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September 28, 2004

Peaking Curiosity

I've been looking for a reason to write about this for some time, but this excellent Eugene Register Guard editorial has forced my hand.

The recent runup in petroleum prices has put a new spotlight on an old controversy--whether the world is running short of oil. The battle lines of the debate are clearly drawn. One side--consisting primarily of old-guard petroleum geologists and a few maverick oil industry insiders--thinks that we are fast approaching a peak in global oil production, after which oil supplies will inevitably and inexorably fall. They point out that global oil discoveries peaked long ago, in the 1960s, and that oil companies now discover only one barrel of oil for every four that are pumped out of the ground. Walter Youngquist, a respected former professor of geology at the University of Oregon, is among those predicting a near-term peak.

M. King Hubbert
This "pessimist" view does have a proven track record. In 1956, oil geologist M. King Hubbert predicted that U.S. oil production would peak once about half of the county's oil had been pumped out of the ground -- an event which he thought would happen by 1970. Some oil industry execs scoffed, but he was right: U.S. production has never since been as high as it was in 1970, even with the opening of Alaska's North Slope.

The other side of the debate--consisting primarily of energy economists, oil industry analysts and some younger geologists--believes that a peak is so far off in the future that to worry about it now is folly. Oil may run scarce in a generation or so, but there's no compelling reason to panic now. Rapid advances in technology make it possible to tap oil fields far under the ocean, and underground imaging is now so sophisticated that even small oilfields can be targeted and tapped cost-effectively. Plus, they say, there's still lots of exploration left to be done in oil-rich regions of the world, including Iran and Iraq. And even if conventional oil supplies run thin, there's always "unconventional oils" such as tar sands and oil shale that can, for the right price, be tapped.

The recent price runups, these "optimists" believe, are a symptom not of geological limits, but of a surge in demand from the developing world (China and India), coupled with political unrest in oil producing nations (Venezuela, Russia, Iraq, and Nigeria, and even in Saudi Arabia).

Both sides of the debate make good arguments, and there's no real way to tell who's right. What the pessimists -- the ones who see an imminent oil peak -- have going against them is that there have been predictions of the end of oil almost since the first oil wells were drilled. Every few years, it seems, some well-meaning but misguided soul claims that the end of the oil age is just around the corner. They've been wrong every time. And they'll continue to be wrong, every time.

Until the one day they're right.

The implications of peak oil for the Northwest should be obvious enough. We produce almost no oil (only a little in the northeast corner of British Columbia), but our transportation systems are completely dependent on the stuff. What's worse, we've built our cities and communities in such a way that the automobile is not merely a convenience but, for many of us, a necessity. In sprawling suburbs, goods, services, and jobs are simply out of reach without cars. If you can't drive, you're stranded. And between our houses and our cars, we have many billions of dollars of capital invested in the status quo of inexpensive oil.

So the prospect of a world in which oil production is falling, even as demand is rising, isn't comforting. It would entail more global unrest, and substantial economic pain for Northwesterners. But a world in which oil supplies -- and the attendant greenhouse gas emissions -- are effectively unlimited is no less ominous.

This is a debate in which I want both sides to be wrong. But we can't have it both ways -- and as a region, we'll need to prepare for either eventuallity.

Posted by ClarkWD | Permalink