Ted Friedman comments on “The New Energy ‘Crisis’ and Iraq“:
This is a confusing post that sees to suggest that Peak Oil is a “theory” based on “junk science.” Mathew Simmons seems to have excellent credentials. Much better than the author of this post. His quote carries way more punch than the author’s conflicted and confusing claims based on unrelated predictions about food supply. Notice there are no links to any scientific data to back the claim of highly regarded experts such as Colin Campbell or Mathew Simmons.
If the science is indeed junk, where are the links to the real science that disputes it? Instead the author quotes Simmons a world-renowned expert with a vast fortune and reputation refuting his unsubstantiated claims.
The evidence supporting the argument that no catastrophic shortage of fuel is likely to occur is economic and historical. In a capitalist economic system – one based on ‘money’ (any efficient symbol-based exchange system), voluntary exchange, and private property – profit accrues to those who conserve commodities (often through efficiency-increasing innovation) and those who substitute less expensive for more expensive commodities. Scarcity is an important aspect of price: given unchanging or rising demand for a commodity, scarcity raises that commodity’s price; the rising price, in turn, raises the incentive for conservation and substitution. The system is self-regulating, barring political, or other, shock. The method used by the peak oil theorists – estimate future consumption based on current trends, then subtract this estimate from estimated supply – is bogus, as demonstrated by two centuries of failed predictions. Whether or not scientists currently have an accurate estimate of oil reserves is irrelevant.
Tim Gillin adds to his previous comments:
For a critique of the “Hubbert’s Peak” oil scare see “Inflaming the oil crisis” by Joe Kaplinsky and EnergySeer.com.
Of course for a more radical view of the petroleum supply situation one can turn to “heretical” astrophysicist Thomas Gold who argued that petroleum had an abiotic origin. “Fuel’s Paradise” by Oliver Morton:
“Since the oil crisis of the 1970s, Gold has been saying that the Earth is hugely well endowed with these hydrocarbons – hundreds of times more so than most geologists, or oil companies, or OPEC leaders believe. The general belief in scarcity that drives up gas prices and causes fears of inflation, Gold argues, is a mirage that has served vested interests among oil producers for decades.”
George Mason University Professor of Physics Robert Ehrlich reviews a range of offbeat scientific ideas, including Gold’s, in his Nine Crazy Ideas In Science. He evaluates them via his “cuckoo scale.” Four cuckoos means “certainly false.” Zero cuckoos means “why not?” Gold got zero cuckoos.
And Tom Lowe of Borrego Springs, California warns that the oilman’s revenge is coming:
I was born in Casper, Wyoming, an oil town. I am a petroleum engineer, the very best the world has to offer. I have a MS in it from the University of Texas at Austin, co-published three papers while earning that degree, led the Student Chapter of the Society of Petroleum Engineers there as its President to a #1 world ranking in the 1984-85 academic year, and was hired in 1986 by Schlumberger Ltd. To work as a Wireline Field Engineer in Patagonian Chile and Argentina to the tune of $60k annual, where I did very well on the job and have documents to back all that up.
That wonderful Schlumberger career lasted exactly 361 days. (Vestment was to be at 366 days.) That was 1987 during a period in which Schlumberger offed a third of its South American engineers (one by one to keep the profile low), along with other global cuts in a successful effort to acquire funding to buy the major drilling company South Eastern Drilling Co. (SEDCO). It was a very, very bad move: Schlumberger was in the Fortune 20 then, but today it is not even to be found on the Fortune 500. Ha-ha – whoops! …
For the past 17 years I have had to sit on my arse as an underemployed, selling stamps, postal history and postcards because there has been no work. And now, for the past one-plus year I have actually had to sit on my arse watching the US CPA steal $20 billion of Iraqi oil proceeds.
Where is it, folks? …
Here is the way it is with oil:
1. There is plenty of oil out there to be found – but at the right price, which is higher than it is today. What they are actually doing is complaining that all of the “easy oil” is gone, which is largely true. But there is plenty of “difficult oil” out there to be extracted when prices rise enough to make extraction economically feasible.
2. Since the late 1980s, oil companies have found it cheaper to buy others’ reserves than to invest in frontier explorations. This of course was a major part of the Reagan-era merger/ acquisition antitrust pillage whereby the oil industry was reduced from hundreds of companies to less than 100 and true industry competition was effectively politically murdered. (See Oil & Gas Journal issues listing the O&GJ 500 over the years. Last time I checked, the O&GJ 500 had become the O&GJ 100 due to lack of surviving competition, a fact which OG&J itself loudly lamented.)
3. The same is true of the ridiculous, fateful maneuver recently perpetrated in Iraq: it was cheaper to usurp, use up and waste that $200+ billion of money and manpower resources of the American people to steal oil reserves from Iraq at gunpoint on behalf of western oil concerns and their customers than it would be to pay me and a bunch of other people $35-$125 per hour to go out to the distant wilds and find more oil in a truly responsible manner, which oil is definitely out there. This is just one of the reasons Iraq was invaded, but it is one reason nevertheless, and an important one that should cease to continue to be denied by some: if $20 billion has been stolen thus far at 1+ year on 2 million BPD production, then in ten years it will be about $200 billion, and that is at today’s relatively anemic current Iraqi production levels. If they get it up to 4 million BPD, then it will be $40 billion per year stolen, making the ten year investment outlook a “good one” at ~$400 million if it works out, which it likely will not since the whole world is watching them make war criminals of themselves in broad daylight on global TV – with their pants literally down around their ankles, no less.
4. Because of their rather embarrassing cultural ignorance in general and deeply ingrained cultural prejudices as a whole, Americans, though generally sincere and technically quite adept as a lot, have never been able to work with Iraqis well on joint oil projects due to those vast cultural differences. Nor are Great Britain or any of its dominions any better at it in spite of some absurd and patently false claims they have made regarding their war criminal work in Southern Iraq. But Russia and especially France, on the other hand, have always worked well with Iraqis in the oilfield, and we will inevitably see a return to that historically natural working relationship as the years ahead unfold, if for no other reason than the sheer dictates of production economics. … And over and above all of this, at present the Iraqis hate Americans with a passion, and due to the illegal invasion, they will continue to do so for a very long time.
5. Until the price gets high enough, energy concerns will continue to buy and/or steal others’ reserves, after which time they will then find it mathematically economical to send out the geo-exploration parties.
6. When the oil moguls finally come to me and the others with their hat in their hands and on bended knees, we are going to recoup our two decades of vast financial and personal losses before we ever do a single stinking thing for those bastards. Payback is coming for them eventually, right in their wallet, and it couldn’t happen to a nicer bunch. They will definitely be held up for salary and bonus ransom all the way until we have got back everything and then some. And after that re-compensation business is settled, only then will we go find them their precious oil. Meantime, they are only buying and/or stealing each others’ oil in what can only be called a grand charade of market churning and unhealthy takeoveritis, with Iraq being the foremost, most socially heinous, and most illegal example.
There is plenty of oil out there to be found. And here I am, world, the answer to your whole oil problem – warming the bench year after year after year. …