September 28, 2016

PITY THE POOR MALTHUSIANS:

What Ever Happened to Peak Oil? (Bill Murray & Carl M. Cannon, September 28, 2016, RCP)

For more than two generations, schoolchildren were assured by their science teachers, elected officials, and the media that the world's supply of oil--the great fuel of America's car culture, not to mention U.S. economic prosperity--was finite and would soon be exhausted.

This perception that we would run out of oil, and sooner rather than later, became more than a theory, one that went by the name "peak oil." It became a kind of catechism. It was included in the prayer books of the environmental movement and incorporated into the legislative history and language of U.S. federal energy policy. It became an underlying basis for everything from Jimmy Carter's admonition to turn down the nation's thermostats, the enactment of 55-mile-per-hour speed limits, and federal mandates on gasoline standards for cars and trucks.

Today, the question is how policymakers should one react when the conventional wisdom is proven so spectacularly wrong, as is the case here.

It wasn't that the peak-oil hypothesis defied common sense. And it wasn't only environmental doomsayers making the claim. That gold-and-white Plymouth sports car was in a time capsule in the energy-friendly oil-patch city of Tulsa-by-God-Oklahoma. The closer one got to the oil industry, the more talk one heard of peak oil.

The theory itself was promulgated and then popularized by M. King Hubbert, a Shell Oil Co. geologist who predicted in a 1956 scientific paper that U.S. oil production would peak in the early 1970s at 10 million barrels a day--and then begin a long inexorable decline. It came to be called "Hubbert's peak" and eventually "peak oil." When U.S. oil output did peak for a while in the early 1970s, this seemed confirmation of his theory. Americans stuck in long lines at the gas station during OPEC-induced shortages were in no mood to argue.

Later, Hubbert extrapolated the theory globally, arguing that worldwide peak oil production would occur in the 1990s. With help from doomsday futurists such as Paul Ehrlich, citing additional work by Hubbert, "peak oil" entered the non-energy sector lexicon as a shorthand for the inevitable exhaustion of the world's natural resources, most especially fossil fuels.

But an unexpected development occurred in the 21st century, a century that the naysayers had said would be one with scarce crude oil resources: The supply instead exploded.

The apocalyptic future promised by the "peak oilers" simply did not come to pass. In 2004 the world produced nearly 84 million barrels of oil a day; by the second half of 2016, roughly 97 million barrels of oil is being produced daily, with more on the way as OPEC, Russian and U.S. oil producers do battle for market share with prices at the gasoline pump more than 40 percent lower than they were two years ago.

In 2007, the U.S. produced 5.1 million barrels of crude a day, while Oklahoma produced 175,000 barrels a day. A short eight years later, the U.S. produced 9.4 million barrels a day and Oklahoma had more than doubled its production to 432,000 barrels a day.

 "Welcome to the world beyond Hubbert's peak," wrote Kenneth S. Deffeyes, a Princeton geologist who was a Shell Oil colleague of King Hubbert--and someone who had believed in peak oil himself.

Yet, old creeds die hard. Mason Inman, Hubbert's biographer, believes that peak oil's originator, who died in 1989, would still not concede that he was wrong.

What Mathusian ever has?

Posted by at September 28, 2016 4:26 PM

  

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