wood to coal for heating, or from coal to oil, were either of those an identifiable "historical event"? If we switch from oil to other fuels in our lifetimes, this will happen so gradually that nobody will notice when it happens. Any more than we noticed as "an interesting historical event" the moment that everybody got an email address, or started using google, or bought a smartphone.
devx 13y ago
The faster the oil/gas price increases, the more attractive electric cars become. Unfortunately, it could also mean US will never cut oil subsidies, unless they do it now, before the perceptible decline starts. Hopefully, governments will at least resist the urge to increase oil subsidies to keep the prices the same. Instead they should be looking at building electric car infrastructure in their countries, faster, so when the gas prices start climbing, the population switches "smoothly" to electric cars, and doesn't feel much of a shock.
- fleitz 13y ago
  Most countries tax oil heavily. Europe and Canada come to mind.
  - arthurcolle 13y ago
    The country of Europe
  - thrownaway2424 13y ago
    Yeah. Last time I was in Europe the local gas tax was more than the entire price of gas in the USA. Our low gas tax is, in effect, a subsidy, because we (as a society) choose to ignore the externalized costs of burning gasoline. Gas is currently 2CHF per liter (about $8 per gallon) in Zurich, in case you haven't been out of the USA lately.
    - fleitz 13y ago
      You could call it externalizing the costs of burning gasoline, or you could call it internalizing the profit of burning gasoline. The rest of the world burning gasoline results in cheap credit for the US. http://www.newyorkfed.org/research/current_issues/ci12-9/ci12-9.html http://www.newyorkfed.org/research/current_issues/ci12-9/ci1...
      - thrownaway2424 13y ago
        The result of burning all that fossil fuel will indeed by internalized in the end, but when it comes around I doubt you'll call it a profit.
jofer 13y ago
As a geologist in the oil industry, this is one of the few articles I've seen on peak oil that absolutely nails the salient points. (And even gets the geology correct.) To quote: "Most simply, peak oil is about rates, not amounts." Yes, there are a lot of unconventional resources. They're just a lot harder, more expensive, and most importantly in this context, slower to produce. On the upshot for me, and the downshot for the rest of civilization, oil (and to a large degree, energy) prices are likely to stay high for the near future for exactly this reason. However, we haven't developed a viable alternative to liquid fossil fuels in terms of energy-density fast enough. That very, very deeply scares me.
- toomuchtodo 13y ago
  > However, we haven't developed a viable alternative to liquid fossil fuels in terms of energy-density fast enough. That very, very deeply scares me. Electric cars are getting there, and there is always domestic natgas production in the US. It won't be fun, but that's what we get for dragging our feet. The US had this happen in the 70's (oil embargo). It's been 40+ years. Its our own damn fault.
  - at-fates-hands 13y ago
    Oh man I couldn't agree more. I still refer back to Jimmy Cater's 1977 speech were he warned about our dependency on oil. Not just foreign oil (which a lot of people mistakenly think he said) and yet after 30 years, we're still in the same place. Pretty depressing if you ask me. Here's the speech: http://www.pbs.org/wgbh/americanexperience/features/primary-resources/carter-energy/ http://www.pbs.org/wgbh/americanexperience/features/primary-...
  - matthudson 13y ago
    Consumer vehicles are definitely getting there, at least for high income and/or high net-worth people. And while that is a relief, it is still very troubling to think about the implications for our transportation infrastructure as a whole (where consumer vehicles represent a minority fraction.) How will we power our ocean freighters, our freight trains, our 18-wheelers, and our high capacity airplanes without high energy-density hydrocarbons (or with prohibitively expensive hydrocarbons)? I can imagine nuclear and electric solutions (hand-wavy or hypothetical) to some of these modes, but could they be implemented on a global scale in time? It makes me wonder what our transportation infrastructure will look like 100 or 200 years from now. -In what non-obvious ways will we look backwards to people of the future? -Will these people envy how cheaply we moved goods across the globe? -Will they laugh at how expensive it was to move things across the globe? -Will they even have the luxury of thinking about these things?
fleitz 13y ago
Peak oil depends on oil price, the world is awash in oil at $110. Even up to 2005 oil's peak price was $60. Peak oil also depends on consumption, with cars like Tesla coming out we'll see a sharp decline in consumption over the next 20 to 30 years, at $300/bl a Tesla starts to make a lot of sense. The world will never run out of oil, its price will simply continue to increase until other alternatives become economically viable, as those alternatives become viable economies of scale and capital investment will make alternatives that much better.
- jofer 13y ago
  The world is "awash" in oil at $110, but that oil simply can't be produced fast enough to meet demand. That's the fundamental problem.
  - liber8 13y ago
    This is provably false. If oil couldn't be produced fast enough to meet demand, the price of oil would not be $110 a barrel, it would be $110+x per barrel, where x is the maximum number of dollars people are willing to pay to use the available supply of oil. This thinking generally leads people to miss OP's point, which is that the world will never run out of oil. Price will always fluctuate to meet demand (so long as we let the market set the price).
  - fleitz 13y ago
    The oil business does not get disrupted by 3 kids in an apartment with $20K. If you want to open an oil field or a refinery you need billions of dollars and a financial projection that says the oil will stay at $X dollars for at least Y years. Since most people aren't convinced that oil will stay at $110 dollars for the foreseeable future they'd rather not risk billions of dollars. If you can accurately predict oil prices stop reading hacker news and open a commodities account.
    - jofer 13y ago
      You misunderstood what I'm saying. It has nothing to do with economics or disruption. It has _absolutely everything_ to do with geology. The hydrocarbons that become economic at higher oil prices fundamentally cannot be produced as quickly as conventional reserves. It's a matter of permeability. Not a matter of economics. Also, I'd wager I'm far more aware than you think of the investments required to explore, develop, and produce a prospect. (I know nothing about refining, though.)
rybosome 13y ago
> The risk is asymmetric: starting a crash program toward replacement of finite fossil fuels too early has great up-sides and marginal downsides (opportunity cost); but failure to act has enormous downside for marginal upside. - See more at: http://physics.ucsd.edu/do-the-math/2011/11/peak-oil-perspective/#sthash.hrEoRVjP.dpuf http://physics.ucsd.edu/do-the-math/2011/11/peak-oil-perspec... This is a more intelligent way of stating something I've been saying for years. I always explain my position on peak oil by offering an analogy of a fire escape. If the owner of a building chose not to install a fire escape (assuming they could dodge the law), then a fire in the building would be absolutely disastrous; the law would certainly come down on them for anyone who died, and there would major financial ramifications. On the other hand, if they installed a fire escape but it was never used, then the only downside would have been the initial installation cost. Between these two worst-case scenarios, one is so significantly worse than the other that taking steps to mitigate that risk is the logical thing to do, without regard to the likelihood of worst worst-case happening. Doing nothing with respect to peak oil feels utterly insane.
- deleted 13y ago
  [deleted]
- Casseres 13y ago
  The problem is, the United States is tying its own hands by not allowing the development of newer, safer, more efficient nuclear power plants. If we could, we would be able to retire the older, not-as-safe, less-efficient nuclear power plants - and the price of electricity would go down making it more affordable to use electric cars all while using less fossil fuels! I'm all for having a cleaner, safer environment. But until people get over their "not in my backyard" emotions, and get rid of harmful environmental regulations, then we are forced to use the technology that that is more harmful to the environment.
  - dismiss21x 13y ago
    What "harmful environmental regulations" are you speaking of?
rnernento 13y ago
Looks like the sysadmin has some math to do... Mirror?
- seiji 13y ago
  We've reached Peak SQL.
3rd3 13y ago
http://webcache.googleusercontent.com/search?q=cache:http://physics.ucsd.edu/do-the-math/2011/11/peak-oil-perspective/&ie=UTF-8&oe=UTF-8&hl=en&client=safari http://webcache.googleusercontent.com/search?q=cache:http://...
joe_the_user 13y ago
There is one thing I always like to mention with the usual peak oil math (and resultant fear/glee concerning "the end of civilization" and such). The traditional "Hubbert curve" shows exponential growth and decline in a any particular region of oil production. Peak oil theorists generally extend this to a world exponential peak/decline (the article doesn't directly say but it take the "we have to plan for the peak" position). The exponential growth part makes sense because traditional oil of the ground is a really, "high quality", high efficient energy source (whatever the externalities). The exponential decline at a given location make sense because the supply winds quickly replaced by some other even cheaper source. But the thing is that since these aspect explain the shape of the Hubbert curve locally, these is no reason to expect the global decline shape to have any resemblance to the rise shape. Oil today is a efficient meaning you get a lot more energy out than you put in. We're already moving to less efficient, more costly forms of extract and the price has marginally increase. There's no reason a-priori to think that any cliff would be involved with oil production peaking. Production gets harder, prices go up, consumption declines, technology produces relatively more at the higher rate, iterate a number of times and there you are. It's worth saying that shale oil is arguably much less energy efficient than traditional production but it is still efficient to get a profitable product to market (and does involve the, uh, transformation of a large land area). The main reason to put effort into alternatives to oil is the externalities - especially since pricier oil is going to involve more energy and environmental impact in its extraction. THAT is quite arguably a crisis but unfortunately for people worried about these problem, there's no going to be a "peak point" where oil isn't practical from a purely economic standpoint.
- sergiosgc 13y ago
  Large evolutionary jumps in mankind's history have always been associated with use of more energy per capita. The stabilization of oil consumption, visible since 2000, means one of two things: a) Humanity has plateaued in its energy usage; or b) Some other energy source is increasing. Any of these means oil has hit a peak (there'll be no cliff, though, as you explained). The alternatives are not acceptable (evolution stopped or, for the first time in five thousand years, stopped requiring more energy use).
Zaephyr 13y ago
It would be interesting to see plots of per capita oil consumption against population over time to see to the proportions of which the problem is being driven by current lifestyle/modernisation trends and by global population growth.
ctdonath 13y ago
How about the math of supply and demand? Oil dominates because it's cheap & efficient. When it's not, other existing but relatively uncompetitive energy systems will become viable within a sensibly short time purely as a matter of demand & competition. Remember, oil (as we're speaking of it) was practically nonexistent not all that long ago, yet a vast robust infrastructure has sprung up around it. Keep lofty-goal government subsidies out of it, as they distort the reality of what's viable, boosting lesser technologies while denying funds to what really will work as a matter of economics & physics. In the meantime, put some of your own energy & money into getting "off the grid": make an alternative energy source viable by actually making it happen on a personal scale, not just hoping somebody somewhere will make it happen the way you want it to.
olalonde 13y ago
Sorry for the naive question but what is oil used for? Isn't most of it used for transportation? If so, isn't the problem a bit overblown given that we have electric vehicles?
- maxerickson 13y ago
  A lot of it goes into plastics and also tractors.
- ohazi 13y ago
  Transportation of physical goods everywhere on the planet, not just transportation of your butt between work and home every weekday. We have electric cars. We don't have (useful) electric trucks, or ships, or passenger or cargo aircraft.

61 points by devbug 13y ago

Note this is from 2011 (pre fracking) so it misses quite a bit. And it doesn't plot home prices post mortgage crisis. Generally the whole 'peak oil' thing is of interest perhaps to people trading oil driller stocks (or not) but I have yet to see any way to apply any of the insights into something remotely interesting or predictive.

jofer 13y ago
First off, 2011 was most definitely not "pre-fracking". The majors moved into unconventionals in a big way starting around 2006-2007, and the independents were doing it well before that. However, unconventional gas resources don't particularly play into this calculation. Gas (as in methane) is a completely different resource in this context. The markets are different and the reserves are very different (there's a lot more methane). The "peak oil" debate focuses on liquid hydrocarbons. There are several liquids-rich unconventional "fracking" plays (e.g. the Bakken in North Dakota), but they're not particularly common. Oil shale is a much bigger player in terms of volume, but again, you're looking at slow, expensive, environmentally costly production. It's certainly more of a long-term problem, but it is something to be worried about. It's hard to replace liquid fossil fuels in terms of energy-density per unit volume. It's a problem that we as a society need to be working a _lot_ more on.
thrownaway2424 13y ago
You're kidding, I'm sure. The end of the Oil Interval is the most interesting, possibly the ONLY interesting historical event that will take place in our lifetimes.
- glenra 13y ago
  > The end of the Oil Interval is the most interesting, possibly the ONLY interesting historical event that will take place in our lifetimes. That seems like a bizarre thing to believe. When humanity switched from wood to coal for heating, or from coal to oil, were either of those an identifiable "historical event"? If we switch from oil to other fuels in our lifetimes, this will happen so gradually that nobody will notice when it happens. Any more than we noticed as "an interesting historical event" the moment that everybody got an email address, or started using google, or bought a smartphone.

devx 13y ago

The faster the oil/gas price increases, the more attractive electric cars become. Unfortunately, it could also mean US will never cut oil subsidies, unless they do it now, before the perceptible decline starts. Hopefully, governments will at least resist the urge to increase oil subsidies to keep the prices the same. Instead they should be looking at building electric car infrastructure in their countries, faster, so when the gas prices start climbing, the population switches "smoothly" to electric cars, and doesn't feel much of a shock.

fleitz 13y ago
Most countries tax oil heavily. Europe and Canada come to mind.
- arthurcolle 13y ago
  The country of Europe
- thrownaway2424 13y ago
  Yeah. Last time I was in Europe the local gas tax was more than the entire price of gas in the USA. Our low gas tax is, in effect, a subsidy, because we (as a society) choose to ignore the externalized costs of burning gasoline. Gas is currently 2CHF per liter (about $8 per gallon) in Zurich, in case you haven't been out of the USA lately.
  - fleitz 13y ago
    You could call it externalizing the costs of burning gasoline, or you could call it internalizing the profit of burning gasoline. The rest of the world burning gasoline results in cheap credit for the US. http://www.newyorkfed.org/research/current_issues/ci12-9/ci12-9.html http://www.newyorkfed.org/research/current_issues/ci12-9/ci1...
    - thrownaway2424 13y ago
      The result of burning all that fossil fuel will indeed by internalized in the end, but when it comes around I doubt you'll call it a profit.

jofer 13y ago

As a geologist in the oil industry, this is one of the few articles I've seen on peak oil that absolutely nails the salient points. (And even gets the geology correct.) To quote: "Most simply, peak oil is about rates, not amounts." Yes, there are a lot of unconventional resources. They're just a lot harder, more expensive, and most importantly in this context, slower to produce. On the upshot for me, and the downshot for the rest of civilization, oil (and to a large degree, energy) prices are likely to stay high for the near future for exactly this reason. However, we haven't developed a viable alternative to liquid fossil fuels in terms of energy-density fast enough. That very, very deeply scares me.

toomuchtodo 13y ago
> However, we haven't developed a viable alternative to liquid fossil fuels in terms of energy-density fast enough. That very, very deeply scares me. Electric cars are getting there, and there is always domestic natgas production in the US. It won't be fun, but that's what we get for dragging our feet. The US had this happen in the 70's (oil embargo). It's been 40+ years. Its our own damn fault.
- at-fates-hands 13y ago
  Oh man I couldn't agree more. I still refer back to Jimmy Cater's 1977 speech were he warned about our dependency on oil. Not just foreign oil (which a lot of people mistakenly think he said) and yet after 30 years, we're still in the same place. Pretty depressing if you ask me. Here's the speech: http://www.pbs.org/wgbh/americanexperience/features/primary-resources/carter-energy/ http://www.pbs.org/wgbh/americanexperience/features/primary-...
- matthudson 13y ago
  Consumer vehicles are definitely getting there, at least for high income and/or high net-worth people. And while that is a relief, it is still very troubling to think about the implications for our transportation infrastructure as a whole (where consumer vehicles represent a minority fraction.) How will we power our ocean freighters, our freight trains, our 18-wheelers, and our high capacity airplanes without high energy-density hydrocarbons (or with prohibitively expensive hydrocarbons)? I can imagine nuclear and electric solutions (hand-wavy or hypothetical) to some of these modes, but could they be implemented on a global scale in time? It makes me wonder what our transportation infrastructure will look like 100 or 200 years from now. -In what non-obvious ways will we look backwards to people of the future? -Will these people envy how cheaply we moved goods across the globe? -Will they laugh at how expensive it was to move things across the globe? -Will they even have the luxury of thinking about these things?

fleitz 13y ago

Peak oil depends on oil price, the world is awash in oil at $110. Even up to 2005 oil's peak price was $60. Peak oil also depends on consumption, with cars like Tesla coming out we'll see a sharp decline in consumption over the next 20 to 30 years, at $300/bl a Tesla starts to make a lot of sense. The world will never run out of oil, its price will simply continue to increase until other alternatives become economically viable, as those alternatives become viable economies of scale and capital investment will make alternatives that much better.

jofer 13y ago
The world is "awash" in oil at $110, but that oil simply can't be produced fast enough to meet demand. That's the fundamental problem.
- liber8 13y ago
  This is provably false. If oil couldn't be produced fast enough to meet demand, the price of oil would not be $110 a barrel, it would be $110+x per barrel, where x is the maximum number of dollars people are willing to pay to use the available supply of oil. This thinking generally leads people to miss OP's point, which is that the world will never run out of oil. Price will always fluctuate to meet demand (so long as we let the market set the price).
- fleitz 13y ago
  The oil business does not get disrupted by 3 kids in an apartment with $20K. If you want to open an oil field or a refinery you need billions of dollars and a financial projection that says the oil will stay at $X dollars for at least Y years. Since most people aren't convinced that oil will stay at $110 dollars for the foreseeable future they'd rather not risk billions of dollars. If you can accurately predict oil prices stop reading hacker news and open a commodities account.
  - jofer 13y ago
    You misunderstood what I'm saying. It has nothing to do with economics or disruption. It has _absolutely everything_ to do with geology. The hydrocarbons that become economic at higher oil prices fundamentally cannot be produced as quickly as conventional reserves. It's a matter of permeability. Not a matter of economics. Also, I'd wager I'm far more aware than you think of the investments required to explore, develop, and produce a prospect. (I know nothing about refining, though.)

rybosome 13y ago

> The risk is asymmetric: starting a crash program toward replacement of finite fossil fuels too early has great up-sides and marginal downsides (opportunity cost); but failure to act has enormous downside for marginal upside. - See more at: http://physics.ucsd.edu/do-the-math/2011/11/peak-oil-perspective/#sthash.hrEoRVjP.dpuf http://physics.ucsd.edu/do-the-math/2011/11/peak-oil-perspec... This is a more intelligent way of stating something I've been saying for years. I always explain my position on peak oil by offering an analogy of a fire escape. If the owner of a building chose not to install a fire escape (assuming they could dodge the law), then a fire in the building would be absolutely disastrous; the law would certainly come down on them for anyone who died, and there would major financial ramifications. On the other hand, if they installed a fire escape but it was never used, then the only downside would have been the initial installation cost. Between these two worst-case scenarios, one is so significantly worse than the other that taking steps to mitigate that risk is the logical thing to do, without regard to the likelihood of worst worst-case happening. Doing nothing with respect to peak oil feels utterly insane.

deleted 13y ago
[deleted]
Casseres 13y ago
The problem is, the United States is tying its own hands by not allowing the development of newer, safer, more efficient nuclear power plants. If we could, we would be able to retire the older, not-as-safe, less-efficient nuclear power plants - and the price of electricity would go down making it more affordable to use electric cars all while using less fossil fuels! I'm all for having a cleaner, safer environment. But until people get over their "not in my backyard" emotions, and get rid of harmful environmental regulations, then we are forced to use the technology that that is more harmful to the environment.
- dismiss21x 13y ago
  What "harmful environmental regulations" are you speaking of?

rnernento 13y ago

Looks like the sysadmin has some math to do... Mirror?

seiji 13y ago
We've reached Peak SQL.

3rd3 13y ago

http://webcache.googleusercontent.com/search?q=cache:http://physics.ucsd.edu/do-the-math/2011/11/peak-oil-perspective/&ie=UTF-8&oe=UTF-8&hl=en&client=safari http://webcache.googleusercontent.com/search?q=cache:http://...

joe_the_user 13y ago

There is one thing I always like to mention with the usual peak oil math (and resultant fear/glee concerning "the end of civilization" and such). The traditional "Hubbert curve" shows exponential growth and decline in a any particular region of oil production. Peak oil theorists generally extend this to a world exponential peak/decline (the article doesn't directly say but it take the "we have to plan for the peak" position). The exponential growth part makes sense because traditional oil of the ground is a really, "high quality", high efficient energy source (whatever the externalities). The exponential decline at a given location make sense because the supply winds quickly replaced by some other even cheaper source. But the thing is that since these aspect explain the shape of the Hubbert curve locally, these is no reason to expect the global decline shape to have any resemblance to the rise shape. Oil today is a efficient meaning you get a lot more energy out than you put in. We're already moving to less efficient, more costly forms of extract and the price has marginally increase. There's no reason a-priori to think that any cliff would be involved with oil production peaking. Production gets harder, prices go up, consumption declines, technology produces relatively more at the higher rate, iterate a number of times and there you are. It's worth saying that shale oil is arguably much less energy efficient than traditional production but it is still efficient to get a profitable product to market (and does involve the, uh, transformation of a large land area). The main reason to put effort into alternatives to oil is the externalities - especially since pricier oil is going to involve more energy and environmental impact in its extraction. THAT is quite arguably a crisis but unfortunately for people worried about these problem, there's no going to be a "peak point" where oil isn't practical from a purely economic standpoint.

sergiosgc 13y ago
Large evolutionary jumps in mankind's history have always been associated with use of more energy per capita. The stabilization of oil consumption, visible since 2000, means one of two things: a) Humanity has plateaued in its energy usage; or b) Some other energy source is increasing. Any of these means oil has hit a peak (there'll be no cliff, though, as you explained). The alternatives are not acceptable (evolution stopped or, for the first time in five thousand years, stopped requiring more energy use).

Zaephyr 13y ago

It would be interesting to see plots of per capita oil consumption against population over time to see to the proportions of which the problem is being driven by current lifestyle/modernisation trends and by global population growth.

ctdonath 13y ago

How about the math of supply and demand? Oil dominates because it's cheap & efficient. When it's not, other existing but relatively uncompetitive energy systems will become viable within a sensibly short time purely as a matter of demand & competition. Remember, oil (as we're speaking of it) was practically nonexistent not all that long ago, yet a vast robust infrastructure has sprung up around it. Keep lofty-goal government subsidies out of it, as they distort the reality of what's viable, boosting lesser technologies while denying funds to what really will work as a matter of economics & physics. In the meantime, put some of your own energy & money into getting "off the grid": make an alternative energy source viable by actually making it happen on a personal scale, not just hoping somebody somewhere will make it happen the way you want it to.

olalonde 13y ago

Sorry for the naive question but what is oil used for? Isn't most of it used for transportation? If so, isn't the problem a bit overblown given that we have electric vehicles?

maxerickson 13y ago
A lot of it goes into plastics and also tractors.
ohazi 13y ago
Transportation of physical goods everywhere on the planet, not just transportation of your butt between work and home every weekday. We have electric cars. We don't have (useful) electric trucks, or ships, or passenger or cargo aircraft.