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Peak oil is tied to the rate of extraction in addition to EROEI. The world demands something like 85 million barrels of oil per day. There could be a trillion

Peak oil is tied to the rate of extraction in addition to EROEI. The world demands something like 85 million barrels of oil per day. There could be a trillion barrels in the ground, but if the oil industry can't get it to market fast enough, the price will become volatile. Similarly, there could be a trillion barrels in the ground, but if it takes more than a barrel of oil equivalent to extract a barrel of oil, it's useless as an energy source (but obviously not as a feedstock for oil-based goods production). What happens after an oil source passes its peak is that a) the rate of extraction starts to go down, and b) the EROEI starts to go down. EROEI is proportional to the cost but they're not equivalent. As we saw over 2008, the cost is also a function of the balance between supply and demand. When demand tries to grow against a flat supply, the price goes up. If the price goes up high enough, the economy starts to go into jeopardy. That's why the rate of extraction matters, and it's not a subject the peak oil deniers really address, except to wave their hands and claim that 'new technology' will deal with it. So far, the experience with 'new technology' has not supported this optimism. Most new technologies either a) accelerate depletion of conventional sources without increasing total recoverable reserves; or b) enable access to non-conventional sources at a very low rate of extraction and a very low EROEI. Peak oil theorists have been warning us about exactly the kind of oil price volatility (long run-up followed by an economic crash and a collapse in the oil price) that we're observing today. As long as our economy still runs on an ever-increasing rate of oil production, we will continue to suffer from volatility. Remember, the market has two methods of bringing supply and demand into balance: it can spur the creation of new supply (through the price incentive to increase production), and it can spur the destruction of demand by pricing some consumers out of the market. Given the geological constraints facing the feasible rate of oil production, we can expect that most of the balance will come from destruction on the demand side.

ivankirigin 17y ago
There are huge logistical constraints on the demand side too. Think of all the cars on the road, all the gas stations, etc.
- abalashov 17y ago
  Indeed, the very fundamental underpinnings of the overwhelming preponderance of the US economy, as well as that of other First World countries. Just about everything requires oil, and just about any growth requires more oil.
  - Retric 17y ago
    uses != requires Oil is used for peak power generation that can quickly adapt to chaning demand, however, hydroelectric energy storage is used to do the exact same thing.
    - abalashov 17y ago
      Uses = requires right now. Uses also = requires in very massive quantities in order to produce and deploy whatever is going to (partially) replace it. Do you really think wind turbines, solar panels, hydroelectric dams, and nuclear power plants don't require oil to build, construct and, to a nontrivial extent, operate?
      - Retric 17y ago
        We use Oil for a huge number of things when there are direct substitutes, because it's incredibly plentiful and cheep. EX: Roads. Even in cases when you need Oil due to its chemistry, it's just long chain hydro carbons. And, you can make long chain hydro carbons from many things including Coal and water which are indistinguishable from Oil. The only real question is how fast the price of oil increases, and how long it takes to switch to other substitutes or synthesize it. PS: Even the worst case estimates say the supply will gradually decline over decades so there is going to be a long time to find substitutes. (Less than 25% decline in supply per decade is slow.) What happens to Oil’s price is a separate issue, but that’s far less important than you might think.
- RyanMcGreal 17y ago
  The past few years proved that demand for oil responds to price signals. Driving in the US fell some five percent between 2007 and 2008, and transit use rose by a similar amount. The main reason Europeans today consume half the oil per capita of North Americans is that Europe imposed stiff gas taxes after the 1970s oil shocks. Europeans drive almost as much as North Americans (some 17,000 km per capita per year compared to 18,000 km per capita per year) but they do it a lot more efficiently. But you're right that it takes a long time for price signals to drive a structural change in patterns of oil consumption. If the price of oil gets too high, many people are simply priced out of the market for oil - and in huge swaths of the USA, out of the market for jobs, homes, food, etc. as well. Unfortunately, the sharp recession that high oil prices trigger causes a rapid (if temporary) collapse in oil prices. The result of leaving the price of oil up to the market is volatile prices and wildly fluctuating price signals that periodically sabotage the incentives for individuals to change their energy use patterns.
ars 17y ago
> The world demands something like 85 million barrels of oil per day. No, it doesn't. The world needs a certain amount of energy - any kind. They are almost totally interchangeable. You could pump 0 barrels a day, and as long as there was a transition time (about 10-30 years) there wouldn't be any problem at all. If coal was cheap, you can gasify it, or convert it to liquid fuel. If all you had for nuclear power, then battery powered cars would be much more used, plus you could thermalyze water (similar to electrolyze), then combine with co2 and make liquid fuel. The ONLY thing that matters is how much does it cost. Oil is the cheapest thing right now, so that's what we use. If oil got more expensive, then no problem, we'll switch to something else. It doesn't even matter if there is plenty of oil, if it's expensive we'll do something else - that's why so many wind farms sprung up. We didn't run out of oil, it's just wind suddenly got cheaper than oil.
- easp 17y ago
  You do realize how many unproven assumptions you are relying on. Theoretically, we can have access to infinite amounts of clean energy by fusing hydrogen nuclei... We've known that for decades, and yet, people are still worried about the supply of oil...

ivankirigin 17y ago

There are huge logistical constraints on the demand side too. Think of all the cars on the road, all the gas stations, etc.

abalashov 17y ago
Indeed, the very fundamental underpinnings of the overwhelming preponderance of the US economy, as well as that of other First World countries. Just about everything requires oil, and just about any growth requires more oil.
- Retric 17y ago
  uses != requires Oil is used for peak power generation that can quickly adapt to chaning demand, however, hydroelectric energy storage is used to do the exact same thing.
  - abalashov 17y ago
    Uses = requires right now. Uses also = requires in very massive quantities in order to produce and deploy whatever is going to (partially) replace it. Do you really think wind turbines, solar panels, hydroelectric dams, and nuclear power plants don't require oil to build, construct and, to a nontrivial extent, operate?
    - Retric 17y ago
      We use Oil for a huge number of things when there are direct substitutes, because it's incredibly plentiful and cheep. EX: Roads. Even in cases when you need Oil due to its chemistry, it's just long chain hydro carbons. And, you can make long chain hydro carbons from many things including Coal and water which are indistinguishable from Oil. The only real question is how fast the price of oil increases, and how long it takes to switch to other substitutes or synthesize it. PS: Even the worst case estimates say the supply will gradually decline over decades so there is going to be a long time to find substitutes. (Less than 25% decline in supply per decade is slow.) What happens to Oil’s price is a separate issue, but that’s far less important than you might think.
RyanMcGreal 17y ago
The past few years proved that demand for oil responds to price signals. Driving in the US fell some five percent between 2007 and 2008, and transit use rose by a similar amount. The main reason Europeans today consume half the oil per capita of North Americans is that Europe imposed stiff gas taxes after the 1970s oil shocks. Europeans drive almost as much as North Americans (some 17,000 km per capita per year compared to 18,000 km per capita per year) but they do it a lot more efficiently. But you're right that it takes a long time for price signals to drive a structural change in patterns of oil consumption. If the price of oil gets too high, many people are simply priced out of the market for oil - and in huge swaths of the USA, out of the market for jobs, homes, food, etc. as well. Unfortunately, the sharp recession that high oil prices trigger causes a rapid (if temporary) collapse in oil prices. The result of leaving the price of oil up to the market is volatile prices and wildly fluctuating price signals that periodically sabotage the incentives for individuals to change their energy use patterns.

ars 17y ago

> The world demands something like 85 million barrels of oil per day. No, it doesn't. The world needs a certain amount of energy - any kind. They are almost totally interchangeable. You could pump 0 barrels a day, and as long as there was a transition time (about 10-30 years) there wouldn't be any problem at all. If coal was cheap, you can gasify it, or convert it to liquid fuel. If all you had for nuclear power, then battery powered cars would be much more used, plus you could thermalyze water (similar to electrolyze), then combine with co2 and make liquid fuel. The ONLY thing that matters is how much does it cost. Oil is the cheapest thing right now, so that's what we use. If oil got more expensive, then no problem, we'll switch to something else. It doesn't even matter if there is plenty of oil, if it's expensive we'll do something else - that's why so many wind farms sprung up. We didn't run out of oil, it's just wind suddenly got cheaper than oil.

easp 17y ago
You do realize how many unproven assumptions you are relying on. Theoretically, we can have access to infinite amounts of clean energy by fusing hydrogen nuclei... We've known that for decades, and yet, people are still worried about the supply of oil...