Drill Baby, Drill

 Rumours of Peak Oil Greatly Exaggerated

Sheik Yamani, former head of OPEC, once famously opined that the steam age did not end due to any shortage of wood, and the coal age did not end due to a shortage of coal.  Likewise, he reckoned, the oil age would eventually end, but not for any lack of oil.

For forty years now, we have been regaled with horror stories of the consequences of oil running out.  We have been told repeatedly that "peak oil" was just around the corner.  In fact, it should be happening now.  After that, oil prices would rise dramatically, due to international shortages leading to severe economic dislocation.  Apocalypse now!  As a result we have been subjected to endless government and crony capitalist waste, fraud, graft and corruption in a useless effort to develop alternative energy sources (solar, wind, ethanol). 

Now it is all being exposed as rubbish.  Stupid, ignorant rubbish.
  But wilful, self-absorbed men never learn.  Their own sense of self-importance and destiny demand a world which is filled with doom and crises which, in turn, require their services to prevent and rectify. Those whose faith is in the Saviour State cheer and applaud.  Their god gets bigger and bigger, more and more Leviathanesque.  But it's all in a good cause.  Saving mankind.

Poor old George Monbiot, the Guardian's global warming shriller, has at least one redeeming feature.  He is prepared to face up to some unpleasant truths.  He has, consequently, pronounced "peak oil" to be a crock. 

The facts have changed, now we must change too. For the past 10 years an unlikely coalition of geologists, oil drillers, bankers, military strategists and environmentalists has been warning that peak oil – the decline of global supplies – is just around the corner. We had some strong reasons for doing so: production had slowed, the price had risen sharply, depletion was widespread and appeared to be escalating. The first of the great resource crunches seemed about to strike.

Among environmentalists it was never clear, even to ourselves, whether or not we wanted it to happen. It had the potential both to shock the world into economic transformation, averting future catastrophes, and to generate catastrophes of its own, including a shift into even more damaging technologies, such as biofuels and petrol made from coal. Even so, peak oil was a powerful lever. Governments, businesses and voters who seemed impervious to the moral case for cutting the use of fossil fuels might, we hoped, respond to the economic case. . . .

Peak oil hasn't happened, and it's unlikely to happen for a very long time.

A report by the oil executive Leonardo Maugeri, published by Harvard University, provides compelling evidence that a new oil boom has begun. The constraints on oil supply over the past 10 years appear to have had more to do with money than geology. The low prices before 2003 had discouraged investors from developing difficult fields. The high prices of the past few years have changed that.

Maugeri's analysis of projects in 23 countries suggests that global oil supplies are likely to rise by a net 17m barrels per day (to 110m) by 2020. This, he says, is "the largest potential addition to the world's oil supply capacity since the 1980s". The investments required to make this boom happen depend on a long-term price of $70 a barrel – the current cost of Brent crude is $95. Money is now flooding into new oil: a trillion dollars has been spent in the past two years; a record $600bn is lined up for 2012. . . .

There are, we now know, monstrous deposits in the United States: one estimate suggests that the Bakken shales in North Dakota contain almost as much oil as Saudi Arabia (though less of it is extractable). And this is one of 20 such formations in the US. Extracting shale oil requires horizontal drilling and fracking: a combination of high prices and technological refinements has made them economically viable. Already production in North Dakota has risen from 100,000 barrels a day in 2005 to 550,000 in January.

 Here in New Zealand, the Greens and their fellow travellers, have been pronouncing jeremiads about "peak oil" for years.   They have only served to portray once again their woeful ignorance of free markets, economic growth, economic history, and technological development.

This from the NZ Herald in 2005:

An oil-free New Zealand is on the Green Party's agenda.  At the party's "Picnic for the Planet" on Waiheke Island yesterday, co-leader Jeanette Fitzsimons warned of an oil crisis within 10 years.  "The end of cheap oil is coming towards us with the force of a tsunami and New Zealand is not ready," she said.

Oil consumption had been so extravagant that in one century the world had used up about half of the planet's resources and demand was continuing to grow. When the half-way point in oil reserves was reached - known as peak oil - it would become physically impossible to increase production and an oil crisis would occur, she said.

The Government last year acknowledged the peak oil point and has estimated it will be about 2037, but Ms Fitzsimons said there was a consensus among independent petroleum geologists that it might be less than 10 years away.  When the point was reached, prices would rise inexorably.

And this from the Greens' website:

Peak oil is not the end of oil, but the end of cheap oil. From 2000 prices were steadily increasing, but in 2008 we saw them skyrocket. This had a serious impact on the world economy.   By the end of 2010, prices were climbing over US$100 a barrel again, threatening the global economic recovery. We can expect a future of volatile but increasing oil prices, and as the chief economist of the IEA has said, for the future of our economy and society “we need to leave oil before oil leaves us”.

Another faux crisis is about to bite the dust.