Experts Split on Peak Oil

Note: I am traveling to Seattle on Monday, returning Wednesday. No updates during that time, and responses to e-mails will be delayed.

Per a story in today’s Austin American Statesman:

Is oil at its peak? Experts split

A sampling of the opinions cited:

‘As much as you’re uncomfortable with today’s oil prices, these are going to be the good old days. We’re talking about pain here that is unimaginable. There’s no question in my mind that we’re likely to see oil production go into decline somewhere between 2010 and 2012.’

Robert Hirsch, oil expert and author of the Hirsch Report

‘For the past three years, global oil production has remained constant at roughly 85 million barrels per day. OPEC production has remained largely flat while non-OPEC supply growth has been well below levels seen just four years ago. … If there are no additional supplies of oil, for every 1 percent increase in demand, we would expect a 20 percent increase in price to balance the market.’

Samuel Bodman, U.S. Energy secretary, at a June 22 oil summit in Saudi Arabia

‘Political factors, barriers to entry and high taxes all play a role here. In other words, when it comes to producing more oil, the problems are aboveground, not below it. They are not geological, but political.’

Tony Hayward, BP CEO, during a June 11 presentation on BP’s annual world energy report

‘The imminent peak in global oil production has been predicted for a century – but incorrectly; it has not occurred. This does not mean that it will not occur ever. … But we need to be aware that some of the very arguments we are hearing today have been heard before – and have, in retrospect, been scaremongering.’

Peter Davies, BP’s special economic adviser, in January 16 speech to a peak oil group in London

‘The global economy is facing the third great oil shock of recent decades. … We are becoming increasingly aware of the technical, financial and political barriers to the production of more oil.’

Gordon Brown, prime minister of Britain, in a May 28 commentary published in the Guardian

‘There is enough oil and gas in the ground, but the access is what’s impeding production. So we could have a squeeze in the years ahead if we don’t get after increasing our supplies.’

David O’Reilly, Chevron Corp. chairman and chief executive, CNN, June 17

‘It’s supply and demand. … We don’t have excess (production) capacity in the world anymore. That’s why you’re seeing the oil prices.’

Warren Buffet, CNBC, June 25

‘The consensus view is that oil above $100 a barrel is going to be with us for some time. So we have two choices. One, continue exporting our wealth overseas … and hope that American consumers can outbid the Chinese and Indians in the world oil market; or two, we can commit to blazing a new path, one that frees our country from the shackles of oil.’

Rep. Edward Markey, D-Mass., at June 11 congressional hearing

Of course this is the same confused Markey who thinks we need to tap the SPR to bring prices down:

Rep. Edward Markey, the Massachusetts Democrat who chairs a special energy panel in the House, told reporters he will be introducing the legislation if President George W. Bush continues to oppose any withdrawals of oil from the Strategic Petroleum Reserve. Markey said that the bill will call for replenishing the SPR through government purchases of heavy crude oil over five years.

“I am going to introduce legislation that will require the president to sell 500,000 barrels of oil a day for a six-month period and to require that he put together a plan to repurchase heavy crude over a five-year period in order to replenish the oil,” Markey told reporters.

Yes, let’s refill the SPR with oil that many refineries can’t use. I presume someone told Markey that heavy crude is cheaper than light crude, so he figured this is a good way to raise money. Maybe next he can seek to understand why heavy crude is cheaper. One also wonders how this is supposed to help us ‘free our country from the shackles of oil.’ (If it seems like I am picking on Markey, I am. I think he has historically proven himself to be one of the biggest oil demagogues, right up there with Chuck Schumer).

My own view remains that I think there is a 90% probability that we will peak within 5 years. I think there is a 10% chance that we have already peaked.