Peak Oil: After the Deluge

Obsolete cults often linger long after all rational justification for them has fled. Cult leaders often flog the dead horse long after time for proper burial, for reasons of personal monetary gain, popular acclaim of the faithful, and a sense of self-worth and something to do.

True cult believers may find themselves in a worse position, psychologically, than their inconvenienced-by-reality leadership. Threatened by disillusionment and a nihilistic despair, true believers fly from rationalisation to justification to tautological argument, desperate for another fix of true belief and its consequent sense of self esteem.

This phenomenon of a moribund cult that refuses to die can be clearly seen in the peak oil doom cult.

Like it or not, the world is not running out of oil or natural gas — contrary to doomsday forecasts that have been spectacularly wrong for a good century.

Most famously, “peak oil,” a concept around since the 1950s, has failed to materialize, despite repeated predictions of its imminent arrival.

Peak oil refers to the theoretical point when oil production hits its “peak,” afterwards inexorably slipping downward due to dwindling supplies of the fossil fuel.

People have been predicting “peak oil” for decades. The problem, or good news, depending on your point of view, is that we just keep finding more and more oil, whether from unconventional sources like shale oil deposits or via use of new technologies that allow for the economical exploration and exploitation of previously inaccessible fields.

Ditto for natural gas, which has also been subject to predictions of its demise due to resource exhaustion.

The U.S. now has such large reserves of oil and natural gas — thanks in large part to fracking — that it’s forecast to soon pass Russia to become the world’s second-largest fossil fuel producer, behind Saudi Arabia.

Large oil fields have been discovered — just to name a few places — in Africa, off South America and, in what’s sure to shake up the Middle East even further, in Israel.

The fact Canada and Israel signed an agreement on energy co-operation late last month is directly tied to last year’s discovery of massive shale oil deposits, possibly up to 250 billion barrels, southwest of Jerusalem. Israel is now also believed to have extensive — in excess of 15 trillion cubic feet — offshore unconventional natural gas resources.

So what does this all mean?

First, the price of oil — though it likely won’t crash, as a Harvard University researcher recently predicted — is quite unlikely to soar to the stratosphere as some have feared.

It’s Supply and Demand 101. As oil prices rose, they spurred more exploration — and more technological innovation — leading, in turn, to increased supply. That’s dampened further price spikes, though of course the global recession has also played a key role. _CH

Peak oil doomers have been predicting peak oil since the mid 1800s. Modern peak oilers have been forced to surreptitiously slide their dates of doom backward from the 1980s to around 2000 to 2005 to 20010 to 2015 and on and on it goes.

Some leading peak oilers are wallowing in self pity. Others are lashing out with a renewed fury.

These cultish dukes of doom understand very well that they are being pushed to the limits of their own credibility. But they have no options left other than to double down on repetitious bluster and empty bombast.

The near-term future of this doom cult depends upon whether energy starvationists currently in power in the US, the EU, Australia, etc. can continue to win re-election. Once the energy starvationists are driven from power, the great game of make-believe is over, for all practical economic purposes.

Meanwhile, a wide range of new technologies are being developed to reduce societal dependencies on crude oil. And that trend of substitution has just gotten started.

In hindsight, there will always be a point where production of any commodity will be seen to have peaked -- at least up to that moment of observation. The reasons for such production peaks are likely to be multiple, and often not the reasons which were expected ahead of time.

To doom cultists, there is only the one true faith. Go easy on them in their rigid mindedness. Time and history are not on their side.