OP-ED: Don't worry — we'll never run out of oil

[Chuck]

It is beginning to look as though the U.S. could largely cease to depend on the Middle East as its principal supplier.

A. Barton Hinkle - TIMESDISPATCH - June 1, 2012

Then we don't have to worry about Iran or another supplier cutting off oil. Right? --Ed.

Remember the term “peak oil”? Whatever happened to it?

The notion that world oil production had reached its summit and would soon begin a decline—bringing with it shortages, economic collapse, resource wars, and general ruination—was in great vogue not so long ago.

"Is global oil production reaching a peak?” asked the BBC in 2005. “We are approaching peak oil sooner than many people would have guessed,” said The Houston Chronicle three years later. Two years after that, The New York Times reported on a group of environmentalists who “argue that oil supplies peaked as early as 2008 and will decline rapidly, taking the economy with them.”... [Read More]

[ALS]

We have never had what most people and experts refer to as "Peak Oil" as in a diminishing supply of oil

We have reached a point of Peak oil, when inexpensive to recover oil has pretty much vanished.

The Earth has enough oil for many decades to come, the hitch is that oil is becoming more and more expensive to find, and pump out of the ground. The days of sinking a hole and pumping it out of the ground for $20 a barrel are over. Today, most of the oil production break even points are closer to $70 a barrel and increasing.

This is where finding alternative fuels is a way to cut the cost of oil. Most people think that all oil costs $89 a barrel. In reality 90% of the oil on the market is really only worth $60 a barrel, it's the demand for that last 5% to 10% of production is what jumps the price up to $89.

You're seeing this going on today in the oil markets. Now that the world is in a planet wide economic depression, the demand for oil continues to decrease. If the Euro Zone implodes and China's economy goes down with it, we could easily see sub sixty dollar a barrel oil in the next two years.

This push by the west to find alternative forms of energy has terrified the oil producing nations across the planet. Face it when oil accounts for over 30% of your budget and oil prices are dropping, things could get really ugly inside your country as these revenues dry up.

[WriConsult]

No we will never run out. It's a silly strawman argument because no expert ever said we would. *

I agree with ALS ... it's that last few percent of demand that really decides what the price is going to be ... small changes in the level of demand or supply can cause big changes in the price. So the result of peak oil won't necessarily be steady sky-high prices, but bigger fluctuations than we've seen in the past. With the cheap oil gone, we've lost the stability that it provided.

* Although we'll never RUN OUT in strict terms, we have exhausted the $40/bbl oil, the $80/bbl oil is going fast, and eventually we may even go through the $100-120/bbl oil. I think it's possible that we could someday reach the point where the a global recession drops the price the world is willing to pay -- below the cheapest that the oil producers are willing to provide it. So it IS (theoretically) possible that production (or at least exploration) could grind to a near halt, at least for some time. The hope would be that renewables and natural gas supplies would still be sufficient to keep the economy from collapsing completely due to a lack of energy.

[diamondlarry]

I don't think anybody really knows what the price of oil is going to be. Above, I see $100-$120/bbl. In another article I just saw (I think it may have been on this site?), the prediction is that the price will fall to $60/bbl and yet other places I see predictions of $200/bbl or more. I suspect it will probably be somewhere nearer to the lower end of the range as many of the doom and gloomer predictions which, by the way, seem to be more common with the peak/end of oil alarmists. Just my $.02 worth.

[waltermlee]

Oil will not go away but it will be more expensive as the years go by. As the cost of extracting and refining oil into gasoline increases the bottom pricing of gasoline will rise making the use of conventional gas power vehicles less economically sustainable/practical - especially here in the USA where much of the sprawling economic development is based on cheap energy. As the cost for energy to heat and cool offices, factories, stores, and homes goes up, energy will start to be a signficant portion of the cost of living in some areas and this in turn will have a negative economic impact on these regions. Countries like Germany which tax energy to force everyone to conserve energy is likely to be able to adjust to the newer higher cost just by lessening their energy taxes. Countries like the USA which depend on cheap energy to keep their economies running will face signficant challenges in adjusting.

[thunderstruck]

We have not run out of oil, we have run out of cheap, easy to get at, easy to refine oil. It will always be there, it just gets harder to extract it from the ground. The days of Jed Clampett "shooting for some food and up through the ground come a bubbling crude" are long gone.

[herm]

We probably have lots and lots of abiotic methane deep underground.. too deep and it turns into CO2.

[ALS]

Originally Posted by herm

We probably have lots and lots of abiotic methane deep underground.. too deep and it turns into CO2.

Add a little heat, presser and some water and you get bubbling crude, oil that is, black gold Texas tea.

Problem is it takes centuries to make and we don't have centuries to wait. We presently have depleted oil fields that are starting to be refilled. In maybe a thousand or more years it might be worth going back to. There are theories that there are even bigger fields much deeper than we are presently drilling. In the 15,000 to 20,000 foot range.
Much of the oil that is refilling these old depleted fields, is being pushed up under pressure from these much deeper fields.

There are a few oil companies that have started drilling that deep in search of these theorized larger fields. And as been stated in this tread it is going to be very expensive for a company to find these elusive oil fields. To justify the cost of drilling that deep they, need these higher oil prices.

[diamondlarry]

Originally Posted by ALS

Add a little heat, presser and some water and you get bubbling crude, oil that is, black gold Texas tea.

Problem is it takes centuries to make and we don't have centuries to wait. We presently have depleted oil fields that are starting to be refilled. In maybe a thousand or more years it might be worth going back to. There are theories that there are even bigger fields much deeper than we are presently drilling. In the 15,000 to 20,000 foot range.
That much of the oil that is refilling these old depleted fields, is being pushed up under pressure from these much deeper fields.

There are a few oil companies that are starting to drill that deep in search of these theorized larger fields. And as been stated in this tread it is going to be very expensive for a company to find these elusive oil fields. To justify the cost of drilling that deep they, need these higher oil prices.

There are also theories that are pretty convincing that the oil is not only coming from much deeper but, that is even being produced by the heat of the Earth's core.

[ItsNotAboutTheMoney]

First ignore the headline, since the author doesn't write it.

The actual note of the article is that we shouldn't worry because we'll always solve the problem.

However, he (or she) ignores several issues.

He notes that reverses are stated in terms of economically recoverable but ignores the implication that they are now economically recoverable because oil costs have risen.

He notes that imports from Saudi Arabia have fallen as a proportion and notes the increase in US production and imports from Canada, but doesn't mention that US consumption has fallen as well. This is relevant because global consumption is still rising, and it's rising faster than OECD demand is falling.

He notes that there is more deep-sea drilling, but fails to note the implication that the EROI and cost of this drilling is much higher. He also ignores the implication that even with improved recovery technologies we're still consuming reserves. He also ignores the economic costs of energy dependency when underlying costs of energy are rising.

He notes the increase in US production but doesn't say how technological advances have changed long-term reserves.

And to round things off he passes off long-term issues as "don't worry, it'll all work out in the end".

A Barton Hinkle supports unrestricted free-markets and the global free movement of labor. It seems to me he does that by ignoring problems.

I'm optimistic about the power of technology. In fact, I think that simply by using current technology effectively we could solve many problems. Unfortunately we stumble from crisis to crisis because we'd rather use wealth to post to Facebook from the drive-thru line.