(NEWSCOM)
Pickens: Oil production has peaked
By Eoin O'Carroll | 06.18.08
Speaking in a Senate committee hearing, the legendary Texas oilman T. Boone Pickens said that world crude oil production has topped out.
“I do believe you have peaked out at 85 million barrels a day globally,” he told the Senate Energy and Natural Resources Committee Tuesday, according to Reuters.
He noted that the United States is consuming “21 million barrels of the 85 million and producing about 7 of the 21, so if I could take just a minute on this point, the demand is about 86.4 million barrels a day, and when the demand is greater than the supply, the price has to go up until it kills demand.”
And when Mr. Pickens speaks about energy, the world listens. His ability to read markets has vaulted him into the ranks of the world’s wealthiest people. His hedge fund, BP Capital, manages more than $4 billion in assets.
He’s put his money where his mouth is. He is currently at work planning the world’s largest wind farm, in West Texas.
By saying that oil has “peaked,” Pickens means that right now, the world is producing the most oil it will ever produce. Soon, production will enter into a terminal decline, and prices will continue to go up.
The theory of peak oil was first developed in 1956 by Shell geoscientist M. King Hubbert. He predicted – correctly – that the United States would pass its own peak production between 1965 and 1970. Since then, US oil production has dropped steadily. Today, the United States imports about two-thirds of its oil, a phenomenon that Pickens described as “the greatest transfer of wealth in the history of mankind.”
Most analysts agree the slide down the other side of the peak will not be smooth. In 2005, the Department of Energy commissioned a report to examine the impact of peak oil. The Hirsch Report (PDF) named for its lead author, energy adviser Robert Hirsch, puts the problem in stark terms:
The world has never faced a problem like this. Without massive mitigation more than a decade before the fact, the problem will be pervasive and will not be temporary. Previous energy transitions (wood to coal and coal to oil) were gradual and evolutionary; oil peaking will be abrupt and revolutionary.
The report recommended 10 to 20 years of “accelerated effort” to implement alternative fuels would be needed before the oil peak to avoid “major economic upheaval”.
“Waiting until world oil production peaks before taking crash program action,” says the report, “leaves the world with a significant liquid fuel deficit for more than two decades.”
Not all energy analysts agree with Pickens’s belief that peak oil has been reached. According to the Hirsch Repors, Royal Dutch Shell has stated that the peak will occur in 2025 or later, and the firm Cambridge Energy Research Associates says that it will occur after 2020. But most analysts cited in the report put the peak at around right now.
In response to Pickens’s testimony, Republicans on the committee issued a press release that cited a June 17 Rasmussen Reports survey showing that 67 percent of Americans believe that drilling should be allowed off the coasts of California, Florida, and other states. Currently, the US bans offshore exploration for oil and gas deposits.
Incidentally, a day earlier, Rasmussen found that a minority of Americans oppose nationalizing America’s oil industry.
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2. Allen Fuller | 06.18.08
This should be a (much belated) WAKE UP CALL to our so-called “leaders” to get our national butt in gear. We’ve known for years that our oil addiction is bad for us, sends money to people that don’t like us, and is unsustainable. But our strategy so far has been to continue business as usual.
We need leadership NOW to face this problem head-on. Some in the private sector (such as Pickens himself) are investing in alternatives, but the government needs to give its full backing to accelerate these efforts. Through incentives, research dollars, reducing subsidies on oil, and so on, the government can make a big difference.
But the biggest change will occur only if our leaders lead a change in the culture. We need our leaders on national television, in newspapers, on the radio, talking about this DAILY, and encouraging everyone to collaborate and make the necessary life changes. This should be our new national project, similar to winning WWII, or going to the Moon.
3. Chas | 06.18.08
Crude oil production has not topped out. Untapped proven reserves are being brought on-line, new reserves are being discovered, and new technologies are being applied to older reserves and oil shale deposits to increase supply. Cheap oil is over but peak-oil hasn’t arrived. The current market conditions, and rapid increase in oil prices, is a direct result of the US Fed’s attempt to stave off the impact of losses in the financial community from the real estate investment (mortgage) fiasco from earlier in this decade. The Fed’s inflationary policies of lowering borrowing cost for investment firms and bankers has led to rapid devaluation of the dollar and subsequent increase in the dollar price for oil. Investment bankers and hedge fund managers are further criminally manipulating this situation for financial gain, to offset financial losses in other sectors, and as a hedge against inflation.
4. ian | 06.18.08
a major portion of oil consumption is used in transportation and much of that used in commuting to work, doesn’t anyone address this issue?
6. Daniel | 06.18.08
Chas: Pickens may or may not be premature in declaring that peak oil has arrived, but if you look at the latest data (great summary at http://europe.theoildrum.com/node/4152) it’s clear that one can’t make the case that we *haven’t* peaked, either.
What we DO know is this: Global production (of all oil, including tarsands, deepwater, etc.), has basically been flat since 2005. The “conventional oil” is peaking right now (there’s no real disagreement about that) and the “unconventional oil” resources, like tarsands and deepwater, simply aren’t making up the difference. On top of that, fewer and fewer analysts believe that unconventional oil will be able to not BOTH make up that difference AND add *more* oil to current production rates so as to meet steadily-rising global demand.
Yes, the speculators and the weak dollar and all that play a role in rising oil prices. But it IS fundamentally about supply and demand — and even the Wall Street Journal is now recognizing that we face peak oil, if not today, then within the next five years:
http://www.futurepundit.com/archives/004804.html
http://online.wsj.com/article/SB121139527250011387.html?mod=hps_us_whats_news
==
Ian: Yes, a lot of people are talking about transportation and commuting:
http://postcarboncities.net/taxonomy/term/23/9
http://planetizen.com/taxonomy/term/1137
7. Bruce | 06.18.08
http://wattsupwiththat.wordpress.com/2008/02/13/where-have-all-the-sunspots-gone/
has an interesting take on Sun Cycle 24. Sunspots indicate solar activity levels.
Assuming another Maunder Minimum (1645-1710 and another Little Ice Age - we’re due for one) arrives on top of Peak Oil -
then the greatest concern is housing and heating (energy). Not many houses of the latest bubble would be livable in such conditions. But check out:
http://www.earth-house.com/index.html
for something a little more relevant as may be required.
8. Paul | 06.18.08
Wow, this is absolutely wild. I was just watching the documentary “Crude Impact” on he Sundance OnDemand (sorry for the plug) channel. The movie came out in 2006 and so predates the rapid rise in oil prices. The prediction in the movie was that we would hit peak oil in or around 2007… I decided to do a search about “peak oil” and here was this article released just 8 hours ago. The prediction appears sound among many in the know. All I can think is that we have hit it, or if we haven’t hit it we are very close. Discovery has appearently already peaked and so in following with Hubbert’s predictions, we are due very soon for a decline in production. Extraction of know fields can increase, but this will have marginal effect on the overall supply. Therefore, extraction of small reserves off our coasts will only stave off the enevitable for a year or two - likely not keeping pace with the current rate of demand increases. I encourage people to watch this movie as it explains in depth this process and other contributing factors. There are some liberal leaning ideas towards the beginning but even if you are a “conservative” idealist you’d benefit I think of viewing this if only to have a firm understanding of the concept. I’m personally going to learn more about this, invest in oil futures, and see if I can’t get a job with Mr. Pickins wind interest.
9. Clifford J. Wirth | 06.18.08
We are at peak global oil production now. Eventually oil will run out, and there are no real alternatives. Ten or twenty years from now the world’s highways and power grids will fail. Peak Oil is actually worse for the U.S. This means no food from afar and nothing coming in from the outside. Read about it here: http://www.peakoilassociates.com/POAnalysis.html
Anyone interested in retiring in a nice safe sustainable location? clifford dot wirth at yahoo dot com or 603-668-4207
10. Gonzo | 06.19.08
I noticed someone who said that global oil production hasn’t peaked because of untapped oil fields, you see the problem is not running out of oil rather consumption outpacing demand.
First, Oil companies have spent nearly 8 billion dollars looking for oil fields and only found about 4 billion dollars worth of oil:
This is despite using all of the most advanced technology and science available to the oil companies. So you see we have found most of the oil we will ever find.
Second:
Once the largest oil fields peak, in a short amount of time they will begin to decline, any oil wells we drill will simply serve to offset declines in the largest oil wells.
Third:
Oil shale is not the answer, it takes a large amount of energy, water and resources to convert the oil shale to liquid fuel. This is equivalent to telling someone looking for water; go to the ocean you will find almost limitless drinkable water, if you are willing to distill it or use reverse osmosis to remove the salt. Hopefully you get the picture.
Fourth:
The United States has some of the best universities in the world, with some of the smartest most talented people in the world. Why don’t we convene a commission of Scientists, engineers, economists, and politicians to develop a plan for us to follow. I can’t believe that with all the human capital we have we are falling victim to this!
Gonzo
11. Allen Fuller | 06.19.08
Gonzo, the problem is not the lack of scientists, engineers, economists or ESPECIALLY politicians (we probably have too many of those).
The problem is 1) lack of AWARENESS and 2) lack of LEADERSHIP.
I’m politically pretty conservative but on this issue I really get frustrated at people on my “side”. Their mantra is “drill drill drill” and “blame the enviro-wackos and the Democrats.” Well, duh, yes, drill for whatever we can find. But it’s only a stopgap. We need to FOCUS on what happens after our drilling proves to extend our lease on our wasteful lifestyles by only a few years. I don’t see very many people on my “side” focusing on getting OFF of oil as fast as possible.
On the Democratic side I don’t see leadership either, but mostly opportunistic grabs for more government power (e.g. the “windfall tax” on oil companies’ profits). I can understand the need for a tax on oil, but let’s not do it to “punish” profits. I would only agree to it if the money were directly invested into renewables.
In short, we need leadership that will do what’s right for America in the long run, not for their own party’s short-term success.
12. r2k_in_the_vortex | 06.19.08
“The United States has some of the best universities in the world, with some of the smartest most talented people in the world. Why don’t we convene a commission of Scientists, engineers, economists, and politicians to develop a plan for us to follow. I can’t believe that with all the human capital we have we are falling victim to this!”
you seem to grossly overestimate human potential, the problem is not really lack of ideas or solutions, but rather the practical implementation. you could in theory put up countless solar panel factories and grow world energy resources gotten from PV from 0,004% to 30% in a decade or so, but that would require immense effort and will to do so. same thing as with tapping new oilfields - you could theoretically get the oil NOW not in 20 years, but the effort required is just too much. disparate effort will be only seen once the situation actually gets disparate.
once the primary sector will stop due to fuel prices and food disappears from shop shelves then the situation will be disparate, but its kind of too late to start doing anything then…
the question remains: when we have 6billion people to feed but only enough food for 1billion or at best case scenario for 2billion - where will we dig the hole for corpses?
such grave world situation will surely spark fuel wars, anyone remembers how Iraq oil production dropped once US invaded? with invasion to oil producing country surely its production will drop to near nil - in progress worsening the situation. but worry not: wars are fought with money and fuel once one runs out of one of those war will stop, soldiers will starve in desert, both sides will be in shambles and vultures will pick the bones clean. peace restored! until then tho world will see some interesting times
13. Clifford J. Wirth | 06.19.08
Hi R2K_in_the_Vortex, The National Academy of Sciences did that in the 1970s and will do it again soon. The problem is that there is no way to develop what we need: liquid fuels. Scientists have been at this for years and years. For a full explanation, see the report at http://www.peakoilassociates.com/POAnalysis.html
14. Daniel | 06.19.08
Paul said: “The movie [Crude Awakening] came out in 2006 and so predates the rapid rise in oil prices.”
A little more background: Oil prices started going above 15-year highs in 2004. 2004-2005 is when a lot of people outside the petroleum industry started paying attention to peak oil, thanks also in part to the movie ‘End of Suburbia’ (2004), James Kunstler’s book ‘The Long Emergency’ (2005), and the first conference of the Association for the Study of Peak Oil (Sept. 2005). Crude Awakening is a great film on this stuff, as are ‘End of Suburbia’ and ‘The Power of Community: How Cuba Survived Peak Oil.’
BTW, great new update on peak oil that touches on the falling dollar, the potential for new oil in ANWR and offshore, etc.:
http://globalpublicmedia.com/peak_oil_for_policy_makers
15. Eoin | 06.19.08
Has anyone read Kunstler’s “World Made by Hand”? I really liked his talk on TED.org, and I’m thinking of picking up his latest novel. Is it any good?
16. Joris | 06.19.08
Yep, it sure is exciting and wild. Peak oil! I’ve been following this development since mid 2004.
I’ve talked about it with friends and family.
I’ve talked about it at work, with colleagues and higher management.
I’ve called my national institute for statistics and planning (Dutch) about it.
Everywhere, allways I’m been met with either disinterest, incomprehension, disbelieve or smirking ridicule.
Right now I am set up financially thanks to investing with peak oil in mind. And I hope all the executive officers, politicians and civil servants I’ve met go broke and end up homeless.
17. mike3 | 06.19.08
“This should be a (much belated) WAKE UP CALL to our so-called “leaders” to get our national butt in gear. We’ve known for years that our oil addiction is bad for us, sends money to people that don’t like us, and is unsustainable. But our strategy so far has been to continue business as usual.”
We the PEOPLE should have changed sooner and not tried waiting for leaders to come arund because the fact is they will NOT come around until the very last moment. Our stupid dependence on leaders, and not wanting to DO THINGS FOR OURSELVES, was a big problem here.
I say quit waiting around for the govenrment or trying to get the government to change, change NOW. The government is a lost cause. The people have to change.
“But the biggest change will occur only if our leaders lead a change in the culture. We need our leaders on national television, in newspapers, on the radio, talking about this DAILY, and encouraging everyone to collaborate and make the necessary life changes. This should be our new national project, similar to winning WWII, or going to the Moon.”
We have to start the changing NOW and not try and get the “leaders” to change and go on business as usual until that happens. We must forget about ‘em and do the changes ourselves, and make them a secondary concern.
NOW!
18. mike3 | 06.19.08
“I’m politically pretty conservative but on this issue I really get frustrated at people on my “side”. Their mantra is “drill drill drill” and “blame the enviro-wackos and the Democrats.” Well, duh, yes, drill for whatever we can find. But it’s only a stopgap. We need to FOCUS on what happens after our drilling proves to extend our lease on our wasteful lifestyles by only a few years. I don’t see very many people on my “side” focusing on getting OFF of oil as fast as possible.”
Have YOU changed YOUR lifestyle now or are you just gonna enjoy “business as usual” UNTIL these “leaders” appear?
19. Tim Jackson | 06.19.08
There is a very good chance that the world has reached peak oil - we won’t know until after it happens. What I find amusing and frustrating is 1) the degree of denial that change is happening and 2) the lack of understanding that it is only the high price of oil that makes, for example, tar sands and deep offshore drilling profitable. The idea that development of these resoures will decrease the price of oil is a fallacy. They can be developed only because of the high price of oil.
By the same token, the idea that the government leaders can fix the problem is equally ludicrous. We can’t fix the problem. We can only change our habits. And what will change our habits is the economics of peak oil, which we are just beginning to see. The
big question in my mind is how our country will respond to the devloping situation where more and more people have to share an ever decreasing resource. Will we be noble and share what is left as we change our lifestyle to adapt? Or will we just take shat we want from others. Sometimes I fear that the answer to that question is right before our eyes - after all, the largest army in the world is sitting on top of the largest oil reserves in the world.
We will see, and sooner, I think, than anyone can imagine.
20. Kurt | 06.20.08
Agree with 18,19 on those whining about some sort of “political leadership” (how quaint). Here’s some leadership —-> Follow my lead and consume less, arrange your life to be more energy efficient.
Save more and expect to pay more for what you consume. It’s not the end of energy, just the end of CHEAP energy.
Move on and enjoy the blessing that is your life. It’s not like we’re running out of clean water…. :/
21. Jack Kevorkian | 06.20.08
Oil has peaked because even though new discovery’s are being made they are less than is being used up, discovery peaked thirty years ago.
Fewer barrels are being found than are being used.
Just to keep up with declines we would need a new Saudi Arabia every year.
There are not enough oil rigs
not enough deep water oil rigs as well.
It takes years to go from discovery to the tank.
Oil shale is decades away if ever from development.
The major oil producing countries are using more of their own oil. Exporting less.
Indonesia now is a net importer.
UK is now a net importer.
Mexico is on track to be a net importer by 2010.
Mexico’s oil is in rapid decline.
Oil is up vs the Euro, did the fed do that too?
22. robert lacour | 06.23.08
people who say i thought we had oil for another 80 years dont understand the reality of what peak oil is about, sure there is going to be oil probably for another 100 or 200 years its just that demand is far surpassing our ability to produce from an ever decreasing supply, most of the oil wells of today are decreasing 4.5% to 8% a year and if you do the math you will figure out that the world will be in big trouble in ten to fifteen years. tar sands of canada have major problems with extraction due mainly with water, it would take years to meet the global demand even if we started major efforts right now to extract it from the sand, as of right now the world uses 85 billion barrels of oil a day and to even think about extracting just 5 billion barrels a day from the canada tar sand is ludicrous
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1. ShirlyUJest | 06.18.08
re: Rasmussen found that a minority of Americans oppose nationalizing America’s oil industry.
Oh yippee. Another government official seeking whether Americans would like another inefficient bureaucracy to steal their tax dollars away while they pat each other on the back.
If they weren’t just out for themselves they would start removing the restrictions that keep entrepreneurs from solving these problems and let the real Americans that can actually produce something handle it. Don’t legislate, DE-legislate!