“The Quest” Questioned #1: Peak Oil Projection Was Far Off?

17 Sep 2011

Daniel Yergin, a Pulitzer Prize-winning historian and energy analyst, is one of the world’s greatest optimists about oil supplies. In “There Will Be Oil“—his article in the Wall Street Journal to plug his new book, The Quest—Yergin sums up a chapter of his book, the one about fears that the world will soon reach its peak of oil production. Yergin argues, however, that “on a global view, Hubbert’s Peak is still not in sight.”

But the arguments in his article—and in his 800-page book—are full of gaping holes, so I’m going to dedicate a number of blog posts to sticking my head into a number of them. This post is the first in the series.

A bit of background: The idea of peak oil is that oil supplies are limited—they are not infinite, and not regenerating themselves anywhere near the speed at which we’re using them up—so production can’t go up and up forever. At some point, production will have to reach a peak, whether we like it or not. It’s possible that we would choose to give up on oil well before we hit any limits to supplies, but there’s no sign that’s happening.

So if we say that oil production could reach a peak despite our best intentions, the big question is: When would this happen? The timing of the peak is a huge issue, since it marks a turning point, from having more and more each year to coping with less and less. Having a way to predict when this will happen, even roughly, would be a huge benefit in planning where we’ll get more oil or alternatives. (Remember: oil is still the world’s top energy source, above coal and gas.)

The most prominent peak oil forecasts came from a geologist named M. King Hubbert, who worked at Shell for two decades, and who made a well-known prediction in 1956 that U.S. oil production would reach a peak around 1965 to 1970. This ran counter to what most of the industry was saying at the time, and many tried to shoot Hubbert down. But after the OPEC oil embargo of 1973, the U.S. fell into an energy crisis, and wasn’t able to boost its production back to earlier levels, even after furious drilling.

Yergin tells a version of this story about Hubbert’s prediction in his book, but doesn’t give Hubbert much credit for predicting the date of the peak. “Hubbert got the date right, but his projection on oil supply was far off,” Yergin writes on page 236.

But the numbers he states in the book unfairly make Hubbert’s prediction sound worse than it was. Yergin’s argument is undermined by his own company, CERA, in their 2006 report “Why the Peak Oil Theory Falls Down.” Here’s a graph from that report, comparing Hubbert’s prediction (made in 1956) and what actually happened.

(I pulled this graph from a blog post on a Chapel Hill, NC newspaper’s website, but I have seen the CERA report and can confirm that this same graph is in there.)

I’d say Hubbert’s prediction (the white triangles) seems pretty spot on, compared with the actual production for the lower 48 states (green squares)—especially considering he made the prediction in 1956, when production was still on the rise.

But CERA nitpicks, saying that actual production in 2005 was 66% higher than what Hubbert forecast—implying that Hubbert’s technique isn’t useful. That seems like bad enough hair-splitting.

In The Quest, though, Yergin goes a step further, comparing Hubbert’s prediction with the red line. The red line includes Alaska’s oil fields, which had yet to begin producing at the time of Hubbert’s forecast, so he intentionally left them out and stuck to the lower 48 states. Yet Yergin writes (p 236): “By 2010, U.S. production was four times higher than Hubbert had estimated.” This does make Hubbert sound far off the mark—but the graph above tells a completely different story.

Hubbert did get the overall shape and timing of the peak and decline correct, though, and I think he deserves a lot of credit for that—but Yergin seems to only begrudgingly accept this. He writes (p 235) that in the 1970s, “Hubbert appeared more than vindicated.”

But why did Hubbert only “appear” vindicated? Was his strikingly accurate forecast just luck? Yergin doesn’t say so directly, but he implies that he thinks it was luck, since he argues that Hubbert’s method doesn’t work in general. More on this in a later post.

UPDATE: See also “‘The Quest’ Questioned #2: One Giant Oil Field?


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books I've read on failure & grace

The World Without Us
The Last Oil Shock: A Survival Guide to the Imminent Extinction of Petroleum Man
A Paradise Built in Hell: The Extraordinary Communities That Arise in Disaster
Hell and High Water: Global Warming--the Solution and the Politics--and What We Should Do
The Worst Hard Time: The Untold Story of Those Who Survived the Great American Dust Bowl
The Tipping Point
Three Cups of Tea: One Man's Mission to Promote Peace... One School at a Time
The Upside of Down: Catastrophe, Creativity and the Renewal of Civilization
Out of Poverty: What Works When Traditional Approaches Fail
The Little Ice Age: How Climate Made History, 1300-1850
Confessions of an Eco-Sinner: Tracking Down the Sources of My Stuff
Deep Economy: The Wealth of Communities and the Durable Future
The Geography of Bliss: One Grump's Search for the Happiest Places in the World

Mason's favorite books »