Monbiot says peak oil predictions wrong

July 4th, 2012 at 2:00 pm by David Farrar

Kudos to for telling the truth, as reported in the Guardian:

 The facts have changed, now we must change too. For the past 10 years an unlikely coalition of geologists, oil drillers, bankers, military strategists and environmentalists has been warning that peak oil – the decline of global supplies – is just around the corner. …

Some of us made vague predictions, others were more specific. In all cases we were wrong. In 1975 MK Hubbert, a geoscientist working for Shell who had correctly predicted the decline in US oil production, suggested that global supplies could peak in 1995. In 1997 the petroleum geologist Colin Campbell estimated that it would happen before 2010. In 2003 the geophysicist Kenneth Deffeyes said he was “99% confident” that would occur in 2004. In 2004, the Texas tycoon T Boone Pickens predicted that “never again will we pump more than 82m barrels” per day of liquid fuels. (Average daily supply in May 2012 was 91m.) In 2005 the investment banker Matthew Simmons maintained that “Saudi Arabia … cannot materially grow its oil production”. (Since then its output has risen from 9m barrels a day to 10m, and it has another 1.5m in spare capacity.)

Peak oil hasn’t happened, and it’s unlikely to happen for a very long time.

report by the oil executive Leonardo Maugeri, published by Harvard University, provides compelling evidence that a new oil boom has begun. The constraints on oil supply over the past 10 years appear to have had more to do with money than geology. The low prices before 2003 had discouraged investors from developing difficult fields. The high prices of the past few years have changed that.

This is why it can be very dangerous to try and second guess these things. The environmental movement has a history of getting it wrong time after time, because they don’t understand how people respond to incentives.

Maugeri’s analysis of projects in 23 countries suggests that global oil supplies are likely to rise by a net 17m barrels per day (to 110m) by 2020. This, he says, is “the largest potential addition to the world’s oil supply capacity since the 1980s”. The investments required to make this boom happen depend on a long-term price of $70 a barrel – the current cost of Brent crude is $95. Money is now flooding into new oil: a trillion dollars has been spent in the past two years; a record $600bn is lined up for 2012.

As the price of oil and petrol rises, it will both lead to investment in alternative technologies and lead to greater drilling in previously unprofitable areas.

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34 Responses to “Monbiot says peak oil predictions wrong”

  1. krazykiwi (9,189 comments) says:

     For the past 10 years an unlikely coalition of geologists, oil drillers, bankers, military strategists and environmentalists has been warning that peak oil – the decline of global supplies – is just around the corner.

    Nonsense. Environmentalists outnumbered the others by 50:1. The wheels are falling off their fear machine.

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  2. leftyliberal (642 comments) says:

    “As the price of oil and petrol rises, it will both lead to investment in alternative technologies and lead to greater drilling in previously unprofitable areas.”

    I’ve never heard a prediction of Peak oil that didn’t include dollars in the equation. The whole idea behind Peak oil is that at some point we hit peak production _at a given price_ and the only way production increases is with sufficient price rises. Eventually the price rises get to the point where it’s no longer profitable to extract remaining oil as newer forms of energy give better bang for your buck. This is exactly what we are seeing, which appears to validate the basic premise, no?

    Agreed that the question of when things happen is crystal-ball stuff for the most part – any estimates are going to be based on incomplete data for a start – see the Shell debacle a while back where they were found to be overstating their reserves.

    [DPF: That is a totally new definition of peak oil. I've never ever heard anyone else say peak oil is linked to a certain price point. It is about terminal decline of supply]

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  3. flipper (3,552 comments) says:

    In respect of pricing, the use of biofuels (at the expense of food production) has also been a disaster (also in respect of food production) for no less a “genius” than Obamination.

    Obama DIRECTED that the US Navy switch from petroleum based fuels to biofuels. It was disclosed yesterday that the US Navy pays $US26 a US gal for bio fuel. Petroleum fuel for the navy costs $US3 per gallon.

    DUMB!

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  4. RRM (9,446 comments) says:

    Funny, I recall reading a lot of environmental stuff about “the end of cheap oil..” in around 2004-2005. Not so much the end of all oil…

    Seeing as the pump price of 95/ 98 has pretty much doubled since then the fears seem to have some foundation in reality.

    I would like to see someone develop a crate re-power package for ordinary FWD cars.. consisting of a stack of batteries mounted on top of about a 150 horsepower electric motor, and an electronic ‘brain’ unit to control it. The whole thing would need to have about the dimensions of a DOHC 4-cylinder engine + auxiliaries + gearbox. It would have clever adjustable mounting flanges to bolt into any car’s existing engine and gearbox mounts, and clever multi-fit drive axle flanges to bolt to the car’s existing half shafts.

    If someone could sell those for a few thousand dollars then the environmentalist’s dream of getting half the population driving electric cars would come true almost overnight…imho!

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  5. tom hunter (4,400 comments) says:

    I really should ignore GD threads some days so ….

    I laughed at this reference back to the economist, Julian Simon:

    There seemed to be a bizarre reverse-Cassandra effect operating in the universe: whereas the mythical Cassandra spoke the awful truth and was not believed, these days ‘experts’ spoke awful falsehoods, and they were believed. Repeatedly being wrong actually seemed to be an advantage, conferring some sort of puzzling magic glow upon the speaker.

    As with Paul Ehrlich, it’s very important to note that these people’s predictions were wrong not because of some sign inversion in their mathematical models, but because their assumptions were wrong in the first place. You can see this in action in this old Kiwiblog thread on Peak Oil, where long-banned idiot “Rogernome” shows the same ignorance.

    And they’re still wrong. In particular Monbiot, like Ehrlich before him, simply had no understanding of the interplay between economics and technology – but thought he did. Which means that in the future we will simply get different wrong predictions about different subjects from them.

    I’ve never heard a prediction of Peak oil that didn’t include dollars in the equation.

    You should take a look at that old thread. Most of the argument is around physical constraints and money is only mentioned in the sense that it is argued that no amount of money will make any difference.

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  6. bhudson (4,734 comments) says:

    toad will be thrilled!

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  7. RRM (9,446 comments) says:

    (Also the wife’s little old Ford Laser would go quite nicely if it had about 150 brake under the bonnet…)

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  8. flipper (3,552 comments) says:

    bhudson…
    Yep.
    Add chrissie wussy and milky et al to toady….

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  9. mikenmild (10,686 comments) says:

    ‘Kudos to George Monbiot for telling the truth’
    Nice framing. Obviously his previous statements were deliberate lies.

    [DPF: Not at all. I am sure he has always held honest belief. It is rare for someone to say that they were wrong in their beliefs]

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  10. tom hunter (4,400 comments) says:

    “the end of cheap oil..”

    But even that argument fails if you look at the price of oil in “constant” dollars, or even better, in terms of the price of gold. On that basis even oil at $US 100/bbl has not budged much in four decades, even with two “oil shocks” involved where prices doubled or trebled in less than a year.

    Moreover, take a look at these graphs from Infometrics showing that the price of petrol in NZ since 1981 – even with all the effects that have recently pushed oil to historic nominal high prices – is still lower than the mid-1980′s. Of course I would not be surprised if the Greens were to simply ignore what that chart is telling them and use it to argue that fuel taxes can (and even must) be pushed much higher.

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  11. tom hunter (4,400 comments) says:

    It is rare for someone to say that they were wrong in their beliefs.

    Now come on DPF, that’s a very cruel jibe at milky.

    But aside from that I agree with you: Mr Monbiot’s comments on this matter were those of an ignorant, deluded, hysterical, controlling old left-wing nutter.

    But they weren’t lies.

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  12. hj (6,350 comments) says:

    Tom Hunter says:

    “And they’re still wrong. In particular Monbiot, like Ehrlich before him, simply had no understanding of the interplay between economics and technology – but thought he did. Which means that in the future we will simply get different wrong predictions about different subjects from them.”
    ……………..
    Julian Simon says that when prices go up technology discovers substitutions or invents something better. What we are seeing is fossils fuels that need more fossil fuel and produce more pollution (CO2).

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  13. hj (6,350 comments) says:

    The effect of oil is analogous to someone with angina in so far as whenever economic growth reaches a certain point oil prices will trigger recession.

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  14. Grendel (951 comments) says:

    RRM, how much of the increase in petrol from 95/98 to now is simply more taxes?

    it would be interesting to see what the rise in actual petrol cost is due to the petrol, rather than the rise in cost of petrol due to increased taxes.

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  15. KH (687 comments) says:

    We can dance around this in lots of ways.
    But you know – there is no little gnome, under the ground, refilling the oil pockets as we empty them out.
    There is a fixed amount there.
    Me – I am all for Hydrogen fueled Internal combustion engines. Hydrogen sourced from solar powered electricity.

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  16. Scott Chris (5,878 comments) says:

    But even that argument fails if you look at the price of oil in “constant” dollars, or even better, in terms of the price of gold.

    In terms of the price of gold? Come on tom, you are kidding right? Apart from which these two gentlemen would disagree with you:

    All the easy oil and gas in the world has pretty much been found. Now comes the harder work in finding and producing oil from more challenging environments and work areas. ”

    — William J. Cummings, Exxon-Mobil company spokesman, December 2005

    “ It is pretty clear that there is not much chance of finding any significant quantity of new cheap oil. Any new or unconventional oil is going to be expensive. ”

    — Lord Ron Oxburgh, a former chairman of Shell, October 2008

    Not that I would go as far as to say they’re truth tellers as Farrar so hastily trumpets. Easy to extrapolate what our future demand will be, much harder to determine the true extent of the reserves.

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  17. krazykiwi (9,189 comments) says:

    … and produce more pollution (CO2).

    CO2 is not a pollutant. That’s a lie perpetrated by eco-loons the world over, then declared to be truth the the EPA. CO2 is essential to life on earth.

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  18. Scott Chris (5,878 comments) says:

    Here’s a graph. Read it how you will.

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  19. Manolo (13,358 comments) says:

    Monbiot’s statements will make no difference to the followers of AGW, those Luddites who put Gaia above all.
    The same people who would rather see human being extinct or living in poverty than moving forward with progress.

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  20. tom hunter (4,400 comments) says:

    I’m well aware of the issues with gold, given it’s boom and bust price history. But I was looking at it’s long-term average as simply another way of viewing the devaluing of the $US dollar. That aside, given that the US dollar has been so severely inflated over the past few decades and oil is priced in those dollars, are you really sure you want to make the argument against the constant dollar view? You’d be silly if you did since it’s a very basic fact in economic history.

    As far as your other quotes are concerned I’d simply point to the dates on them, and the fact that even “experts” in a business can sometimes not understand the economics of their own industry. This is a dead argument for the left and the environmental movement.

    And as one final example of not understanding the connection, here’s an article on how the US is “accidently” achieving the targeted Kyoto GHG emissions (1990 levels). The US has done so because natural gas has been ahead of oil on the fracking curve, leading to massively expanded reserves and huge reductions in price. That, in turn, has lead to a rapid replacement of coal-fired electricity plants with natural-gas fired plants:

    As of April, gas tied coal at 32% of the electric power generation market, nearly ending coal’s 100 year reign on top of electricity markets. Let’s remember the speed and extent of gas’s rise and coal’s drop: coal had 52% of the market in 2000 and 48% in 2008. …

    Shale gas production has slashed carbon emissions and saved consumers more than $100 billion per year. Truly astonishing!

    It is, and it’s happened in a country that stiffed the Kyoto Treaty and the Democrats Cap and Trade legislation. It should be constantly thrown in the face of those left-wingers (middle, far, etc) who constantly scoffed at the claim that capitalism and it’s “markets” could not be relied upon to achieve such reductions. Government regulations – lots of them, in great prescriptive detail – would be needed.

    Just as a local example: can you imagine any left-winger or environmentalist accepting the argument that the best way for the US to hit the Kyoto targets would be to dramatically reduce the price of natural gas? Reducing GHG’s by reducing the price of a fossil fuel – uh huh!

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  21. beautox (430 comments) says:

    I’d recommend people read this site:

    http://physics.ucsd.edu/do-the-math/

    It’s not from a greenie. The writer is a physicist, but he makes some powerful points. One is that the world cannot continue to grow it’s energy use at even 2.3% a year, otherwise we will be in for some SERIOUS global warming. NOTHING TO DO WITH CO2 or rubbish like that.

    No, it’s because the only way to rid the earth of excess energy (ie waste heat) is through radiation into space, and if you do the math you find that in a little over 400 years from now the planet’s surface temp will be 100C, the boiling point of water.

    See http://physics.ucsd.edu/do-the-math/2011/07/galactic-scale-energy/

    Now I know we won’t live that long, but 400 years is nothing historical terms.

    Regarding peak oil, ok so the date might be out, but the point is that oil and fossil fuels won’t last forever. If you look at the graph Scott Chris linked to you see that we have consumed more oil than we have discovered since 1990.

    The point is that fossil fuels are like an inheritance – a one time bonus that’s let the world grow it’s economies (we all have access to something like 300 full time slaves due to oil).

    And replacing oil is hard. Very very hard. I suggest those with basic math read the site I linked to. It’s very eye opening.

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  22. Scott Chris (5,878 comments) says:

    Just as a local example: can you imagine any left-winger or environmentalist accepting the argument that the best way for the US to hit the Kyoto targets would be to dramatically reduce the price of natural gas? Reducing GHG’s by reducing the price of a fossil fuel – uh huh!

    The argument doesn’t work for environmentalists because the relative cost of renewables becomes even more expensive. Cap and trade worked for CFCs and sulphur dioxide. Can’t see why it wouldn’t work for carbon too.

    [krazykiwi] CO2 is not a pollutant.

    That’s like saying a plant is not a weed. To my neighbour her agapanthus is a beautiful flower, but I can tell you that the ones blocking my ditch are fucking weeds.

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  23. Ryan Sproull (7,028 comments) says:

    Fucking.

    Agapanthus.

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  24. RRM (9,446 comments) says:

    krazykiwi (8,058) Says:
    July 4th, 2012 at 3:46 pm

    CO2 is not a pollutant. That’s a lie perpetrated by eco-loons the world over, then declared to be truth the the EPA. CO2 is essential to life on earth.

    Atmospheric CO2 is a greenhouse gas. Therefore industrial emissions of bulk CO2 into the atmosphere constitute pollution.

    It’s nice that plants are attempting to mitigate the problem by consuming some of the CO2.

    But take a look at Lake Rotorua if you think “plant food is good, therefore adding any a mount of extra plant food is all good!”

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  25. tom hunter (4,400 comments) says:

    The argument doesn’t work ….

    In other words you’d have sooner stuck with beating the renewables horse while watching the CO2 emissions levels rise, than accepting a counter-intuitive compromise.

    As far as I’m concerned the NG route continues to build wealth until we reach other tipping points in energy production where we can afford them: thorium nuclear reactors being my favourite, with the ever-receding wank of nuclear fusion still in view. At which point we will see NG fueled power undergo the same dramatic reductions that coal has been experiencing. But that argument – like the one I gave above – has long been dismissed as a religious faith in capitalism.

    Cap and trade worked for CFCs and sulphur dioxide. Can’t see why it wouldn’t work for carbon too.

    Emphasis on the “Can’t”. Apparently twenty years worth of abject failure with Kyoto internationally, and numerous national failures on this approach have not dampened your enthusiasm for it. That would be cute if you were a goldfish in front of a mirror.

    The approach worked for CFCs because there was already a ready replacement at hand and the extra cost was temporary, not a huge marginal increase and could be easily amortised. In the case of sulphur dioxide it’s a small bi-product from burning coal and oil and did not impact a choice of fuel use.

    Niether of those things are true in the case of CO2 (and can we please stop using the scientifically dumb use of the word “carbon” – if it was just carbon there would not be an issue). As several decades of subsidy and research have demonstrated, renewable energy sources just cannot cut the mustard as a ready replacement – not because of the price alone but because of the price-performance ratio for large-scale energy production – and certainly not as the replacement or even a decent supplement for existing energy sources. And CO2 is not a small bi-product of current energy production – it is the main product aside from the energy itself and as such it’s negation or elimination implies a large, costly process, whether geophysical, mechanical or political. There is such a thing as low-sulphur coal (or oil), but no such thing as low-CO2 coal (or oil, or gas), so the only way Cap and Trade can work in that area is by simply suppressing fuel use across the board. As you imply, even NG use would have to eventually be suppressed.

    I understand that you (and a huge proportion of the rest of the environmental and left-wing movement) “Can’t” accept either that argument or two decades plus of demonstrated failure for the opposing argument – but that’s okay, it will not change the technical-economic facts on the ground.

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  26. wat dabney (3,671 comments) says:

    RRM,

    If you insist that CO2 is a pollutant then the word ceases to have any meaning, since you can apply it to anything and everything. You are using the term as a pejorative.

    So CO2 is not a pollutant, it is indeed plant food – a positive externality to burning fossil fuels for power. Here is a nice picture of what increasing levels of CO2 do for rice production:

    http://wattsupwiththat.com/2012/06/30/memo-to-doubtersi-was-tempted-to-say-deniersco2-is-plant-food/

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  27. alex (301 comments) says:

    Wonderful, we have enough oil to complete the job of climate change.

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  28. EAD (599 comments) says:

    Wrong about ‘acid rain’.
    Wrong about the ‘Population Bomb.’
    Wrong about bird flu’.
    Wrong about the Millenium Bug.
    Wrong about Solar energy panels.
    Wrong about Wind power.
    Wrong about Mad cow disease.
    Wrong about salmonella egg poisoning.
    Wrong about vanishing ice caps.
    Wrong about vanishing polar bears.
    Wrong about vanishing Himalayan glaciers.
    Wrong about Dutch sea levels.
    Wrong about Tuvalu vanishing under the pacific.
    Wrong about ocean acidifictaion.
    Wrong about the Great Barrier Reeef’s imminent ‘collapse’.
    Wrong about warmer oceans ‘killing’ coral.
    Wrong about banning DDT for malaria.
    Wrong about vanishing snows of Killimanjaro.
    Wrong about palm oil.
    Wrong about Biofuels.
    Wrong about denying Africa cheap energy via coal power stations.
    Wrong about CO2 causing catastrophe.
    Wrong about positive feedbacks.
    Wrong about ‘Runaway Warming’.
    Wrong about the sun being of ‘minor significance’.
    Wrong about cloud being ‘too complex to bother including in our computer models’.
    Wrong about the Hockey Stick.
    Wrong about Hiding The Decline.
    Wrong about the ‘evidence’ for AGW.
    Wrong about suppressing unwanted data.
    Wrong about adjusting the data.
    Wrong about CO2 correlation with warming.
    Wrong about the Carbon Credit Exchange.
    Wrong about Europes Emmissions Trading Scheme.
    Wrong about Australia’s Carbon Tax.
    Wrong about ‘The Green Deal.’
    Wrong to dismiss millions of years worth of climate eveidence for the sakes of 25 years worth of warming.
    Wrong to suppress peer review.
    Wrong about ‘Climategate’ not being important – it single-handedly killed AGW credibility.
    Wrong about The Climategate ‘Inquiries’.
    Wrong about An Inconvenient Truth.
    Wrong about ‘Peak Oil’.
    Wrong about ‘Man Made Global Warming.’

    Other than that the eco-greens were spot on

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  29. Scott Chris (5,878 comments) says:

    The approach worked for CFCs because there was already a ready replacement at hand and the extra cost was temporary, not a huge marginal increase and could be easily amortised. In the case of sulphur dioxide it’s a small bi-product from burning coal and oil and did not impact a choice of fuel use.

    Okay, that’s a reasonable argument. Let’s just make it a carbon tax then. (btw the contraction of CO2 to carbon is generally accepted and understood so you may as well accept it too. Help keep the blood pressure down.)

    And to be honest, I think more emphasis should be place on using more efficient hydrocarbon fuels in the short term, especially diesel which has a 40% thermal efficiency as compared to petrol which is around 25%. Apparently VW are developing a diesel hybrid that promises a fuel economy of 157mpg!

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  30. krazykiwi (9,189 comments) says:

    Atmospheric CO2 is a greenhouse gas. Therefore industrial emissions of bulk CO2 into the atmosphere constitute pollution

    Why?

    Let me say it again: CO2 is not a pollutant. Attempting to claim that is it on the basis that too much of something could be dangerous would similarly render water, travel and the Greens all toxins

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  31. libertyscott (356 comments) says:

    My response always to peak oil enthusiasts (let’s not pretend that they didn’t like the idea of being doomsayers) has been to ask them:

    Have you invested all your savings in oil futures?
    If not, why not?

    For if you want government to believe your predictions and spend other people’s money in response, surely you’d put your own money where your mouth is to make a fortune, and then you can do far more good than you ever can campaigning.

    Of course, none say yes.

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  32. Other_Andy (2,286 comments) says:

    Yes RMM, CO2 is a pollutant.
    That why greenhouse farmers pumping it in their greenhouses.
    They want to kill their plants.

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  33. hj (6,350 comments) says:

    Wrong about CO2 and thhe greenhouse effect.
    Wrong about rising temperatures
    Wrong about… (squawk)…

    Tell that to the people who see their houses go up in smoke in super hot temperatures :
    http://www.guardian.co.uk/environment/2012/jul/03/us-extreme-summer-future-climate-change

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  34. oildepletionz (1 comment) says:

    George “the reverse Cassandra” Monbiot has been sucked in by the US- centric shale oil bonanza hype. Simple as that

    David Strachan sums up the reality of “peakonomics” here..
    http://www.davidstrahan.com/blog/?p=1562
    “Slower oil production combined with intensifying competition among consumers may soon produce oil prices so high they kill all prospect of sustained economic growth. The outlook is for repeated oil price spikes alternating with deep recessions, regardless of when global output actually peaks. Welcome to the last oil shock.”

    If Monbiot had researched a little more thoroughly he would have discovered the issues which are at the heart of the peak oil debate

    First is that the rapid depletion of older existing oil fields is what is driving the oil price upward. As a result of depletion an IMF paper predicts prices to double by 2020

    Second the so-called shale oil “bonanza” is not backed up by hard data. The IMF team expects total oil production (including shale and tarsands) to grow at no more than 0.9% per year for the next decade, way below the historical average of 1.5%-2%, and therefore insufficient to sustain economic growth.

    Third … non-OECD oil consumption has risen around 4.8 million barrels per day since 2008, while OECD consumption has fallen by almost exactly the same amount. “China is bidding away the OECD oil supply” says oil analyst Mr Steve Kopits quoted in in the Strachan article, “and recessions are the mechanism by which that oil is being transferred from weaker economies to faster growing economies”.

    Fourth …major oil producers such as Russia and Saudi Arabia are canabalising their own supply to meet soaring internal demand, leaving less and less for export. Saudi Arabia will be a net importer by 2038 if current trends continue.

    MED industry-supplied data shows NZ domestic production has already begun a steep decline and will be near zero by 2020. This will force NZ to be ever more dependent on ever more expensive oil imports at the worst possible time in the next decade. Even if we found a super field tomorrow it would take a decade to bring it to full prodcustion and we would still pay the international oil price. Meanwhile China and India are already taking an ever larger slice of available net world exports. How exactly is NZ going to secure a share of this diminishing market? Send a frigate?

    Finally Monbiot glosses over the recession-inducing impact of even $US80-$90 a barrel oil. Economic peak oil is the point at which the cost of supply exceeds the price economies can pay without destroying growth at a given point in time. For mature economies such as in the OECD that unaffordable price and trigger point for recessions is around $US80 – $US90 a barrel, or historically when 4% – 5 % of GDP is spent on oil. 10 of the last 11 global recessions are linked to oil supply/ price shocks ( US economist James Hamilton ) and the current recession and that in 2008 have oily fingerpints all over them.

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