We will never run out of oil. Peak oil #1

I’ve come across a term that struck me as silly as soon as I read it – peak oil – That’s the idea that we’ve hit the maximum production and we will soon see production levels fall and then run out of oil.

The definition of proven reserves and a minimal knowledge of supply and demand makes it so obvious that we will never run out of oil.  A glance at this blog or the blogs I cite should make the concept of peak oil laughable.

I need to explain this across several posts.

The whole concept of peak oil becomes more astoundingly ignorant with every additional paragraph I read on the issue. Conceptually, there is a big problem. Practially, developments in the last couple of years should kill off the concept permanently. Daniel Yergin explains the issue in great detail at his WSJ article There Will Be Oil.

Here is the concept: We have already hit the maximum production level and will run out of oil very soon. Here are a few of Mr. Yergin’s comments:

{Peak oil} advocates argue that the world is fast approaching (or has already reached) a point of maximum oil output. They warn that “an unprecedented crisis is just over the horizon.” The result, it is said, will be “chaos,” to say nothing of “war, starvation, economic recession, possibly even the extinction of homo sapiens.”

The date of the predicted peak has moved over the years. It was once supposed to arrive by Thanksgiving 2005. Then the “unbridgeable supply demand gap” was expected “after 2007.” Then it was to arrive in 2011. Now “there is a significant risk of a peak before 2020.”

This sound like the alarmism of some Christians who declare with absolute certainty that the world will end on a specific date. When the sun rises the following morning, they run their calculations again to find their previously unknown math error and then calculate the next date that the world will certainly end. Only they are absolutely, positively sure this time.  In spite of clear biblical instruction that no one knows the date, such folks are allowed two, three, or four tries.

So the concept is we are about to see production peak and then fall off. Only production just keeps rising, more fields are found where there wasn’t any oil before, and technology makes unrecoverable oil recoverable.

Check this out:

This is actually the fifth time in modern history that we’ve seen widespread fear that the world was running out of oil. The first was in the 1880s, when production was concentrated in Pennsylvania and it was said that no oil would be found west of the Mississippi. Then oil was found in Texas and Oklahoma. Similar fears emerged after the two world wars. And in the 1970s, it was said that the world was going to fall off the “oil mountain.” But since 1978, world oil output has increased by 30%.

Ooooooookay.  There will never be oil west of the Mississippi. Not too far off other than those few little spots down there in Texas a few decades ago. And North Dakota. And Green River. Oh, and Eagle Ford.

It’s sort of like saying that I’m going to die of starvation in 10 days because I will consume all the food in my home in three days and then will linger for another week or so.  Or that all the people in my city will starve because there is only a 1 1/2 day supply of food on all the shelves of all the stores in my area.  After that’s gone, we go home and wait to die.

Next post: Who came up with this idea of peak oil? Then, what are proven reserves?