We can cause a peak in oil production followed by a perpetual decline in output – Peak Oil #11

Contrary to what I have been saying, it actually is possible for us to hit a peak in oil production followed by a dramatic drop in output leading to a perpetual decline in the available energy we have.

How?

We as a society can decide that’s what we want.  Or our politicians can choose that for us.  Or regulators can impose their choice.

I’ve noticed a number of articles in recent months that make that point. Consider the following.

France has gas under the ground equal to something in the range of a century of usage. Yet the government has decided not to allow fracking to get that out of the ground, according to an editorial in the Wall Street Journal – No Fracking, We’re French.

For perspective on the need and potential, consider:

France imports 98% of the natural gas it uses each year. Yet according to U.S. Department of Energy data, the country’s technically recoverable shale gas is second only to Poland’s in Europe, and equal to more than a century’s worth of French gas consumption. Those numbers are still tentative, but the short history of shale-gas exploration suggests preliminary estimates often prove low.

Matthew Hulbert discusses a number of reasons that international exploration is slow in Has Unconventional Oil Production Peaked?

He surveys the political risk of working in countries with volatile, undemocratic governments. The political and economic pushback if anything ever goes wrong can be very harsh in democracies. Some governments rewrite the contracts for productive fields under threat of expropriation after production is well underway.

All of those make exploration more risky and dangerous, thus reducing the amount of exploration.

This attitude can carry over into policies at the state level, even in the U.S.

In Missing the Black Gold Rush, Bradley Anderson explores the reasons that oil production in Montana lags so far behind North Dakota and their coal production lags behind Montana.

A major cause?  Intentional policies at the state level.

There are some geological reasons, such as the Bakken field is richer and thicker in North Dakota, but that doesn’t explain why…

North Dakota’s proven oil reserves are only about 3 times that of Montana’s, but it has 10 times the drilling and production.

Here is the core of the issue:

Those matters aside, Montana’s business, regulatory, and legal climate is still unfavorable compared to neighboring states like North Dakota.

As a result, there is less oil and coal production that there could be.

His solutions? He has five:

First, Montana’s business equipment tax … is antiquated and needs to go. …

Second, the state must bring workers’ compensation premiums under control. …

Third, state legislators should work toward a bipartisan commitment to keep oil and gas taxes competitive. …

Fourth, the state should improve its unfavorable litigation climate. …

Fifth, Montana should make its regulatory culture less adversarial. …

If you want to see what seems to be the major cause for production, and state tax revenue, and jobs, and overall economic health of the state being lower than it could be, ponder the intentional policies and decisions behind Mr. Anderson’s recommendations.

Read through the list again.  Behind every one of those suggestions are conscious choices of the state government.

While in the geological world Peak Oil is imaginary, in the political world it is a very real possibility.

P.S. For possible future reference, please note the date and time this post is published.

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