Working Papers

Peak Oil Nutters

The WSJ profiles some typical Peak Oilers:

It was around midnight one evening in November when Aaron Wissner shot up in bed, jolted awake by a fear: He wasn’t fully ready for the day when the world starts running low on oil.

Yes, he had tripled the size of the garden in front of the tidy white-clapboard house he shares with his wife and infant son. He had stacked bags of rice in his new pantry, stashed gold valued at $8,000 in his safe-deposit box and doubled the size of the propane tank in his yard.

“But I felt panicky, like I needed more insurance,” he says. So the 38-year-old middle-school computer teacher put on his jacket and drove to an all-night gas station, where he filled three, five-gallon jugs with gasoline.

“It was a feel-good moment,” says his wife, Kimberly Sager. “But he slept better.”

Not sure how a few bags of rice, a propane tank and a few grand in gold is meant to help with TEOCAWKI, but like they say, whatever helps you sleep at night.

At least someone is out there trying to give the peak oilers an education:

Three weeks after their first immersion, the couple drove to a peak-oil conference in Ohio, where lecturers showered them with statistics on demand curves and oil-field depletion rates. Then, at a conference in Denver, a man in a chicken suit called them crazies as he passed our fliers arguing that the world still has plenty of oil.

I’m with chicken suit guy.

posted on 26 January 2008 by skirchner in Culture & Society, Economics, Financial Markets

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I’ve been following the Peak Oil debate for several years now.  Pretty much everything the “nutters” forecast 2-3 years ago has eventuated: Oil has breached $100/bbl, global oil production has been stuck at ~84 million barrles/day for almost 5 years, very little new oil production capacity has come online, no significant oil discoveries have been made and food inflation is accelerating as biofuels compete with food production.

Despite oil prices increasing 10 fold since 1998 the market has not magically produced a substitute fuel, nor has it produced an alternative to the internal combustion engine.

OTOH, your forecasting record is pretty poor.  The U.S. housing bubble (that supposedly didn’t exist) has burst messily.  Your much-loved U.S. economy is in tatters, the Fed is panic-mode and the U.S. dollar continues its downward spiral.

Can you and the chicken suit guy please explain how, where and why the “world still has plenty of oil”?

Posted by .(JavaScript must be enabled to view this email address)  on  01/30  at  02:07 PM

Seeing as you are with the chicken suit guy I think you should get one yourself.

I just hate the smug way economists dismiss Peak Oil as if economics is the perfect science (or art?) and is always right.

The maths is pretty simple. 85m barrels of oil is extracted from the ground every day. Existing oil fields are suffering production declines of at least 4.5% if you are listening to CERA and 8% if you are listening to Schlumberger (the guys the oil companies call in when they don’t know what to do next). Personally I would listen to Schlumberger in preference to a bunch of spreadsheet jockeys, but being charitable and therefore using the lower figure, this gives field declines of 4m barrels per day every year.

Economists predict that demand for oil will be 117m barrels per day by 2017. That means at least 36m barrels per day new production must be found just to stay even. Then we also need an extra 32m barrels a day to increase production from the current base. That amounts to new production that must be found of 68m barrels per day, 80% of todays production; or 7 new Saudi Arabias. How many new Saudi Arabias do you think we might find?

No oil? Substitutes will roll in seamlessly when the price is right? No they will not. Go and learn the first and second laws of thermodynamics. More fossil fuel is burnt in the US every year than the entire photosynthesis gain. Anyway, what do you propose we eat?

The chicken suit is not only appropriate, but richly deserved.

Posted by Saildog  on  02/06  at  09:17 PM

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