Thursday, May 22, 2008

Update from the Morons

Mr. Manzi, in a response to a response, humbly suggested it might be worth it to check in with some "morons" who might know something about petroleum production, rather than relying on the word of a highly credentialed professor of Government (I think that's what's called sarcasm. Though I do sympathize with, and share his distrust of, highly credentialed academics). He wrote, "Since I am not a petroleum geologist, I decided to check in with those morons who have actually studied this question. Apparently, Professor Deneen did not bother to read the links I provided to the forecasts from the DOE (estimates peak oil sometime in the 'middle of the current century'), the International Energy Agency (only forecasts out to 2030, with rising production through that date) or OPEC (only forecasts out to 2030, with rising production through that date). So, what if we thought we would reach peak in 2050 (42 years from now), would that change what we should do? How about 2100?"

Well, if we assume that OPEC just gives bogus numbers - and we ought to, if the word of another "moron" like energy expert Matthew Simmons (of VP Cheney's 2001 Energy Commission) is to be believed, then that leaves us with only a few other morons cited by Manzi. According to stories in both the NYT and the WSJ today about one of of his expert "morons" - the IEA - they are in the process of significantly revising their figures.

According to the Wall Street Journal,

The latest supply worries arose after reports Thursday that the International Energy Agency, based in Paris, was considering reducing its assessment of the long-term world supply of crude oil after a study of depletion rates at the world’s 400 biggest fields.

“Clearly this is the issue we have had for a while of an increased deficit in consumption versus production,” said John Kilduff, energy analyst at MF Global in New York. “That’s produced this creep up in the rise in oil prices. The market gets hit on a daily basis.”

The energy agency has long forecast a slow but steady increase in production that would keep pace with demand. Output was projected to reach 116 million barrels a day in 2030, from 87 million barrels a day now.

“We are conducting a major study,” Fatih Birol, the agency’s chief economist, said in an interview Thursday, “and we are going to revise our oil supply prospects.”

“We don’t know the results yet,” he added, which will be conducted “project by project and field by field.”

“But there are difficulties in expanding production,” he said, and the World Energy Outlook 2008 — which will be published in November — will take that into account. The I.E.A. has expressed concerns for some time that the growth of new supplies may not keep pace with demand as oil companies struggle to find new sources of oil.

So, in light of these concerns, I guess I might ask a similar question: "So, what if we thought we would reach peak now or very soon, would that change what we should do? How about 2005?" (that's the date that has been suggested by Kenneth Deffeyes, petroleum geologist and professor emeritus at Princeton University - I guess another moron).

Interesting times.


Anonymous said...

And as oil prices rise, coal comes raging to the forefront. Even marginal mines will be restarted, at great environmental cost. We will all drive "clean" electric cars.

Anonymous said...

2005 or 2050. I'm young enough to think I may be around then, and my future children will face the constraints of that world. It's a shame when 2050 feels like a date beyond the horizon.

Anonymous said...

Well said. Manzi has been extremely selective in his sources.

This is interesting: well-known investing guru Jim Rogers said linchpin OPEC member Saudi Arabia has been fibbing about its oil reserves for years.

"Saudi Arabia has announced for 20 years in a row that they have 260 billion barrels of oil in reserve," Rogers told Money Morning during an interview in Singapore last month. "It’s astonishing. The figure never goes up and it never goes down. They have produced dozens of millions - billions - of dollars of oil in that period of time.

"If you go to Saudi Arabia, you have to wonder: ‘How could this be? How could it be that every year for 20 years in a row, you always have 260 billion barrels of oil in reserve?’ The Saudis say: ‘You either believe us or you don’t.’ And that’s the end of the conversation."