Has the ‘Peak Oil’ drama peaked?

Remember Peak Oil?  Just a few years ago Green Party leaders Jeanette Fitzsimons and Russell Norman routinely issued warnings about ‘the world running out of oil’ and told us that we needed to move freight off roads and on to shipping and rail, and commuters out of cars and on to trains, buses and bicycles.

They weren’t alone of course.  An April 2006 article in The Economist reported that:

For years a small group of geologists has been claiming that the world has started to grow short of oil, that alternatives cannot possible replace it and that an imminent peak in production will lead to economic disaster.  In recent months this view has gained wider acceptance on Wall Street and in the media.  Recent books on oil have bewailed the threat.  Every few weeks, its seems, “Out of Gas”, “The Empty Tank” and “The Coming Economic Collapse: How You Can Thrive When Oil Costs $200 a Barrel”, are joined by yet more gloomy titles.

How times change!  Just this month the following items have appeared in the international media (hat tip:  Global Warming Policy Foundation).

In the last few years, we’ve discovered the equivalent of two Saudi Arabias of oil in the form of natural gas in the United States. Not one, but two. –Aubrey McClendon, CBS, 14 November 2010

Just as it seemed that the world was running on fumes, giant oil fields were discovered off the coasts of Brazil and Africa, and Canadian oil sands projects expanded so fast, they now provide North America with more oil than Saudi Arabia. In addition, the United States has increased domestic oil production for the first time in a generation. Meanwhile, another wave of natural gas drilling has taken off in shale rock fields across the United States, and more shale gas drilling is just beginning in Europe and Asia. Energy experts now predict decades of residential and commercial power at reasonable prices. Simply put, the world of energy has once again been turned upside down. –The New York Times, 17 November 2010

The word “revolution” is overused, but it’s truly appropriate when applied to these technological breakthroughs. Literally trillions of dollars’ worth of shale oil and gas can now be economically extracted. The implications are staggering. Oil production, too, in the U.S. will increase far beyond what experts thought possible a few short years ago. The Earth is awash in energy. –Steve Forbes, November 2010

Oil and gas will continue to be pillars for global energy supply for decades to come. The competitiveness of oil and gas and the scale at which they are produced mean that there are no readily available substitutes in either one year or 20 years. — James Burkhard, The New York Times, 17 November 2010

“When wind guys talk to each other,” said Michael Skelly, president of Clean Line Energy Partners, a developer of transmission lines for renewable energy, “they say, ‘Damn, what are we going to do about the price of natural gas?’” Without a government policy fixing a price on carbon emissions through a tax or cap and trade, the hydrocarbon bridge could go on and on without end. –The New York Times, 17 November 2010

In order to avoid higher electricity prices, Prague is slowing the solar power boom and is slapping a new tax on it. It will be the death knell for smaller operators – up to 1450 companies are seriously effected by the new tax. In the neighbouring country of Slovakia, an amendment to the Energy Law was adopted in May which has severely curtailed the potential for solar energy investment.  –Christoph Thanei, Die Presse, 17 November 2010

The Spanish government has launched a new regulatory framework that will result in subsidized tariffs for ground-mounted solar energy projects drop 45% this year, killing future investment in the trade, which industry leaders expect will be frozen in the next few years. In addition, approximately 75,000 jobs have been lost with countless firms moving abroad to find new growth opportunities. -–Renewable Energy World, 15 November 2010

Danish environmentalist Bjorn Lomborg suggested in his 2003 Sir Ronald Trotter Lecture for the Business  Roundtable that oil and substitutes like shale oil could cover current energy consumption levels for 5000 years.

He also noted that “Sheik Yamani, founder of the Organisation of Petroleum Exporting Countries (OPEC), has often pointed out that the oil age will come to an end but not for a lack of oil, just as the stone age came to an end but not for a lack of stones.  Humans search constantly for better alternatives.”

Provided markets are allowed to adjust to supply and demand trends, and are not distorted by government interventions based on false ‘peak oil’ premises, there is every likelihood of an eventual smooth transition to other energy sources.