Matthew Simmons, analyzing the recent attempts to debunk peak oil theory, summarizes the various views here:
1. Oil will remain an extremely important part of the world's economy throughout the next century as its main base of users shifts from prosperous countries to the teeming mass of humanity in Asia that previously used only tiny amounts.2. Oil markets are now far more transparent and far more liquid given the fact that existing oil contracts allow investors to trade three to five times more oil than the world uses every day. This transparency will flood capital into oil markets, keeping the price low which, in turn, will encourage even greater demand.
3. The world's endowment of oil has never been so large, despite 150 years of constant oil use coupled with the fact that the world now consumes more than 85 million barrels of oil daily. This "fact" is why all four authors took aim at the Peak Oil worry-warts who they feel are intent on trying to convince the world that it is running out of oil.
4. The emergence of spectacular new technology will enable the supply of oil to flow far easier than ever. And, this new technology boom is just getting started. Over time, it will improve by leaps and bounds.
... and then he explains why the optimists are wrong. Excerpt:
The final topic the Gang discussed was the rapid advances in oilfield technology. Sadly, this is the greatest myth of all. I spent four decades as an investment banker to the global oil-service industry, which collectively invented all of this technology. The concept that there are new innovations in this area is false.In fact, the seeds of this so-called technological revolution -- the ability to exploit oil from deep water or drill horizontally -- were first developed 40 years ago. I personally raised a great deal of the venture capital that helped implement some of the most important technical advances in the industry. Our firm, through advising on mergers, consolidations, reorganizations, and bankruptcies, helped save the oil-service companies that created these great technological advances that help us find and commercially exploit oil and gas.
None of this technology is new -- in fact, it is now quite mature. Sadly, there are few new ideas in the oilfield pipeline to replace advances that were made decades ago.
In my view, while Yergin, Lynch, Morse, and Jaffe, are articulate in their theories, none seem to have any strong sense of the brutally grim reality of today's oil markets. The facts speak for themselves: Oil flows have peaked, technology is now mature, the people running the industry are far too old, and few top-notch graduates are interested in embarking on a career in such a volatile field.
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I read this a few weeks ago and don't know the source, but I felt it hit the mark:
"Debunking peak oil is like railing against gravity and aging"
Messrs Yergin and Lynch have their reasons for stating that Peak Oil is a myth, but in time at least Yergin will say loud and clear - "I was wrong and I am sorry for the harm that I have caused the world. A person who wrote such a great book as the Prize, can't be all bad, in the case of Peak Oil he is dead wrong.
Paul
...we should have started looking at and funding other energy sources in a serious way 30-40 years ago. We are just starting.
And so, Rod, the reaction of our government minders to the first energy crisis was to get "serious" in 1977 and create the Department of Energy. Now I'm sitting here 30 plus years later and wondering WTF the DOE has been doing all this time. Can you imagine, oh, I don't know, the leadership at Google, or GE or some other well run and managed company when facing a similar challenge being allowed to do essentially nothing for three decades??? They'd be lucky to survive with their jobs for three years before getting the boot. Not hard to find examples, but this is a great one of government ineptness that I think borders on the criminal. What makes it even worse is that we all tolerate it.
Best regards.
Mike,
One problem with the DOE is that the DOE was operated by oil industry hacks from 2001-2008. The main goal was to max the status quo to maximize short term profits.
That doesn't explain was DOE was doing during the 80s and 90s but it covers the most recent past.
Mike & KateA,
"WTF the DOE has been doing all this time."
Of DOE's approximately $20MM annual budget, about 10% is spent on alternative energy and energy efficiency. Most of it is spent on the US's nuclear arsenal and cleaning nuclear sites. Another significant chunk is spent on basic research (high energy physics and the like). A bit is spent on tracking the energy status Therefore, DOE may be the Department of Energy in name but is really the department of weapons, science, and energy. To make it worse, the portion spent on alternative energy and energy efficiency is highly politicized and around 20% of it is spent on earmarks that often go to groups that do little to advance the technology but have the ear of their congressperson or senator.
What has DOE done in the last 30 years with the few remaining funds for alternative energy and energy efficiency?
1) Reduced the price of wind power by almost an order of magnitude and made wind a viable energy source.
2) Reduced the price of solar power by over 80% and developed technologies that are now being installed
3) Developed hybrid vehicle technologies in conjunction with the Detroit 3 automakers. Unfortunately, the Detroit 3 "did not see a business case for hybrid technology" and dropped their plans to commercialize it. DOE does not sell products and cannot (or at the time could not) force companies to make good business decisions.
4) Reduced the cost of second generation biofuels by 80% or more.
5) Developed energy efficiency technologies for building windows and insulation and high efficiency lighting. Those technologies led to today's possibilities for energy efficiency.
6) Developed combined heat and power technology and smart grid technology to reduce the wasted energy.
No DOE is not perfect but I think anyone who actually spends time looking at its record and recognizing that most of DOE is not even involved in alternative energy and energy efficiency would realize that the accomplishments of that portion of DOE are not only not "inept bordering on criminal" but are much greater than the accomplishments of most US businesses.
Please, review the government programs before making claims that make no sense.
Regards
We interviewed Matthew Simmons on our show The Agenda back in March and where he talks all about this. Here's the link: http://www.youtube.com/watch?v=Gem872xH_7s
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