New column: So maybe those peak oil people weren't crazy after all

Bravo, Justin. We certainly need to be thinking about what will be our next sources of energy. A lot of people are starting to do that but we also need to realize that, no matter what sources we go to, they are going to be more expensive that just pumping crude oil out of the ground. Those speculating traders are probably on to something.

You didn't mention secondary recovery. There is still a lot of oil in those reservoirs that can be recovered but it is going to be more expensive oil. We can probably stay on your plateau for quite a long time, with oil getting gradually more expensive and with diesel from natural gas, tar sands and shale oil taking up the slack.

Meanwhile, we need to develop many solar-based alternatives and, frankly, I don't see how we avoid increased dependence on nuclear energy to base-load our energy supply. Then, some time in the distant future we're going to fuel our cars and planes with hydrogen made by the electrolysis of water, using nuclear energy to supply the electricity.

I understand that "reserves" are measures of the quantity of oil that can be recovered economically. This means as the price goes up so do the reserves. If the price of oil were to decline, the amount of oil in the reserves would decline even if nothing were taken from the ground.
Many people are concerned that we will "run out" of oil. That will never happen. We may run out of economically recoverable oil but not out of oil itself. The best example of this is the tar sands in Canada. They were un-economical at oil prices of less than $30 to $40 per barrel. Now with oil at $90+ per barrel, they are economical and are in the reserves. That is why our reseves are still growing faster than the oil is extracted.
I do not share your Dad's view about hydrogen as a fuel. To get a sufficent amount of energy from burning hydrogen to drive a vehical 300 miles would take a tank about the size of the vehical unless the hydrogen were compressed to very high and potentially dangerous pressures. The power loss from electrolysis and compression is pure waste. I predict we will develop better batteries instead and use the atomic energy to charge them.

"I do not share your Dad's view about hydrogen as a fuel."

GLD: You may be right but there is room for improvement in hydrogen storage technology as well as in electricity storage.

The key problem is net oil export capacity. For more info, do a Google Search for Net Oil Exports. Our most recent article is linked below.

BTW, regarding "reserve growth," this assertion, at least regarding conventional production, is contradicted by the Texas and North Sea case histories: Essentially no restrictions on drilling, best available technology, developed by private companies. Texas has declined at about -4% per year, the North Sea at about -4.5% per year (EIA, crude + condensate).

http://www.energybulletin.net/35079.html
Declining net oil exports--a temporary decline or a long term trend? (9/07)
Jeffrey J. Brown and Samuel Foucher, ASPO-USA
The current decline in world net oil exports is probably the start of a long term trend, as a result of declining production and/or increasing consumption in key exporting countries.
first published September 24, 2007.

Justin, thank you for one of the better articles on peak oil that I've seen in mainstreem US media. BTW, European media is way ahead of you guys on this issue. I encourage you to learn more about this issue by spending some time at theoildrum.com. There you will find a lot of serious discussion of the issue by scientists, engineers, and other deep thinkers. For example, I have a masters degree in engineering and work in energy (first in oil, now as a VP of a solar company).

The imminent peaking of global oil production is by far the biggest story of this generation. Yes, bigger than global warming. If you read the Hirsch report, you'll understand why. The peak oil story should be the Time cover story. It certainly will be when oil hits $300/barrel and there is rationing worldwide. Which is coming, as you say, "well ahead of schedule". I encourage you to work to get this story on the cover of Time. Your Pulitzer awaits!

Anyone looking for a relatively quick intro to the basics of peak oil is invited to download (and redistribute) my most recent energy presentation, The OIl Crunch (http://www.grinzo.com/energy/downloads/theoilcrunch09x20x2007.pdf).

I also highly recommend that people read the reports on the European Fuel Cell Forum's site (http://www.efcf.com/reports/), especially paper E21. The difficulties associated with using hydrogen for transportation are fundamental and far tougher to crack than most people realize. As I say on my own site, the question isn't can we get hydrogen fuel cells in vehicles to work acceptably in terms of safety, convenience, longevity, reliability, etc. I have no doubt whatsoever that we can do that. The issue is whether it makes economic or environmental sense to use hydrogen that way, given the advances in plug-in hybrids and EVs that are coming very soon, and how pressed we will be to use new renewable electricity generation to displace existing coal plants, not fuel new demand for cars.

I helped write Portland, Oregon's report on how to deal with peak oil.

Much time has already been wasted, and it appears we are in fast decline. Municipal planners can download the report, which includes a How-To section for preparing your area for Peak Oil.

Simply Google "Peak Oil Task Force".

The title begs the questions: why were the peak oil people dismissed as 'crazy' in the first place? Did they not present rational arguments? Or was it because their thesis was so unpalatable? What does this say about those who dismissed them, often with the put-down of peak oil as a 'conspiracy theory'?

GLD - you are right about the reserves and whether they are "economically" recoverable. The economic factor in question is not money though, it is energy. Once it costs more in energy terms than a barrel of oil to lift a barrel of oil, it is no longer economical. No amount of money in the world is going to change that.

The concept is net energy and that is why the tar sands are not long term viable. The net energy return is very poor. The fact that they are economic at all is because there has been extensive market failure with respect to the price of natural gas, which only reflects the short term (max 1 season) stocks "in the system". It takes nearly a barrel of oil equivalent in natural gas to make a barrel of syncrude from tar. Natural gas of course is the highest quality fossil fuel and the process of use natural gas to turn tar into oil has been described as like turning gold into lead.

In fact natural gas production has peaked in North America and supply is beginning to decline. Production is down 3% since 2000 even though there are 400,000 producing wells compared to 340,000 wells then. As real shortages develop that cannot be replaced with imported LNG (also declining) the price will spike. At that point the tar sands industry will need a rapid reappraisl.

To be fair the industry is aware that this is a looming problem and some of the players are proposing nuclear power to generate the heat needed. Nukes are big beasts from the era of central planning and they haven't worked out how to distribute the heat, or what the economics will look like. The idea seems improbable to say the least.

Does anyone know when there will be a viable plug in electric hybrid car on the market? I'm looking forward to powering it with my future solar pv system on my house. It seems that the time to prepare for peak oil is NOW. Also, I think we will see many gardens sprout as the price of food goes through the roof.

Patrick, isn't it because "peak oil" is often bundled with so much more than that? I mean, you can readily find sites that bind "peak oil" to the fall of western civilization and etc.

To make a long story (gained in my 2-3 years surfing the peak oil sites), once we accept the likelihood of a "peak" (or "plateau") we are sometimes drawn into prediction. "If" we say, there is a production decline of such-and-such, "then" we say "this" will happen.

The unfortunate feedback loop has been that people with strong bindings to "doom" tend to flock into peak oil, and peak oil gets to be a bit about them.

It leaves moderates wondering if they should even be identified with peak oil, and as Justin said, the "motley crew of survivalists, despisers of capitalism, a few billionaire investors and a lot of perfectly respectable geologists"

"Even the optimists think we have less than three decades to go?" You're on the right track there Justin. In fact, the 'optimists' think there is a 50/50 chance that the peak will happen within 20 years (I refer to the USGS 2000 report).

Predicting a date for the 'peak' is like trying to predict when a hurricane will hit. The question everybody needs to be asking instead is 'What is the probability of a conventional oil peak in the next 20 years?' And the answer to that question is much closer to 50% than to 5%.

So if we need at least 20 years to prepare (see the Hirsch report) then any double digit probability should be ringing alarm bells all over the media. Imagine yourself living in New Orleans in 2002, and asking 'What is the probability of a major hurricane strike in the next 20 years?' Everybody says, 'Don't worry, there's only a 30% chance of that happening...'