Uh oh, another hippy lie busted, Peak Oil is well dead now

Remember peak oil?

The hippies still cling to this shibboleth like Michael Jackson to a small boy.

But the reality is there is more oil now than ever before as we have got smarter and technology improvements give us access to previously uneconomic oil supplies. And the alarmists are upset that oil prices are falling.

Many environmentalists had assumed that if neither fear nor reason helped us to lessen our reliance on oil, then at least we could count on scarcity. But scarcity is not an economic or environmental policy. Humans have long had a habit of expecting the sky to fall. Yet from Malthus to Paul Ehrlich, predictions that the planet was on the verge of starvation have never come to pass (or at least not as broadly as expected). Nonetheless, the drop in oil prices comes at a terrible moment. Last month the Intergovernmental Panel on Climate Change reported that our only chance to halt the rising temperature of the Earth, and to prevent the calamity that rise will cause, would be to eliminate fossil-fuel emissions by the end of the century.

A plan to end U.S. fossil-fuel dependence would be an unlikely goal in any case, but, if oil remains easily accessible, it becomes politically impossible. “It is technically feasible to transition to a low-carbon economy,” Youba Sokona, the co-chair of one of the I.P.C.C.’s working groups, says. “But what is lacking are appropriate policies and institutions. The longer we wait to take action, the more it will cost to adapt and mitigate climate change.”

See the alarmism at the end..not even a hint of irony that their alarmism over ‘peak oil’ has proven by the market to be a lie.

Others think low prices are here to stay.

During the last decade, even as alarums about the advent of “peak oil” grew ever more frenzied, world oil production actually increased from 77.6 million barrels per day in 2003 to 86.8 million barrels per day in 2013. Lynch’s book The “Peak Oil” Scare and the Coming Oil Flood, scheduled for publication this coming spring, predicts even larger leaps in the global production of crude. Lynch thinks world oil production will increase to around 110 million barrels per day during the next decade. In the meantime, global oil prices will hover around $60 per barrel over the next couple of years and conceivably drop to $40 per barrel in five years. At $40 per barrel, the price of oil would, in inflation-adjusted dollars, just about equal the annual average price of $17 per barrel in 1998.

I asked Lynch if this meant oil markets might be in for a replay of the price collapse that occurred in the 1980s. He replied that he thought so. In inflation-adjusted dollars, the price of oil reached its peak annual average of $106 per barrel in 1980 and then collapsed to an annual average of $30.80 per barrel in 1986.

Another factor to consider when attempting to project future prices is that demand for oil appears to have peaked in the United States and Europe. This is due in large part to the recent period of sustained high prices that encouraged drivers to buy more energy-efficient vehicles and to conserve the amount of fuel they burned. U.S. gasoline consumption peaked at 142 billion gallons in 2007 and has since fallen by 6 percent to 135 billion gallons in 2013. In the European Union, transport fuel consumption has fallen by 8.4 percent since peaking in 2007. In addition, the total estimated vehicle-miles traveled by Americans has dropped by more than 2 percent since 2007. (Lynch muses that low oil prices may mean we’ll “see the death of the electric car” once again.) Finally, if the big industrial countries do get serious in the next decade or so about cutting carbon emissions, that too will tank demand for oil.

Well there is one benefit..the death of the electric car.

Either way the claims about peak oil have proven to be as accurate as Michael Mann’s hockey stick in predicting global temperatures.


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  • MaryLou

    I would be sad to see the death of the electric car – again. The idea of being able to plug into my household power at around $2 would be great if they can just sort out the batteries. Even better if the house was fully solar-run.

    Climate change is the new peak oil/ozone layer hole – there’ll always be something…

    • Mad Captain

      I agree, a Tesla Model S P85 is on my list of dream cars. Would eat my fossil burning M5 for breakfast.

      • John1234

        Trouble is it only goes 250 miles on a charge. Fine if you are commuting in it … but in that case who needs the performance?

        • Mad Captain

          The M5 only does 250 miles on a tank too and it costs about $180 each time, but at least I can fill it up in 5 minutes. I see Tesla is now officially in Australia and building their ‘super-charging’ stations; perhaps when they get around to doing that here…

          You can never have too much performance IMO, but that’s just being environmentally incorrect. Prius anyone?

          • Wendy

            Get an M6 I say.

          • Rick H

            How about a VW Lupus diesel – 3 litres per 100k

          • John1234

            Wow, why is the M5 so short ranged? Shouldn’t it be getting at least double that?
            I love modern diesels – my Toureg gets around 800k orr 500miles a tank of city driving and over 1100k on long distance trips, and it is no slug.

          • Mad Captain

            Hi John, mine is a classic 1992 3.8 litre BMW M5, gets around 15-18 mpg whether I thrash it or not. Back then they were made to go fast without much attention to fuel efficiency! See the movie Ronin for an example :-)

        • MaryLou

          Everyone. Always.

      • MaryLou
    • CheesyEarWax

      The idea of using rechargeable batteries in cars is outdated, battery technology hasn’t advanced much over the decades. The future will be some sort of fuel-cell type technology in a form where consumers can buy and replace as needed, not recharging the cells which is impractical in cars.

      • Bretto

        There’s also some merit in remote charging e.g. power by proxy, where charging pads could be installed into the roads. Bit of a billing nightmare though…

      • Kiwibabe

        There is R&D that is on the cusp of much longer charger life batteries using lithium, for just one option. Were oil prices to have stayed above $100 a barrel then more affordable electric cars could start to emerge within a decade. Cam’s point about electricity for charging though is correct so as the saying goes there is no free lunch with energy. To generate energy economically you’re generally got to burn something, dam rivers, or go nuclear which also has been improving.

    • have you even thought about the load on the grid if everyone all of a sudden was charging cars.

      The Resource Management act will put paid to any new dams that we need…and the greens will baulk at Nuclear.

      Right now I doubt there would be capacity for even 25% of the vehicle fleet to move to electricity.

      • MaryLou

        But then, not more than around 25% of the population WOULD move to electric all in one hit. It’d take a long time to filter through. Plus I reckon the SI smelter will close down once they finish their term. Greens – well, they’re paid to be a problem, so that won’t change, but in terms of supply – if it can be taxed, and a commercial outfit can make money of of it – it’ll happen. Either that or hydrogen

      • Dog Breath

        Time it with the closure of Tiwai Point and there will be plenty of electricity not only for electric cars but just about anything we can think of such will be the glut.

      • Kevin

        We simply haven’t come up with a viable replacement for the combustion engine. As for the electric car being more cleaner the opposite is actually true. It merely replaces one source of pollution, the exhaust pipe, with another – the factory.

        Instead of wasting money on developing electric cars it would be better spent developing more fuel-efficent cars.

  • Alan

    The concept of peak oil (or any natural resource for that matter) is ridiculous – anyone with a basic understanding of economics can tell you that.

  • CheesyEarWax

    Can they please invent peak climate change?

    • R2D2

      Can they invent peak public service and council staff?

  • Michael_l_c

    Electric cars, great idea, minimal fuel costs but where does the electricity come from? How much more electricity would need to be produced if 10% of cars ran on electricity? It would be interesting to see the research & stats.

    Overseas most electricity is produced by fossil & nuclear power stations, particularly pebble reactors. Personally I don’t have a problem with nuclear apart from the price.

  • John1234

    Ain’t it great! I’ve seen gas in Auckland $1.919 a litre!
    One thing the article didn’t cover was that the low price will discourage exploration and more expensive recovery from fracking, Arctic circle etc which would stabilise supply and price rather than continue downward past $60.

    • Mad Captain

      $1.86 at Westgate yesterday

    • cows4me

      I have several mates in the oil business,already the amount of work available is slowing down. One had a contract fracking in Aussie, it’s virtually come to a half.

  • Economics is a very poor way to study the idea of the idea of peak oil. Throw enough money at the oil problem and you will get oil, even if you have to extract it by wringing out baby sealions. The Price itself is always going to swing up and down with worldwide demand, but there comes a point where you don’t want to pay that much for the product, or it starts taking up unreasonable percentages of your income. We’re moving into deep sea oil wells now, why? because shallow sea oil wells are getting harder and harder to find. Very few new landbased feilds have been found in the last 40 years. The UK has become a net oil importer again for the first time since the North Sea Oil Feilds were developed, and it was those feilds and a few others coming online that broke the grip of OPEC in the 70s. The feilds coming online now are much smaller. Even the new feilds coming online in Saudi Arabia are “sour” (Meaning high sulphur content that damages the plant refining it).

    We will always have oil in our economy, our great grand children will be able to enjoy the roar of a mighty V8 engine, but it will be at a museum and they will probably get there in a car in a car powered by battery or Hydrogen (powered is a bad word here, as both those options are energy carriers, but what charges the battery won’t be oil).

    The Big fear is that Oil will reach that price point before alternatives are ready. The symptoms of that will be quite subtle, car sales will fall, particularly of big cars, public transport use will increase and production will move to less oil dependant locations.

    Now in my opinion we need to keep investing in developing an oiless economy, even if peak oil and climate change are both complete rubbish, we still end up with cleaner transport and a more secure energy economy, Its a win-no loss strategy

    • Elinor_Dashwood

      Agree with all of that except the first sentence, since the rest of the post is in fact a good clear explanation of the economics of oil supply and demand

      • LOL, re-reading what i wrote, you are in fact dead right, When i was composing that in my mind I was intending to write more about the geology and logistics of the oil operations, but edited that out as my sources are at home and about 3 years out of date.

    • R2D2

      In the 1980’s, the world was capping oil wells like there was no tomorrow, in texas, in offshore california, in the gulf of mexico, in all arab countries, because there was such a huge glut of world oil supply. We were told the direct opposite. Now, there are so many capped wells, which OPEC instructed to be capped, that world production could increase by a factor of 20 overnight, if the order was to be given.

      • If that was the case, why bother drilling for deep sea oil? Just uncap a few wells, plonk a well head on and pump it away.

        The Oil price colapsed in the 80s because of North sea & Mexican Mega feilds opening up, Unprofitable old, low flow Oil Texan feilds were capped then because the oil they produced cost more to extract than they could sell it for. Texas is or the US for that matter are not in OPEC, so they had no authority to cap them.

        • R2D2

          Yes, it’s true that the Texas wells cost more to produce than they supplied, at US prices. The US was paying around 6 cents a litre at the time, while we were paying around $2 per litre.

          • Rick H

            Don’t forget how many millions they paid to one Jed Clampett when he discovered the old “Texas Tea”

          • Something is wrong with your figures here buddy, i can beleive the 1980s 6c/L, i don’t have my reference to confirm that, but we’re not paying $2/L now at the pump for 91 and the price hadn’t crossed the $2 barrel at all until i think the early naughties.

        • R2D2

          Do you realise that the price of petrol (at the pump) in the US at the moment is around 58 cents per litre? (all state and regional and council taxes included)? Go check it!

          • Actually according to Globalpetrolprices.com it is actually $US0.79, its also $US0.02c in Venezuella & $US2.08 in Norway, but i don’t know what that has to do with anything.

        • R2D2

          OK, then lets be specific, Texaco built a pipeline to pump crude oil directly into the Gulf of Mexico, because in the 1980″s it was not worth even the storage cost. Please note that at this same time, New Zealand had doubled it’s fuel prices because there was a “second fuel shock”

          • I want to see a photo of that pipeline and your references because the enviromental pollution fines would far exceed the cost of storing it. The cost of building the pipeline would exceed the cost of simply capping the wellheads & not extracting it from the ground in the first place.

  • Cadwallader

    I have doubted the idea of “peak oil” for years for the particular reason that proponents of it, consistently avoid defining “peak exploration.”

  • Excitedly awaiting Whodunnit

    Yay!!! I can feed the 350 chevy the good stuff and annoy the greens too!!

  • murrayirwin

    how many times can you cry “Wolf…”?

  • nath

    Although i do enjoy a good bash of the hippy, I think you’ll find that the fluctuation of current oil prices, although affected by supply and demand, are a result of the Saudi’s dumping oil onto the market, at the behest of the American’s, in order to drop the price, I believe the current price blows the break even of Russian oil production, creating a net loss on exported oil….. and consequently devaluing the rouble.

    So is really a politically motivated issue.


    • nath

      Conspiracy theorist ?

  • sin-ic

    Conspiracy theorist. The Saudis want Isis(l) out of the way, and it serves their purpose to drive the price down (they can afford it) and starve Isis(l) of those revenues they have had to date (having stolen Iranian revenue) to pursue their vile cause. Don’t underestimate these devious Arabs.

    • This is correct. More telling is the combined action of the oil cartels to maintain low prices to force the collapse of oil producers who have high marginal extraction costs. The average cost of production varies depending on location from about 60 to 110 USD bbc. Low prices serve best the agendas of those with huge reserves and who can virtually sell at loss. Peak oil is a long way off if countries can play such games.

  • I just bought a hummer and put a “Vote Green” bumper sticker on it.

    • Kiwibabe


    • Alright

      I have a brother-in-law with a V8 Audi with a similar bumper sticker.