[lbo-talk] Peak Oil or Oil Bubble?

Tom Walker timework at telus.net
Thu Apr 14 08:15:54 PDT 2005


Wojtek wrote,


>As I understand, "peak" is not just the supply-side phenomenon, but above
>all, the demand-side one. You may have a peak effect when supply grows
>slower than demand.

Yes peak oil is really about the dynamicism of supply, demand and price not simply about barrels of oil in the ground. Why Syncrude talks about the oil sands supplying world energy needs for 15 years, two questions need to be asked: 1. is that constant needs based on current demand? and 2. Is that gross or net supply? If the answers are current needs and/or gross supply then the claim is sheer hucksterism because it takes more energy to produce synthetic crude from bitumen.

Another anomaly in this debate is that many, on both sides, assume that "peak oil" is a bad thing. It's not. Consuming petroleum is not inherently a good thing. That doesn't mean peak oil necessarily a good thing, but it could be. If governments adopted true-cost life-cycle pricing for petroleum and planned and implemented a transition from high energy dependency to social economy, that would actually INITIATE a beneficial version peak oil. So peak oil doesn't have to be doom and gloom and it doesn't have to be the accidental collision of market factors and geological facts.

In fact, several decades ago when M. King Hubbard was introducing the notion of world peak oil, he pointed out the potentially postive aspect of it. Peak oil is only a doom and gloom scenario for those who are wedded to the notion that perpetual compound annual growth of Gross Domestic Product is the only and best way to provide for human needs. This in spite of the fact that such growth over the past 30 or 35 years has proven the opposite -- human needs are sacrificed to economic growth. The economy keeps growing and the quality of life for the majority declines, people work longer hours, they buy more stuff but are no happier. This is what my friend John de Graaf calls Affluenza and part of the cure for Affluenza is actively peaking the oil, not just sitting around, wringing hands worrying about whether it will peak or not.

A funny thing happens when I read the mitigation reports that have been prepared recently for the US Department of Energy and for the International Energy Association. A lot of the mitigation strategies that they suggest are things that would be worth doing anyway. Worth doing anyway. In other words, the prospect of peak oil might "force" us to do things that are good for us and will make our lives better. In other words, we would have to have our cake and eat it too. Horrors! Not that! Anything but that!

Relax, "realists", the fact that the DOE and the IEA are commissioning mitigation studies doesn't imply that the peak is upon us. What it suggests, though, is that it is not only a motley of conspiracy theorists, new age catastrophists and oil industry self-promoters who take the matter seriously.

The Sandwichman



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