Razib Khan Looks at Peak Oil

Razib Khan is one of the founders of the renowned GNXP (Gene Expression) blog, and a prolific blogger on the Discover Magazine Blog "Gene Expression." Khan is trained in biochemistry, biology, and genetics, and despite his famous prickly nature, is a well-respected blogger on a wide range of topics.

Razib could not help but notice a recent brouhaha over oil price dynamics between the peak oil doom camp and energy analysts such as Leonardo Maugeri. He brings his unique insights into play in examining the situation:

Despite evolutionary ecology, the reality is that ecologists seem to be characterized by a mindset which posits limits to growth and a finite set of responses to the challenges of scarce resources. That is, the Malthusian paradigm. I bring this up because despite the similarities between ecology and economics it strikes me that ecologists often have a difficult time admitting that the parameters of the model which they think they have a good grasp of may not always be fixed.

Incentives and innovation can shift the dynamics radically. Consider George Monbiot’s about face on “peak oil,” We were wrong on peak oil. There’s enough to fry us all:

A report by the oil executive Leonardo Maugeri, published by Harvard University, provides compelling evidence that a new oil boom has begun. The constraints on oil supply over the past 10 years appear to have had more to do with money than geology. The low prices before 2003 had discouraged investors from developing difficult fields. The high prices of the past few years have changed that.

Maugeri’s analysis of projects in 23 countries suggests that global oil supplies are likely to rise by a net 17m barrels per day (to 110m) by 2020. This, he says, is “the largest potential addition to the world’s oil supply capacity since the 1980s”. The investments required to make this boom happen depend on a long-term price of $70 a barrel – the current cost of Brent crude is $95. Money is now flooding into new oil: a trillion dollars has been spent in the past two years; a record $600bn is lined up for 2012.

Let’s take Monbiot’s assertion as a given, that we are not entering an era of hydrocarbon scarcity. Why? As he outlines increasing demand, flat supply, and higher profits, stimulated exploration and innovation, generating more supply. This isn’t rocket science, critics of peak oil were pointing out this likelihood back in the mid-2000s. What this reminds me of is evolution. A eternal and circuitous race across a fluctuating ‘adaptive landscape,’ with fitness target constantly shifting.

Of course evolutionary process is not such that anything is possible. This is still science, and science has limits. But evolutionary process is often surprising in its ingenuity. Similarly, over the past 250 years or so human ingenuity has been surprising. This doesn’t mean we should bet on this lasting forever, the Malthusian condition has been the norm for almost all of human history. But, we should never forget the power of innovation and incentives when we consider policies at the intersection of the environment and economics. I don’t get irritated when the general public operates with Malthusian assumptions. But I do get irritated when biologists, and especially ecologists, seem to act as if human economic history since 1800 simply hadn’t happened. _Razib Khan in Discover

Amazing Shale Revolution

Monbiot (climate alarmist) on "A New Boom in Oil"

The NYT's Andy Revkin and his little green friends join the commiseration over the new energy supplies

Green academics, activists, journalists, bureaucrats, and politicians often get caught up in a fantasy world of models, imaginations, and nightmare scenarios which generally have nothing to do with the real world -- because they rarely subject their models to real world criticism and validation. Most ecologists of the green persuasion have very poor conceptions of the actual world as it is, and are almost always unprepared to deal with actual developments and real inflection points.

Climate alarmism is viewed scornfully by most competent scientists who do not make a living promulgating climate disaster porn. And yet it is the climate pornographers who are held before the public as the face of science in the rapidly building climate debate.

The same is true for peak oil doomerism. Those who make a living promoting peak oil doom have absolutely no doubt in their (public) minds as to what is coming. More objective analysts, on the other hand, see a wide range of possibilities for future supplies of energy, power, and fuels.

It will be a wild ride. For your own sake, don't limit your sweep of possibilities to those narrow ranges provided by vested interests of one type or another.