Ten years ago peak oil was assumed to be a rather straightforward, transparent process. What was then thought of as “oil” production was going to stop growing around the middle of the last decade. Shortages were going to occur; prices were going to rise; demand was going to drop; economies would falter; and eventually a major economic depression was going to occur. Fortunately or not, depending on your point of view, the last ten years have turned out to a lot more complicated than expected. Production of what is now known as “conventional” oil did indeed peak back around 2005, and many of the phenomena that were expected to result did occur and continue to this day.
Oil prices have climbed several-fold from where they were in the early years of the last decade – surging upwards from $20 a barrel to circa $100. This rapid jump in energy costs did slow many nations’ economies, cut oil consumption, and with some other factors set off a “great” recession. Real economic hardships have not yet occurred.
Much of this is due to the reaction that set in from high oil prices and increased government intervention into the economy. In the case of the U.S., Washington turned on the modern day equivalent of the printing presses and began handing out money that was used to develop expensive sources of oil and gas. The high selling price per barrel, coupled with cheap money, led to a boom in U.S. oil production where fortuitous geological conditions in North Dakota and South Texas allowed the production of shale oil at money-making prices, provided oil prices stay high.
Related: Why Peak Oil Refuses To Die
U.S. unconventional oil production soared by some 3.3 million barrels a day (b/d) in the last four years, and, if the US Energy Information Administration is correct, is due to climb by another million b/d or so in 2015. While this jump in production was unexpected by most, it was just another phenomenon resulting from unprecedentedly high oil prices, which in turn resulted from the lack of adequate “conventional” oil production. As is well known, economic development can have major reactions and feedbacks.
What is so interesting about all this is that a temporary surge in what was heretofore a little-known source of oil in the U.S. is masking the larger story of what is taking place in the global oil situation. The simple answer is that except for the U.S. shale oil surge, almost no increase in oil production is taking place around the world. No other country as yet has gotten significant amounts of shale oil or gas into production. Russia’s conventional oil production seems to be peaking at present, and its Arctic oil production is still many years, or perhaps even decades, away. Brazilian production is going nowhere at the minute, deepwater production in the Gulf of Mexico is stagnating, and the Middle East is busy killing itself. On top of all this, global demand for oil continues to increase by some million b/d each year – most of which is going to Asia.
If we step back and acknowledge that the shale oil phenomenon will be over in a couple of years and that oil production is dropping in the rest of the world, then we have to expect that the remainder of the peak oil story will play out shortly. The impact of shrinking global oil production, which has been on hold for nearly a decade, will appear. Prices will go much higher; this time with lowered expectations that more oil will be produced as prices go higher. The great recession, which has never really gone away for most, will return with renewed vigor and all that it implies.
Related: 5 Industries Worried About Peak Oil
An additional factor which has grown considerably worse in the last ten years is climate change, largely brought about by the combustion of fossil fuels. We are already seeing global weather anomalies with record high and low temperatures and record floods as well as droughts. This too will take its toll on economic development as mitigating this change will soon become enormously expensive. We are already seeing migrations of restive peoples. Thousands are dying in efforts to get from the Middle East and Africa into the EU. Millions are already homeless across the Middle East and recent developments foretell hundreds of thousands if not millions more being added to ranks of refugees as decades and even centuries-old political arrangements collapse.
All this is telling us that the peak oil crisis we have been watching for the last ten years has not gone away, but is turning out to be a more prolonged event than previous believed. Many do not believe that peak oil is really happening as they read daily of surging oil production and falling oil prices. Rarely do they hear that another shoe has yet to drop and that much worse in terms of oil shortages, higher prices and interrupted economic growth is just ahead.
We are sitting in the eye of the peak oil crisis and few recognize it. Five years from now, it should be apparent to all.
by Tom Whipple
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The article focuses on oil without mentioning U.S. natural gas production. The natural gas market is different than oil, but related. In all but the core shale areas, profitability is very iffy for NG at today's prices. So, a lot of NG is produced as a byproduct of the more profitable petroleum liquids.
The music for US unconventional petroleum will stop if the resource itself winds down, interest rates for borrowing rise, or market prices go low for an extended period.
I see lots of risk in unconventional petroleum. I am encouraged by growing success in clean electric power. Now for some major steps forward in clean transportation!
Your 'facts' are missing out on truth leaving them worse than useless. Its obvious that people are migrating (and dying) for political reasons, not climate change (or peak oil). As to the climate I think you need to reset your brain with information and not fatuous dogma. RSS satellite data shows no warming for almost 18 years. (What are you thinking happened in the last ten years?) As for storms and floods, nothing unusual is happening. Most high temps records come from the 1930s. I quote Christopher Monckton of England for other trends below.
“Storms, droughts, floods, ocean acidification, sea-level rise”: The usual litany. As for storminess, the trend in severe hurricanes, typhoons and tropical cyclones has been downward in recent decades; there has been no trend in land falling Atlantic hurricanes for 150 years; and the U.S. has enjoyed its longest period without a major hurricane landfall since records began. There is no trend in extra-tropical storminess either, according to the IPCC’s special report on extreme weather.
As for floods, the same report, confirmed by the Fifth Assessment Report, says there is no evidence of any global increase in the frequency, intensity, or duration of floods.
As for droughts, Hao et al. (2014) show that the land area under drought has fallen slightly over the past 30 years."
Someone has said that facts are stubborn things. They don't move or change. We have to deal with them eventually even if they don't support politically correct or fashionable beliefs. I invite you to verify these facts independently and then decide what you believe. But regardless, please don't bring irrelevant, political claptrap into an essay where it has no bearing at all.
If you look back to about 2005, drought in Syria drove people off the land and into the cities. Combine that with a brutal dictator and you have civil war.
pure propaganda, we will all be laughing about this in the future huddled around the fire to stay warm.
Laugh at yourself before laughing at others. It is just their view and needs to be respected for that. Cheers