37 comments on IEA boss denies and confirms peak oil in same breath
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Imagine that Mandil said instead “we’ve peaked”. Can you imagine the shock waves that would send? With oil at 80$, were would it stop?
I don’t think we'll have any blatant acknowledgment of PO from IEA before it is obvious to everybody else. It is a responsibility these guys are not willing to take, they fear to be market agitators.
Reading between the lines it is interesting to see how these guys are scared to death with the present energy situation. Speed limits, taxes on large cars, these guys do not say such things light heartedly.
I find it interesting that his dismissal of peak oil is based on belief in new discoveries but then goes on to say the necessary exploration isn’t happening and there isn’t the incentive for it to happen. He undermines his own argument, he admits “big problems” but won’t admit to “peak oil”. Why is that term so caustic when he feels able to talk about the production problems associated with above ground factors? This suggests to me a political decision to specifically deny “peak oil”. Is this encouraging because they are thinking about it or scary as they don’t feel able to talk about it?
What would happen if Mandil were to call peak in say 2010? Then call for exactly the same response he’s talking about here? Would the market notice, react? Does the market care if the IEA say oil supply problems are above ground or below ground – when the immediate impact is identical?
I interpret it as a way for him to let all the practical arguments and fact of peak oil slowly seep in (recognising reality) while refusing to acknowledge the label (to avoid panic) and pretending, for political reasons, that lack of exploration and production is somehow not the same thing as lack of oil...
Maybe this is the difference:
1) "Peak oil", the strong form, means "We will not be able to produce additional oil at that rate no matter what we do."
1b) "Peak oil", the doomer form: "and so we're doomed."
2) "Peak oil", the weak "realistic" form means, "I don't care what's hypothetically possible, what matters is what is likely to happen, and that pretty clearly is that we won't be producing additional oil at the same rate as before."
He interprets (conveniently) "Peak Oil" to mean 1a and 1b, and dismisses them, but may subscribe to Peak Oil form 2.
And that's what all the verbiage of "above ground factors", yadda ydadda, mean: when you combine geology with sociology and scatology, you get Peak Oil form 2.
More cynically it may be job protection. If enough people really believed in Peak Oil form 1, then all those oil industry employees are deemed superfluous.
If enough people believe in Peak Oil form 2 (but with optimistic spin), then the oil industry employees aren't superfluous, they are essential.
'geology with sociology and scatology'
Is this another way to say the shit will hit the fan? Because if it is, not bad.
Arthur Robey
Love it.
Arthur's secret oil formula.
Equal proportions of economy and scatology,
Blend and serve with a smile.
"Peak Oil", as the term appears to be overwhelmingly used, refers to declining production caused by geological factors. If he doesn't believe that will happen soon, he doesn't believe in peak oil. What it seems like he does believe is that geological and political factors will make supply expand too slowly to keep up with present demand growth.
What he's saying is really quite a different statement from "oil is peaking", and it shows a certain narrow-mindedness and fixation to insist on interpreting his statements solely through the lens of "peak or not peak". This isn't a yes-or-no question.
Of course, I may also be injecting my own biases - what he appears to be saying is rather similar to what I usually say, which is that oil supplies are likely to become increasingly tight - and increasingly concentrated in the hands of a few countries - and hence there are strong economic as well as political reasons for aggressively reducing our oil consumption.
In terms of practical policy matters, differences between his position and yours are just a matter of degree.
"tight" sounds like weasel words, do you believe supply will increase or decline in absolute terms? If increasing then it's no big deal, perhaps it won't increase as fast as some would like but it doesn't affect the current growth paradigm. If on the other hand supplies decline in absolute terms the rules of the game change.
By dismissing peak oil by citing yet to be discovered oil and then saying the necessary exploration isn’t happening Mandil is suggesting absolute declines – that’s peak oil in my book.
A chance although increasing smaller exists for extensive discovery of new oil deposits and exploitation of those deposits. We have almost reached the point that we have to discover two ghawars worth of oil to grow oil production again. So oil production will peak because of above ground factors alone even if we have not used up 50% of our oil. Simply because we certainly have used up a significant amount of the oil thats easy to extract. We have probably reached and passed the point that we can increase production fast enough to keep the production rate from decreasing.
Peak production and the point at which we have used half the remaining oil reserves are related but not directly. The reason that production declines generally set in some time after 50% of the oil is extracted is both a technical and empirical observation at the field level that holds as you aggregate fields.
Our concern is the peak production rate. This is achieved when about 50% of the easily accessible oil is produced after this point the amount of remaining reserves which could easily be greater than 50% of the total only serve to provide a upper bound on how much oil is extracted.
Since we are fairly confident half of the easy oil or conventional oil has been or is close to being extracted then the concerns about above ground factors simply mean production will always be less than our prediction and in some cases a lot less i.e Iraq. As production continues to decline the chances of increasing it become remote in another year or two probably impossible no matter how much oil you believe is in the ground since too many fields will be in decline.
No - it's simply a descriptive term. Oil supply is not a yes-or-no question, and it's foolish to fixate exclusively on whether it will increase or decrease.
You're drawing a false line between "increases 0.01%" and "decreases 0.01%", saying that the former is "no big deal" but the latter means "the rules of the game change". That's simply nonsense - those two scenarios are effectively identical.
Oil supply is not a matter of "yes" or "no", it's a matter of how much. Like a vise being tightened, it's all a matter of degree.
He isn't saying that, though:
"Geological reserves remain abundant....The main problem for security of supply is that the world will be increasingly dependent on a shrinking number of countries. If, in addition, they cannot invest for various reasons...we go towards big problems."
He's saying the risk is that concentrating the (abundant) oil supplies in the hands of a few producers makes the supply more volatile, meaning that disruptions to the ability of only a small number of producers would then be enough to cause big problems.
He's not saying declines will happen. He's not even saying they may happen. He's just saying that concentrating the supply risks unspecified "big problems".
While you may interpret that phrase as meaning "peak oil", all that really tells us is about your personal biases. It's possible that by "big problems" he means "such slow growth that prices skyrocket and the world enters a lengthy recession." Indeed, based on some of his similar-sounding concerns a few years ago (saying KSA needed to increase production by 3mb/d or there'd be big problems; they didn't, and prices shot up), it seems likely that he is talking about prices, or is just prone to hyperbole.
Imagine that Mandil said instead “we’ve peaked”
Monday's IEA report does use the term "supply crunch" and "crunch" is the term a lot of the media picked up on. What is the difference between "peak oil" and "oil supply crunch"?
'Oil supply crunch' means the supply is not enough to meet demand. It still allows the possibility that supply is increased to match demand. Peak oil means supplies can never be increased again. Governments prefer 'supply crunch' which sounds less alarming, especially since everyone assumes that this is because of growth in China. This in turn is accepted as we all enjoy cheap imports from there.
You are confusing terms here big time:
'Oil supply crunch' means the supply is not enough to meet demand.
To meet demand at what price? You are missing the price variable. Maybe this is the current price? But then for some people $5/barrel could be the 'fair price' for oil. My interpretation to 'Oil supply crunch' would be that oil production is either falling or not rising enough to prevent constantly rising prices. And again such definition is assuming that there are no structural changes to the demand side - e.g. recession.
Peak oil means supplies can never be increased again
There still might be some year/year increases, but the general trend would be down. These increases will be the primary reason we will be able to detect PO only when we are well past it.