Higher Oil Prices Seem to Prove Peak Oil Sceptics Right After All

Peak oil sceptics have been saying that if the price of oil rises high enough to offset the decline in the Obama dollar, that oil production would rise correspondingly. And so it seems to be doing:

The US Energy Information Administration (EIA) is reporting a new monthly peak in crude oil and lease condensates for January 2011 at 75.282 million barrels per day. This is 600,000 barrels more than July, 2008 (74.669 million barrels per day).

The IEA had reported a new peak in world oil supply (that includes other fuel liquids at 89 million barrels per day in February 2011)

These are important for the whole peak oil argument. World oil production is still slowly moving up. It is not declining yet. Claims of peak oil having already occurred in 2008 or 2005 are wrong. Even with Libyan oil production out, there could still be new highs in world oil production.

If world oil production keeps going up slowly to 2018-2025 then so what ?

It means more time for improved biofuels to be created. Algae biofuel or other kinds of synthetic fuel. _NextBigFuture

There are many reasons to be sceptical of the peak oil doomer spiel:

1. There remains considerable scope for further oil discoveries. For example, the Arctic is effectively unexplored and is opening up, and there remain unexplored areas elsewhere, especially in deep water and onshore. Furthermore, the technology-driven successes in exploiting shale gas in the US should now be repeatable in shale oil.
2. Putting new discoveries to one side, globally only circa 10% of existing oil discovered volumes have been brought onto production so there remains a considerable resource to be exploited.
3. Considering fields that are already in production, average global recovery factors are relatively low. Some industry experts place the number as low as 22%, others in the low 30’s. In either case, there is a considerable prize to be won by the use of improved recovery and enhanced recovery techniques. Some numbers illustrate this:
Shifting the average recovery factor offshore Norway from ~45% which is what it is today to their government’s target of 50% would add an extra 4 billion barrels or so.
Enhanced Oil Recovery using CO2 is capable of raising recovery factors offshore the UK by from 4 to 12%, resulting in from almost 3 up to 8 billion barrels of technical reserves. This is 60 to 160 times the most exciting discovery made in the UKCS last year!
An increase of 1% in the aforementioned global recovery factor would yield almost 90 billion barrels, equivalent to roughly 3 years consumption at current rates.
4. Some would argue that ‘Peak Oil’ will occur for economic reasons, specifically because the price of oil will rise so high that it will become too expensive to use.... _OilVoice

But the problem with the #4 argument is that as the price of oil rises, not only do new oil resources (deep sea etc.) become economical to exploit, but more alternatives to oil (GTL, CTL, BTL, and soon --- microbial fuels etc) become economical substitutes. As new resources and technologies come to bear -- on top of inevitable demand destruction -- the danger to oil markets becomes yet another price crash.

Peak oil religionists get hung up in "EROEI" and "exponentially rising global demand for oil" etc. without understanding all the drivers and inhibitors of demand, and without understanding all the dynamic economic and technological factors which affect EROEI. Consequently, many true believers peak oil tend to invest more than they can afford in long oil instruments, and when the inevitable collapse of the periodic bubble occurs, these invstors get hammered -- as in 2008.

Things are setting up for a repeat of the 2008 crash much more quickly than is comfortable for most observers. Blaming it all on the Obama - Bernanke fiscal and monetary policies would be unkind. They are only two men out of many individuals whose corruption is bringing about massive economic hardship for hundreds of millions of people in the developed world. Yet, if you could select any two persons most proximately responsible for the disaster that is developing, you would not go far wrong by choosing Oba-Bernie.