The Crux of Peak Oil Criticism

The Crux of Peak Oil Criticism

Charles C. Mann is an outstanding storyteller and always well worth reading, and this includes his latest work "Peak Oil Fantasy" for Orion Magazine. It follows many of the same themes as his cover story in the Atlantic from 2013: "What If We Never Run Out of Oil?" (aka the "Don't worry, methane hydrates will solve all our energy problems" article).

But "Peak Oil Fantasy" is a great teachable moment about the common themes you often see in Peak Oil criticism, and I'd like to identify some of them here:

  1. Misdefining Peak Oil
  2. Forgetting The Numbers
  3. Looking Back Instead of Forward
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Shale Oil and the 2014-15 Price Collapse

Art Berman is out with a new deck: "The North American Unconventional Revolution & The 2014-2015 Oil Price Collapse" (pdf) and it's a great review of US shale, Saudi/OPEC response, and the great price fall over the past year. 

As always, Art is out to tell you some facts you don't often see in the headlines: 

  • The story of the price collapse is pretty simple: It's Chinese demand fall + US oil production growth + response of Saudi oil production growth. That's pretty much it. Lower demand and production gains leading to surplus and lower prices.
  • The heroic tales of rig productivity and drilling efficiency gains are what oil companies have to tell investors to show a brave face. Dig a little deeper to realize - what should be obvious to everyone - that companies are getting killed at these low prices. 
  • But future higher oil prices are INEVITABLE, and this is important to understand because a lot of really smart people out there don't seem to get this. John Kemp has an article out today on how U.S. gasoline sales have surged at the fastest rate in a decade. That's just Econ 101, price is always the leveling mechanism that brings supply and demand back into balance. Colin Eaton has another article out today on how North American oil drillers are responding to the tough environment by slashing investments. In this environment, companies are thinking about staying afloat, not increasing production. In an article from a month ago, Robert Rapier pours cold water on the far too common predictions that oil is going to $20 and will stay there for an extended period of time. "I don’t believe the people predicting $20 oil are seeing the whole picture," Rapier writes, in what might be the understatement of the year. 
  • Finally, Art touches on Peak Oil and reminds everyone that things are preceding exactly how the Peak Oil story predicted. When you look at the numbers, it's easy to see that conventional oil production remains in decline and is increasingly being replaced by unconventional production. And that shift is important for people to grasp because what does the future look like if you're forced to increasingly rely on more expensive, lower quality sources of oil? As Art reminds us, remember that U.S. tight oil required almost 100 times more wells to produce the same volume of liquids as Saudi Arabia, with a cost 100 times as much.

That sentence might not give you cause for concern... but it should.

Adam is Still Ruining Everything

How about that, they actually gave Adam Conover a TV show. Conover is best known for his Youtube videos on the CollegeHumor channel under the same name "Adam Ruins Everything." The videos use a mix of comedy, history, and science to dispel widespread misconceptions about everything we take for granted.

The comedy part of Conover's program comes from the fact that when we really think about some of the routine parts of our lives... many of them are sort of ridiculous. Why do we still vote on Tuesdays, why has no one changed that? Why do we have car dealerships? What other consumer good has a random middleman stuffed in the middle between producer and consumer? If you've ever read Paul Keegan's 2014 article about the war between auto dealers and the website TrueCar or the on-going battle between my home state of Michigan and Tesla Motors on how Tesla can sell their product to consumers, you'd be right to think that are current system is sort of bonkers.

Or even much more basic customs of day-to-day life. To this day, I freeze in silence when someone near me sneezes because I once made the mistake of learning the history of the phrase "God bless you!" - now I'm constantly torn between not saying anything and genuinely feeling horrible because it's such an expected part of American culture.

The masterclass of this "our everyday life is ridiculous" concept are the weekly rants on John Oliver's show, which should absolutely earn Oliver a much deserved Emmy. Conover's program won't be on that level, but it should still highlight some of the odd things about everyday life. Things we might not want to think about... but we should.

Here are a couple of my favorite videos from Conover on Youtube:

Adam's earliest work about wedding rings ends with the depressing and true line "... but you'll still end up buying one." That's just how deeply this - one of the most successful marketing campaigns in history - is tied into our culture. Maybe our grandchildren will be able to evolve past this. Until then... rings for everyone!

Discuss tipping with friends and expect to get into an argument, especially if they work in the service industry. We all know why we tip, because servers get horrible pay if we don't - and that's just cruel. But how did we get here? How is it simply OK for restaurants to pay workers wages that guilt tips from customers to make up the rest? Lots has been written on this including "Tipping Is an Abomination" by Brian Palmer in Slate and another piece by Brandon Ambrosino in Vox demanding we get rid of it.

Short version: Getting rid of tipping won't be easy, and is a long-term challenge. But if we get to 2050 and we're still tipping in restaurants, it's because society was too unwilling to deal with an obvious problem right in front of us.

A Pleasant Way to Spend the Time

Cheers to Jon Stewart on his final Daily Show yesterday. His closing speech is well worth reading and remembering.

The good news is this. Bullshitters have gotten pretty lazy, and their work is easily detected, and looking for it is kind of a pleasant way to spend the time...

So I say to you tonight, friends. The best defense against bullshit is vigilance. So if you smell something, say something.
— Jon Stewart
Jon Stewart hosts “The Daily Show with Jon Stewart” #JonVoyage. (Brad Barket/Getty Images for Comedy Central)

Jon Stewart hosts “The Daily Show with Jon Stewart” #JonVoyage. (Brad Barket/Getty Images for Comedy Central)

Shale Gas Reality Check

David Hughes and the Post Carbon Institute are out with a quick must read "Shale Gas Reality Check," an update to their "Drilling Deeper" report released last fall. You might remember that shale industry group Energy in Depth posted a critical response to Drilling Deeper, and I had an absolute blast responding to that.

"The future production of shale gas plays is a function of well quality variation by area, drilling rates, decline rates and number of available drilling locations. Although much is made by industry of the role of technological improvements in increasing the amount of gas recovered per well, an analysis of the country’s largest shale gas play, the Marcellus, shows that after a period of growth in the 2012 to early 2014 period, well productivity is declining in the play overall and in the sweet spot counties" Hughes writes.

And on over-optimistic EIA projections, Hughes adds "...we are led to believe that shale gas will be even more abundant in the future than projected just a year ago, setting the stage for a robust LNG export industry, and greater industrial and power sector use, all at relatively low prices. Getting it wrong has very serious implications for energy policy and future energy security..."

Making Sense of Climate Science Denial

A new free online course, Making Sense of Climate Science Denialbegins April 28, 2015 courtesy of edX and the University of Queensland Australia. 

From the course description: "This course will give you the tools to identify, understand, and respond to climate facts and climate myths. We'll look at the psychology, we'll explain the science, we'll examine the mistaken arguments that distort that science. This will equip you to distinguish information from misinformation. You'll learn how to respond to climate myths by fighting sticky myths with even stickier facts."

Course participants will learn:

  • How to recognize the social and psychological drivers of climate science denial
  • How to better understand climate change: the evidence that it is happening, that humans are causing it and the potential impacts
  • How to identify the techniques and fallacies that climate myths employ to distort climate science
  • How to effectively debunk climate misinformation

Register for the course on the edX website.

In Push for Arctic, Oil Majors Throw Shale Under the Bus

In Push for Arctic, Oil Majors Throw Shale Under the Bus

Jonathan Fahey's Associated Press headline was nothing if not memorable: "Oil Council: Shale won't last, Arctic drilling needed now." The article goes on to describe a new report from the National Petroleum Council prepared by an internal committee for Arctic research. The chairman of the committee was Rex Tillerson, CEO of Exxon Mobil.

Just in case you're thinking, "But wait, the oil industry said shale would last for decades and decades before peaking," it's worth taking a step back to highlight the parties at work here...

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"Shale Plays Have Years, Not Decades"

If you ever have a few hours free and you need a good video overview to develop a more realistic view of oil (and a window into the pessimistic side of the Peak Oil Debate held by people like me), you can't go wrong by choosing Steven Kopits early 2014 talk or by choosing any of Art Berman's talks on shale like his great 2013 talk to the Houston Geological Society (HGS). Or Art's recent 2015 update to the HGS embedded above.

These presentations will give you great background to re-think common oil and shale industry hype and insight into factors that don't often make the news. Art's talks in particular tend to focus on the little discussed aspects of shale profitability. The simple fact is that oil production continues to cost more and more money, requiring higher oil prices to breakeven and larger amounts of debt to stay afloat. When the money and investors dries up, production is soon to follow.

This talk is the first time Art has publicly used a term that's sometimes associated with him, even though he never actually said it until now. He called shale a Ponzi Scheme. Talk is talk and hype is hype, but in the end, shale just has to work in a financially sustainable way, and it simply doesn't. Big production gains can only mask that for awhile, but eventually investors will catch on, then the house of cards will tumble down.

The Paradox of Oil

In this article I outline and analyse various explanations for why the price of oil has fallen so dramatically in recent months and present some considered but tentative hypotheses about what we can expect from the oil markets in coming years. I also hope to challenge the naive conclusion – drawn all-too-hastily in the mainstream media – that the drop in price somehow debunks the analytical framework of the ‘Peak Oil’ school...

Those who claim that the effects of cheap oil are ‘clearly positive’ are at best being simplistic and are at worst just plain wrong....

The fall in prices... undermines the oil industry by scaring off capital investment in an age when the costs of establishing and drilling new fields is relentlessly on the rise, due to declining energy returns on investment. Cheap oil therefore is likely to retard mid-to-long term production, setting the scene for a foreseeable mid-range supply crunch that will soon enough push prices back up.
— Samuel Alexander

Samuel Alexander's paper "The Paradox of Oil: The Cheaper It Is, The More It Costs" is an excellent review of modern Peak Oil thought. It's well worth reading both as a review of important concepts and for the impressive list of references at the end. 

The paper describes what's sometimes referred to as the "Goldilocks Zone" for oil production - there's danger on both oil price extremes, the price can't be too low or too high, it needs to be just right.

Sure, there are some out there making bold claims that oil is going fall to $10 or $20. But oil producers are businesses. They won't just happily produce away regardless of price and profit. Just as investors won't continue to pump money into ventures that don't provide an adequate return on investment.

The cure for low oil prices is always low oil prices. Just as the cure for high oil prices is always high oil prices.

And remember to revisit Steven Kopits' talk from this time last year. If producers were having that much trouble at $100 oil, you can imagine how they're doing at half that.

WeWork's Ambitious Plan to Re-Design Apartment Living

WeWork's Ambitious Plan to Re-Design Apartment Living

Co-working superstar WeWork is preparing to launch its first residential venture in the Crystal City neighborhood of Arlington, VA - just outside of Washington DC. The project, which has taken on the unofficial names of "WeWork Residential" and “WeLive” is the renovation of an older office building into 250 micro-apartments.

How important is building community in an apartment complex? And how might WeWork's special blend of co-working magic make this project a step-up from traditional apartments.

In this piece I want to take a look at what we know about the WeLive project itself, look back at some of my own apartment and housing experiences, and finally have some fun brainstorming how WeLive might change the micro-apartment game forever...

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Statistical Realism

...the output of the average well drilled in the Bakken slumps by 85 percent over the first three years of production... by comparison, the production decline at Ghawar, the world’s largest conventional oil field in Saudi Arabia, is about 5 percent per year. “The problem is that all shale plays ramp down much faster than conventional oil fields,” said Hughes, pointing out that steep decline curves are inherent with shale oil fields and yet rarely mentioned in breathless discussions of the riches of the Bakken and Eagle Ford.

From a longer profile of David Hughes by Jeremy Miller titled "Statistical Realism: David Hughes crunches unpopular numbers for the shale oil boom"

There Is No Free Market In Energy

Remember, if you ever hear a politician preaching an "all of the above" energy policy and that we can't "pick winners and losers" - what they're really advocating is business as usual. And they're advocating for avoiding difficult choices.

Because our policies absolutely prioritize certain fuels over others. 

If someone ever, really, advocated for a true free market in energy, where no one receives subsidies, tax breaks, or special deals - that's a deal the renewable energy lobby would accept in a heartbeat, and a deal the fossil fuel lobby would violently reject.

That's the tradeoff. We subsidize fossil energy because to do otherwise would raise the cost of fossil energy. But the higher cost of fossil energy would make renewables far more competitive and speed their adoption. 

As is the case for many policy decisions, it's a choice of if you want the pain now in terms of the economic damage of higher energy prices, or the pain later in terms of greater energy transition challenges and climate impacts. 

It's Supposed to Be Wrong, But Effective

One thing that I would point out is that it’s very important for people to be skeptical and anticipate that people will be misleading to the public. Some of the misinformation that’s out there is not accidental. I think there’s quite a bit that’s put into the public discourse in order to have a political effect. It’s supposed to be wrong, but effective.

What our research shows is that if people are aware of the possibility that they might be misled ahead of time, then they’re much better at recognizing corrections later on.

That's a quote from Stephan Lewandowsky, a psychologist at the University of Bristol and co-author of The Debunking Handbook. It is taken from an interview of Lewandowsky titled "How to debunk false beliefs without having it backfire."

The quote above speaks to a point I often try to drive home: That some misinformation is not accidental. 

My very first post on this blog examined what I considered the worst and most misinforming energy chart of 2013. Part of the story is to examine the chart and understand WHY it's misinformation. But the next question, the question rarely asked, is the WHY of the chart itself. You have to go out of your way to produce the chart like that. Someone has the intent to make the chart like that. Someone signs off on it and commands the graphics staff to make the chart like that. The question is why?

Here on the blog I also often discuss the changing definition of "oil" over time. And two classic articles by Chris Nelder and Kurt Cobb examine the differences between how we used to discuss oil data previously and how that has changed. And it wasn't industry groups changing the presentation of data to bolster numbers - this was the EIA and the IEA themselves, organizations that hold almost universal trust from a public that would never question their data or motives. The result of the change is the well-known talking-point that the United States is now the number one producer of oil. Is that talking-point true? Again, it all depends on how you choose to define oil. 

The latest piece this week from Cobb actually looks at the growing movement to go around the EIA and IEA in pursuit of energy data (and a couple of weeks ago, Cobb also looked at the dangers that arise when EIA forecasts are wrong - as they frequently are).

The question again, is why. Why change the definition of oil to include various other liquids? What was the catalyst over the past 15 years that caused and explains this change? Satisfactory answers to these questions are rare.

It's like the old-saying says: Sometimes you have to revert to a child-like mind and be willing to ask WHY five times in order to get to the truth of a matter.

Merchants of Doubt (2015) - A documentary that looks at pundits-for-hire who present themselves as scientific authorities as they speak about topics like toxic chemicals, pharmaceuticals and climate change.


One of the most interesting people I met was a woman named Nancy Sullivan, a scientist at NIH who has spent a decade working on a vaccine for a disease that had never had an outbreak of more than 100 people, that was over in Africa, that no one really knew about. She’s laboring away in a lab for a decade trying to build this vaccine that no one really cared about, to be honest. And all of a sudden, Ebola was a big global problem. And the vaccine she spent a decade working on was a critical part of the response. The president went to her lab at NIH, went to the bench she’s been working at, saw her notebook with her notes from when she first discovered this vaccine, a little notation in her notebook where she’s just written in the margins, “Yahoo!” Seeing her fill these little pipettes and tubes and all these things, do this work, you know, it was just really inspiring. And knowing that there are just people out there doing this work quietly in labs, no one really knows if their work’s going to matter to anyone; they’re just doing it because of their dedication to science and medicine and trying to find cures—it was really amazing.

From Michael Grunwald's fascinating extended interview with Ron Klain on the White House Ebola effort.

In December, I posted my thoughts on the US Ebola response.

Remembering William Catton Jr.

Like many, I only recently heard of the passing of William Catton Jr, author of the 1982 book "Overshoot: The Ecological Basis of Revolutionary Change."

Richard Heinberg and John Michael Greer have both written excellent remembrances of Catton:

Greer writes of the one time he had the chance to meet Catton, a 15-minute conversation over dinner at the 2011 ASPO-USA conference. Since I had a hand in planning that conference in Washington DC, I'm happy to have had a small part in that meeting.

And it seems fitting to revisit Catton's talk from that conference in the video below. Through the large help of the offices of Congressman Roscoe Bartlett and Congressman Mike Honda (who were both in attendance), we were able to secure the Congressional Auditorium at the U.S. Capitol Visitor's Center inside the U.S. Capitol as our venue for the first day of the conference. 

From this esteemed stage, Catton spoke of lessons learned over a long life and of visions for the future.

William R. Catton, Jr - Professor Emeritus, Dept. of Sociology, Washington State University;

An analysis of the fundamental trends underlying the Peak Oil and resource depletion issue, and the implications for the economy, energy security, and global stability.

Gregor Macdonald's Tight Oil Tweetstorm

Gregor Macdonald's Tight Oil Tweetstorm

Every once in awhile I think it's useful to preserve the times where people drop tons of great knowledge on Twitter before it's lost forever in the Twitter void, as I did before with a David Roberts flurry on climate change and a Chris Nelder tweetstorm on Peak Oil. This time it's for Gregor Macdonald who produced a series of 21 tweets on tight oil and the vastly under-appreciated issue of well age. 

Check out all of the tweets below the fold. And notice that he also references another must read article: John Kemp's recent Reuters column, "U.S. oil production will be falling by end of 2015"

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Should Environmentalists Stop Using Fossil Fuels?

I always get a chuckle out of the "Stop-Using" strawman argument. In short it's the line of thinking that says that if you're opposed to fossil fuel production than you shouldn't be allowed to use the products of fossil fuels. 

And you hear versions of this from time to time. There's the fake outrage people have when they discover an environmentalist using plastic bags at the grocer. Or the fake outrage people have when they discover the shocking truth that Al Gore, former Vice President of the United States, lives in a large house or occasionally travels in an airplane. 

I wrote about this before in a piece titled "No, You Can't Just Pretend That People Hate Fossil Fuels

Notice that environmentalists never make the opposite claim: That if someone opposes solar power, then they are hypocrites if they do not instantly stop using all the products of solar power. These of course would include all plant and animal life and... oh yeah... fossil fuels.

It's always easy to spot when an arguer is walking into strawman territory when their claim becomes person-centered as opposed to issue-centered. All of these discussions are about people. They aren't about fossil fuels or solar power, they're misinformation about a person's claim combined with an attack on the person making the (now re-imagined) claim.

Products from Fossil Fuels

Products from Fossil Fuels

Just because a person is concerned with the financial sustainability of fracking, doesn't automatically mean they're opposed to fracking. Just because a person is concerned about potential environmental damages of fracking, doesn't mean they are opposed to fossil fuel production. Just because a person is concerned with climate change and the need to reduce emissions, doesn't mean they lack appreciation for the benefits and advantages fossil fuels and modern technology bring to the world.   

We have to guard against living in a world of absolutes, and recognize that the ability to see multiple perspectives isn't being hypocritical, it's exercising a strong maturity of thought.

Adult thinking about these issues challenges us to walk the difficult path and find the nuanced middle ground. Nothing in policy is ever simple. There are always hard choices. There are always tradeoffs. Anyone that tells you otherwise is lying to you.