One of the interesting things about blogging is that it’s a public record of your thinking over a period of time. Ever so often people find old posts while searching and then comment on them. That happened to me again today, as someone posted a comment about a peak oil-related post from last summer.
Here’s the pertinent parts of the comment:
We are awash in oil. Supply currently far outstripping demand and we are in a mild recession, not a depression. Gasoline is down to $1.65 — what it was in 2004.
And if you follow the news, you will see more and more reserves are being found. Yes, we may run out of oil some day but it won’t be in my lifetime, my children’s lifetime, or even in the lifeime of my grandchildren. And by that time we will have moved on to other energy sources.
A few comments on this. First, peak oil is not about the end of oil. It’s about production flows. Yes, there is plenty of oil available, and we are finding reserves all the time. The issue is that we are finding smaller fields, usually of lesser quality, and they are harder to extract oil from. Combine smaller, lower quality fields with the depletion of many of the larger, high-quality fields and it is obvious that there can be a supply problem at some point down the road. We will be extracting oil from the ground hundreds of years from now… just not in large enough quantities to keep our current petroleum-driven way of life going. People who have put way more research into this than I have disagree about when we will or maybe already have already reached the ‘peak’ of oil production. We won’t know for sure until the peak is past, so for now we just watch and wait.
The dig about following the news goes both ways. Yes, more reserves are being found. At the same time several major producers are seeing their oil production drop… sometimes fast. Will new production coming online be able to replace if not surpass depleting fields?
Gas prices have indeed dropped precipitously in the last few months, as have most commodities. I personally wouldn’t associate this with a return to business as usual. The global economic crisis will reduce demand for oil worldwide, which will have an effect both production and consumption for some time… extending the plateau for some time possibly.
As to whether we are in a mild recession or something worse, a lot of it depends on your personal perspective. Like the old saw goes, when your friend loses his job, we’re in a recession; when you lose your job, it’s a depression. I think we are still in the opening phase of a longer economic shakeout that is looking to be deflationary at least for now. Prices on lots of things are dropping. The question is how far will they drop, and how much economic damage will be done by the time this cycle ends?
Reasonable people can disagree. If the commenter truly thinks that we are awash in oil, might I suggest posting his thesis on The Oil Drum and see how the statistical nerds, oil industry insiders and other knowledgeable folk respond.