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Energy Insights: Energy News: As Fracking Rises, Peak Oil Theory Slowly Dies

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As Fracking Rises, Peak Oil Theory Slowly Dies




On July 3, the administrators of The Oil Drum, a blog/discussion forum site dedicated to and frequented by those who advocate for “Peak Oil” theory, announced the site would close at the end of July, marking an end to an eight-year existence.  During that period of time, “Peak Oil” theory has basically gone the way of the California Condor, from widespread existence and acceptance in the oil and gas environment to near extinction as its environment has dramatically shifted thanks to the discovery of and ability to access massive oil shale reservoirs not just in the United States, but all over the world.

Eight years ago, some of the leading thinkers in and around the oil and gas industry, like the late Matt Simmons, were proponents of this theory, which advocates the belief that worldwide oil production has reached or has very nearly reached its peak overall production, and the world faces a long period of decline of the resource.  Today, given the new abundance of shale oil, almost no real industry thought leaders are Peak Oil proponents, and the theory is now mainly advocated by self-promoting opportunists looking to gain free media attention by being contrarians to prevailing belief, and environmental activists who cobble together misleading data and fright scenarios to justify costly policies that throw billions of public dollars at renewable energy schemes.

At his Carpe Diem blog on Tuesday morning, Dr. Mark J. Perry posted a great chart illustrating the levels of interest from 2005 through today in the topics of “peak oil” vs. “fracking” using the Google GOOG -0.19% Trends tool.  Anyone wondering why the administrators of The Oil Drum are unable to sustain a critical mass of interest in discussions and news around Peak Oil theory need only view this chart to get the picture.

The chart graphically and very predictably shows a very high interest level in Peak Oil from 2005 through late 2008, when the general acceptance of the theory among actual experts in the subject matter was as high as it had been since the early 1970s.  Then, beginning in 2009, as it became apparent that the Saudi Arabian oil fields were not losing their productive capacity, as Mr. Simmons had predicted they would in his book, “Twilight in the Desert”, and drilling efforts in the Bakken Shale in North Dakota began to show real promise, the graph illustrates the reality of belief and interest in Peak Oil theory rapidly diminishing over the following four years.

Similarly, and predictably, interest in the term “Fracking” basically doesn’t even register on the chart until about 2010, as efforts by radical anti-development groups and friendly news media to redefine a very safe and mature industrial process – hydraulic fracturing – and turn it into a virtual cussword in the American lexicon began to take hold in the public’s mind.  Those efforts, combined with natural public curiosity about an industry that became pretty much the nation’s lone economic bright spot during the worst years of the Great Recession, led to a very rapid rise in interest around Fracking, ultimately to a higher level than Peak Oil ever achieved in those years.

As we mentioned in an earlier piece on this subject, Peak Oil theory has reared its head as a semi-popular theory about oil supplies periodically since the early 1880s.  Real energy expert Daniel Yergin notes that proponents of Peak Oil at that time espoused the belief that oil was a resource largely isolated to the Pennsylvania area, and none would ever be discovered in any event west of the Mississippi River.  Discoveries soon thereafter in Texas and Oklahoma put the lie to that particular bit of sophistry.

Those of us who are advanced enough in age will remember U.S. President Jimmy Carter, in 1978, telling the public in a televised speech that the world was in fact running out of oil at a rapid pace – a popular Peak Oil theory of the time – and that the US had to wean itself off of the commodity.  Since the day of that speech, worldwide oil output has actually increased by more than 30%, and known available reserves are higher than they were at that time.

The main reason why Peak Oil theorists always turn out to be wrong is that they by and large appear to be unable to grasp the huge role advancing technology plays in allowing the industry to discover new oil resources previously unknown, to access known resources that were previously thought to be unexploitable, and to extract an ever-increasing percentage of oil long known to be in place via secondary and tertiary recovery techniques.  They appear to believe – either through lack of imagination or due to political convenience – that current assessments of available resources in known formations will always remain static and never increase, never understanding or acknowledging that those assessments will rise along with advances in technology.

And so it should surprise no one that The Oil Drum, a site devoted a theory based on lack of imagination and growing irrelevance among prevailing thought around the oil and gas industry, was unable to sustain a critical mass of interest and will soon be closing its proverbial doors.



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