KJP:

 

Why worry about that?  As supplies dwindle, assuming they do (and even I concede that they will eventually), then eventually the price will rise until either (a) we reach the point of cost-effective extraction from nonconventional sources (oil shale at $80/b may make no sense, but at $180 or $280, things may be different), or (b) it make economic sense to switch to other fuel sources.  (And yes, I know that we get much more from petroleum than just fuel, but the demand for fuel is the primary driver of the price.)

How much will the price of your Wisconsin dairy products, Iowa corn, Nebraska wheat or Maine lobster be with oil at $180 to $280? Remember the skyrocketing price of food last summer as oil hit $147? Items in your grocery store travel an average of 1,000 miles to get there (let alone all the oil used in creating America's agricultural "miracle" since World War II). That's one reason why I worry.

 

Since America doesn't make much of anything the world wants anymore, we have to import it. Those cheap toys from China, clothes from Malaysia and televisions from Taiwan won't be so cheap anymore. That's another reason why I worry.

 

Americans have become fat, lazy car potatoes nestled in their suburban lifestyles. BTW, for a great social experiment, go to a health club parking lot at 6 p.m. and watch people vie for parking spaces near the club entrance. Another great experiment will be to see what happens to suburbia and suburbanites with oil at $180 or $280 per barrel. How would suburbanites respond? Like chickens with no heads, or deer in the headlights? Would they blame everyone but themselves for trying to sustain a lifestyle that hasn't been sustainable since 1970? Would Americans pawn their valuables to buy gas, or sell their homes and move into their cars? It was happening up until last summer. Nope, no worries there.

 

And then there's the balance of payments problem. Before U.S. oil production peaked in 1970, America was the world's largest producer of oil and was even an oil exporter. We built an oil-dependent lifestyle around it. But we still maintain that lifestyle and have to import two-thirds of our oil (13 billion barrels of oil per year) to live the way we do. At current oil prices of $70 per barrel, we're sending nearly $1 trillion of our wealth overseas per year. At $180 per barrel, we're sending $2.3 trillion of our wealth overseas. At $280 per barrel, we're sending $3.6 trillion of our wealth overseas -- that's an economic bloodletting. Although at $280 per barrel, oil shale might become economically practical to harvest, but not if it takes two barrels of oil to harvest one barrel of oil from shale. That's a pretty expensive gamble, and that's another reason why I would worry.

 

Then there's the national security issue. By the time we get to this concern, if Americans aren't homeless, starving and destitute, they might even care about it.

How much will the price of your Wisconsin dairy products, Iowa corn, Nebraska wheat or Maine lobster be with oil at $180 to $280? Remember the skyrocketing price of food last summer as oil hit $147? Items in your grocery store travel an average of 1,000 miles to get there (let alone all the oil used in creating America's agricultural "miracle" since World War II). That's one reason why I worry.

 

You're not thinking fourth-dimensionally.  Long before oil gets to $280/b, our land use patterns will have shifted to growing more locally, and our transportation sector will have evolved to being less dependent on petroleum-based fuels--possibly completely independent.  There are already viable prototypes for vertical farms that can enable one dedicated city block to produce as much as a good-sized farm; they just aren't cost-effective at today's prices.  The same applies to electric trains (and actually, these may well be cost-effective earlier than vertical farms).  The tech will be there when we need it, however, and we'll have decades more to improve it.  (And yes, I can see your signature quote.  Can't say I share the sentiment.)

 

Since America doesn't make much of anything the world wants anymore, we have to import it. Those cheap toys from China, clothes from Malaysia and televisions from Taiwan won't be so cheap anymore. That's another reason why I worry.

 

This is a complete misperception.  America's manufacturing output has been increasing steadily, at least until the recent economic crisis.  It's manufacturing employment that has been decreasing.  That's because it doesn't take 5,000 workers to man a factory anymore.  (See, e.g., <a href="http://www.aier.org/research/commentaries/206-the-decline-of-manufacturing">here</a>; Google can provide numerous similar links.)

 

Americans have become fat, lazy car potatoes nestled in their suburban lifestyles. BTW, for a great social experiment, go to a health club parking lot at 6 p.m. and watch people vie for parking spaces near the club entrance. Another great experiment will be to see what happens to suburbia and suburbanites with oil at $180 or $280 per barrel.

 

Um, I thought you were trying to list reasons to worry about peak oil, not welcome it.

 

And then there's the balance of payments problem. Before U.S. oil production peaked in 1970, America was the world's largest producer of oil and was even an oil exporter. We built an oil-dependent lifestyle around it. But we still maintain that lifestyle and have to import two-thirds of our oil (13 billion barrels of oil per year) to live the way we do. At current oil prices of $70 per barrel, we're sending nearly $1 trillion of our wealth overseas per year. At $180 per barrel, we're sending $2.3 trillion of our wealth overseas. At $280 per barrel, we're sending $3.6 trillion of our wealth overseas -- that's an economic bloodletting. Although at $280 per barrel, oil shale might become economically practical to harvest, but not if it takes two barrels of oil to harvest one barrel of oil from shale. That's a pretty expensive gamble, and that's another reason why I would worry.

 

As I said, we'll have moved to substitutes in almost everything well before oil gets to $280/b.  Also, this justification is not a reason to worry about peak oil so much as it is reason to worry about foreign oil.  The two are slightly related but are really separate issues.  Our addiction to foreign oil would be an economic and national security issue even if there were 500 years' worth of oil left in the ground in the Middle East and Venezuela.  Peak oil, if there were anything to it, would be a concern no matter the balance of domestically produced oil, oil imported from allies, and oil imported from enemies.

Is it wrong to live in a suburb and own an SUV?  Why?

You're not thinking fourth-dimensionally.  Long before oil gets to $280/b, our land use patterns will have shifted...

 

I do think fourth dimensionally. But our concepts of time for making preparations and adaptations are different. Your assumption is that we have time. Mine is that we don't.

 

This is a complete misperception.  America's manufacturing output has been increasing steadily,

 

What are we making? When was the last time you saw a "Made in America" sticker or tag? When I was growing up in the 60s and 70s, damn near everything was made in America.

 

Um, I thought you were trying to list reasons to worry about peak oil, not welcome it.

 

Well, you got me there!  :-)

 

As I said, we'll have moved to substitutes in almost everything well before oil gets to $280/b. 

 

U.S. Department of Energy reports show that the transition time from our oil dependent economy to one more like Europe's (half as oil-intensive as ours) or China's (one-fourth as oil intensive) would take 20 years without incurrent economic hardship. It could be done in 10 years with some economic hardship. Anything less than that will cause serious economic problems.

 

Again, this all goes to a question of time for adaptation. You believe we have time. I don't.

Is it wrong to live in a suburb and own an SUV? Why?

 

Because it's a lifestyle that can't be sustained in a nation that imports two-thirds of its oil. It was sustainable when America was the world's largest oil producer until 1970. Now we're exporting our wealth to continue propping it up.

Peak Oil, I've come to believe, is not a myth but a long-range ideal that has an "end date" that keeps getting pushed further and further back. When oil per barrel was over $100, the discussion of peak oil was at its height, and people were clamoring to get on the Prius bandwagon so that we could all save the planet.

 

Except that the Prius didn't get that great of a gas mileage, and that the environmental effects of the manufacture of the batteries was very much off-putting. But hey, nothing like slapping that "60 MPG" or "THIS CAR EATS SUV'S" bumper sticker on the back, eh?

 

That said, the trend line for oil per barrel does rise for the next ten years, but only slightly in the best estimate. SUV's and other vehicles -- even the Prius, typically have a shelf life of under ten years and most consumers will swap vehicles within five. Slightly rising oil prices will help promote long-sustaining change in terms of technological and economic advances, including promoted social goals. Sticker shock at the gas pump with rapidly rising prices in a matter of months doesn't promote this; it only advances mass-hysteria of $200 per barrel oil, with the scary guys jumping up and down saying that it would be a matter of a year before the United States would be screwed.

 

People abandoned realistic projections. We are addicted to our shock jocks and those who can raise their voice the loudest. Peak Oil. Swine Flu. Anthrax. Iran. We need to change our habits NOW, they begged, yet people could not afford to change their lifestyles and habits within a few months. Or years. It takes time, and shocking us into this perceived future-reality doesn't work.

 

Want us to abandoned our SUVs and large houses? Give us free market-based ideas and principles, not social-economic programs by the government. Let the consumer decide what is best for them. If gasoline is $4 per gallon, I might consider selling my SUV and purchasing a wagon or a car. But I have a perfectly fine SUV that can last me years if properly maintained, that gets reasonable gasoline mileage, and isn't breaking my budget by far. But don't force regimes and programs on the average consumer; they can make the best decision that will affect how they want to live, not how others want them to live.

 

This would be a great blog post that I need to expand on.

Is it wrong to live in a suburb and own an SUV? Why?

 

I don't think it's wrong.  I just think that it's a lifestyle that has been subsidized to a level that is both unprecedented and unwarranted.  Cities utilize many, many resources--not just land and energy--more efficiently than suburbs.  The same can generally be said of SUVs, though the greater problem there is that suburbs make it so difficult to carpool.  (An SUV with five people in it is actually a fairly efficient mode of transportation when cost-per-person-mile is your standard, which is what I use.)

 

If the roads were privatized, so that people actually were confronted with a real price tag for a 45-minute, 30-mile daily commute, America's cities would not have emptied so quickly or so much.

 

This is a complete misperception.  America's manufacturing output has been increasing steadily,

 

What are we making? When was the last time you saw a "Made in America" sticker or tag? When I was growing up in the 60s and 70s, damn near everything was made in America.

 

I just installed $300 worth of tile in my bathroom, the ceramic tiles were made in the USA as well as the cement backer board. 

 

Peak Oil, I've come to believe, is not a myth but a long-range ideal that has an "end date" that keeps getting pushed further and further back.

 

Unless you're asking the International Energy Agency, the U.S. Geological Survey or some economists or independent geologists who have moved up the date from "2030 or later" to "as early as 2020." I don't care when it is, just like I don't care when it will snow next. But I still have my boots and winter coat in the closet.

 

I don't think it's wrong. I just think that it's a lifestyle that has been subsidized to a level that is both unprecedented and unwarranted. Cities utilize many, many resources--not just land and energy--more efficiently than suburbs. The same can generally be said of SUVs, though the greater problem there is that suburbs make it so difficult to carpool. (An SUV with five people in it is actually a fairly efficient mode of transportation when cost-per-person-mile is your standard, which is what I use.)

 

True, it can be efficient -- if the other four people are paying a share of the cost of using that SUV and none have vehicles sitting idle at home but are still costing their owners.

 

If the roads were privatized, so that people actually were confronted with a real price tag for a 45-minute, 30-mile daily commute, America's cities would not have emptied so quickly or so much.

 

Indeed, and I think that may be the only thing that will save the highway system from financial collapse. ODOT is facing, at minimum, a $3.5 billion gas tax shortfall in the next few years (some think it will be in excess of $10 billion). And only 12 percent of the Federal Highway Administration in FY2010 is budgeted to be funded by gas tax revenues. Well-meaning programs like Cash for Clunkers will only exacerbate this. Increasing the gas tax or indexing it to inflation will only increase the cost of driving and cause further reductions in vehicle-miles traveled, thus creating a negative feedback loop.

 

Privitization may be the only way to save our highway system. Either way, we may not be able to keep all of our highways.

I don't think it's wrong. I just think that it's a lifestyle that has been subsidized to a level that is both unprecedented and unwarranted. Cities utilize many, many resources--not just land and energy--more efficiently than suburbs. The same can generally be said of SUVs, though the greater problem there is that suburbs make it so difficult to carpool. (An SUV with five people in it is actually a fairly efficient mode of transportation when cost-per-person-mile is your standard, which is what I use.)

 

True, it can be efficient -- if the other four people are paying a share of the cost of using that SUV and none have vehicles sitting idle at home but are still costing their owners.

 

Well, I meant fuel-efficient.  Like I said, cost per person per mile.  Also, I don't think that there's anything particularly wrong with owning a car and not putting many miles on it; that may not be "efficient" in the classic sense of "getting the maximum use out of something for a given cost," but it still wouldn't be all that inefficient an arrangement, since the wear and tear on those less-used cars would be less (though the elements and the passage of time would still take their toll).

 

If the roads were privatized, so that people actually were confronted with a real price tag for a 45-minute, 30-mile daily commute, America's cities would not have emptied so quickly or so much.

 

Indeed, and I think that may be the only thing that will save the highway system from financial collapse. ODOT is facing, at minimum, a $3.5 billion gas tax shortfall in the next few years (some think it will be in excess of $10 billion). And only 12 percent of the Federal Highway Administration in FY2010 is budgeted to be funded by gas tax revenues. Well-meaning programs like Cash for Clunkers will only exacerbate this. Increasing the gas tax or indexing it to inflation will only increase the cost of driving and cause further reductions in vehicle-miles traveled, thus creating a negative feedback loop.

 

Privitization may be the only way to save our highway system. Either way, we may not be able to keep all of our highways.

 

Well, that's the inevitable consequence of removing a subsidy, almost by definition.  If we stopped subsidizing sugar, sugar prices would increase and there would be less sugar.  The same applies to highways.  Economically, the principle is the same, even though the goods involved are nothing alike.  You'd almost certainly see some of the gleaming highways through the empty states get abandoned.

Is it wrong to live in a suburb and own an SUV? Why?

 

Absolutely not.  But don't let me hear you bitching about high gas prices... I don't want to hear it.  It was your decision so live with it.

 

People have the choice to live where they want and drive what they want, but they need to understand the possible consequences. 

 

I just installed $300 worth of tile in my bathroom, the ceramic tiles were made in the USA as well as the cement backer board.

 

 

Oooh, the next thing you know we'll be able to make coat hangers or lint rollers.

 

Yes, I know we still make computer equipment, cars, and other things in this country, and that takes a lot of technical know-how. But to deny our industrial capacity has been eroded or traded in for lesser skills in the service and retailing sectors is to have been asleep for the past 30 years.

 

I'm sorry I made the point because it would detract from the subject at hand. If you wish to discuss this more, here are two threads worth visiting:

 

http://www.urbanohio.com/forum2/index.php/topic,17134.0.html

http://www.urbanohio.com/forum2/index.php/topic,17136.0.html

Yes, I know we still make computer equipment, cars, and other things in this country, and that takes a lot of technical know-how. But to deny our industrial capacity has been eroded or traded in for lesser skills in the service and retailing sectors is to have been asleep for the past 30 years.

 

No, it really hasn't.  I already linked to one chart of the data.

 

The percentage of the workforce in manufacturing has gone down.  Our industrial capacity has continued to climb.

Peak Oil, I've come to believe, is not a myth but a long-range ideal that has an "end date" that keeps getting pushed further and further back. When oil per barrel was over $100, the discussion of peak oil was at its height, and people were clamoring to get on the Prius bandwagon so that we could all save the planet.

 

Actually, there are some who happen to believe that we have already peaked. After all, if the current producers were actually capable of producing more, why didn't they take advantage of the $4/gallon price of gas to ramp up production and sales? Some have said that the producers were simply taking advantage of the high profits but when you are highly profitable, don't you ramp up production to take advantage of the windfall? But nobody did. Production didn't rise in response to high prices. Why? Some say because production was already at or near peak and the producers didn't want that known.

 

Let's say that they are nowhere near peak production. Then they could increase production to meet demand, stimulate more demand through lower prices, and realize more revenue. But, instead, they did nothing. Why? Well, what if you are near peak and you start to increase production?  At some point, you reach your peak and it becomes obvious where that is. If you do nothing, people don't know.

 

Sure, there are other options, but they only become feasible when oil prices are over $XX/barrel and they need to be sustainable at that price for sufficient time that you can complete your recovery of the oil.

 

Besides, it is silly to look at oil/gas prices as it affects the individual, directly. A fuel price change of as little as a few percentage points has tremendous implications for the cost to transport goods and services. And air travel is acutely sensitive.

 

Consider that a barrel of oil is 42 gallons. Processing results in about 19 1/2 gallons of gas, 9 gal. of fuel oil, 4 gal. of jet fuel and the rest being products such as lubricants, grease,kerosene,asphalt and plastics, and that's only light, sweet crude. In other words, it take more barrels of oil to produce the same volume of jet fuel as gasoline.

An excellent thread (especially the economic impact discussion) that I have not contributed to because I don't feel that I know as much as those of you who are carrying the discussion.  I do have a question though.  Assume for proposes of argument that the Russian conclusion that petroleum is not primarily a fossil fuel but results from abiotic processes deep within the earth requiring drilling on the order of miles, not feet.  How does this impact the above analysis, if at all? 

 

BTW, based on findings from the moons of Jupiter I believe that the Russians are at least partially correct. 

An excellent thread (especially the economic impact discussion) that I have not contributed to because I don't feel that I know as much as those of you who are carrying the discussion. I do have a question though. Assume for proposes of argument that the Russian conclusion that petroleum is not primarily a fossil fuel but results from abiotic processes deep within the earth requiring drilling on the order of miles, not feet. How does this impact the above analysis, if at all?

 

BTW, based on findings from the moons of Jupiter I believe that the Russians are at least partially correct.

 

I think I'm confused about your question.

 

The depths to which drills need to go is not a matter of conjecture; there aren't many places left in the world where drilling on the order of "feet" is still doable, but no matter where you are, we have pretty good technology now for sounding out where oil lies.  There may be some places where we need to go down miles, I don't know.  I'm not a geologist.

 

As to it being "not primarily a fossil fuel"--that's a new one on me, too.  I just Googled "oil on Jupiter moons" and didn't find much.  Also, while it's made from simple elements (C, H, N, O ... I think that's it ...) and could therefore be made by some chemical process elsewhere in the solar system, I still don't think that that would defeat the notion that here on Earth it's "primarily a fossil fuel."

True. Oil is not liquified, fossilized dinosaurs. Or at least not mostly. To develop the quantities of oil we have today, the majority of the scientific community believes oil deposits came from marine algae that occasionally filled much of the oceans during warmer periods in Earth's history before dying, being acted upon by bacteria, covered with sediment, compressed and slowly "cooked" over millions of years.

 

With this knowledge, there are attempts to accelerate this process using abiotic algae. It shows some promise, but primarily for individual users such as farmers in remote areas. The problems come from being able to develop it in quantities to make a difference and still have enough land left over to produce anything else! Could we produce it in spaces in the ground left vacant by the oil we've already produced? Possibly, if it hasn't filled by water or gases to maintain flow pressure during the oil field's dying years. Then there is the same old issue of pollutions emissions. The burning of abiotic oil produces similar amounts of greenhouse gases as conventional crude. So it is renewable, but it isn't clean and isn't easy to produce it any meaningful quantities.

I just Googled "abiotic algae oil."

 

Three of the first ten links were to FreeRepublic, RedStaterUSA, and Rense.  I haven't done much reading on the topic--but when I decide to do reading on a topic and my first sixty seconds of reading go like that, it does tend to color my perception of the worthiness of keeping reading.

The percentage of the workforce in manufacturing has gone down.  Our industrial capacity has continued to climb.

\

 

As a percentage of our economy, manufacturing has been on a steady decline for 30+ years. 

 

I just Googled "abiotic algae oil."

 

Three of the first ten links were to FreeRepublic, RedStaterUSA, and Rense.  I haven't done much reading on the topic--but when I decide to do reading on a topic and my first sixty seconds of reading go like that, it does tend to color my perception of the worthiness of keeping reading.

 

Algae oil can't be "abiotic"  abiotic implies "without life". 

Sorry for the confusion.  The abiotic oil theory is not new, just newly testable.  Conventional theory says that decomposing biotic material (e.g. algae) under the right conditions (anaerobic decomposition I believe) produces petroleum in a biological process.  The abiotic oil theory postulates that although some oil may be produced in this way, most of the oil we use seeped up from deep within the Earth's crust by catalytic reformation of methane gas (same process used by the Nazis in WWII).  The oil we use is thus both a product of nonrenewable primordial chemistry and of renewable biological material due to common decomposition of under high heat and pressure due to the depth below the earth's surface).  This was recently confirmed (last two years) when the Russians drilled 5 or 7 (I forget) miles below the surface and hit oil.  As no dinosaur or other biological materials are or ever were present at this depth this is believed to be confirmation of the abiotic theory of oil synthesis.  Liquid methane was also recently discovered on Titan which surely didn't have any dinosaurs.  Futher confirmation that methane, the raw material for abiotic oil production was abundant in the early solar system and thus presumably currently present in the deep earth crust. 

 

The significance of all of this is that if correct, petroleum is a renewable (sort of) resource as methane producing biotic material is subducted into the crust by plate tectonics where it is catalytically reformed into oil.  I say "sort of" because although this process is now known to occur, recovery is very expensive.  Extremely deep drilling will be necessary for commercial production, think on the order of 20 miles, and the rate of catalyzation is not known. 

 

Please understand that I am neither a geologist nor a chemical engineer and this is my best understanding.  So, the question I have is assuming the above is correct, how does it affect the above economic analysis.  Thanks.

I just Googled "abiotic algae oil."

 

Three of the first ten links were to FreeRepublic, RedStaterUSA, and Rense. I haven't done much reading on the topic--but when I decide to do reading on a topic and my first sixty seconds of reading go like that, it does tend to color my perception of the worthiness of keeping reading.

 

Algae oil can't be "abiotic" abiotic implies "without life".

 

I thought of that myself, but I accepted it for a time while I worked on a good zinger involving zombie algae.  You beat me to the punch. :-)

 

 

While an efficient, desirable transportation system works best in a high density setting, that does not make living in a high density setting desirable. 

 

I don't feel guilty one bit and would promote suburban living as healthier, safer, and just plain old better.  If oil is a problem, the best answer is not a move back to cities, but rather a more efficient way to power a personal vehicle.

While an efficient, desirable transportation system works best in a high density setting, that does not make living in a high density setting desirable.

 

I don't feel guilty one bit and would promote suburban living as healthier, safer, and just plain old better. If oil is a problem, the best answer is not a move back to cities, but rather a more efficient way to power a personal vehicle.

 

Sounds like someone may be purchasing a "flintstone mobile" in the near future.  Yabadabooo!!!

Sounds good to me, I am always looking for ways to stay active. ;)

While an efficient, desirable transportation system works best in a high density setting, that does not make living in a high density setting desirable. 

 

I don't feel guilty one bit and would promote suburban living as healthier, safer, and just plain old better.  If oil is a problem, the best answer is not a move back to cities, but rather a more efficient way to power a personal vehicle.

 

Sounds like someone may be purchasing a "flintstone mobile" in the near future.  Yabadabooo!!!

 

Speak for yourself.  <a href="http://www.teslamotors.com/">Here's my energy efficient ride</a>. 8-)

 

Actually, we're only two technological breakthroughs away from making suburbs sustainable (or at least, dramatically narrowing the gaps with cities): one more generation of battery technology and grid parity in rooftop solar.  We're a lot closer on both fronts than many people realize.

 

Suburbs are actually more well-suited to rooftop solar--in theory--because there's more surface area for panels per cubic foot of space demanding the power from those panels.  And, as the Tesla shows, electric cars can not only be built, but can be pretty damn cool, with existing technology.  They're just not yet affordable.

 

A suburban subdivision that made efficient use of rooftop solar (possibly augmented with some ground-level emplacements--just every subdivision has at least some dead no-man's-land that could be devoted to the task) and electric cars could power every car in all of its garages and still be grid-positive.

While an efficient, desirable transportation system works best in a high density setting, that does not make living in a high density setting desirable. 

 

I don't feel guilty one bit and would promote suburban living as healthier, safer, and just plain old better.  If oil is a problem, the best answer is not a move back to cities, but rather a more efficient way to power a personal vehicle.

 

Sounds like someone may be purchasing a "flintstone mobile" in the near future.  Yabadabooo!!!

 

Speak for yourself.  Here's my energy efficient ride. 8)

 

Actually, we're only two technological breakthroughs away from making suburbs sustainable (or at least, dramatically narrowing the gaps with cities): one more generation of battery technology and grid parity in rooftop solar.  We're a lot closer on both fronts than many people realize.

 

Suburbs are actually more well-suited to rooftop solar--in theory--because there's more surface area for panels per cubic foot of space demanding the power from those panels.  And, as the Tesla shows, electric cars can not only be built, but can be pretty damn cool, with existing technology.  They're just not yet affordable.

 

A suburban subdivision that made efficient use of rooftop solar (possibly augmented with some ground-level emplacements--just every subdivision has at least some dead no-man's-land that could be devoted to the task) and electric cars could power every car in all of its garages and still be grid-positive.

 

That car looks sweet!  Unfortunately my knees would probably be in my throat.

Peak Oil, I've come to believe, is not a myth but a long-range ideal that has an "end date" that keeps getting pushed further and further back. When oil per barrel was over $100, the discussion of peak oil was at its height, and people were clamoring to get on the Prius bandwagon so that we could all save the planet.

 

Actually, there are some who happen to believe that we have already peaked. After all, if the current producers were actually capable of producing more, why didn't they take advantage of the $4/gallon price of gas to ramp up production and sales? Some have said that the producers were simply taking advantage of the high profits but when you are highly profitable, don't you ramp up production to take advantage of the windfall? But nobody did. Production didn't rise in response to high prices. Why? Some say because production was already at or near peak and the producers didn't want that known.

 

IIRC the refining capacity (to gasoline) was/is the bottleneck in that

Also, my understanding is that existing wells really were operating near maximum output, and new wells can't simply be drilled on a moment's notice.  By the time they could have been operational, the bubble would have burst (in hindsight), anyway.

S'matter-ya'll afraid of aboitic oil?

Sorry for the confusion.  The abiotic oil theory is not new, just newly testable.  Conventional theory says that decomposing biotic material (e.g. algae) under the right conditions (anaerobic decomposition I believe) produces petroleum in a biological process.  The abiotic oil theory postulates that although some oil may be produced in this way, most of the oil we use seeped up from deep within the Earth's crust by catalytic reformation of methane gas (same process used by the Nazis in WWII).  The oil we use is thus both a product of nonrenewable primordial chemistry and of renewable biological material due to common decomposition of under high heat and pressure due to the depth below the earth's surface).  This was recently confirmed (last two years) when the Russians drilled 5 or 7 (I forget) miles below the surface and hit oil.  As no dinosaur or other biological materials are or ever were present at this depth this is believed to be confirmation of the abiotic theory of oil synthesis.  Liquid methane was also recently discovered on Titan which surely didn't have any dinosaurs.  Futher confirmation that methane, the raw material for abiotic oil production was abundant in the early solar system and thus presumably currently present in the deep earth crust. 

 

The significance of all of this is that if correct, petroleum is a renewable (sort of) resource as methane producing biotic material is subducted into the crust by plate tectonics where it is catalytically reformed into oil.  I say "sort of" because although this process is now known to occur, recovery is very expensive.  Extremely deep drilling will be necessary for commercial production, think on the order of 20 miles, and the rate of catalyzation is not known. 

 

Please understand that I am neither a geologist nor a chemical engineer and this is my best understanding.  So, the question I have is assuming the above is correct, how does it affect the above economic analysis.  Thanks.

 

The oil we have been using is, in fact, oil from biomass-- mostly algae from a warmer period in the earth's history that began in the Carboniferous Period which began roughly 360 million years ago and ended about 200 million years ago.  Virtually all oil has been found in sedimentary rocks of marine origin.  Our coal reserves were also formed during this period and is found in sedimentary rocks of both marine and freshwater origin (swamps, bogs, lakes, etc).  It is biotic oil theory that has lead us to successfully find the oil we've been using. 

 

It should also be noted that the existence of liquid methane on Titan and on planets in the outer solar system are not evidence of abiotic oil on earth.  Early in its geologic history, the Earth's atmosphere contained a lot of methane, but it was in the gaseous form.  It's liquid on Titan and the outer planets because it's so damn cold out there.  The composition of the Earth's atmosphere has changed since then.

 

It is doubtful that there is very much methane deep in the earth's mantle.  When the earth was a molten blob as it formed, density separation occurred and as a result, the core and mantle are dominated by heavier elements.  Any carbon that may exist there, and the evidence of it is not strong, is not enough to matter as far as producing recoverable oil. 

 

It is also important to remember that oil formation zone is between roughly 7,500 and 15,000 feet below the earth's crust.  Below that, the heat and pressures are just too great to have anything but methane.  Furthermore, iIf methane were to seep up and form in the "oil zone", it would also be found in rocks of non-marine origin, not just marine origin. 

 

Long story short, the abiotic oil theory is weak.  So weak, in fact, that it is not generally accepted among geologist as a source of commercially recoverable oil. 

 

There is a good discussion of abiotic oil here:

http://www.energybulletin.net/node/2423

 

 

^ I thought it sounded a little fishy, but I'm glad for that explanation.  Props.

 

  No matter what the source of oil is, it seems to be peaking, based on historical consumption data.

^actually, it's based on the production profiles in the oil producing countries.  Whether a well, well field, a collection of well fields in an entire country, production follows a bell-shaped curve.  Once a country passes its production peak, it doesn't ever recover.  54 or 55 of the 65 countries that produce oil are past their peaks. 

This is a perfect example of peak oil disinformation that routinely gets spread around by the same few people.  Michael Lynch, author of this Op-Ed is one of them.  Go to link for entire article. There is a good rebuttal at The Oil Drum:  http://www.theoildrum.com/node/5711 

 

I inserted some comments in red

 

http://www.nytimes.com/2009/08/25/opinion/25lynch.html?_r=1&th=&emc=th&pagewanted=print

 

‘Peak Oil’ Is a Waste of Energy

By MICHAEL LYNCH

 

Amherst, Mass.

 

REMEMBER “peak oil”? It’s the theory that geological scarcity will at some point make it impossible for global petroleum production to avoid falling, heralding the end of the oil age and, potentially, economic catastrophe. Well, just when we thought that the collapse in oil prices since last summer had put an end to such talk, ...

It did not put an end to "such talk" it has been argued by the peak oil crowd that price volatility would be a hallmark of approaching the peak in production whereby there would be spikes in prices that would slow the economy which in turn would cause a temporary drop in demand then, as the economy recovers, the price spikes return.

 

 

Like many Malthusian beliefs, peak oil theory has been promoted by a motivated group of scientists and laymen who base their conclusions on poor analyses of data and misinterpretations of technical material... I've never seen anything written by Lynch that explains what these "misinterpretations" are.

thanks for the detailed response.

^no problem... I actually remembered some of my 5 years of geology from college (haven't used it since).

Good job, Gildone. Perhaps Lynch should have taken some geology courses. If he had, he could understand the pitfalls of trying to get oil from a stone. Nothing's impossible. Practicality? That's another matter entirely.

IIRC the refining capacity (to gasoline) was/is the bottleneck in that

 

I don't think so.

 

http://www.reuters.com/article/marketsNews/idUSN1641107120090716

^If refining capacity was the problem, then it should have only been the price of the refined products that spiked, not the price of crude.  It was the price of crude that was the problem. 

http://whiskeyandgunpowder.com/washington-capitulates-peak-oil-is-real/

 

Published Sep 1 2009 by Whiskey and Gunpowder, Archived Sep 1 2009

Washington Capitulates: Peak Oil Is Real

by Doug Hornig

 

Each year, generally in May, the Energy Information Administration publishes a less-than-eagerly-anticipated tome called the International Energy Outlook, 250+ pages of mind-numbing text, charts, graphs, and tables.

 

No one reads it. The mainstream media ignore it.

......

 

With that in mind, by 2007 the IEO was in its final year of irrational exuberance, confidently predicting that world production of conventional liquids would be 107.5 million barrels/day (up from 81.9 in 2005). That dovetailed nicely with a forecast for world demand of 118 million b/d, with 10.5 million barrels of unconventional liquids taking up the slack.

 

Projected production is suddenly shriveling up. From 107.5 million b/d of oil projected for 2030 in 2007, to 102.9 million b/d in 2008, to this year’s meager expectation for 93.1 million. That’s a drop of 13.4% in only two years, and posits production growth of only 11.6 million b/d (14.2%) from 2006 levels.

 

If that isn’t an admission that the era of Peak Oil is upon us, what is?

 

......

 

 

I have a serious question for all the peak oil prophets of doom:

 

Have you put your money where your mouths are?  Are you invested in oil futures, oil-future ETFs, CanRoys, US natural resource trusts, or other securities that are likely to appreciate over time if supply really does decline as demand continues to rise?  Granted, all of those have other risks associated with them, and the tax changes in Canada slated to come into effect in 2011 will dilute the distributions on the CanRoys, but the market has already taken those into account and if the price of oil skyrockets as you all seem to think it will, that will trump pretty much every other factor.

 

I do have one oil-and-gas trust in my portfolio, but I got it more as an inflation hedge than a bet on the accuracy of peak oil alarmism; I bought gold at the same time.

 

  I think that the science shows that peak oil is real, and it will be peaking soon if it has not already. I don't know if the peak refered to in the above article is the maximum peak, or just a spike in the overall trend leading to an even higher peak in the future. In any case, by 2030 we should be well on the downslope side of the curve. Peak Oil is a long term trend, measured on the scale of decades.

 

  What I do not agree with is predictions about price. Peak oil is about volume of petroleum; it is not about price. Many folks try to tie peak oil to the price of petroleum, but they are getting into economics and not science. Price is determined by the variable supply and demand, which are more or less in equilibrium all the time.

 

    Said another way, the price is the outcome of the supply curve and the demand curve. It takes both.

 

    To say that demand will rise while supplies fall is a misconception. Demand will always nearly equal supply in a free market. It is very well possible that supply will fall, but demand will fall also, and the price will remain constant or even decrease.

 

    Quite frankly, I have no idea what the price of oil will be in the future. Therefore, I have no investments based on any assumption on the future price of oil.

 

     

Prophets of doom??  Alarmism?  Uh, that's over the top.  Since when is acknowledging the reality of peak oil translate into doom and alarmism? 

Response to Lynch/Yergin:

 

Commentary: Michael Lynch, Daniel Yergin--The Denizens of Peak Oil Denial

by Steve Andrews and Randy Udall

http://www.energybulletin.net/node/49998

(Note: Commentaries do not necessarily represent ASPO-USA's positions; they are personal statements and observations by informed commentators)

 

Last week Michael Lynch and Daniel Yergin pummeled the concept of peak oil in two mainstream media outlets. Lynch's feisty but nearly fact-free op-ed for the New York Times and Yergin's more scholarly reflection in Foreign Policy whipped up further discussion in the blogosphere. Although the majority of on-line responses to Lynch's piece were negative, peak oil advocates were put on the defensive.

 

The two critics employ distinctly different separate styles — Yergin is a Pulitzer Prize-winning historian and suave, savvy corporate schmoozer, while Lynch resembles the kind of pit bull that enjoys attacking bicyclists from behind. Both have been pounding away at peak oil since its "modern renaissance" began with the March 1998 article in Scientific American, "The End of Cheap Oil." These two masters of denial enjoy flogging peak oil. It's clearly what their paying clients in Big Oil want to hear, and sometimes the peak oil community inadvertently hands them ammo that is too good to pass up....

 

 

Nice they categorized it by country, but it would be more accurate to state those figures in the table by production volume and future production volume.

 

Mexico (through BP) discovered one of its biggest oil finds in decades IIRC yesterday. 3 billion barrels worth of oil, enough to lop it into the "increasing production" category.

Prophets of doom?? Alarmism? Uh, that's over the top. Since when is acknowledging the reality of peak oil translate into doom and alarmism?

 

Substitute whatever more PC or modest terms you prefer.  In my experience, a preexisting anti-suburb or anti-oil-company agenda leads one to put more faith in peak oil theory, rather than the other way around.  However, I'm not having that debate here, since I already know how it would end (everyone digging in their heels on both sides and shouting at each other).  My question was whether you have enough confidence that you're actually right to have put your money on the line.  (In the alternative, I would ask whether, if you have not put your money on the line, you realistically expect the value of oil not to increase with increasing scarcity, e.g., if you actually believe that demand will decline more than supply over the long term, and if so, why.)

 

As I said, even as a peak oil skeptic, I still have oil and gas assets in my portfolio.  However, if I genuinely believed in "peak oil" theory, or at least the most alarmist visions of it (the ones predicting severe shortages of it unless we change our ways, pronto), I'd be buying more like crazy now, while the lingering recession is depressing commodity prices.  I would do so because I consider it extraordinarily unrealistic to expect demand to start a long-term downward trend, particularly not once India, China, Brazil, etc. come out of the doldrums.  Their demand for energy is going to continue to increase, and fossil fuels are going to be the reigning monarchs of the energy world until technology actually offers a viable substitute.  I see absolutely no credible chance that worldwide energy consumption is actually going to decrease over the long-term (particularly from its current levels, which already represent a drop-off from the boom heights).

 

Of course, I admit that there's a finite amount of oil out there and that the Earth is not producing more of it faster than humanity is consuming it.  Therefore, oil production has to peak at some point.  And if that's all you mean when you say "peak oil," then I retract what I said about alarmism.  When I think of "peak oil theory," however, I don't just think of some scientists engaged in a scholarly debate about supply and demand curves, the definition of "recoverable," "proven" reserves, etc.  My mind calls to mind political activists who want to use the theory as a pretext for imposing, often with heavyhanded government intervention, massive (and massively unpopular) changes to our way of life--the kind that no democratic society would accept unless they were scared into silence and acquiescence.  This may be just a product of my own experience, but that has overwhelmingly been where I've encountered "peak oil" prophets.

 

For as long as humankind has existed, there has always been some person or group predicting the end of the world unless "we" do X.  For as long as humankind has existed, these prophets of the apocalypse have never yet been right.  Therefore, as a matter of principle, I refuse to give credence or even much respect to any "theory" that says the world is coming to an end unless we do what the prophets say we must to avert Armageddon.  (In the peak oil case, that generally means stop building suburbs, build more public transportation, and use less energy all around.)  If that's not you, then my comment didn't apply to you.  However, I've been on these boards long enough--i.e., more than 24 hours--to know that there are definitely people sounding the klaxons about this on the political front as well as the scientific.

For as long as humankind has existed, there has always been some person or group predicting the end of the world unless "we" do X. For as long as humankind has existed, these prophets of the apocalypse have never yet been right.

 

Depends what you mean by "Armageddon".  If you mean the dead rising and angels fighting in the skies, you're right, that's never happened.  If you mean collapse of an economic, political, and social order, then indeed "armageddon" has happened a number of times, including a number of times because of resource depletion.  See Easter Island, the Anasazi Indians, Haiti, and arguably much of Sub Saharan Africa.

For as long as humankind has existed, there has always been some person or group predicting the end of the world unless "we" do X. For as long as humankind has existed, these prophets of the apocalypse have never yet been right.

 

Depends what you mean by "Armageddon". If you mean the dead rising and angels fighting in the skies, you're right, that's never happened. If you mean collapse of an economic, political, and social order, then indeed "armageddon" has happened a number of times, including a number of times because of resource depletion. See Easter Island, the Anasazi Indians, Haiti, and arguably much of Sub Saharan Africa.

 

With respect to Easter Island and the Pueblo tribes, point taken.  I don't know enough about the history of Haiti to know what you're referring to, nor to what sub-Saharan African civilization you're talking about (I would, however, note that sub-Saharan Africa is still incredibly resource-rich, so I find it hard to believe that resource depletion alone collapsed any historical civilization there).  However, the inapplicability of any of those as a parallel to where we are today should be immediately obvious.  They were tiny (sub-Saharan Africa excepted), they were isolated, and they were economically and politically less adaptable than we are or any modern capitalist country is.

For what its worth

 

UPDATE 4-BP makes 'giant' oil find in Gulf of Mexico

Wed Sep 2, 2009 7:01pm EDT

By Tom Bergin

 

LONDON, Sept 2 (Reuters) - Oil major BP Plc (BP.L: Quote, Profile, Research, Stock Buzz) said it has made an oil discovery in the Gulf of Mexico that analysts believe could contain more than 1 billion barrels of recoverable reserves, reaffirming the Gulf's strategic importance to the industry.

 

http://www.reuters.com/article/newsOne/idUSL253064820090902?virtualBrandChannel=10522