Wednesday, September 15, 2010

Send in the Clowns

Oil analyst Charles Maxwell is making news recently with his "new" forecast for "Peak Oil" around the year 2017. Of course, this is the same Robert Maxwell who (as reported by Robert Hirsch) predicted in the spring of 2008 that gasoline prices were headed right on up to $12 to $15 a gallon. In other words, Mr. Maxwell (along with Mr. Hirsch) knows how to jump on a bandwagon.

The interesting thing about Maxwell's pronouncement is not that it is being picked up and blared out by all the doomers ("See! We told you so!), but rather that it is being used as confirmation of previous bias by cautious and respected energy bloggers such as Robert Rapier.
Here is Robert Rapier discussing his reaction to Maxwell's prediction:
While there are some differences in the details, what Maxwell articulated approximates my own views.

I view a global oil production peak within the decade as a near-certainty.
I think there is a small probability that the peak has already occurred, but we won’t know that until several years after the fact.
I don’t believe that there is anything in the technology pipeline that can prevent a growing gap between supply and today’s demand.
I believe that gap will be closed by price-induced rationing, which will be very hard on businesses and individuals.
Higher prices will result in a very difficult transition period in which we are forced to use less because we simply don’t have the money to use the oil that we have historically used. This will be a period of great economic difficulty, lasting for years. At the same time that the economy is in great difficulty, oil companies will continue to reap big profits, causing an enormous amount of resentment and calls for higher taxation and greater regulation of the oil industry.

However, I also believe that humans are very resilient, and that we will eventually come through this. This is why I do not characterize myself as a ‘doomer.’ We do use a lot more energy than we absolutely have to use. I would bet that most people – if they really had to – could cut their fuel consumption by 50%. It wouldn’t necessarily be convenient or easy, but it could be done. _RobertRapier
Toward the end of his piece, Rapier begins to clearly diverge from the simplistic doomer view of Peak Oil -- when he says that Americans (and presumably others in the advanced world) could cut their fuel consumption by 50%.

Think of it! An energy reduction of 50%? What would that do to oil demand? And what if people just went ahead and reduced their energy consumption (including fuels) by 50% without even trying -- just as a reaction to general economic conditions? What would that do to Peak Oil?

People who talk about historic peaks in oil production generally assume that peak production occurs due to supply problems. But in most realistic scenarios -- other than temporary production peaks due to political causes -- peak oil production is likely to occur due to demand reduction. I will leave it as an exercise for the reader to determine why this is true.

More: Here is an interview with Robert Hirsch, famous Peak Oil analyst and author of a 2005 report: The Peaking of World Oil Production PDF. Hirsch has recently published a book, "The Impending World Energy Mess."

Hirsch's 2005 Peak Oil report (PDF linked above) helped to boost Peak Oil well into the mainstream of conventional and political thinking. Unfortunately, once one jumps onto the doomer bandwagon, it becomes difficult to think clearly enough to do anything else from then on. Just as an actor may be "typecast" in a particular sort of role, authors and speakers can very easily allow themselves to fall into a theme du jour, and wallow about in the muck for the rest of their lives -- never again rising to a vantage point that allows them to see beyond the rut.

But one must remember that Peak Oil predictions have been flying through the memeways ever since oil was used as an economic commodity. And predictions of peak oil tend to ebb and flow with the times -- and have always ultimately failed.

The current Peak Oil fad owes more to the spectacular rise of demand from China and India than from any problems on the supply side. What Peak Oilers must eventually learn, is how fickle demand can be. They will soon learn.

Clarifiction: I am not calling for a reduction of energy consumption by 50%, although a reader might honestly get that impression. With a rational investment in small modular nuclear reactors -- particularly molten salt reactors -- individuals could increase their energy use immensely without any harmful impact on the planet or on their communities.

The goal should be toward prudent reductions in fossil fuel use, by substitution of other forms of energy. First we will want to move from petroleum to other fossil fuels -- in an environmentally clean manner (disregarding carbon hysteria, of course). Then from those fossil fuels we will move to advanced nuclear, enhanced geothermal, microbial and biomass-derived fuels and energy, and eventually we will find an economic way to use solar energy (perhaps orbital solar). The transition should take between 20 to 50 years -- depending upon the urgency.

Currently, urgency has been artificially propped up by the doomers of Peak Oil and the doomers of Carbon Hysteria. The doomers are fabricating a situation where a transition to a new energy infrastructure must occur within 5 years -- or we are all doomed. That comes from their doomer instincts, they really can't help themselves.

But rational and responsible observors and commentators should attempt to spare society from unnecessary hysterias and abrupt, damaging dislocations. That is where our governments, media, punditry, and academics are failing us abysmally.



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