Peaks and spikes  

Posted by Big Gav in ,

The Economist has a refreshing sensible post on Daniel Yergin's latest criticism of peak oil (having slowly modified his wildly inaccurate positions over time to "we're facing a plateau" - no doubt his views will eventually swing around to reality once no other credible options remain) - Peaks and spikes.

OVER the weekend, energy expert Daniel Yergin took to the pages of the Wall Street Journal to argue that "peak oil" is a phony concept, a "specter" that's unlikely ever to materialise. The concept of peak oil, for the unitiated, is that humanity is close to reaching peak production of the world's finite supply of oil. Most of the extractable oil has now been brought out of the ground and used, and henceforth new discoveries are unlikely to replace falling output from old fields, leading to a steady decline in supply. Mr Yergin argues that people have been warning of a looming oil crisis for over a century and have never yet been right.

Economist James Hamilton has a measured and wise reply to the piece, in which he points out that supply growth has been worryingly slow of late. He concludes:
I submit that meeting the growing global demand for crude oil over the last five years has posed significant challenges for the world economy. And those who worry that the next 5-10 years might be like the last should not be dismissed as crackpots.

I'd just note that the phenomenon of peak oil is unlikely to manifest itself as a sudden sharp decline in supply. What you're more likely to see in a climate of more or less steady demand growth is supply that first tracks demand, then lags demand as the peak approaches while still growing. If oil demand were elastic, demand growth would ease with supply while prices rose moderately with the cost of producing the marginal barrel of oil. If oil demand is inelastic, however, then supply shortfalls will generate price spikes, producing recessions and a volatile cycle of rising and falling demand. The pain of occasional spikes and the economic damage of price swings is likely to drive investment in alternatives, by consumers and governments, leading to a substitution away from oil in key sectors long before people are ever caught standing at dry petrol stations. Electric car technology and infrastructure is improving rapidly; given enough pain, societies will make the switch, drastically reducing oil demand in the process.

Of course, it isn't easy to define "enough pain"; it might well take a decade of these gyrations to facilitate a meaningful switch away from petrol. The prospect of this kind of difficult transition ought to be enough to get governments to take the issue seriously, whether or not actual peak oil output is imminent.

2 comments

Anonymous   says 4:28 AM

I disagree, while oil production may decline slowly, the increased car user base in China and India and elsewhere will mean significantly less oil for the west. Already in Finland, numbers of mopeds sold have almost tripled in the past two years. Oil prices are hitting hard.

I think the article says much the same thing - doesn't it ?

Post a Comment

Ads

Ads

Statistics

Locations of visitors to this page

blogspot visitor
Stat Counter

Total Pageviews

Ads

Books

Followers

News

Loading...

Blog Archive

Labels

australia (582) global warming (365) solar power (338) peak oil (321) electric vehicles (193) renewable energy (181) wind power (172) ocean energy (155) csp (144) geothermal energy (142) smart grids (139) solar thermal power (133) tidal power (132) coal seam gas (127) nuclear power (122) oil (116) lng (112) geothermal power (111) solar pv (110) china (109) iraq (108) energy storage (105) green buildings (104) natural gas (102) agriculture (85) biofuel (76) oil price (76) smart meters (72) wave power (68) electricity grid (63) energy efficiency (63) uk (63) google (55) coal (53) internet (51) food prices (48) shale gas (48) surveillance (48) bicycle (47) big brother (47) thin film solar (41) biomimicry (38) canada (38) ocean power (37) scotland (36) new zealand (35) air transport (34) algae (34) water (34) queensland (32) credit crunch (31) politics (31) shale oil (31) bioplastic (30) concentrating solar power (30) california (29) geoengineering (28) offshore wind power (28) population (28) cogeneration (27) saudi arabia (27) resource wars (26) arctic ice (25) batteries (25) censorship (25) cleantech (25) woodside (25) bruce sterling (24) drought (24) tesla (24) ctl (23) economics (22) carbon tax (20) coal to liquids (20) distributed manufacturing (20) indonesia (20) iraq oil law (20) limits to growth (20) origin energy (20) brightsource (19) buckminster fuller (19) rail transport (19) ultracapacitor (19) santos (18) ausra (17) exxon (17) lithium (17) cellulosic ethanol (16) collapse (16) electric bikes (16) mapping (16) michael klare (16) ucg (16) atlantis (15) bees (15) geodynamics (15) iceland (15) psychology (15) concentrating solar thermal power (14) ethanol (14) fertiliser (14) al gore (13) ambient energy (13) biodiesel (13) brazil (13) carbon emissions (13) cities (13) investment (13) kenya (13) biochar (12) bucky fuller (12) matthew simmons (12) otec (12) public transport (12) texas (12) victoria (12) chile (11) cradle to cradle (11) desertec (11) energy policy (11) internet of things (11) lithium ion batteries (11) terra preta (11) amory lovins (10) fabber (10) gazprom (10) goldman sachs (10) gtl (10) hybrid car (10) severn estuary (10) tinfoil (10) toyota (10) volt (10) alaska (9) biomass (9) carbon trading (9) distributed generation (9) esolar (9) fuel cells (9) jeremy leggett (9) pge (9) sweden (9) afghanistan (8) antarctica (8) arrow energy (8) big oil (8) eroei (8) floating offshore wind power (8) four day week (8) guerilla gardening (8) linc energy (8) methane (8) methane hydrates (8) nanosolar (8) natural gas pipelines (8) pentland firth (8) relocalisation (8) us elections (8) western australia (8) bloom energy (7) boeing (7) chp (7) climategate (7) copenhagen (7) fish (7) stirling engine (7) vinod khosla (7) airborne wind turbines (6) apocaphilia (6) bolivia (6) ceramic fuel cells (6) cigs (6) futurism (6) jatropha (6) local currencies (6) nigeria (6) ocean acidification (6) saul griffith (6) scenario planning (6) somalia (6) t boone pickens (6) space based solar power (5) varanus island (5) garbage (4) kevin kelly (4) low temperature geothermal power (4) oled (4) tim flannery (4) v2g (4) club of rome (3) global energy grid (2) norman borlaug (2) peak oil portfolio (1)