Since the 1960's one of the most precious theories in the world has been Peak Oil. From the first time I heard it in 1980 I have seen it drive investment decisions in sometimes inexplicable directions. When oil prices (and production) tanked in 1986 a lot of talking heads claimed that it was because of "Peak Oil" and prices were sure to rebound quickly because of supply and demand--prices stayed low for 15 years. The hypothesis of peak oil was promulgated in 1956 by M King Hubbert. It came with a Hubbert Curve and dire predictions of the world freezing in the dark. The Curve through 2010 looked like a pretty good fit for the data (with a peak in about 1975 and a secondary peak in 1986 caused by a run-up in prices).
In 2005, U.S. imports of oil were 70% of energy consumption and the Peak Oil guys were getting kind of smug. In the third 2012 Presidential Debate the sitting President said that "We are currently importing 20% of our energy demand". I hadn't looked at the numbers in several years, but that sounded wrong so I looked and his numbers were good. Demand is down slightly, but U.S. production of hydrcarbons is currently higher than the 1975 peak (crude is still only 2/3 of 1975 but it is increasing fast, natural gas is a bigger portion of the energy mix than it was in 1975 so the energy mix is 80% domestic).
Current estimates are that the new Shale Oil sources will make the U.S. a net exporter again by 2017. The Shale Oil resources are expected to increase Proved Developed Reserves in the U.S. from a current 20 billion barrels to something approaching 100 billion barrels in the next 5 years. These resources are far from unique in the world and similar shale plays in 20 countries currently do not have any significant development activity. We are not running out of oil any time soon.
Peak oil is pretty much considered a failed hypotheses after 50 years of guiding a progression of seriously stupid decisions. "Everybody" bought into it and "everybody" knows that increasing demand in an declining supply simply has to result in increasing prices. It is a model that is incredibly easy to internalize and you can even explain it to your Grandmother. It just isn't an accurate representation of a global phenomenon no matter how much we want to reduce a complex concept to a sound byte.
Hopefully it will not take 50 more years to put that other hypotheses that "everybody believes" and is "easy to internalize and can even be explained to one's grandmother" to rest. "Peak Oil" let the industry to carry too much debt and led to thousands of companies going under. "Anthropocentric Global Warming" is leading regulators down similar silly paths, but with much higher stakes.
David Simpson, PE
MuleShoe Engineering
"Belief" is the acceptance of an hypotheses in the absence of data.
"Prejudice" is having an opinion not supported by the preponderance of the data.
"Knowledge" is only found through the accumulation and analysis of data.
In 2005, U.S. imports of oil were 70% of energy consumption and the Peak Oil guys were getting kind of smug. In the third 2012 Presidential Debate the sitting President said that "We are currently importing 20% of our energy demand". I hadn't looked at the numbers in several years, but that sounded wrong so I looked and his numbers were good. Demand is down slightly, but U.S. production of hydrcarbons is currently higher than the 1975 peak (crude is still only 2/3 of 1975 but it is increasing fast, natural gas is a bigger portion of the energy mix than it was in 1975 so the energy mix is 80% domestic).
Current estimates are that the new Shale Oil sources will make the U.S. a net exporter again by 2017. The Shale Oil resources are expected to increase Proved Developed Reserves in the U.S. from a current 20 billion barrels to something approaching 100 billion barrels in the next 5 years. These resources are far from unique in the world and similar shale plays in 20 countries currently do not have any significant development activity. We are not running out of oil any time soon.
Peak oil is pretty much considered a failed hypotheses after 50 years of guiding a progression of seriously stupid decisions. "Everybody" bought into it and "everybody" knows that increasing demand in an declining supply simply has to result in increasing prices. It is a model that is incredibly easy to internalize and you can even explain it to your Grandmother. It just isn't an accurate representation of a global phenomenon no matter how much we want to reduce a complex concept to a sound byte.
Hopefully it will not take 50 more years to put that other hypotheses that "everybody believes" and is "easy to internalize and can even be explained to one's grandmother" to rest. "Peak Oil" let the industry to carry too much debt and led to thousands of companies going under. "Anthropocentric Global Warming" is leading regulators down similar silly paths, but with much higher stakes.
David Simpson, PE
MuleShoe Engineering
"Belief" is the acceptance of an hypotheses in the absence of data.
"Prejudice" is having an opinion not supported by the preponderance of the data.
"Knowledge" is only found through the accumulation and analysis of data.
