Peak Oil: 2050

The price of oil hovers above US $100, but then the dollar is not what it used to be. Even without the huge reserves of tar sands, oil shales, heavy oils, or biofuels breakthroughs, there is enough crude oil underground to last a few more decades. The price is apt to remain high, however, which in terms of attracting investment in alternatives, is a very good thing.

...Hundred-dollar oil will provide a clear incentive for reinvigorating fields and unlocking extra barrels through the use of new technologies. The consequences for emerging oil-rich regions such as Iraq can be far more rewarding. By 2040 the country's production and reserves might potentially rival those of Saudi Arabia.

Paradoxically, high crude prices may temporarily mask the inefficiencies of others, which may still remain profitable despite continuing to use 1960-vintage production methods. But modernism will inevitably prevail: The national oil companies that hold over 90% of the earth's conventional oil endowment will be pressed to adopt new and better technologies.

- What will be the average rate of crude consumption between now and peak oil? Current daily global consumption stands around 86 million barrels, with projected annual increases ranging from 0% to 2% depending on various economic outlooks. Thus average consumption levels ranging from 90 to 110 million barrels represent a reasonable bracket. Any economic slowdown -- as intimated by the recent tremors in the global equity markets -- will favor the lower end of this spectrum.

...When will peak oil arrive? This widely accepted tipping point -- 50% of ultimately recoverable resources consumed -- is largely a tribute to King Hubbert, a distinguished Shell geologist who predicted the peak oil point for the U.S. lower 48 states. While his timing was very good (he forecast 1968 versus 1970 in fact), he underestimated peak daily production (9.5 million barrels actual versus eight million estimated).

But modern extraction methods will undoubtedly stretch Hubbert's "50% assumption," which was based on Sputnik-era technologies. Even a modest shift -- to 55% of recoverable resources consumed -- will delay the onset by 20-25 years.

Where do reasonable assumptions surrounding peak oil lead us? My view, subjective and imprecise, points to a period between 2045 and 2067 as the most likely outcome.

Cambridge Energy Associates forecasts the global daily liquids production to rise to 115 million barrels by 2017 versus 86 million at present. Instead of a sharp peak per Hubbert's model, an undulating, multi-decade long plateau production era sets in -- i.e., no sudden-death ending.___WSJ

If one factors in new nuclear plants to power larger fleets of electric vehicles, increasing use of biomass CHP, and enhanced geothermal power plants alongside larger-scale solar thermal plants--which are highly scalable--one discovers ways to make the oil supply last longer.

Transportation needs diesel fuel and jet fuel. Aviation, maritime shipping, rail freight, truck freight--civilisation depends on these petro-fuels. Clearly, biofuels will eventually provide sustainable substitutes for every liquid fuel humans need. Just as clearly, new in situ methods of crude recovery from oil shale, tar sands, and heavy oil deposits will provide more petroleum than humans are likely to need--assuming biofuels scale up in the next 50 years to the size infrastructure they are capable of building.

There is still a minority view, held largely by a small band of retired petroleum geologists and some members of Congress, that oil production has peaked, but the theory has been fading. Equally contentious for the oil companies is the growing voice of environmentalists, who do not think that pumping and consuming an ever-increasing amount of fossil fuel is in any way desirable.___NYT

Peak oil panic belongs with other fashionable panics of modern times--the holy warmer climate orthodoxy, the overpopulation dieoff.orgians, the gray-goo nano-apocalypse, etc. Even the determined march of the leftist-islamist alliance is not likely to spell the ultimate doom of civilisation, as hard as the duo may try.

Humans will survive, and they will prosper. But they will need to learn to love a challenge. And that will be very difficult for the psychological neotenates among us. Psychological neotenates crave tenure--cradle to grave security provided by others. The future is not likely to provide that.