TCS Daily

Peak Performance?

By Vaclav Smil - February 23, 2007 12:00 AM

Peter Odell, one of the most astute, life-long observers of global oil scene, calls them "peak-oilers." Some of them were quite unhappy when I pointed out (in Energy at the Crossroads, in these pages, and in Worldwatch in January 2006) their propensity for wholesaling catastrophic scenarios of the world once the global oil production peaks and begins to decline. But how else can one label such writings as Richard C. Duncan's "Olduvai theory" according to which the declining oil extraction will plunge humanity into life comparable to that experienced by some of the first primitive hominids who inhabited that famous Kenyan gorge some 2.5 million years ago?

And no one else can be blamed for the repeated failure of their forecasts but the prominent peak-oilers themselves. According to Colin Campbell the global oil extraction was to peak in 1989; Ivanhoe's peak was in 2000; Deffeyes set it first in 2003 and then, with ridiculous accuracy, on the Thanksgiving of 2005.

Well, the numbers for 2006 are in. And they show that even after OPEC once again cut its production (by 1.2 million barrels a day effective November 1, 2006) in order to arrest yet another rapid fall in prices, the global oil supply for the entire year rose once again, by about 0.85 million barrels a day. That is about 42 million metric tons a year, or more than the annual output of Oman or nearly twice the annual extraction in Azerbaijan, a major oil power on the Caspian Sea. But once we take into account the need to replace worldwide reserve depletion (currently amounting to more than one million barrels a day) this means that some 2 million barrels of new oil found their way on the global market, an equivalent of adding a bit more than UK's entire North Sea production or Iraq's annual extraction.

This supply had fully covered the global demand even with OPEC's production cuts and with China's record imports of oil bought in order to start filling the country's new massive strategic oil reserve. The average price of OPEC's basket of exported crude oils dropped from the peak of about $70/barrel in July to $55/barrel by the end of the year. And then it slid below $50/barrel in January 2007. In 2006 non-OPEC production rose strongly in the countries of the former Soviet Union, surpassing the level of 12 million barrels a day for the first time since the collapse of the USSR and coming within 5 percent of the record annual production reached in 1987 So much for the rumored inability of Russia to maintain its production, and for the "disappointing" results in Azerbaijan and Kazakhstan.

Higher outputs came from Africa, particularly from Angola, as well as from Latin America, and even China recorded a small increase. Extraction in the United States, still recovering from the Katrina damage in the Gulf, dipped a bit but it is expected to increase this year (by about 4%) and again in 2008. And the world's largest oil company, Saudi Aramco, continues with its plans to expand its production capacity from the current 11 million barrels a day to 12 millions barrels a day by 2009. .

If one is to believe the catastrophic prophecies of Matthew Simmons, another prominent peak-oiler, this must be the stupidest business decision of the 21st century. Simmons claims that Saudis have falsified their oil reserve data so much that in reality they have only a fraction of the claimed oil left in the ground, and that their, and the world's, largest oilfield, al-Ghawar, has been so damaged by waterflooding (used for enhanced recovery of oil) that it faces imminent and massive extraction downturn. And yet Saudis will be investing nearly $50 billion between 2007 and 2011 to get this nonexistent oil to the global market. Perhaps they know something that Simmons is not aware of (these days it is, after all, de rigueur to say only bad things about Saudis).

And, of course, market forces eventually assert themselves as prices rise. In 2006 oil demand was down in all of the leading importing affluent countries (US, EU and Japan) and no dramatic increases are expected this year. Consequently, global oil extraction may be lower in 2007 than it was in 2006, but if such a dip were to take place (China's and India's imports will make it unlikely) it would reflect a reaction to prices, not any physical inability to produce more oil or outright absence of requisite oil reserves in the Earth's crust.

That another non-peak year came and went is no surprise (merely a rational expectation). But I was surprised with what I found when this non-event led me to return to King Hubbert's original peak oil forecasts and to discover how badly off they were.

Hubbert is the patron saint of peak-oilers, seen as an infallible and astonishingly prescient seer because he correctly predicted the peak of the US oil production in 1970. Not quite. In his March 8, 1956 presentation before the Spring Meeting of the Southern District Division of Production of the American Petroleum Institute, Hubbert plotted two production curves, one for the ultimate US output of 150 billion barrels that peaked in 1962 at 2.6 billion barrels a year, and another one for the ultimate output of 200 billion barrels that peaked in 1968 at 3 billion barrels a year. In later revisions of this original work (the last major one was published in October 1968 and published as a chapter in the National Academy Science's Resources and Man in 1969) he put the peak of the complete cycle of US petroleum liquids (that is crude oil and natural gas liquids) at "about 3.5 billion barrels a year . . . during the first half of the 1970-decade." The actual peak came in 1970 at 4.12 billion barrels, 18% above Hubbert's prediction.

That is not an insignificant miss, but it is a small error compared to Hubbert's insistence that the complete production curve of a resource is perfectly symmetrical -- that is, that the post-peak decline of extraction is a mirror image of the incline. This led Hubbert to produce a curve that put the US oil output in 1980 at about 3 billion barrels (while the actual production was 3.7 billion barrels) and the 2000 extraction at 1.2 billion barrels. The actual extraction was 2.8 billion barrels or 2.33 times higher, hardly an enviable accuracy for a 30-year forecast.

And Hubbert's record is no better in forecasting the peak of global oil extraction. In 1969 he put it (for two different estimates of ultimately recoverable oil) either in 1990 at 25 billion barrels, or in 2000 at 37 billion barrels, projecting again a symmetrical curve and continuing high demand that prevailed during the 1960s.

He could not, as nobody did, anticipate a substantial decline of oil demand following OPEC's two rounds (1973-74, 1979-81) of extortionary price increases. Consequently, the global oil extraction did not peak either in 1990, when it was actually about 4% below the level forecast by Hubbert, or in 2000, when it was, at 27.4 billion barrels, 26% lower than Hubbert's predicted peak. And while the global production still keeps going up, it was still below 31 billion barrels a year in 2006. So in this case Hubbert was nowhere near being correct either on the timing or the production level.

These facts, I am sure, will not make the least difference to the devotees of an imminent oil peak whose mantra has been to elevate the timing of an obviously inevitable event to a dreadful watershed of history, and whose insistence has been on pinpointing its largely irrelevant arrival. Irrelevant because once the extraction of conventional liquid oil peaks we will intensify our (already advancing) efforts to produce more non-conventional oil and to use more natural gas and accelerate the production of gas- and coal- and biomass-derived liquids.

Finally, a practical reminder: If there is an imminent peak of oil extraction, should not then the prospective shortage of that increasingly precious fuel result in relentlessly rising prices and should not buying a barrel of oil and holding onto it be an unbeatable investment? But a barrel of a high-quality crude, say West Texas intermediate, bought at $12.23/b in 1976 as a nest-egg for retirement and sold before the end of 2006 at $60/b would have earned (even when assuming no storage costs) about 1.2% a year, a return vastly inferior to almost any guaranteed investment certificate and truly a miserable gain when compared with virtually any balanced stock market fund. And a freedom-at-55 investor who bought that barrel at 30 years of age in 1980 and sold in 2005 would have realized a nearly forty per cent loss on his precious investment. Being a true believer in imminent peak oil may be fine as a provocative notion but not as a means of securing a comfortable retirement.

Vaclav Smil (website lectures at the University of Manitoba in Canada. His latest published books are Transforming the 20th Century: Technical Innovations and Their Consequences and Energy: A Beginner's Guide. Energy in Nature and Society will appear later this year.



if you think that's something
check out this website: Serioiusly, this blog is something else

When easy petroleum becomes more scarce and the price rises
When easy petroleum becomes more scarce and the price rises the follow become economical in something approximating this order:

1. Gas to liquid
2. Tar sands
3. Bitumen to liquid
4. Coal to liquid
5. Bio-fuels
6. Shale oil to liquids.

Vehicle and electrical production efficiency will continue to increase but the higher the price for fuel the faster the rate of increase.

Peak Wishful Thinking?
the global oil supply for the entire year rose once again, by about 0.85 million barrels a day
But you forgot to mention that most of this increase is not coming from crude oil but from "other liquids" including refinery gains and biofuels. The EIA data is showing a flat production between 2005 (73.57 mbpd) and 2006 (73.48 mbpd) for crude oil only.

You also conveniently forgot a few bad news:

Norway and the UK are declining faster than most official forecasts
Mexico output has peaked and his decreasing rapidly due to a precipituous decline in his largest field (Cantarell).
Now around 50 countries have passed their production peaked and are declining.
The number of new oil field discoveries has peaked in the 80s and is rapidly declining especially compared to what the USGS has predicted in 2000 (110-140 Gb dsicovered between 1996 and 2006 instead of 276 Gb!).
Chinese oil production is predicted to peak in the near future hence increasing their oil imports further.

This led Hubbert to produce a curve that put the US oil output in 1980 at about 3 billion barrels (while the actual production was 3.7 billion barrels) and the 2000 extraction at 1.2 billion barrels. The actual extraction was 2.8 billion barrels or 2.33 times higher, hardly an enviable accuracy for a 30-year forecast.
Hubbert forecast was for the Lower-48 production only (i.e. excluding Alaska and Gulf of Mexico) and the cumulative production for the lower-48 is effectively converging toward Hubbert's URR estimate (200 Gb). Any engineer can tell you that predicting a downturn in a curve is a difficult challenge and this achievement by Hubbert is quite remarkable.

shale oil
Canada already has pilot plants running, and production scale plants are being built.

A lot of Mexico's problem, like Iran and Venezuela, stems from inadequate investment in infrastructure.

During the 80's, oil prices were at rock bottom. Only those with no concept of economics, would be surprised that oil companies cut way back on exploration at such times.

If you are so convinced that we are rapidly running out of oil, how much money have you invested in oil futures?

There is also quite a bit of tar sands production allready...
...going but there is great growth possible.

Only half empty-- not half full
I guess it all depends on who you're talking to. The CBC, not normally known for its pessimism, has this to say:

"The London-based Oil Depletion Analysis Centre recently released a study that predicted tight supplies through the rest of this decade, even if all of the new major oil recovery projects scheduled to come on stream over the next six years meet their targets. The only way to avoid it, the study said, is for demand to drop sharply."

Gas to liquids article in today's (2/23) Wall Street Journal
Exxon/Mobil has dropped out of a GTL project in Qatar (0.2 mb/d). Costs have been skyrocketing recently for most of these projects, including GTL from tar sands. The problem seems to be lack of resources to construct all these plants, which still amount to only a drop in the bucket compared to total world consumption.

The formation of OPEC and the resulting increase in crude oil prices slowed oil consumption enough to buy us some time, but the time is still running out. The question still is, will alternative supplies be available in the quantities needed when production finally does decline? Or can we adjust to drastically higher oil prices (carbon tax anyone?) and slow our consumption again?

Tight supply does not necessarily or even usually result in a monotonic increase in price. What you actually see is what we are now getting, an unstable price with large swings. That makes the underlying trend difficult to ascertain as well as discouraging investment in alternatives.

Exxon's annual profit is over $40 billion, and world production is on the order of 80 million barrels/day. That should put a little perspective on the significance of an increase in supply of 0.85 mb/d and and an investment over several years of $50 billion.

Water flooding doesn't damage an oil field. It is a standard method for maximizing recovery. As the field nears the end of its capacity, however, the percentage of water being pumped out along with the oil increases rapidly. The question is, how much water are the Saudi's pumping? Needless to say, that's a state secret.

Once upon a time, oil companies reinvested earnings in exploration and R&D because there was no better place to put the money. That isn't happening any more. That should tell you something.

Not in my backyard
I never see the articles discuss the cost of lack of refining capacity due to regulation and the "not in my backyard syndrome". I know that refining capacity is near 100%. Should we not increase this capacity?

Second, ANWR and the Florida coast must be tapped. The Chinese are now drilling in the Gulf. Were going to sit by and let them suck out all our oil for what? To mitigate risk tyo the beach? Would you rather have a US company drill or a Chinese company to mitigate risk? Do people think the Chinese care about Gulf Shores?

Third, why are we so paralized that the Nuclear power option is ignored? Are we so paranoid that this SAFE and CLEAN source is ignored out of sheer ignorance?

Finally, I have read the largest gas reserves are off the California coast. Once again, it is "bad to drill" for this source to?.

It is time that the public get educated. Life is full of risks.

It is better to make the wrong decision than no decision at all...

performing well
I've been amused for decades about the phoney issue of running out of oil(and anything else). And like the author, I didn't invest in buying barrels of oil, but have made a fortune investing in oil companies, and oil services companies, etc. Indeed, I recommend that others do so even these days since there are many companies whose stock prices are rather low like BP, Schlumberger and Halliburton.

Ghawar water injection
Ghawar is now producing 35 to over 50% water with its oil. It reflects the old age of the field. I do believe that water injection combined with overproduction can increase the amount of stranded oil as water flows easier than oil and can short circuit around blocks of oil. Ghawar has that problem. Lots of infill and branched horizontal well drilling is going on there to try to extend the life of the field.

They are in trouble and that means we are in trouble.

Running Out???
The peak oil folks never talk about running out of oil. That is not the issue. The issues are producing less than market demand and producing less for the market year over year. Take notes re your scepticism and be prepared to eat them in 3-5 years.

The problem with alternatives is that they are very costly in terms of energy inputs and they are slow to get out of the ground.

A lot of conventional oil came out of the ground under 4k to 6k psi by the tens of thousands of barrels per day per borehole. The wells were choked back to prevent overproduction from damaging them. The days of discovering huge prolific oil fields appears to have ended about four decades ago.

Good luck to us all.

Peak Oil
My grandfater worked for Conoco. 60 years ago he told me a story about "world Class" Geologists. In the 1920's "World Calss Geologists" said that Signal Hill (in SoCal) would run out of oil in the 1930's. When I was in high school in the 1950's Signal Hill was yeilding xxx,xxx
barrels a day. In 07 Signal Hill is still pumping oil.

The "World Class Geologists" were not even close. Predictions of the end of oil have been arounnd almost since Rev Malthus. Both were wrong. Just like Big Brother Al is.

running on empty?
But about "repeated failures of forcasts". They've always been wrong. But it could be that they're just as accurate as Paul Erdman was, or a right as the guys who predicted the sustainability of the Atlantic Cod stocks. Or maybe just as right as the falsified hockey stick phoney GW scare. Disclaimer: I'm not only heavily invested in oil, and oil service companies, but also one who make the oil rigs.

World Class geologists said that continents were fixed in place as late as the '60s
But that was then. Actually, oil company geologists were convinced of continental drift a lot earlier, but they didn't publish in peer-reviewed journals. We know a lot more now. New oil field hits peaked in 1964. New oil field discoveries peaked in 1978. These are facts. The only questions are how soon, not if, world oil production peaks and whether we will be prepared for it or not. Right now it looks like not and the cornucopian, head-in-the-sand, the market will magically provide, view isn't helping.

Falsified GW...are you on AM shout radio and Fox News, too??
Ice cores from Antartica dated back 475,000 years show a half dozen or so ice ages, global warming and cooling and CO2 increases and decreases. The CO2 range has stayed within 200 and 270 ppm during that time. It is now at 380 ppm and going up like a rocket. There is no debate about whether extraordinary warming is in our future. There still are some intellectual prostitutes telling all who will listen there is no problem, CO2 will be good for forests and food supplies, etc. Nice theories, but disproven in peer reviewed research. Go with the science, forget the deluded false prophets.

Peak oil predictions
Up until a decade or so ago oil companies were very conservative about how much of their oil discoveries were booked as proven reserves. So discoveries in the sixties could still be used to add to reserves in the 70s and 80s, even though no new oil was discovered. It was a financial game with rules written by the SEC. Peak Oil scientists have back dated reserve additions to original discoveries and revealed that we are not finding much new oil. Oil companies are more interested in stock buybacks than drilling dry holes. Junior oil companies are now doing much of the wildcat drilling and the big guys are buying other companies with proven reserves. Oil shale, oil sands, hydrogen and biofuels are not going to solve our energy deficit problem. And having the country led by conquering hero cowboys with no sense of diplomacy has not endeared us to the countries that do have a fair amount of energy still in the ground. The only solution on the table that will give serious relief is using less. Get used to it.

Read the Robert Hirsch report to the DOE (02-2005). Read at,,, and

Go with?
You mean I should go with the scientists that also think it's a crock, or just the ones you approve of?
Do you mean that even though there have been many other warming cooling periods where we are certain that were not caused by humans, this time it's different? Do you mean that of all the thousands of compounds in the air, we should just be alarmist about CO2? What about, "Sun spot activity has reached a 1,000-year high, said scientists
affiliated with the Max Planck Institute in Gottingen, Germany, and the
Institute for Astronomy in Zurich, Switzerland, in a 2004 report. More sun
spots mean Earth will grow warmer; fewer mean it will turn colder. Solar
radiation has increased by 0.05 percent per decade since the 1970s,
concluded a NASA-funded study in 2003.hat about, "?
What about the Medieval Warm Period, were humans worse off then, when warmer, than when it got colder? Don't forget that even Greenland was habitable then, but when it got colder they all starved?

getting less?
You mentioned that people should get used to using less. Once on this place I mentioned that the alarmists like you who are complaining should sell some of their cars, with thge result that I was scolded by many people. They said it wasn't a matter of them doing anything, but of having the government force other people to do things that they otherwise wouldn't do. Liberals are like that. BTW, how many cars in your family? Or are you like the prez candidate who said that they were his wife's cars not his? I forgot the guys name but he was the one who was the admitted war criminal.

Historically, the CO2 content of the earth's air is currently quite low. It crashed around 55 million years ago, from levels that were more than two or three times current levels.

And yes, CO2 levels and temperature levels have changed often in the last few hundred thousand years.

The problem is that the CO2 ALWAYS lagged the temperature changes, by as much as 900 to 1000 years.

There is plenty of debate as to whether there is warming in our future. Solar scientists are telling us that the sun is warmer than it has been in the last 1000 to 8000 years. And it is getting ready to cool down significantly.

As to the claim that CO2 is not good for plants, would you care to point out this alleged peer reviewed literature?
I've never seen any make that claim, but I've seen hundreds that prove that enhanced CO2 is good for plants.

Current production in Alberta tar sands
is about 1 million bbl/day. Production by 2015 expected to be about 3 million bbl/day based on current investment. Total proven reserves extractable with existing technology, about 190 billion barrels. That's about two centuries worth of oil production.

About Mexico
An official described the situation with Mexico's oil industry. Pemex is a national company owned by the government. Its creation was financed by public subscription, so it has very high feelings of ownership within the Mexican population at large, making it difficult to change it. Mexico's reserves have been dropping, not because of a lack of reserves but of a complete lack of investment. The Mexican government takes as dividend about 40% of the company's gross revenues BEFORE expenses. As a result, the company has been losing about $3-5 billion annually for the last few years with no capital left for development.

Economics is one thing, but insane politics contributes extensively to stagnant energy production.

It lags the temperature changes
for very good reason. As the world warms, CO2 comes out of solution in the oceans. As it cools, the reverse.

it's not magic, it's nature
the market does not 'magically provide' anything. how do you think we started using oil derivatives in the first place? there was a profit to be made. as soon as oil prices start going up, and all peak oil theories demand that they will, people will starting looking for cheeper energy sources. it's not magic, it's natural. the idea that we're going to wake up one day and there won't be oil anymore is a fact, eventually we will run out if we keep using it. but the idea that this will catch us by suprise and there won't already be mechanisms in place to continue generating profits by supplying consumers with other forms of energy is a complete fantasy.

that one would consider the study from an organization based on the premise of declining oil production to be a good source for objective, scientific data.

One would believe, considering the numerous false predictions of doom, that the proper starting point for analysis would be to determine if we actually have an oil supply in decline. This topic mirrors the AGW gloom and doom scenarios in so many ways. The lack of scientific validity never stands in the way of prophecies of impending doom.

But hey, as you say, it is all about who you listen to. So answer one question: which peak-oil prediction has been accurate to date?

How dare you...
suggest that markets will adjust and innovate over the awesome and benevolent power of governmental interference!

A free market is the best means of allocating a scarce resource...
but it doesn't guarantee that a replacement for that resource will appear in time to prevent a supply crunch. The idea that peak oil predicts that one day we will wake up and there won't be any oil is a straw man argument. Nobody but a few whackos think this is the case. I think there's a good chance, though, that we're going to see $300/barrel oil and $10/gallon gasoline (in current dollars) in ten years.

As noted above (WSJ, 2/23), major investors are dropping out of gas-to-liquids projects even though the gas feedstock is basically free (it was being flared). It takes time, money and engineering resources to build a coal or gas to liquids plant. The engineering resources are in especially short supply right now. You'll have to fight off the greens and warmers as well because the coal to liquid process produces a lot of carbon dioxide. Gas to liquid, in Qatar at least, is CO2 neutral because it was already being burned.

In the best case, it will take decades to build enough capacity to make a significant contribution to world consumption. I don't think we have decades before the supply crunch comes, based on current evidence.

Maligning the source
Instead of deciding before even looking at their data that they are wrong, why don't you find something they've actually said, and find the flaw in it? To bad mouth them with no supporting data just means you're a guy with a computer and some spare time. Do some work, if you have a point to prove.

"So answer one question: which peak-oil prediction has been accurate to date?"

Hubbert's original curve for American crude oil production was right on the button. That's what got the world listening so closely to what he had to say.

And so far the curve for global crude oil production seems to be following the same trajectory. Spot prices doubled only a couple of years before he predicted we'd hit the top of the curve. Plus, presently any informed individual would say we have very little reserve capacity for increased production of sweet crude-- while demand steadily increases across the globe. These two lines, if you care to look, are going in very different directions.

What's new is the many competing sources for petroleum-like substances. Tar sands, oil shales, coal gasification, all the newer technologies, become feasible as price rises. Under the old pricing structure they weren't. So we will face a future, not of an absence of complex hydrocarbons, but a plethora of different kinds of substitutes-- all of them very high priced.

your evidence refutes your argument
The reason why investors are falling away from gas-to-liquids projects is because nobody expects the current high prices to continue.

If people thought that oil was going to be $300/bbl in just 10 years, they would be begging for the opportunity to invest in such projects.

I don't see any evidence that we are running low on oil, much less that it will suddenly dry up in just a few years.

Production Forecasts and EIA Oil Production Numbers
For those interested:

I wholeheartedly approve of global warming
Earth is dynamic;
Life is dynamic;
Neither is worth experiencing if it weren't so.

No problem
They'll do what every other third world government w/nationalized extractive industries has learned to do. Drive it into the ground and insolvency, gratuitously blame America, beg for foreign capital, enter into new contracts with foreign investors, change the tax law after billions invested (afterall, the corporations are ripping them off!), and take it all back. Then do it again under a new socialists peoples' revolutionary regime. It's been very standard now for some time. Observe Venezuela, Mongolia, Zimbabwe, and Bolivia. Can you think of other examples?

I consider myself to be rather conservative. That used to mean being concerned about sustainability and stewardship of natural resources and energy, among other things.

Today's conservatives make up the chew it up and spit it out crowd. More for me, to hell with conservation, Jesus is coming back to clean up the mess, etc. Scary.

The only thing that seems to matter to today's conservatives is money and being free to pig out on our global commons.

Conservatives like to pooh-pooh energy depletion because it hints of limits to growth. The biggest oil field on the planet, the Ghawar in Saudi Arabia is being juiced with 7 million barrels a day of water and is producing 55% water now. The second and third biggest are in announced decline (Kuwait's Burgan and Mexico's Cantarell). Fifty-four of 65 largest oil producing nations have peaked. The North Sea fields are in rapid decline. The UK has gone from being an exporter to being a net imported of crude oil and natural gas. With the energy equivalent of 500 hours of human labor per gallon of crude oil you might assume we will miss it when it goes away, and that it will soon get VERY expensive. There are some new fields coming on line in the next few years, but they may barely cover depletion and production declines from existing old fields.

I have one mid-size car that was my mothers, an 18 year old minivan for trailering construction stuff to the farm, and a 12 year old hatchback for work. New cars take a lot of resources to manufacture, so I use up old ones. We do no pleasure driving just to be driving. BTW 2 bicycles, too. We put in a high efficiency furnace and low-e windows, insulated the foundation and added attic insulation. We mostly use compact fluorescent lamps and we buy green power. We are building a passive solar greenhouse and root cellar to raise and propagate hazelnuts (60% oil) for biodiesel. We read lots from the world press about energy and give presentations to community groups.

If you don't think we have serious energy supply problems and global climate change issues you aren't paying attention. The folks at Fox News can proudly include you as one of their deluded sheep.

Not really
For the last time, Hubbert theory doesn's say oil is going to 'dry up' in a few years. That's a straw man. The Hubbert curve is symmetric. Oil will continue to be produced for at least another hundred years. According to Hubbert theory, there is about 2 trillion barrels of recoverable oil in the ground. Total world production up to 2005 was about 1 trillion barrels. That means there is still a lot of oil left. The problem is that the rate of production will decrease. Oil production ten years after the peak will be about 90% of peak production. That's about 8 million barrels per day less than now. And the rate of decrease will increase for another 40 years or so. Meanwhile, demand is increasing and China, for one, has lots of dollars to bid on oil and is well known for overpaying when they want something enough.

All that being said, you might still see $40/barrel oil again in the near future for a short time. Wild price swings are common in a tight supply situation. Price swings make investors nervous, though, so they delay their investment. That makes a supply crunch a near certainty.

We also have the usual suspects in Congress getting ready to pillory Big Oil and threatening to impose oil price controls. That's not a climate conducive to investing hundreds of billions of dollars either. Rick Boucher, congressman from southwest Virginia, is introducing legislation that will guarantee a profit for investors in coal to liquid plants, btw. Don't hold your breath waiting for it to pass, though.

Thanks for the forecasts, and I'll bet they're just as accurate as all the other wrong proved forcasts over that last, say 100 years or so. But of course you'll say it's different this time. And that is not because you yourself can't buy as much gas as you want to, but because you have some vague feeling that maybe some other people can't. Or maybe because when you were young gas was cheap and you really could buy as much as you want, but nowadays you can't really afford it. Or maybe it's because you are making the claim that you can predict the future, even though nobody has ever been able to do that. On the other hand my claim is that anybody can get as much as they want of anything, and if they can't it's just a complain that they're too poor.

to norm
I congratulate you that you admit to having only TWO cars instead of the normal 3 or 4 per family. Now I will be more convinced of your sincerity when you SELL off one of them! But of course, you have a good reason for having two cars when most of the world that you're presumably worried about don't even have a bicycle. What's your justification for having two cars again?

you claim that peak production is here, or recently passed
that means, especially when combined with increased demand,
that prices are going up. As you claim fast. You are the one who made the prediction of $300/bbl in a decade.

If any of that would be true, investors would be rushing to invest in alternatives to pumped oil.

As you point out. They aren't. In fact they are abandoning such schemes.

Price swings do not make investors nervous. Only price swings that go below the cost of production. Price swings that go from a little bit above cost to way above cost make investors very happy.

If we were facing imminent shortages, prices would be going up, and futures prices would be going up even faster.

That isn't happening. Either the people who spend their entire lives studying and working with oil know something that you don't want to, or everyone else in the world is an idiot.

Skirting the issue once again...
So you find nothing wrong with forming a group based on the decline of resource that hasn't been proven to actually be in decline? By all means, don't address the actual question I asked and keep pouting because I questioned the validity of a source that is somehow able to produce a report that backs up its very reason for existing.

I am not maligning a source, it certainly seems to have several oil insiders as members. I am merely questioning the premise they operate under since declines in oil production are more of a product of voluntary decreases by such entities as OPEC rather than an actual decline in the amount available for production.

>"Hubbert's original curve for American crude oil production was right on the button. That's what got the world listening so closely to what he had to say."

Please tell me how this is by refuting the very data in the article this forum is based on. You seem to pretty much ignore the actual data to say the exact opposite of what the facts show. Hubbert was wrong on numerous predictions and it is up to you to show how he was right by debunking the author's claims.

>"Instead of deciding before even looking at their data that they are wrong, why don't you find something they've actually said, and find the flaw in it? To bad mouth them with no supporting data just means you're a guy with a computer and some spare time. Do some work, if you have a point to prove."

Considering your track record on unsupported claims, uninformed reactions, conspiracy theories, and just plain dead-wrong analysis on a variety of subjects this comment falls flat.

The work is done in the article, you just provide one analysis by a group whose very premise remains unproven. If anyone is "just a guy with a computer and some spare time" it would be you. It takes a longer time to hunt down the opinions that support your predetermined position rather than just the facts.

Don't you old folk always say "Work smarter not harder"?

I do like this statement:

>"Plus, presently any informed individual would say"...

How typical of you Roy. As I said, so similar to AGW alarmists. Better to stifle debate by questioning intelligence than to provide facts, eh? Once again you decry the very behaviour you portray.

What is your issue?
The article is just an article. If there's something in there that you disagree with, point it out and disagree with it. Don't just point a finger and say, without foundation or specificity, that this is all crap.

If you want authoritative voices from inside the oil industry describing the state of remaining reserves, go to them and read them. What you will find is what I have said. Recoverable conventional oil reserves are waning, existing major fields are becoming harder and harder to pump, and new discoveries haven't kept pace with depletion for the past several decades.

Find the most authoritative sources you can, and that is what they'll say. At the same time, higher prices-- which after all are totally dependent on falling supplies in the face of rising demand-- are opening up the field for a variety of new, previously uncompetitive fuel sources.

Be specific. Exactly which of THESE COMMENTS do you find fault with? Don't just find something else, and tell me that was what our little conversation was all about.

some vague feeling?
Re: I'll bet they're just as accurate as all the other wrong proved forcasts
I have no idea, only time will tell.

Re: Or maybe it's because you are making the claim that you can predict the future, even though nobody has ever been able to do that.

Well, Hubbert just did that in 1956 when he predicted that the US production will peak in 1970. Of course, he was laugh at when he made this claim.

All too many of them
Mexico's Pemex is a commonly repeated problem. The only country with state-owned industries that's bucking the trend is China, and its doing it by divesting of state-ownership in a number of sectors.

However, in the case of Pemex, there's an interesting aspect. It used to be a very successful company under state ownership. However, the rise of political instability in Mexico has been accompanied by an increase in political interference in the operation of the company. So, while state ownership isn't necessarily bad in and of itself, the company is hostage to bad policies foisted on it by the politicians. The current generation of politicians doesn't have the restraint that previous generations did. Hence, state ownership largely no longer works.

So do I
A cold world is a dead world.

To the inquisator
Dietmar, I don't think I have to justify anything to you. The better car is for my wife and for family trips. We both have an aging parent that lives some distance away. The other car usually has the back seat folded down and tools and parts in it for rentals work, presentation equipment, laptop, etc. I am a DIYSer.

I have a used Toyota Corolla diesel engine and transmission from Japan that will go into a 90s Corolla so I can run it on biodiesel from hazelnuts in a few years.
Our farm truck, skid steer and tractor are also diesel and will be run on biodiesel when we have it. We intend to buy a screw press to make our own. We are not perfect, but we think we are headed in the right direction at a reasonable pace.

How do you know OPEC "cuts" aren't really a peak?
You state that "even after OPEC once again cut its production (by 1.2 million barrels a day effective November 1, 2006) in order to arrest yet another rapid fall in prices, the global oil supply for the entire year rose once again, by about 0.85 million barrels a day."

Firstly, EIA says that the peak for Crude Oil + NGL remains May 2005 at 82.08 mbpd, and that the year to date average production for 2006 (11 months) is 81.40 mbpd, down 0.03 mbpd from 2005 (11 months). I don't see your 0.85 mbpd.

More importantly, with all the evidence that the OPEC giants are producing as much as 90% water, why would you assume that OPEC is telling the truth about it's "cuts?"

Looks like a choppy plateau to me.

phoney peak
You think there would still be a peak if they were actually allowed to look all over for the stuff, even in the US. For example, can't drill off the 'left coast' of Califonia, presumably because it would upset the hollywood flakes, can't off of Florida either, because it would hurt the self esteem of Cubans, can't off the coast were the decadent Kennedy family has it's compound, can't drill in ANWAR, or yosemite or many other places. So it's all a phoney issue.

I knew it...
Just like J. Kerry, it's YOUR WIFE'S car. What a laugh. It's amazing to my that people can use such a lame excuse for having more than one car. People overseas just mock such rich and decadent americans for being hypocrits. Even biodiesel seems to be a scam since it's mostly subsidised as far as I can tell. Even if you do it yourself on your own farm, you have to factor in what that amount of land would otherwise produce, your labour, resources used, etc. It could be more worthwhile to grow say, trees, or ginseng or whatever, and just buy gas, or normal diesel. If that's the case, then it's only a matter of 'feel good' factor, like being holyier than thou.

Just for curiousity
How many hectares of hazelnut trees will be required to operate your vehicles and farm machinery? It's very interesting.

history has shown that warmer times are better than colder times
Those times when the earth was much warmer than today, life flourished.

problem is, Hubbert was wrong
Oil production peaked temporarily, then recovered.

Oil production in the US would increase dramatically, if the politicians would let the oil companies drill everyplace there is known to be oil.

Heck, the politicians won't even let the oil companies explore. They are afraid that if they find too much oil, the pressure to allow drilling will increase even more.

how do you know the moon isn't made of green cheese?
How do you know that the sun is not really a big heat lamp powered by Al Gore's ego?

How do you know that the tide isn't caused by a giant taking a bath?

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