You Don't Have to Be Nuts to Believe in Peak Oil Doom, But It Helps!

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If all the citizens of Planet Earth were polled, it is likely that most citizens believe in one doomsday cult or another. Peak oil doom is a highly addictive, though irrational, doomsday cult. Like the climate catastrophe doomsday cult, it is a quasi-scientific religion, with just enough factual bits included to snare the unwary.

The first problem one confronts when trying to come to grips with the cult of peak oil, is finding a definition of the phenomena which is both widely held among adherents, and clear enough to be falsifiable. Here is a short explanation from Matt Savinar of Life After the Oil Crash (as quoted by Fabius Maximus)

In practical and considerably oversimplified terms, this means that if 2005 was the year of global Peak Oil, worldwide oil production in the year 2030 will be the same as it was in 1980. However, the world’s population in 2030 will be both much larger (approximately twice) and much more industrialized (oil-dependent) than it was in 1980. Consequently, worldwide demand for oil will outpace worldwide production of oil by a significant margin. As a result, the price will skyrocket, oil dependant economies will crumble, and resource wars will explode.

The issue is not one of “running out” so much as it is not having enough to keep our economy running. In this regard, the ramifications of Peak Oil for our civilization are similar to the ramifications of dehydration for the human body. … A loss of as little as 10-15 pounds of water may be enough to kill him. In a similar sense, an oil based economy such as ours doesn’t need to deplete its entire reserve of oil before it begins to collapse. A shortfall between demand and supply as little as 10 to 15 percent is enough to wholly shatter an oil-dependent economy and reduce its citizenry to poverty. … _FabiusMaximus

Fabius Maximus analyses Savinar's claims line by line at the link above, and explains in several ways why the peak oil cult is massively overblown, and suitable only for people with nothing important to do or think about. Take one of Savinar's points: oil production follows a bell curve. Does that actually hold up in reality? Not really. Think rather of a curve with a long plateau at the top (yet to be reached) and a gradual skew to the right over decades.

JD at Peak Oil Debunked blog has an interesting recent post explaining how a drop in demand for oil such as we are seeing now, can completely change the equation. Here is more on the demand slump in the US.

New supplies--even new wells that will not produce for 5 or 10 years--will also have a downward effect on oil prices and a re-shifting in markets. Producers who are holding back production will be inclined to sell more at current higher prices before later new supplies kick in. See this non-OPEC outlook (PDF), and consider the coming oil rush to the offshore and the arctic.

In China, India, Indonesia, Malaysia, Mexico, and many other emerging economies, governments are subsidising petroleum costs for residents. This is incredibly expensive for those governments. Some of them are already tapering their supports, and others are making definite plans to do so. The loss of those subsidies will trigger a demand destruction in those countries similar to what we are seeing in North America and Europe. It is like a dimmer switch: high cost of a commodity affects how that commodity is used, and promotes substitution of all kinds. This is one of the many things that peak oil cultists fail to comprehend.

It is very likely that high oil prices (above $90 a barrel) will continue to stimulate massive investment in oil exploration, production, and improved refinement--particularly of heavy, sour, and unconventional oils. It is also virtually inevitable that the headlong rush to develop bio-energy solutions will not only continue but will accelerate--as long as oil stays above $90 a barrel.

The US Democratic Party controlled congress will try to continue to cut off energy supplies to the US by banning offshore drilling, arctic drilling, shale oil exploration and development, coal to liquids and coal to gas technologies, nuclear fission power plants, etc. That is political peak oil which we have plenty of. If Barak Obama is elected, he has suggested that he may even ban Canadian oil sands from being used anywhere in the US--political peak oil in spades!

But the US Democratic Party functionaries such as Nancy Pelosi and Barbara Boxer are playing with fire, considering the mood that US consumers, taxpayers, and voters are in. There will be a reckoning, and the Pelosis, Boxers, and Obamas may not enjoy the final tally. Political peak oil is a useful scam for temporarily wrecking an economy only as long as you can blame the carnage on your political opponents. Once the voters begin to see who is really responsible, an intelligent political crook should know when to back off. It is not clear that the cronies leading the political peak oil charge in the US are intelligent.

Even the election of John McCain will not help the energy equation very much, since McCain is actually a believer in climate catastrophe--and probably peak oil doom--at heart. Much of his current posturing is merely a savvy reading of the electorate's mood.

What we are seeing now is a race between the political peak oilers who are trying to shut the US energy supply down via prohibitions, regulations, and bans, and the energy entrepreneurs, engineers, wildcatters, inventors, and innovators--who want to see continued economic growth based upon ever cleaner and more abundant energy. Who are you cheering for?