“The Quest” Questioned #5: Peak Oil = Running Out of Oil?


25 Sep 2011

In Daniel Yergin’s critique of peak oil—in his new book The Quest, and in his articles and interviews elsewhere—he repeatedly equates peak oil with “running out of oil.”

(This is the fifth part of a series on The Quest, covering Yergin’s errors and biases.)

In The Quest, Yergin titled his chapter on peak oil “Is the World Running Out of Oil?” He uses this kind of formulation as well in the main text as well, such as when he writes (p 232): “By the beginning of the twenty-first century, oil prices were once again rebounding. It was around that time that fear of running out of oil began to gain prominence again, for the fifth time.”

And he used it the same kind of wording in a book excerpt the Wall Street Journal, and he repeated it in a video interview with the Wall Street Journal and in a Q&A with McClatchy.

Yergin seems to have been extremely successful in getting others to think about peak oil the same way—even in publications that should know better.

In a review of Yergin’s book in MIT Technology Review, magazine’s editor described peak oil as “the idea that the world is on the verge of running out of oil.” The New York Times’ review describes peak oil as “the idea that the world’s supply is rapidly running out.” In the journal Nature, the review by energy expert Vaclav Smil says Yergin “presents ample evidence to counter the notion that we are running out of oil.”

The problem with equating peak oil with “running out” is that it gives the impression that the world’s oil wells will soon go dry, and suddenly there will be no oil left. But I’m not aware of anyone even half-reputable who has that in mind when they talk of peak oil.

Instead, the idea is that production will at some point reach a maximum, for a combination of reasons, including geology, economics, and politics. And then later production will decline. Although this is often referred to as “peak oil theory,” it’s not a theory—it’s happened in the U.S. Production reached its all-time high of 9.6 million barrels a day way back in 1970, and has been declining, decade after decade, ever since.

But this decline takes a long time. Even the trend of the past few decades continues, the U.S. will still be producing oil for at least another 100 years.

For the whole world, if it is at peak oil production now, it has taken 150 years to reach this point, and the decline back to near-zero production of crude oil would take at least a similar period of time. Nobody credible, as far as I’m aware, has claimed that we will soon “run out of oil.” The issue, instead, is when we will reach a turning point, in which production no longer goes up and up, as we’ve gotten used to over the century-and-a-half-long age of oil.

(Here’s a good primer on the concept of peak oil.)

A number of writers deserve credit for not simply parroting Yergin’s formulation—including Foreign Policy‘s Steve LeVine writing in the San Francisco Chronicle, and Michael Levi blogging at the Council on Foreign Relations. Interestingly, a review of the book in the Wall Street Journal, written by a scholar at the ultra-conservative American Enterprise Institute, does manage to get the idea of peak oil right—calling it “the notion that world-wide production is going into terminal decline“—even while dismissing the possibility.

Why does this matter? People like Yergin characterize “peak oil” as “running out”—but when we look around and see that the U.S. is still producing a lot of oil (we’re still #3 in the world, behind Russia and Saudi Arabia), then it seems like the peakists don’t know what they’re talking about. Clearly oil isn’t going to dry up completely in the next decade or so.

What’s more, Yergin’s over-simplification spills over to distort what intelligent people have said about resources, even when they weren’t specifically talking about peak oil.

Take for example how Yergin describes comments by Hyman Rickover, a nuclear physicist known as the father of the nuclear submarine, and generally regarded as extremely brilliant.

In the opening pages of his book, Yergin describes a 1957 talk by Rickover, titled “Energy Resources and Our Future,” and claims “Rickover’s central point was that fossil fuels would run out sometime after 2000—and most likely before 2050.”

It’s strange that Yergin pulls a few quotes from Rickover’s speech—but then when it comes to Rickover’s central point, Yergin paraphrases rather than quoting. So I’ll quote Rickover’s speech (which was reprinted in full in a newspaper in 1960) to show he was saying something considerably different from what Yergin seems to think.

Here’s what Rickover actually said:

… the most significant distinction between optimistic and pessimistic fuel reserve statistics is that the optimists generally speak of the immediate future—the next twenty-five years or so—while the pessimists think in terms of a century from now. A century or even two is a short span in the history of a great people. It seems sensible to me to take a long view, even if this involves facing unpleasant facts.

For it is an unpleasant fact that according to our best estimates, total fossil fuel reserves recoverable at not over twice today’s unit cost, are likely to run out at some time between the years 2000 and 2050, if present standards of living and population growth rates are taken into account. Oil and natural gas will disappear first, coal last. There will be coal left in the earth, of course. But it will be so difficult to mine that energy costs would rise to economically intolerable heights, so that it would then become necessary either to discover new energy sources or to lower standards of living drastically.

I underlined the part that Yergin mischaracterized, and quoted at length to show that Rickover was issuing a thoughtful warning. What Rickover was saying was that we’d run out of the cheap stuff around 2000—and that seems about right.

This is a more nuanced idea than simply “running out”—but it’s not all that complicated, and should be easy to grasp. It seems, though, that Yergin has an extreme bias against any kind of notion of scarcity, so that whenever someone presents an idea like this, he caricatures it as simply “running out.”

Yergin later spends five pages on a brief biography of Rickover, telling the tale of how he became a driving force behind the development of America’s nuclear power plants, and generally putting him in a positive light. So it’s a bit mystifying why he distorts what Rickover said about fossil fuels. Yergin makes him sound like he was either extremely gloomy or an idiot.

To compound the problem, others have repeated what Yergin said. David Biello’s review on Scientific American’s website repeats this bit about Rickover supposedly claiming we’d run out of fossil fuels between 2000 and 2050, as does Fareed Zakaria’s review in the New York Times’  Sunday book section.

At least Yergin didn’t mangle recent statements from Fatih Birol, the chief economist at the International Energy Agency (IEA).

In The Quest, Yergin says (p 271) the IEA “operates as a kind of ‘energy conscience’ for national governments,” since it “provides continued monitoring and analysis of energy markets, policies, technologies, and research.”

In his book, Yergin generally has nice things to say about the IEA. Yet he seems uninterested in the series of warnings that Birol has been issuing for the past few years.

For example, when the IEA published its last big annual report, the World Energy Outlook in November, Birol told me, they have concluded “the age of cheap oil is over.” This has huge implications, he said. “If the consuming nations do not make major efforts to slow down the oil demand growth, we will see higher oil prices, which we think is not good news for the economies of the consuming nations.”

Birol has been saying the same kinds of things for the past few years—like this warning he wrote in 2008 for the UK newspaper The Independent.

And in April, Birol told the Australian Broadcasting Corporation that world crude oil production reached its peak in 2006. That is, peak oil is here and now.

Yet Birol does not show up once in The Quest. Yergin’s book is very up-to-date, including big events of 2011 such as the Fukushima disaster, the killing of Osama Bin Laden, and the fractious OPEC meeting. So he easily could have said something about Birol’s statements, which I imagine he’s aware of.

In a couple of weeks, I’m going to go to hear Yergin speak at one of the stops on his book tour, and I’m going to ask him what he thinks about Fatih Birol’s statements. Birol has a much better claim, I think, to being an expert on oil supplies than Yergin does.

What I want to know is: Does Yergin simply think that Birol is wrong about the end of cheap oil, and about crude oil production reaching its peak in 2006? Or does Yergin have some way of trying to reconcile their views?

2 Comments

  1. C. Paul Davis had this to say, on 30 September 2011 | Permalink

    This my second post.

    I have read The Prize and I am now reading The Quest. I have also read Mr. Inman’s five posts.

    Daniel Yergin a good historian writer and I enjoy reading what he writes about the history of the oil industry in The Prize and more on the history on the world in The Quest, but when it comes to Peak Oil Daniel Yergin comes up short and so wrong about so many things about Peak Oil. In my opinion he is not to be believed.

    Paul Davis

  2. Mason Inman had this to say, on 30 September 2011 | Permalink

    Thanks, Paul, for your post. I agree completely.

    But given some of the mistakes in Yergin’s book, I’m going to double-check anything he says before I would repeat it in anything I write, even if it’s in Yergin’s bread-and-butter area of the political side of the oil industry.

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bookshelf

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
Zeitoun
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


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