Wednesday, March 05, 2008

Plenty of oil?

This oil industry spokesman, Mr Nansen G. Saleri, argues the world has plenty of oil to the end of the century and that $100 barrel prices will stimulate the types of innovations that will bring new supplies on board.

I don’t have enough oil industry knowledge to evaluate these claims - they seem to depend on the viability of improving extraction technologies and utilising alternative sources of fuel such as tar sands. Some claim alternatively that the point of peak oil production has already been reached. But I am intrigued that Exxon-Mobil – the largest Fortune 500 company – is terrified of a collapse in fuel prices and is sticking to oil as a core product. It is not diversifying into other energy resources. The Economist in 2006 made similar claims to Saleri as did very knowledgeable economists with good information about the oil industry such as Morris Adelman in 2004.

Supposing Saleri and the other 'optimists' are right, the case for investing in renewable and nuclear power will need to be much more firmly based on carbon emission issues. Carbon taxes on liquid fuels will need to be huge to cut carbon emissions from this source. There will also presumably be many red faces (and much red ink!) in the public and private sector components of the 'alternative fuels' market. Oil depletion will not act as a natural constraint on liquid-fuel-induced carbon emissions and the imperative to switch towards coal-fired electricity generation will be weaker. It will be a very different world.

6 comments:

James Dudek said...

From what I understand there are plenty of oil wells that had remaining oil deposits that were deemed too expensive to extract. As the price of oil increases these abandoned oil wells become cost-effective to restart production in.

Additionally, there is plenty of Tar Sand in the politically calm country of Canada, which as the price of oil increase also becomes more cost effective to extract.

Wikipedia link:
http://en.wikipedia.org/wiki/Oil_sands

derrida derider said...

Yep, I've always regarded the "peak oil" thesis dubiously. If we're willing to pay the price, both at the pump and environmentally, there's an awful lot of oil sources still in the ground.

The point is, though, that we haven't been paying the right price - something we should and, sooner or later, will fix.

robert merkel said...

count me in the peak oil skeptic camp as well.

There are just too many abundantly available backstops even if petroleum-based oil becomes scarce.

Anonymous said...

It seems to me that the concept of Peak Oil is only a matter of when, not if. Oil is millions of years old and is not being replenished. Common sense says we will definitely run out some day. It is not water which recycles itself, via evaporation/condensation. But whether Peak Oil is being used to raise the price or not is an open question, and I' not too sure many people have the right answer. And if they do know for sure, T\they aren't going to tell.

Anonymous said...

If you are a peak oil skeptic, then explain the rise of oil prices and the lack of a major discover of oil since 1969? Ignoring the facts and sticking your heads in the Canadian Sand Fields doesn't make you right. It makes you an ostrich. Peak oil is not a myth no more than global warming. Fact not faith should be your guiding factor.

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