Is peak oil dead?

ASPO-USA (The Association for the Study of Peak Oil – U. S. A.) is no more. A week ago Wednesday (January 24), the ASPO-USA directors sent out a note saying that the organization was dissolving: “support of and interest in our activities have dwindled to the point that we can no longer fund basic operations.”

So is peak oil dead? I come to bury peak oil, not to praise it. The key problem with the peak oil idea was that it was never clear what “peak oil” meant. The overzealous predictions that total oil production would decline have not materialized (yet!), and for many people that — combined with breathless news reports that American oil production is increasing — sealed the case against peak oil.

On the other hand, conventional oil production peaked in the United States in 1970, just as M. K. Hubbert predicted in his famous 1956 paper. Conventional oil likely peaked worldwide about 2006, the exact date depending on the precise delineation of the difference between “conventional” and “unconventional” oil. Had the peak oil community been able to communicate the very significant differences between conventional and unconventional oil, things might have turned out differently.

Conventional and unconventional oil are both the same by the time they get to your car’s gas tank. The key distinction is that much unconventional oil — fracking, tar sands, “heavy oil,” deep-sea oil, etc. — is riskier, dirtier, and more expensive than oil obtained by more conventional means. Some unconventional oil, “natural gas liquids,” isn’t oil at all, but can substitute for oil in certain narrow applications. One form of unconventional oil, biofuels, actually is an energy sink in the United States and contributes to global warming.

Virtually all of the recent increases in oil production come from unconventional oil. This has raised the political, environmental, and financial costs of oil dramatically. By staking our energy future on unconventional oil, we have entered a fundamentally different energy world, with no policy discussion or even awareness of what is happening.

Several of the key ideas that came out of the peak oil community have been solidly verified. In March 1998 Scientific American printed “The End of Cheap Oil,” by Colin Campbell and Jean Laherrère, who initiated the most recent phase of the peak oil discussion. Colin Campbell — the petroleum geologist, not the nutritional biochemist — then went on to found the international ASPO group, which continues to exist.

Their remarkably prescient article stated that, “barring a global recession,” conventional oil would peak by 2010. There was no shortage of total oil, they predicted, but what we would see is the end of cheap oil. All this was abundantly verified. There were not just one, but two global recessions after 1998; and one of them nearly destroyed the U. S. financial system. Obviously a global recession will depress oil consumption and delay the peak of conventional oil. Yet conventional oil has peaked anyway and “the end of cheap oil” is already history.

In 2005, a report was commissioned by the Department of Energy which discussed the role of unconventional oil in averting or compensating for peak oil. This report — popularly known as “the Hirsch Report” after the project leader, Robert Hirsch — was widely discussed in the peak oil community, but ignored by almost everyone else. The report said that solar and nuclear power would be insufficient to address energy problems; solar and nuclear only produce electricity, but we needed something liquid to put in our gas tanks. The key to dealing with peak oil, the report concluded, was the development of unconventional oil.

This report turned out to be practically a blueprint of what would actually happen. Since 2005, we have entered a fundamentally different world: a world of environmentally dirtier and financially more expensive unconventional oil, while renewables still lag behind. We need a public discussion of these issues, and neither political leaders nor intellectuals are any help here.

The BP oil spill

Unconventional oil has significantly accelerated damage to the environment — think about fracking, the BP oil spill of 2010, and the Alberta tar sands, all from unconventional oil. But we are paying financially as well. Before 1970, the (inflation-adjusted) price of oil was consistently under $30 / barrel. Today this would be considered a catastrophically low price. Yet despite much higher prices, fracking has consistently lost money. It lost money even when oil was at $100 a barrel, and it’s losing money now with oil at over $60.

What keeps fracking afloat is simply hype, debt, and environmental destruction. Oil still drives the growth economy. We have hit the limits to growth of the economy, even before figuring in the devastating effects of climate change. And we have only delayed, not averted, the final peak of all oil production by a decade or two.

I supported ASPO-USA and am sad to see it go. I attended two of their national conferences (in 2005 and 2009). To this day make it a daily habit to read the “Peak Oil News” — the one element of the organization which will continue, under the auspices of the Post-Carbon Institute.

Perhaps the end of ASPO-USA signals the death of the peak oil idea. But if peak oil is dead, its ghost still haunts the American psyche, and we have never come to terms with it. Like Caesar’s ghost in Shakespeare’s play, it will be back, perhaps to destroy our republic. In the meantime, the oligarchs just convert our real assets — the environment, healthy civic discussions, and the well-being of our citizens — into pollution and poverty, without accounting for it, and pocket the cash. When we are peering out over the wreckage of industrial civilization, perhaps then we will remember the warnings about “peak oil.”