Hey Adam–

I really enjoyed your article. It certainly “piqued” my interest (sorry, bad pun) on the future of oil supplies both domestically and internationally…

I have a few thoughts… It seems to me that peak oil theory is basically a more nuanced version of the idea that we’re running out of oil. That’s true, but only in the sense that the total amount of oil on planet Earth is finite. Which means that we’ve been running out of oil, in a sense, since the very first derrick was erected.

The main problem with the peak oil theory is that it doesn’t fully take into account innovation and technology. The relationship between the oil we take out of the ground and the benefits we get from it are not linear. For example, a gallon of gas in your car in 1950 would take you half as far as it would in 2000. Similarly, industry is using oil and gas more efficiently now than in the past.

Moreover, new technology lets engineers find oil more easily, and new extraction technology lets them remove it from the ground more cheaply. This is especially significant as the price of conventional oil increases. For example, a single large oil shale deposit in Colorado, Utah, and Wyoming contains three times the oil of Saudi Arabia (!). Source: http://seattletimes.nwsource.c.....udy01.html Shale oil is not considered conventional oil because it is harder to get at (and therefor more expensive to tap) than regular oil. But as conventional oil’s price increases and technology improves, this massive deposit of oil will become available. The estimated deposit is 500 billion - 1 trillion barrels–or roughly the same amount of oil that has been used throughout all of human history. And that’s just one oil shale field. There’s bound to be much more in Canada (our #1 source of imported oil), Mexico, and of course, Russia and the Middle East.

So while oil is, of course, a finite resource, I’m not certain we’re peaking yet. One measure of proof is the price of oil (!). Yes, the prices have gone up, but the talk of “record high oil prices” is simply wrong. It’s true–but only if you look at nominal prices. When you adjust prices for inflation, oil prices are higher than five years ago but lower than twenty years ago. And, I would argue that to the extent oil prices have gone up, it’s the result of the shocks caused by the war in Iraq as well as opportunism on the part of oil companies (hence their record-setting profits).

Conserving electricity and oil is certainly not a bad idea, and while oil consumption will undoubtedly increase as China modernizes, I think it’s not yet conclusive that we’re past our peak, so to speak.

So your point is we can find more oil and use more oil, and even though it’s a finite resource we can depend on technology to find ways to extend our usage. Well and good.

But it is a finite resource, that we do untold environmental damage by its mining and transportation which of course must be factored into the “cost,” and one of the reasons we don’t go after deeper oil is because the cost would be more than prohibitive…

Also, that new technology you mentioned won’t be implemented until far too late. Companies would rather take the short-term profit made by keeping old technology now, than invest in a more environmental and potentially useful technology where the rewards will only come in the long term. The interests of the corporation aren’t the interests of most people. So yes, while all the things you said are possible, the big question: are they profitable? If the answer’s no, or involves a long explanation, chances are it’s not happening.

As for the war in Iraq - why would anything there affect our oil prices? They never had a serious oil-exporting business in the first place - as you said, Canada’s our number one provider! When Katrina and later Rita hit, price jumps were expected because those were American companies, and suddenly the resource was much scarcer. There should have been some evidence of the war in our prices, yeah, but not a big jump! Our oil price increases had much more to do with the hurricane problem - one which is expected to worsen this year.

Conservation is much more than “not a bad idea.” Conservation is a “really mofo good idea,” like using a condom before you have sex with someone you’ve just met. Conservation is *essential.* Why would we want to waste anything? Why wouldn’t we want to learn how to make the most out of what we have, period? Because it requires that much more of our attention? Because someone’s selling it to us and they want to make money by selling more of it? Hell, if we used less, they would end up charging us less - we benefit either way… we can’t stop using resources - that would be silly. But let’s recognize the importance of conservation.

Aram - great to see you on here! I’m aware of the possibility of oil shale to possibly alleviate our post-peak energy problems, but it really shouldn’t be seen as a solution. It’s more of a pancaea than anything else.

Take this article by an UCSD econ professor. Many other analysis of shale oil arrive at the same conclusion. There’s a measure called EROEI - Energy Return on Energy Investment.

Conventional oil has an EROEI of 20-100, meaning for every barrel of oil you put into producing the oil, you get 20-100 barrels. Pretty good investment.

Shale oil has an EROEI of only 3, if even that. Some are saying it’s just 1.5. Meaning pour in one barrel of oil, and you get just 1.5 back. It’s a pretty inefficient way to extract enough energy to fuel our global economy. There may be one trillion barrels available, but it’ll also cost nearly a trillon barrels to get that out of the ground. Hopefully, research can make this process more efficient.

Higher oil prices will certainly make this a profitable enterprise, but at what cost? The environmental impact will be enormous - and I think that in a post-peak oil world with significantly less net energy available, we can’t afford to screw up the environment any further.

Any program that goes a mile in supporting shale oil extraction should also go 100 miles in supporting conservation and transition into an alternative-energy economy.

One additional aspect to the definition of peak oil. The upswing of the bell curve is mainly conventional oil - everything that’s easy to pump out of the ground. Peak oil is literally marks the end of the conventional oil age as we will be unable to find and pump new sources of liquid crude oil; the downswing of the bell curve is populated by oil that are increasingly difficult to extract (like shale oil).

Will our economy crash, farmlands go fallow, and billions of humans die? I’m not quite convinced on the doomsday scenario, but given the fact that nothing (even the combination of all the alternative energy schemes) currently exists to completely fuel our petroleum-dependent economy after peak, we’re in for some very difficult times ahead.

The supply of oil is a downward sloping curve decreasing at an increasing rate. For those of you who understand economics, that means that demand for oil will continue to increase while the supply of oil, which is a nonrenewable source by the way (unless you want to wait a couple million years for the natural fossilization process to create more oil), is quickly decreasing. Therefore, the “peak” was back when oil was first discovered and used for consumption. We already had conflicts over oil more than 50 years ago (look at Japan during WWII for example). The only thing that will peak is our stupidity.

Many people think oil is limited to just fuel consumption by automobiles, ships, airplanes, factories, etc. The reality is that every component of oil is used for something. The plastic utensils and plates we use when we eat in a cafeteria or fast food restaurant is made from a byproduct of oil. Our chapsticks, petroleum jelly, and some oil based lotions are also made from byproducts of oil. That’s just a small fraction of what we use oil for. In order to find a true alternative to oil, we would need to find alternatives to much more than just gasoline. Gee whiz… now we can see the iceberg underwater.

Are you ready for a sudden drop in standard of living? Embrace for impact!

Thanks for all of the responses. I don’t disagree that oil is a finite resource. The question is how finite. Adam brings up the point that currently it’s not economically viable to extract and refine shale. That’s true, but only in comparison to conventional, easy-to-get-at oil. With oil prices rising somewhat (though not at record highs as teh press likes to say), more money will be invested into unconventional oil technology. Which means that the price of exploiting shale will drop and make it more economically viable. Joseph mentions the environmental impact, which is obviously an important consideration, although Shell is developing technology to do in situ retorting instead of surface retorting, which would minimize the environmental impact. If you’re interested in the details of shale oil extraction, there’s a great Rand publication on the issue worth reading: http://www.rand.org/pubs/monog.....14.sum.pdf

The point is that there isn’t really a crisis. Oil prices are much lower than they were 25 years ago. See here: http://www.msnbc.msn.com/id/8897401/site/newsweek/ This does not point to a crisis. To the extent oil prices have increased somewhat over the past few years, there are a number of factors–instability in the Middle East, the shift after the dot com bubble to more industrial uses of capital, and gouging in the wake of Katrina.

So what should we do? I would argue…not much. To the extent oil prices go up (reflecting diminished supply, as you argue), there will be economic incentives to conserve. Witness the Prius. And economic incentives to research alternative oil and energy sources, including shale oil. Anyway, I’d love to write more, but I need to gas up the Hummer for this weekend. Just kidding.

As for “Technology” providing solutions such as more efficient SUVs, there’s Jevon’s Paradox to be concerned about. Basically what it means is that even though cars have gotten more efficient and less polluting, our petrofuel consumption has grown and urban air pollution gotten worse.

If we keep making plain-old IC-engine only SUVs with crappy efficiency, people will eventually stop buying them and will opt for a smaller vehicle. When automakers create hybrid SUVs, people get hyped and buy them, thinking they are doing something good for the environment, even though most of the time they have absolutely no knowledge of environment and energy issues. People opt for the hybrid SUV, which actually consumes more gas than smaller vehicles.

A similar analogy would be buying a new super-efficient fridge, and then putting the old one down in the garage (and using it, often only to keep soda or beer cold)

Money is the only connection between energy usage and your average citizen. A lot of people believe the only impact of excessive petrofuel consumption is on the thickness of thier wallet. Fossil fuels touch every aspect of our lives, everything from the gas in your car to the plastic your computer mouse is made from. All of society is in for a rude awakening in the coming years.

nethawk: Jevon’s Paradox. *Gives you points for bringing that up* It’s very true. Someone reduces their energy expenditures only to use the slack elsewhere. And if THEY don’t use the slack, someone else will. It only works if we all reduce at the same time.