Oil is Found in the Minds of Men
And ‘peak oil’ is founded on ignorance, argues Peter Foster:
Peak Oil theory represents a combination of economic ignorance and moral rejection of markets as greed-driven and short-sighted. These all-too common attitudes usually go with a profound faith in effective government policy, despite the monumental weight of evidence to the contrary.
posted on 19 September 2009 by skirchner
in Commodity Prices, Economics, Financial Markets, Oil
(9) Comments | Permalink | Main
We never hear of “Peak Gold” do we? Yet humans have been mining the stuff for, what, maybe 5,000 years? And they still manage to keep finding more.
And yet, oil production has peaked in the US and UK, where oil companies are privately owned and technology is most advanced.
If it were possible for the Americans and Brits to reverse the downward trend in oil production why have they not done so? The incentive is massive. Are you going to tell me the Americans like running a huge petroleum deficit?
Gold production has been declining for the last four years.
Nauru is well past the point of ‘peak phosphate’.
It’s possible to be economically literate and believe in markets while also believing in peak oil. Please, no more false dichotomies.
Carbonsink: Oil production may well have peaked in the US, but isn’t that largely due to govt restrictions on exploration, particularly offshore and in Alaska?
Jeremy: Yes, gold production has been falling lately, see this.
But do you notice something? Gold production has fallen lots of times previously, and each time was followed subsequently by an increase. Why should this time be different? As the price of gold continues to rise, I expect previously un-economic mines will be re-opened thus increasing supply levels once more. In addition, mining companies will invest greater resources into improving the efficiency of existing mines as well as finding new deposits.
E.D., who knows? The US$ gold price has increased fourfold - fourfold! over the last ten years, but that gold production, it just ain’t responding.
Your argument as to why we’ll likely find new gold resources is the same as that used by the non-peak-oilers.
I’m quite positive we aren’t anywhere near ‘peak gold’. I’m not sure about oil, but if I were forced to choose I’d side with David.
What I dislike is simplistic arguments and insults offered up in place of reason. I let Stephen get away unchallenged with too much of this over the last few years, I was quite happy to trust him and his judgement. As it turns out, he and his associates were terribly wrong about the economic situation.
I like reading this blog - but no more free passes.
Gold is not a great comparison because new production is small relative to above ground stocks, so the market is more of a stock rather than a flow equilibrium.
Posted by skirchner on 09/23 at 08:00 AM
Oil production may well have peaked in the US, but isn’t that largely due to govt restrictions on exploration, particularly offshore and in Alaska?
In a word. No.
The USGS estimates there are between 5.7 and 16.0 billion barrels of recoverable oil in ANWR (Alaska) with production peaking at 780,000 barrels per day.
US oil production peaked around 9 million barrels per day in 1970, and has declined to around 5 mbpd today, a shortfall of around 4 mbpd. You would need 5 ANWRs running at full production to offset the losses.
By comparison, the US currently consumes 21 million barrels per day.
So do you have any stats on the amount of oil reserves that cannot be tapped due to US Govt restrictions (e.g. offshore, onshore public and private land)? In relation to ANWAR and peak production, is it not the case that, again, govt regulations prohibit production from reaching higher levels?
Scientific American: Can Offshore Drilling Really Make the U.S. Oil Independent
The Minerals Management Service (MMS), is the part of the U.S. Department of the Interior responsible for leasing tracts to oil and gas companies and collecting the royalties on them
The MMS has estimated that there are around 18 billion barrels in the underwater areas now off-limits to drilling. That’s significantly less than in oil fields open for business in the Gulf of Mexico, coastal Alaska and off the coast of southern California, where there are 10.1 billion barrels of known oil reserves as well as an estimated 85.9 billion more.
Oil companies have yet to take advantage of the nearly 86 billion barrels of offshore oil in areas already available for leasing and development. So why are they chomping at the drill bit to open up the moratorium waters and survey them anew?
“Oil company stocks are valued in large part based on how much proved reserves they have,” says Robert Kaufman, an expert on world oil markets and director of Boston University’s Center for Energy and Environmental Studies. Translation: just having more promising leases in hand would be worth billions of dollars.
Besides, regardless of reserves, its flow rates that matter. To feed America you need to produce more than 20 million barrels a day. The Canadian tar sands supposedly contain 300 billion barrels, but after trillions invested its only producing around 1 million barrels/day.