Thursday, July 25, 2013

Peak Oil Failure

There is a lot of crowing about the demise of peak oil.

The Death of Peak Oil: End of a Flawed Theory
John Kemp, Fiscal Times, 22 July 2013 (hat tip: Big Picture)
Failed predictions about peaking oil supplies, and steep rises in the price of other commodities, all stem from the same error: assuming a world of roughly constant technology, rather than one where technology is constantly changing, sometimes slowly, at other times in large disruptive jumps. Malthus, Jevons, Beal, Hubbert, the authors of Limits to Growth, Hirsch and the modern peak-oilers all failed to see how technology was already changing the world even as they wrote, and would alter it beyond recognition within just a few years.
There is no doubt that some in the "peak" crowd, underestimate potential reserves because of a misunderstanding of the technology out there.
But I have to guestion the mathematical ability of those who say we are out of the woods.  Demand has been flat worldwide because of bubble driven economic growth collapsed.  Since some hydrocarbon fuels are not easily stored, a lot of the pricing is very elastic.  Small drops in demand up or down, can have radical changes in prices.  Construction has similar problems.  You can't store construction workers to be used at a later time.  Right now, construction costs, where you haven't been running into material price competition with bubble-driven Chinese expansion, have been low.  If demand were to pick up, the price would go up dramatically.
The very inability of the World Economies to get themselves out of their bubble driven mess should give people pause about the common model used for economic growth.  Yes the 1970s population/resource alarmists overstated their case, and I think the NTE (near term extinction) folks are very likely doing the same thing now.  But being wrong in the short term is not the same as being incorrect overall.

We'll see.

If we used these new resources as wiggle room to get away from our reliance on limited supply fuel sources, I would be a lot more impressed.


PioneerPreppy said...

With demand dropping so much and yet the price rising as it has I don't know how they can deny peak oil. It was never about oil drying up but the cross of demand and price and it's ultimate effect on the economy.

I think we are seeing it everyday still.

James M Dakin said...

Idiots think $105 oil is the new Happy Motoring. Another Frack Oil Will Last 100 Years advocate. He probably gets all his news on the Zimmerman trial from MSNBC. Just look back at the lies and propiganda from the gas industy in the 70's, right before we peaked in domestic supply, to judge for yourself our energy future.

russell1200 said...

Pioneer: I agree. In fairness to the author, the peak-oil crowd, particularly those associated with the left, has pretty much described it as showing up at the gas station and there is no fuel to be had.

James: I went from being suspicious of global warming, to being pretty sure that it will be a problem going forward. Without fracking we would have peak-oil very quickly. Now other problems have a chance to catch up. All of which goes toward my even more depressing notion that it all comes down to the intersection of global population and life style consumption.