05 January 2010

Robert Rapier on Peak Oil Doomers

Robert Rapier is a chemical engineer working in the energy sector and a well respected energy blogger. Robert has his own website, and has written many articles for The Oil Drum -- a place where many peak oil doomers hang out. Robert's views of Peak Oil Doomers are worth reading:
I have been highly interested in what is going on with Saudi oil production for a long time. Saudi has a tremendous amount of economic leverage because of their oil production, and if their production declined sharply, then a lot of doomer points would start to look more plausible. Thus, I am keenly interested in understanding the true situation in Saudi. This was one of my primary motivations for reading Twilight in the Desert.

Twilight was published in 2005, and argued for a near-term collapse in Saudi oil production, with an inevitable price shock to follow. Following publication of the book, Matt Simmons made a $10,000 bet with New York Times columnist John Tierney that oil prices in 2010 would average over $200/bbl (see the Simmons-Tierney bet). This bet is useful for understanding the time frame Simmons had in mind for a Saudi collapse; certainly by now we would be in the midst of a full-fledged Saudi production collapse.

Given his message, it should come as no surprise that Simmons has gained quite a following among the doomers. He is held in very high regard by many at TOD, and a number of people have used his work as a jumping off point for their own claims of a Saudi collapse.

...Look at what has happened since Stuart's post. When Stuart wrote Nosedive in March 2007, production (C+C) in Saudi was 8.6 million bpd (Data from the EIA). I predicted that the declines would stop by summer, and little did we know that when Stuart published that essay, declines had just stopped and would be stable until late summer before beginning to rise.

The Saudis had production back above 9 million bpd by December 2007, and by July 2008 they had production at 9.7 million bpd - the highest level in almost 30 years (and without the aid of some of the major new projects that were expected to bump production a little). Their production then pulled back after prices collapsed. Just the fact that production flat-lined for 7 months with no new major projects coming on says without a doubt they were sitting on spare production when I was arguing that they were. If they hadn't been, they would have declined a bit each month and could have only reversed that by bringing new projects online.

One argument that many people made for a permanent decline was that if Saudi had spare production they would have brought it online in 2006-2007 as prices climbed. As I replied at the time "Not if inventories are full."

...One thing is clear now in hindsight: Saudi did not go into terminal decline in 2005. Proponents of that theory have now shifted their position to "I will give up the idea that 2005 was the peak when the January-December average production exceeds that of 2005." That's wrong on two counts. First, production in 2008 rose hand in hand with oil prices, and by July when prices hit record levels the production rate was at the highest level in almost 30 years. If 2005 was the peak, no way would that have been possible.

Second, they seem to forget their argument. Assume for a moment that Saudi produces at only 90% of the 2005 rate, but do it for the next 40 years. Will the 2005 peakists maintain that 2005 was the geological peak? As I pointed out recently to someone who made that argument ("I am correct that 2005 was the peak until production for a calendar year exceeds 2005 production") - Saudi production in 1980 and 1981 were both higher than for 2005. By their logic, I must conclude that 1980 was the Saudi peak.

I think ridicule and loss of credibility is inevitable if you are out making predictions based on shoddy analysis - which I felt was the basis for many of the imminent Saudi decline predictions. I believe when you are wrong about something, you try to learn from it so that future projections are better. If you simply rationalize away wrong predictions, you will likely continue to make them. _RSquared
Shoddy analysis is what has made both Peak Oil Doom and Catastrophic Anthropogenic Global Warming such laughing stocks among persons with both open minds and sound logic.

The only kind of peak oil we have at this time is political peak oil brought on by the destructive policies of an Obama - Pelosi reich. Take a fantasy -- catastrophic climate change -- and use it as a pretext to create a genuine crisis -- political peak oil. That is the enviro-leftist echo choir in a nutshell. PS: echoes in a nutshell are really loud.

Still, the concept of peak oil can be useful as a motivator for behaviour change. Eventually the finite world will have to make some hard decisions about energy flows. And as far as Peak Oil Doom goes, if extreme visions are what it takes to cause a person to prepare for unpredictable disasters, then so be it.


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“During times of universal deceit, telling the truth becomes a revolutionary act” _George Orwell

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