The point about one Saudi Arabia every seven years refers to oil consumption in light of economic growth:
That is, for the global economy to grow by around 3 pct a year, oil consumption has to rise by 1.4 pct. That’s around one Saudi Arabia every seven years.
Some more details can be found in the section on economic growth in the IEA report shared earlier.
I think the point refers to production rate and not reserves. The reason for this is that peak oil involves the former:
which explains
“The Myth of ‘Saudi America’”
From what I gathered from the IEA 2010 report, all oil and gas resources worldwide will add only 9 pct to total production for the next two decades.
However, global oil demand has to go up by around 1.4 to 2 pct a year (hence, one Saudi Arabia every seven years), which means the total increase won’t be enough.
Also, the 9-pct increase is based on the assumption that crude oil producers will go for maximum production, something which does not happen, as producers don’t continue extracting if it is not profitable to do so. That can be seen in light of this phenomenon:
“Total Production by the Top Five Oil Majors Has Fallen by a Quarter Since 2004”
http://www.theoildrum.com/node/9946
as well as points regarding capital expenditures and others raised in this lecture:
Finally, I'm not sure if the demand increase per annum factors in a growing global middle class:I work in the energy business (not a great supporter of it; but the paychecks are FANtastic) and we are at LEAST 50-100 years from a time when oil reserves will be so minute that true scarcity becomes an issue. Before that occurs, nuclear energy will have come back into vogue and both solar and energy efficiency will be at the maximum potentials.
Also tidal energy’s myriad kinks will have been “smoothed out” and that will replace fossil fuels in most electrical generating capacities,especially for coastal cities.
When oil does begin to falter or fail, it is likely only going to effect smaller nations wit less developed technological infrastructures the most. Advanced economies in the West and Asia will have moved past oil and into energy efficiency meaning that with exceptions of say, petrochemicals and plastics, they won’t be greatly inconvenienced by oil shortages or oil stoppages.
Besides, in that time whatever oil is available in such remote places as Greenland, the Arctic, the Antarctic and deeper in the oceans will be exploitable and thus will it will fill in the gaps.
Cheap oil is probably gone
Peak Oil is on the distant horizon.
Although that begs the question of when was there ever really cheap oil? Quick searching doesn’t turn up a good crude oil inflation-adjusted chart going back very far, but certainly with gasoline the inflation-adjusted numbers tell a different story from the conventional wisdom. Despite all the waxing nostalgic about old gas prices, when adjusted for inflation fuel prices really haven’t changed that much over the long term. The cheapest gas ever inflation-adjusted wasn’t back when it was a quarter a gallon back in the good old days of the 50’s and 60’s, it was when it was about a buck a gallon during parts of the 90’s. We also came very close to beating that record during the price crash in 2008.
Looking at the last 20 years, we’ve seen the most expensive fuel prices in the internal combustion era, but we’ve also seen the cheapest ones as well. It seems to me that the major difference is simply that (for a variety of reasons) prices are more volatile. There is definitely an overall upward trend, but it’s not quite as pronounced as the “end of oil” crowd like to imply with their cherry-picked data points.
I think you got this wrong- I can’t find which chart was posted, but apparently total global crude oil, including tar sands and shale oil, is still ever-so-slightly increasing, pretty much like it has for a long time now. There is a second use of the terminology in which shales and sands are ‘unconventional’ and not stick-a-pipe-in-the-ground and suck it out ‘crude’. In this sense, ‘crude oil production’ does appear to be in decline.
One of the axes on your graph isn’t labeled, and it isn’t clear what the blue dots are supposed to represent. Can you post a better chart, or explain this one? I guess I don’t have a firm grasp of what the common range of EROEI is. For example, IIRC Libya still has big reserves of cheap oil. They’re going to make a fortune. But you don’t see that everywhere- what’s the ‘spread’ in, say, North America?
Again, I see two uses of terminology here. The Peak Oil disaster scenario went something like this: discoveries have dropped off, but consumption has not. Global production will decline at a rate of ~4% every few years. So, at first that will be like the 70s oil crisis, everyone will flip their shit and the economy will be bad. But instead of things improving, bam! another 4% reduction. Now people really flip their shit. What happens after yet another 4% reduction? And another, and another? Pandemonium. Collapse of modern civilization.
But, while the concept of peak oil remains valid IMHO, the above scenario isn’t playing out. Huge discoveries have been made. Natural gas is surging. No one has even mentioned the possibility of undersea mining for methane- those reserves are truly astounding, and AFAIK still completely untouched.
So anyway, petrochemicals will get more difficult to extract, more expensive, too dirty, and so on. People are already building a better mousetrap via solar and wind, hybrid and plug-in cars, and a lot of other things. Alternatives look like they are going to make it, and oil production will drop off more because of supply AND demand, and not just a supply crunch.
Using the dots is a little confusing, but it’s basically a horizontal bar graph. The left has all the various forms of energy and the dots correspond to their EROEI. It is wikipedia, but it appears to be derived from a legitimate study.
There are definitely problems of terminology when trying to separate “conventional” and “unconventional” oil. For example, the Bakken and the Eagle Ford are widely called “shale oil” in the media, which is wrong. Shale oil is generally understood to mean drilling in the shale source rock itself and using various techniques accelerate the production of oil out of it. In the Bakken and Eagle Ford, the shale itself isn’t being drilled-- the oil is still migrating from the shale source rock to a different reservoir rock as with most historic oil plays, it’s just that the reservoir is thin and has generally low porosity and permeability so without horizontal drilling to increase exposure and fracking to improve porosity they wouldn’t be economic to produce. In the usual oil industry jargon, these would be conventional oil with unconventional reservoirs, whereas actual shale oil is considered unconventional oil.
These unconventional reservoir plays are what’s driving the current domestic boom. There may be more of these plays to be found, particularly overseas, but nothing compared to the potentially huge amounts of shale oil in the world. It’s just that at this point, the technology and economics aren’t quite there (much like oil/tar sands until recently.)
Just out of curiosity, why wouldn’t we run out of oil? I get that at some point it will get too expensive to drill for the last drop. But it’s not like they’re making any more of the stuff.
Oil was “cheap” when it took relatively little work to extract it from the ground. The days of bringing in wells that pump under their own pressure are pretty much gone. While there are some fields in Iraqi Kurdistan where oil freely flows to the surface, they have become the exceptions and not the rule.
Going forward, the energy required to extract hydrocarbons from the Earth is going increase exponentially. When it approaches costs which make nuclear power regain its “luster” and which will force even US automakers to discontinue mass producing less fuel efficient vehicles, then you’ll see a hydrocarbon slow down in the developed world.
This won’t happen in the developing world as they will not be able to afford the “cleaner” technologies.
In my experience the price volatility seen in the oil market is due to its abundance in unstable regions, the limited numbers of refineries near areas where petroleum is the greatest, inefficiencies in the refining and storage processes and the lack of political will in the major petroleum-consuming nation to enact stringent fuel efficiency regulations.
The location oil is the only one of the above which cannot be changed by either greater investment in infrastructure or government legislation.
That’s the optimal Goldilocks scenario. Oil price not low enough to make research and development of alternative energy forms uneconomic; oil price not high enough to collapse civilization.
Oil was always a dirty energy form just one step above Victorian Age coal. Only made worse by the fact that various ugly states in the Middle East sits on vast quantities of it. We should move past it. End of Easy Oil is what we want.
This is simple market dynamics. As oil gets scarcer and harder to extract and refine (EROI declines to close to 1:1), the price climbs to the point that it suppresses demand, then demand drops, lowering the price somewhat, but lower prices make extraction less attractive. Peak oil is defined as a lengthy period of severe demand/supply/price oscillation that finally ends with supply tapering off as it becomes less attractive for players to enter or remain in such an unstable market. Running out is rather like Zeno’s paradox, market forces will prevent us from actually reaching that point, but we will just lose interest in the product and move to something more practical and less economically destructive.
You have repeated this “growing (global) middle class” repeatedly without providing much substantive support for it. “Middle class” is a very nebulous term that can vary even within small regions. It sounds like you are spewing a talking point, to the extent that that part of what you are saying is becoming all but meaningless.
Realistically, growth of the “middle class” is bounded exactly by oil. As oil becomes more expensive (including its inevitable ripple effects), it puts downward pressure on the middle class itself, causing contraction. The lower boundary of what might be called middle class moves up, pushing the comforts out of reach, and so the middle class stops growing or starts diminishing, by definition as well as pragmatically.
My understanding is that if cheap oil is gone, then peak oil has already taken place, especially given high energy return demands for a growing global middle class.
The problem isn’t the discovery of huge reserves, as reserves for crude oil alone are very high. It’s that the production rate will not meet demand, and that’s what’s happening now.
That’s why a better understanding of EROEI is important. Most oil requires more energy to extract, and that eats up production, not to mention requires more money. Thus, most of reserves will remain untouched.
Unfortunately, the same applies to solar, wind, etc. These have low energy returns, and still require oil for petrochemicals, etc. The global economy, and especially a growing global middle class, requires high energy returns.
In summary, the IEA argues that because of these physical facts, all oil and gas sources will increase production by only 9 pct during the next two decades. That’s also assuming that crude oil producers will go for maximum depletion rates, causing crude oil production to flat line and keep total oil and gas production propped up. Unfortunately, for-profit companies do not operate that way, preferring to stop extracting from a source when earnings can no longer meet capital expenditures.
Another problem is that to maintain current global economic growth, oil demand has to go up around 2 pct every year, something that the 9 pct increase (which is based on very optimistic views of how oil companies operate) will not cover.
That means new oil, especially from unconventional sources, will have to contend with a drop in crude oil production plus increasing demand. And if more consumers from the rest of the world join the global middle class (as seen in increasing oil consumption and sales of various consumer goods), then even more new oil will have to be put online quickly.
But EROEI for unconventional sources is not high enough. For example, for shale oil, two-thirds of oil extracted have to be used to replace old wells:
which means what affects crude oil is even more pronounced for shale oil.
The catch is that we need high energy returns and other sources of energy cannot allow for that. More details can be found in the chart featured in the EROI article shared earlier.
IF and ONLY if there is no crossing of the price curve between oil and alternative energy sources.
Theoretically once oil prices rise high enough that it costs more per delivered functional energy content (such as miles driven, homes heated, etc.) than alternative (e.g. renewable) sources, the demand for alternative sources rise driving more supply development and more likely than not lowering the cost.
Realistically that is likely to occur both by virtue of the end of cheap oil and by continued reduction in the costs of alternatives. Civilization will not fall, it won’t even bump, it will transition. The big impacts will not be to the middle class but geopolitcally as countries who importance and power rests on petrodollars lose the ability to swing that stick. What happens as a result?
You seem to be conflating oil that’s “easy” in some conceptual sense with “cheap” oil. Back when it was still bubbling out of the ground, it cost more to produce, refine and bring to market than it does today. In the realm of conventional oil (which, see above, includes unconventional reservoirs like the Bakken), improvements in the efficiency of the production, refining and distribution network have thus far more or less kept pace with costs incurred by the increasing geologic difficulty of oil reservoirs.
Entirely different scenarios.
The concept of “Peak Oil” is that the quantities of recoverable oil will decrease exponentially each year after it occurs,regardless of the cost to recover. “Cheap oil” is simply oil which doesn’t require extensive and expensive methods to recover.
When (not if) drilling in the Arctic, the Antarctic and deeper in the ocean than currently occurs all produce lower quantities of oil, then we can reasonably discuss a “Peak Oil” scenario. Until then…
Oil price has tripled, and in terms of consumption, it dropped for the U.S., EU, and Japan due to economic crises but continued rising for the rest of the world:
The net effect is that oil consumption for the former dropped by around 5 Mb/d but for the rest of the world rose by around 10 Mb/d. Thus, even as oil becomes more expensive global demand keeps rising.
This phenomenon may have to do with the fact that oil is an important component for manufacturing and food production, especially in terms of shipping and petrochemicals used for thousands of products. Add to that a growing global middle class and money used for basic needs (food, construction materials, medicine, etc., many of which require significant oil and gas inputs), and it is likely that demand will continue growing, and probably at a faster rate.
The same can probably take place for many components needed for renewable energy, etc. As the same growing global middle class switches to these energy sources, then demand for them will rise as well. If what affects oil also affects other resources, then prices for these will also go up.
Finally, one can probably see availability of resources in light of ecological footprint:
That is, in 2007 the ave. footprint per capita was around 2.7 global hectares, equivalent to that of Turkey. As more people worldwide join the middle class and want not just conveniences such as passenger vehicles but even electric vehicles and all sorts of components needed to support that and infrastructure, then that ave. footprint is expected to grow.
Meanwhile, biocapacity per capita was only around 1.8, equivalent to the footprint of Cuba.
Thus, the world has been in overshoot for some time. That biocapacity per capita will certainly drop given a growing population plus the effects of environmental damage coupled with global warming.
It’s the same scenario. The reason why production drops is because there’s less “cheap oil.”
Too late. Conventional production peaked in 2005. And in terms of population, global oil production per capita peaked back in 1979.
Do you actually work in the energy industry or are you regurgitating something that you have read?
If we were experiencing “Peak Oil” then refineries around the world would decrease their throughput as they would have decreasing quantities of product to refine. That’s not the case. Also, infrastructure upgrades around the world would fast-tracked instead of stalled as the need for oil in the system would trump environmental concerns or future concerns of climate change.