Matt Simmons is a better analyst /spokesman for the Peak Oil thesis. H'es an oil industry pro who's actually been to the production rigs and scrutinized the reserves data (real and imaginary) with a pro's eye.

I told you Brad. Oil people also warned against ethanol before it was fashionable. Now we have to fight just for the right to drill for oil, exploit shale, and develop clean coal and CO2 sequestration. When it all gets done, solar will still be nowhere, CO2 emissions will come way down anyway and the public will take us for granted once again. Even wind would be nowhere if a tough as nails oil man weren't in the forefront for its development.

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You have information here about the price of oil. But the question of peak oil or not is not about price, but about production rate. Any updated figures on production rate?

Matt Simmons' argument is based on the extreme dependence of future supply projections on Saudi production, which in turn hinges on on a handful of very old (>40 years) mega-oilfields that are past their prime and now heavily dependent on increasingly difficult, low-return extraction methods such as those involving water injection.

Simmons (from his book, "Twilight in the Desert"):

" The ‘twilight' of Saudi Arabian oil envisioned in this book is not a remote fantasy. Ninety percent of all the oil that Saudi Arabia has ever produced has come from seven giant fields. All have now matured and grown old, but they still continue to provide around 90 percent of current Saudi oil output...High-volume production at these key fields...has been maintained for decades by injecting massive amounts of water that serves to keep pressures high in the huge underground reservoirs ...When these water projection programs end in each field, steep production declines are almost inevitable.

"This being the case, it would be the height of folly to assume that the Saudis are capable of doubling their petroleum output in the years ahead, as projected by the Department of Energy. Indeed, it will be a minor miracle if they raise their output by a million or two barrels per day and sustain that level for more than a year or so. Eventually, in the not-too-distant future, Saudi production will begin a sharp decline from which there is no escape. And when that happens, the world will face an energy crisis of unprecedented scale.

"The moment that Saudi production goes into permanent decline, the Petroleum Age as we know it will draw to a close. Oil will still be available on international markets, but not in the abundance to which we have become accustomed and not at a price that many of us will be able to afford. Transportation, and everything it effects—which is to say, virtually the entire world economy—will be much, much more costly. The cost of food will also rise, as modern agriculture relies to an extraordinary extent on petroleum products for tilling, harvesting, pest protection, processing and delivery. Many other products made with petroleum—paints, plastics, lubricants, pharmaceuticals, cosmetics and so forth—will also prove far more costly. Under these circumstances, a global economic contraction—with all the individual pain and hardship that would surely produce—appears nearly inevitable...."

Good stuff, Tep. Thanks for sharing.

Well, it's nasty horrible stuff, but thanks anyway, N.

If you make a chart of oil prices since the first big discovery in Western Pennsylvania, it looks like a profile of the Andes--sharp peaks and deep valleys. For a century and a half, "experts" have told us that we have about thirty years of oil left.

There is almost surely a very great deal of oil under Iraq as no serious exploration has been done there in decades. Then there are the new deep-water finds, and probable new fields in the Indian Ocean, China, and other places.

It's a good idea to develop alternatives, and fast. But I don't believe in "peak oil" as the historical record is utterly consistent in terms of new reserves cropping up.

Price and supply are linked. That is why there is always about a 30 year supply. If you count shale and coal to liquid, there is theoretically a supply that will last for at least 200 years at present consumption levels. Naturally, oil companies will not spend money developing sources that will not be exploited for another 30+ years. But, having said that, logic says that fossil fuels are a finite source. Sometime in the future alternate forms of energy will be cheaper and that will be the end, well before all the possible fossil fuel resources are exhausted. We are still far away from that time.

[Source: Environment and Energy] quoted: Matt Simmons is a better analyst /spokesman for the Peak Oil thesis. H'es an oil industry pro who's actually been to the production rigs and scrutinized the reserves data (real and imaginary) with a pro's eye.

I think you mean "DECREASING the energy intensity" of the economy, or "increasing the energy EFFICIENCY."  The two are inverse functions.

I guess Sheik Yamani said it best: "The Stone Age didn't end because of a shortage of stones, and the Oil Age won't end because of a shortage of oil."

Hopefully we'll do now what we should have done in the 70's after the first oil shock, or in the 80's after the second. Unfortunately, we'll probably enjoy another oil glut and associated bust in prices, until the next time.

Am I misinterpreting the figure, or can we eliminate about half of the models shown already because they clearly fail to predict the present oil production? If you eliminate the models that fail to predict today, then the mean and median predict a much more gradual decline.

But it also seems to me that the issue should not be the peak at all. The issue is when the production rate falls behind global demand and physically can't catch up. It production increases 3% and demand by 6% then the economic consequences still hit. This was not an issue with the US domestic peak oil because there were always imports to make up the difference. But even the most optimistic models shown here show demand outstripping supply well before 2020. And of course there is nowhere to import more oil from that is not already on this planet.

Of course, demand can't actually outstrip supply. The price will skyrocket to keep demand down to the level that matches maximum supply. So my reading of this forecast is that we have at most a decade or so to prepare for the real shortage and price shock. So I don't think it has to come from a Saudi production decline -- the failure of production to keep up with geometric increase in demand will do the same thing.

Oil can be manufactured from coal. Now granted this technology was perfected by Nazi Germany and Apartheid South Africa to give those regimes energy independence, but regardless, we can use that technology to solve the oil shortage.

The coal can be converted at a rate of $40 a barrel and there is ungodly amounts of coal in the crust, enough for millions or at the very very least thousands of years, certainly enough time to develop higher capacity batteries.

But I thought the increased demand from the emerging economies would far outweigh any decrease in America? Learned the hard way not to listen to any of the market experts working for investment firms. They need suckers to take the opposite trade for them to bank profit.

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