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Peak Oil again - From an expert in the field

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The proud, the few
Jun 26, 2004
Ok, I'm getting more than a little annoyed w/ all the hype going on around here about this. I know a guy that has worked in the industry for a long time and deals a lot with the reserves. I dropped him an email a couple of weeks ago and this is his response:

Part 1 -

Oil and gas are naturally occurring, depletable resources. Like tin
the bronze age, iron ore up through the middle of the 20th century,
oil and goal in Britain during the 19th century, and now oil and gas,
have been people predicting the disappearance of these items because of
fast they were being used, how little was known to be remaining, the
don't matter, just the idea that during the age in question and a
depletable resource, people were always screaming about how the world
going to end during the time period in question.

The current crop of "oil is disappearing" fanatics can be found


You can spend weeks reading through all their stuff, feel free to make
yourself familiar with it, here is the short version. As a resource is
and developed, the easy and cheap stuff is found first, given enough
and consumption, half of all the item will have been produced, at which
point in time it is impossible to raise the production anymore because
being used faster than it can ever be found, and therefore supply
diminishes, regardless of demand. Thats it. The peak oilers vary from
when we reach peak its gonna be expensive" to "gee when we reach peak
world will instantaneously fail".

Several things you will not find among these articles, or which are
difficult to find because of course they aren't fans of dissenting
or don't like to broadcast the weakness of their arguments.


1) The original predictor of peak oil in the US, who hit the year dead
and is the founding father of the philosophy behind the movement, also
predicted a bunch of other things, all of which have been wrong. He got
right out of however many, in part because he didn't take into account
of neat things that happened during the 80's and 90's when prices
moving upwards from the crash in 86. For example, he said oil peak for
world would occur in 95 ( oops ), natural gas would be gone in the 80's
big oops ) and various other little boo-boo's which the gang doesn't
want to
talk about.

2) The original peak oiler ( Colin Campbell, you'll see his name alot
the ASPO gang ) was predicting peak oil problems for various fields and
areas in the 80's....the problem was, they didn't peak then. His
peak date was mid-90's I believe, and year after year, he keeps moving
peak further down the road because, of course, he keeps getting proven
by the peak increasing yet again. Big oops.

3) The peak oilers love to talk about reserves, when in fact reserves
nothing to do with resource base beyond quantifying what oil and gas
production companies keep on their books. But peak oilers love
information shows there is only 7 years of production on the
means we all die from lack of oil in 7 years when it runs out, right?
Nope....when they produce some, they do the obvious, they go and find
produce more. Is it getting tougher to find? Sure. Has this affected
Sure..the price has gone up, thereby guaranteeing that they will STILL
find more, even if its harder.
Part 2 -

Now, these are just a few of the problems which peak oilers have no
to talk about, I could go on about reserve growth, the resource
pyramid, the
effects of supply and demand and how the price of a resource works to
competition among competing types of energy, and so on and so forth.

Now, as to how this relates to your question, I have not a damn idea.
now, inventories of crude oil are quite high, and the price is high
speculators are reading the same "gee we're running out" routine that
rest of us do. Can the price go up? You betcha. Enough to crater the
airlines? Sure as shootin. Can it stay that way? Of course not. Why
Create a worldwide recession because of and oil shock and watch demand
right into the toilet. When this happens, everyone will be pumping flat
and getting next to nothing for their product, and lots of
guvmints will have a damn tough time keeping their people from killing
in their palaces. You think oil dependant countries have it bad? Oil
producers will have it worse because they become addicted to the
income, and
fund lots of social programs, and what are they going to do when the
heads south? Starve their people? Have them all dig ditches on borrowed
guvmint money? Large amounts of oil resource are more of a social curse

Will we suffer in the states? You betcha. We'll all go buy hybrids,
start on
bicycles, fly less, travel less, and when everything settles out we'll
even LESS dependant on these countries which have oil but not a pot to
in because they can't restore demands so they can pump at full capacity
full price. They'll NEVER see the good old days again, here in the
we'll burn coal and build lots of nuclear power plants and every car
have a battery system to match its little diesel engine and it'll get
around town and it can STILL tow a light motorcycle and trailer behind
You boys with the planes will have a tough time finding customers for
because I'm betting trains and buses are alot cheaper for regular
people to
travel, but stuff will still move by air. But it'll be pricier because
a few
of you guys will have gone out of business until you can all raise your
prices far enough to make money. Which just makes it easier for buses

My only real suggestions are, buy your real estate close to your work
places where you purchase food, movies, meet chics, all that kinda
stuff. If
you need a cage, smaller is better than bigger, insulated houses are
than open ones, efficient appliances are better than inefficient ones,
the less energy you use the less it'll cost you personally.

The interesting thing about PeakOil is that its all true. In the end,
last word. Sooner or later, things run out, there is only so much.
problem is predicting it all the time while ignoring the times in the
that its happened and what the world did to adapt. We won't starve,
civilization won't end, we'll just get more efficient. It won't be
but it'll happen because $$ will force it too.

Want an interesting career? Get into engineering for renewable
wind, wave, natural gas to liquids conversions, those things should
have an
interesting time when gasoline hits $5/gal and everybody is screaming
murder. But in the end, thats what it will take for soccer moms to stop
driving Excursions, for people to dump their SUV for a hybrid, and the
thing is, the price in Europe is already that high and look what they
did...motorcycles and scooters and efficient little diesels in small
getting 60mpg....over there its taxes, here it will have to be supply
demand and firing most politicians in Washington before people notice,
you hit the average american with a $200 bill to fill the tank on his
Excursion? He'll scream....and when the guvmint discovers it can't do a
thing about it, and tells him the truth, he'll vote for someone else
and go
buy hisself a hybrid, or he'll take it up the ass for as long as prices
high. Its the american way.
Chevron ad campaign

New Chevron Advertising Targets Dialogue about Global Energy Issues

Campaign integrates print, broadcast and Web; engages wide range of stakeholders

SAN RAMON, Calif., July 5, 2005 -- Chevron Corporation today launched a new global advertising campaign to raise awareness and encourage discussion about important issues facing the energy industry, including supply and demand, the role of alternative and renewable energy sources and the promise of technology.

"Energy – how we find it, produce it and use it – is one of the critical issues of the 21st century," said Chevron Chairman and CEO Dave O’Reilly. "Energy affects everyone. And we think everyone should be involved in the dialogue about the future of energy."

The campaign will include print and broadcast in major media, and an innovative website, willyoujoinus.com, that will provide a forum for discussion among a wide range of stakeholders. The site currently offers viewpoints on the future of energy by John Elkington the Chair of SustainAbility and Jerry Taylor, Director of Natural Resource Studies, The Cato Institute

Vice President of Policy, Government and Public Affairs, Patricia Yarrington said, "We developed a campaign that is rooted in the real issues facing our industry. They are issues that affect everyone who has a stake in energy – consumers, businesses, policymakers, environmentalists, educators and political leaders. We think it’s a very compelling campaign about a very compelling subject."

The campaign is breaking in major print media on July 5 with advertising focusing on the challenge of maximizing the world’s supply of oil and gas. Broadcast spots will focus on key facts highlighting the dynamic balance between supply and demand.

Yarrington added, "Chevron is not attempting to solve the world’s energy problems alone, but rather use human energy to bring people together to discuss real issues and to think about developing real world solutions. We are hoping to encourage people to see and understand others points of view with a goal of moving the debate from entrenched rhetoric to pragmatic solutions. Chevron is optimistic about the future and believes that by asking the tough questions now we can help determine how we will best meet the energy needs of the world in decades to come."

Chevron encourages people to visit www.willyoujoinus.com <http://www.willyoujoinus.com/> to join in the debate. The website will periodically explore a new energy issue and visitors can voice their opinion and join in the discussion on a message board, managed and monitored by a third party.

The campaign will launch in print, outdoor, online and with TV teaser ads in global media targeted at influentials who are involved with leading the energy debate. The ads will appear in publications such as the Economist, Wall Street Journal and Financial Times, on U.S. and pan regional TV such as CNN, BBC Africa, Asia, Middle East and Latin America and in airport locations such as Beijing, Moscow and Washington DC.

Chevron Corporation is one of the world’s leading energy companies. With more than 47,000 employees, Chevron subsidiaries conduct business in approximately 180 countries around the world, producing and transporting crude oil and natural gas, and refining, marketing and distributing fuels and other energy products. Chevron is based in San Ramon, California, USA. More information on Chevron is available at www.chevron.com. <http://www.chevron.com/>
Diesel is subsidized in Europe. The high fuel prices in EU are the result of high taxes. They are paying the same per-barrel price as the rest of us. Natural gas requires much more energy to refine than does liquid fuel. Hybrids have the issue of expense for battery replacement or overhaul.

The world recession won't blunt the demand by China and India THAT much. Those countries are voracious consumers (still increasing) of fossil fuels. (I found it interesting that although India has one of the largest coal reserves in the world the government-run coal business is so bogged down by bureaucracy and unions that they have to import most of their coal.)

There are many facets to this problem and no clear solution.

This will be interesting as it plays out in the next few decades. Too bad we won't be disinterested spectators...TC

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