Peak Oil

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In the 1990s and 2000s, people who warned that the Earth was running out of resources often talked about "peak oil". This was a case study in resource exhaustion. US oil production peaked in 1970 at just under 10 million barrels a day, and had been steadily falling ever since. They'd show graphs like this one:

US Oil Production, 1860-2009
(Thousands of barrels per day)

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You see, they said, the US is running out of oil. While consumption continues to rise, production is falling. And it will continue to fall because there is just not much oil left in the ground to recover. In a few decades, at most, it will all be gone.

The oil industry replied that production was not falling because we were running out of oil, but because the federal government would not allow oil to be pumped out of the ground. I wrote an article back in 2008, Bad Movies and Energy, in which I pointed out that the government was marking large areas of the US off-limits for oil drilling, areas that included 85% of our known off-shore reserves, and an astounding 97% of our known reserves on land. Of course it was difficult for oil companies to maintain production levels when it was against the law for them to drill 97% of the known reserves! If the government declared that 97% of US farmland could no longer be used for farming, it's hard to imagine how we could avoid food shortages.

But then a funny thing happened. Let's add a few years to the graph:

US Oil Production, 1860-2015
(Thousands of barrels per day)

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Source: U.S. Energy Information Administration

Production started rising again in 2010, and by 2015 had almost reached the previous peak. I'm writing this in January 2017. As of this writing, data for 2016 is not yet available. But if we didn't set a new record in 2016, it seems likely that we will within the next couple of years.

What happened? In two words, "hydraulic fracturing", or (in one word) "fracking". Fracking is a technique where the oil company injects water, sand, and other chemicals into an oil well at high pressure to force the oil out of shale deposits. (See, for example, How does fracking work exactly?) The technique is not really new. The patent goes back to 1866. (Shooters: A Fracking History.) But like many inventions, there's a big difference between getting the basic idea and making it really practical. Fracking really took off with refinements of the process beginning in the 1980s.

The bigger point here is that arguments that we are running out of some resource are almost always based on two key assumptions: 1. The resources that we have already found are all there is. No new sources will ever be discovered. And 2. The technology to extract resources has now reached its final stage and will never improve any further. But both these assumptions are absurd. One new technology, fracturing, revolutionized the oil and natural gas industry. The lesson to learn is not that when current technology is no longer effective or sufficient that we are all doomed. The lesson is that we have to constantly be searching for new technologies.

I was in a debate once where I said that food and energy production have been continuously increasing with improved technology, and the other person sneeringly replied -- not an exact quote, I don't have a transcript -- "Oh, you're just expecting that some magic new technology will come along and save us." I said, "Yes, I am." So far my expectations have proven correct.

Photo © Calin Tatu | - Operating oil and gas well

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Posted January 16, 2017

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