Articles : Sci-Tech

An Open Letter to Greg Palast on Peak Oil

A leading Peak Oil educator responds to claims the oil isn't running out

Dear Greg,

Congratulations on your new book, Armed Madhouse. As with your previous work, I admire your dedication in exposing the machinations of government and corporate miscreants.

However, this time around you’ve also taken a potshot at a target that I happen to know a good deal about and have been closely involved with for a few years—the efforts by a growing number of analysts to forecast the arrival, and prepare the world for the consequences, of Peak Oil. I think your negative comments about Peak Oil and those of us who study it are not well informed. Ordinarily I wouldn’t respond to an ill-considered statement by an otherwise admirable author; but unfortunately you go on for several pages on this theme, and I’ve started receiving e-mails from folks who are troubled by what you said.

In my many years of fighting to protect our planet from environmental destruction, I have learned how important it is to make sure that our supporters have the most accurate information possible. Time and again, I have seen our opponents seize on internal disagreements as wedges in their drive to weaken and damage the credibility of the environmental movement. I feel the responsibility to help sort out the factual issues in this instance particularly strongly because you have worked so hard to earn your reputation as a truth-teller in these perilous times.

First let me make clear where I’m coming from with my critical analysis. Before you assume that, just because I disagree with you, I must therefore be secretly in the employ of the Heritage Foundation or some nefarious corporation, I should point out that in my own recent book, Powerdown, I take the Bush administration to task as vehemently (if not at so great a length) as you have done. And I teach in a program on “Culture, Ecology and Sustainable Community” at a small, far-left liberal arts college where you have lectured. So we are in other respects natural allies.

In your book, you place your critique of Peak Oil in the context of scathing attacks on the Bush energy plan and the oil companies’ enormous ongoing political influence. These are serious problems and you deal with them skillfully and entertainingly. But, in contrast to these subjects, the Peak Oil discussion is more about science than politics, and when it comes to science, catchy phrases don’t count; only a careful weighing of evidence does. I’m sorry to say that you don’t appear to be fully informed about the terms and history of this debate.
Let’s start with your description of the work of the late geologist M. King Hubbert and the study of oil depletion.

On page 108 you pretend to summarize Hubbert’s 1956 world forecast for global oil production as follows:

Sometime during 2006, we will have used up every last drop of crude oil on the planet. We’re not talking “decline” in oil from a production “peak,” we’re talking “culmination,” completely gone, kaput, dead out of crude—and not enough natural gas left to roast a weenie.

But “Decline” and “peak” are precisely what Hubbert was forecasting—and not in 2006, but around the year 2000, as shown in the graph you reproduce on page 111. How could you possibly get the essential terms of the debate so plainly wrong? Frankly, I’m amazed. Maybe you got hung up on the word culmination (which, among other things, means “the highest point achieved by a celestial object in the night sky before it begins its descent”—a good metaphorical usage of the term in this instance). But even so, how could you have completely missed the context in which Hubbert used that word—a discussion that was entirely about “decline” and “peak”?

This is a core misunderstanding that crops up repeatedly in your treatment of the subject. In your caption to Hubbert’s graph on page 111, you say, “Note: the total sum of oil is 1,250 billion barrels—which runs out in 2006.” The graph clearly shows production peaking around the year 2000—which it probably would have done if not for the oil shocks of the 1970s, which Hubbert could not have foreseen—and still shows oil being produced in the year 2200. The oil industry is fond of citing historical claims from the 1890s that “oil will run out in 10 years” as a way of discrediting current concerns about Peak Oil, and your accidental misinterpretation of this graph unfortunately echoes this oil industry line.

Hubbert just flat-out never predicted that oil would “run out,” nor has any oil depletion analyst that I’m aware of predicted oil “running out.” There will always be more oil in the ground, just not enough at a cheap enough price to sustain the current world oil demand. Debaters would call putting the phrase “running out” into the mouths of oil depletion analysts a “straw-man” argument: you wrongly attribute an absurd statement to your adversary, you disprove the absurd statement, and the audience cheers—except for the frowning woman in row 12 who happens to be taking a course on critical thinking.

In fairness, you seem to be saying that the total amount of oil represented under the curve Hubbert drew is too small (which it was); thus, if we take that amount as fixed and subtract the oil actually used so far, what’s left won’t last us till the end of this year.1 Well, according to my calculations the world still has a few years to go even if we do pursue this useless thought exercise, but that’s mere quibbling. The point you wish to make is: Hubbert got it wrong!—he underestimated the global amount of ultimately recoverable oil. Therefore we should pay no attention to him.

But hang on—didn’t Hubbert get it amazingly right when in 1956 he predicted that U.S. oil production would peak around 1970 (which it did)? You don’t mention that. Why was one prediction spot-on, the other less so? Well, in 1956 the U.S. was much more thoroughly explored—and depleted—than the rest of the world. The method Hubbert had developed for predicting peaks worked well in the U.S. in 1956. And it seems to be working well for other large provinces (such as the North Sea) where extraction has proceeded sufficiently far so as to establish a linear trend.2 If you want to understand the method better, I recommend a careful reading of Chapter 3 of Kenneth Deffeyes’s excellent book Beyond Oil. In the decades since Hubbert made his initial forecasts, world depletion has more than caught up with where U.S. depletion stood back then. Thus a Hubbert-type forecast for world peak is much more likely to be correct today than it was in 1956, given the data available.

These are only a couple of examples; you go on from there. Sentence after sentence betrays ignorance of the scientific matters at issue.

There’s just no hope of setting the record straight on everything. Therefore the best I can do is to address what I take to be your three core assertions.

1. King Hubbert was a shill for Shell

Just because someone works for a company or agency, that does not mean that everything the person writes or does is in the service of the institution. But you assume the worst of Hubbert in this regard, and your line of reasoning goes like this:

King Hubbert worked for Shell Oil research labs during the years when he made his predictions about the U.S. and world peaks in oil production. That means he was being paid by Shell. That means that the work he was doing must have been suggested by Shell, approved by Shell, and in Shell’s interest. Therefore the entire Peak Oil notion is one created, bought, and paid for by Big Oil.

This might be characterized as argument by innuendo. The first two sentences in the preceding paragraph are demonstrably true; the second two are pure conjecture. What does the evidence say? I challenge you to produce any account of the events that differs substantively from the one Ken Deffeyes (who knew Hubbert well) offers in his book Hubbert’s Peak. Not only did Shell not suggest the line of inquiry that led to Hubbert’s famous depletion curve, but when he came up with it his bosses tried to prevent him from talking about it. The general reaction in the industry was anything but supportive. Deffeyes puts it this way: “It was as if a physician had diagnosed virulent, metastasized cancer; denial was one of the responses.” Hubbert was repeatedly attacked from within the industry.

Well, you might say, maybe this was all a clever plot. I suppose there’s no way to prove whether it was or wasn’t. But we might profitably inquire: Just what kind of man was Hubbert? Was he the sort to participate in an industry conspiracy? Not according to the people who knew him.

I cannot tell if you talked to people who knew Hubbert and worked with him—before slandering him by innuendo. I have spoken to a few such people, including several of his former students, a co-worker, and a close relative. The picture they paint is of a somewhat imperious, pig-headed genius who had gradually come to the conclusion that the world was headed in the wrong direction fast because of its dependence on fossil fuels. He was a respected geologist responsible for other important contributions in his field. In addition to working for Shell, he also worked for the USGS and taught at several universities. He did not suffer fools lightly, nor did he show much interest in climbing corporate or academic ladders. This would not appear to be the sort of person who would stake his career on a bogus hypothesis just because a temporary employer told him to.

As a current and apt analogy, consider the case of James Hansen of NASA, who has spoken out strongly about the dangers of global greenhouse gas emissions. The man works (indirectly) for the Bush administration; therefore should we assume that he is secretly doing Dick Cheney’s bidding by needlessly scaring the nation about climate change? Of course that’s absurd: the Bush administration has tried to muzzle Hansen—just as Shell tried to muzzle Hubbert.

Innuendo is just not a proper form of argument.

You point out that King Hubbert supported nuclear power. I happen to disagree with him on that issue—as I also do with biologist James Lovelock, who likewise supports nukes.

But you make it sound as though Hubbert came up with his oil depletion forecasts as a justification for Shell’s nuclear program. There is no evidence for that assertion, as far as I’m aware. Hubbert’s colleagues tell the story differently: Once he had calculated that global oil production would peak in a mere half-century, Hubbert realized that the world would need a new non-fossil source of energy. At the time (remember, we’re talking about events in the 1950s), nuclear power seemed the only realistic alternative. Later he threw his support behind solar power, when that technology began to show promise.

In retrospect, it seems to me that King Hubbert was one of the most visionary scientists of the twentieth century. You may disagree. But ultimately there is only one question about Hubbert that really matters in the current discussion: Did he make an important contribution to our understanding of oil depletion? On that point, there is widespread positive agreement. Not only has Hubbert’s method produced results that have been confirmed by events, it also yields forecasts that mirror ones generated through entirely different methods.

Chris Skrebowski, the editor of Petroleum Review, has been tracking decline rates from producing oilfields and comparing those numbers with new production capacity expected from the various new projects in which the industry is investing. He calls this a “bottom-up” method (because it requires patiently assembling and crunching data from many sources), in contrast to Hubbert’s “top-down” graphs. I doubt if Chris has ever drawn a standard Hubbert curve, but he has come to essentially the same conclusion as those who do: he expects global oil production to peak around 2010.3

Was Hubbert right about everything? Obviously not. We’ve already seen that he underestimated the global amount of ultimately recoverable oil, and why he did so—because he was working with early data. However, some of your own statements seem to be inaccurate in ways that are harder to account for.

2. The oil companies are behind today’s Peak Oil warnings

You point out that Chevron has recently taken out ads declaring that world oil discoveries are down. Chevron is pushing Peak Oil! Therefore the latter must be a corporate plot whose purpose is to drive up oil prices and line the pockets of greedy executives. Here’s the relevant passage from your book:

So who’s selling us Peak Oil today? The operator of the supertanker Condoleezza has been running an extravagant advertising blitzkrieg to tell us: We’ve peaked! “The world consumes two barrels of oil for every barrel discovered!” That’s just the billboard. Their double-page spread in Harper’s is even more hysterical: “The fact is, the world has been finding less oil than it’s been using for twenty years now.” Unfortunately, that “fact” isn’t a fact at all—reserves rise year after year—and those facts don’t change because Chevron paid my magazine to print it.

Actually, Chevron—rather than being at the forefront of the Peak Oil discussion—is late on the scene: independent and retired geologists have been talking about this problem for years; the companies have generally been discouraging the discussion in every way possible. I know because when I lecture about the subject, the people I find myself debating are usually industry PR reps (including, just recently, one from Shell), while the folks who offer the most informed encouragement are nearly always retired or independent geoscientists. Chevron still hasn’t used the “P” word, and is just saying that oil will get more expensive from now on.

Of all the oil companies, Exxon is leading the charge in opposing Peak Oil. You may remember that Exxon also spearheaded the industry’s effort to deny the link between climate change and carbon emissions—and in fact is still doing so. Here are passages from an Exxon ad, titled “Peak Oil: Contrary to the Theory, Oil Production Shows No Sign of Peak”:

Will we soon reach a point when the world’s oil supply begins to decline? … So goes the theory. The theory does not match reality, however. Oil is a finite resource, but because it is so incredibly large, a peak will not occur this year, next year, or for decades to come.4

The case made in the Exxon ad is essentially the same one you outline in your book. So which company is telling the truth and which is engaged in a disinformation campaign? One of the problems with argument by innuendo is that it often requires us to speculate about other people’s motives. The only question that really matters here is, which line of argument is correct? And the only way to make an informed judgment in that regard is to examine and weigh the evidence and the quality of reasoning on each side.

Well, what about Chevron’s statement that “the world has been finding less oil than it’s been using for twenty years now”? You say that “isn’t a fact at all.” Not if one conflates actual discoveries with reported reserve additions—but these are two very different animals. Reserve additions occur for a number of reasons—some political, some simply having to do with SEC reporting rules. Sometimes they reflect recent discoveries, but this is less the case as time goes on. The Royal Swedish Academy of Sciences, in a recent publication titled “Statements on Energy,” describes the situation this way:

In the last 10–15 years, two-thirds of the increases in reserves of conventional oil have been based on increased estimates of recovery from existing fields and only one-third on discovery of new fields. In this way, a balance has been achieved between growth in reserves and production. This can’t continue. Fifty percent of the present oil production comes from giant fields and very few such fields have been found in recent years.5

In fact, recent oil discovery figures are much worse than Chevron makes them out to be: the Chevron ad you quote says that two barrels of oil are being extracted for every one discovered; for the past few years the ratio has actually been more like four, five, or even six to one.

But why does it matter if discoveries are down, when reserves are still growing? Doesn’t the fact that global oil reserves are at record highs preclude a near-term peak in production? Not necessarily. There are many examples we could explore—after all, over half of the world’s producing nations are in decline, most of them irreversibly so. Did reserves drop substantially in these nations before they hit their production peaks? Certainly not in the most important and well-documented case—that of the US. Here, while discoveries of new fields peaked in 1930, reserves as of 1970 were at record levels, as was production. Therefore it came as a surprise to nearly everyone (except King Hubbert) when production levels began to drop the following year, despite every effort on the part of the industry to keep them soaring. U.S. production in the onshore lower 48 is now back down to about where it was in 1940.

Is Chevron right, or is Exxon right? I’d say that what Chevron is telling the American public is closer to the truth. But only time and careful analysis will tell. Speculating on the companies’ motives may be easy and entertaining, but it is probably the least helpful way of getting at the truth in this instance.

3. The world has oodles of oil—and most of it’s in Venezuela

As I read and re-read the pages in which you claim to show that “the Peak Oil crowd is crackers,” I am disturbed to see how much your case relies on guesses about what’s going on in the minds of oil company executives, and how little discussion you provide of the sea of facts and analysis that are publicly available. It’s in your Appendix, “Return to Hubbert’s Peak: Why Palast Is Wrong,” that you finally do present a brief analytic case. The factual core of your argument (still confined to only a few sentences) seems to be that the world simply has enormous amounts of oil, and thus a near-term peak is unthinkable.

Price, you say, makes all the difference:

World oil reserves, officially measured at 1.189 trillion barrels, are probably, as one of Mr. Hubbert’s protégés stated a few years back, grossly overstated—if you assume oil selling at $10 a barrel. But kick the price up to a post-invasion $50 a barrel, and the world reserves are wildly understated.

Yes, the world has more oil available at, say, $50 or $70 a barrel than at $10 or $20. Everyone agrees; that’s a truism in the industry. But there’s no simple mathematical relation between increasing the price of oil and increasing the size of estimated reserves. Doubling the price doesn’t double the reserves; it merely makes a few out-of-the-way known reserves more attractive.

The all-important question is, how much oil can the industry pump every day (that is, at what rate can that oil be produced)? That’s what the debate over Peak Oil is all about—not reserves or amounts ultimately recoverable, but flow rates. When will the flow rate that the industry can possibly attain reach its maximum?

With prices high, you say, hundreds of billions of barrels of oil from the tar sands of Canada and from the heavy-oil fields of Venezuela become economical to produce. Right again, though this is not conventional oil we’re talking about, but materials that have to be transformed into synthetic petroleum using energy-intensive processes. Again, the real question is, at what rates? Canada is currently extracting a million barrels a day from the tar sands; Venezuela is pulling a little over half that amount from the Orinoco belt. These numbers are expected to climb—and then level off. Why? Because the process of producing synthetic oil from these low-quality hydrocarbon sources is constrained by physical factors that just do not respond much to economic stimuli. Canada needs lots of fresh water and natural gas to make oil from the tar sands, and both are in short supply. The best published forecasts say that, regardless of the price of oil, flow rates there will max out at about three to five million barrels per day by 2025—a generous amount in terms of the benefit to Canada’s economy. But this is not nearly enough fuel to satisfy the U.S. habit of over 20 million barrels per day—and crucially, it’s not enough to make up for expected shortfalls from the world’s giant and supergiant conventional oilfields once the latter begin their inevitable declines – as they are doing now. There are only about a hundred of those big fields that, collectively, yield roughly half the oil extracted today.

Nearly all are old (found in the 1940s through the 1970s), and we’re seeing that, with the newer water-flooding recovery methods, when decline comes it can hit unexpectedly and with catastrophic swiftness—as it did in the Yibal field in Oman, which peaked at 250,000 barrels per day in 1997 and is already down to less than 80,000 b/d.

The situation in Venezuela is similar to that in Canada.

All of these questions have been discussed, dissected, analyzed, and graphed endlessly. Yes, it’s theoretically possible to build nuclear reactors to cook the tar sands—but the practical challenges in that case are prohibitive, as the tar sands are geographically extensive and each nuclear plant would be able to heat only a limited area; that means lots of expensive nuke plants with useful lifetimes limited by the amount of bitumen within easy reach. It’s already costly to make oil from bitumen; add hundreds of billions of dollars in nuke plants and the exercise quickly becomes an investor’s worst nightmare.

I could provide more details, but what’s the point? We are breaking no new ground here. Every serious analyst I know who is predicting a global oil production peak between now and, say, 2012 is thoroughly familiar with the standard free-market argument about higher prices stimulating more production, and with the published reserves figures for tar sands, heavy oil, shale oil, and so on. All of this has long ago been taken into account.

After writing the previous paragraph, I went back to your book to see if I had missed something. But no—the rest is all guesswork: Why did the U.S. really invade Iraq—was it to close down the oil spigot and raise prices? Is Shell Oil Company using its ads to try to scare us into supporting further invasions of the Middle East? Did Hubbert time the release of his famous paper to coincide with the overthrow of Iran’s Mossadegh and the closure of the Suez Canal? I honestly don’t know whether you’re right on any of these points. I just don’t have enough information to go on—even though I’ve spent the past few years devoting considerable time each day to studying the oil industry and following the same press reports you must have read.

What I do know is that the arguments you have brought up in order to “debunk” the Peak Oil thesis are not up to your usual journalistic standards.

* * *

In an apparent nod to folks like me, you write, near the very end of your book, “Some environmentalists have echoed the ‘peak oil’ theorem in the false hope that oil companies’ raising prices will lead to conservation. Fat chance.” As you might imagine, Greg, it gives me no pleasure to see the efforts of five years (and the motives for those efforts) misrepresented and flushed away in a couple of snide sentences. The truth is, I write and speak about Peak Oil because I believe that the evidence for it is overwhelming, that it will have a devastating impact on everything we hold dear, that there are actions we can take to mitigate that impact, and that those efforts won’t be undertaken unless the public is alerted.

The problem of Peak Oil has been acknowledged by environmentalists like Bill McKibben and Lester Brown, by public figures like Bill Clinton, by international affairs experts like Michael Klare, and by both oil industry insiders and severe critics of the industry. The world is deeply dependent on cheap, abundant oil, and we are seeing the end of cheap oil unfolding before our eyes. The process of economic adaptation is not going to be quick or easy. We’re all going to have to work together on this—whether we think of ourselves as liberals or conservatives, whether we live in rich or poor countries, and regardless of our area or level of expertise. Naturally, there will be disagreements along the way, some folks will try to take advantage of the situation, and we’ll need investigative reporters like you to help keep everyone informed and honest. But if we don’t commit ourselves to trying to work together, things could get ugly—much uglier than they already are.

I’d be happy to discuss the evidence with you at greater length, and I’d be happy to point you toward some good source material, most of it untainted by association with any oil company.

I refuse to speculate about your motives. I assume they are the best. Therefore I also assume that, if shown to be incorrect, you will set the record straight. Everyone is wrong sometimes, and when one is publicly wrong, there is a strong incentive to retrench. Being wrong in print is the worst case. But sometimes it happens, and when it does the best thing is to admit it and move on.

On the other hand, you may wish to write a rebuttal. If so, might I suggest some sources for research on anti-Peak Oil arguments? Try these:

Exxon (as discussed above);
Daniel Yergin, chairman of Cambridge Energy Associates and author of The Prize and The Commanding Heights—the latter a book that’s on every neocon’s short list of favorites; and
Jerome Corsi, proponent of the “abiotic oil” hypothesis and primary architect of the Swift Boat disinformation campaign against John Kerry.

Now, these people’s assertions have already been countered by competent scientists, so if you want to make a real contribution to the discussion, you will need to take account of those counter-arguments and bring the debate up to a still higher level. That will require familiarizing yourself with an extensive literature.

But I would greatly prefer it if you would simply acknowledge that thousands of Peak Oil activists around the world are in fact devoting themselves to a worthy cause. Most of them are working hard to wean themselves and their local communities from oil dependency.

In my view, the best large-scale strategy for going forward would include the international ratification of an Oil Depletion Protocol mandating reductions in petroleum production and imports. Such an agreement would tend to stabilize prices, reduce international competition and conflict, and conserve the resource base. If nations observed such a Protocol, it would also help with the problem of greenhouse gas emissions, as long as it was accompanied by a strong Kyoto-like accord. A coalition of individuals and groups is forming in order to persuade the nations of the world to adopt such a Protocol.6

I’d really like to have your support on the Protocol and on grassroots Peak Oil efforts, Greg. A lot of people listen to what you have to say, and a lot is at stake.

Sincerely,

Richard

Notes

1. Hubbert estimated that the Earth would eventually yield about 1,250 billion barrels of regular oil (excluding tar sands, oil shale, and so on); many current estimates of global recoverable regular oil are in the range of 2,000 billion barrels, or about 800 billion barrels (65%) higher. The world has consumed just about 1,000 billion barrels so far.

2. Jeffrey J. Brown and “Khebab,” ““Texas and U.S. Lower 48 Oil Production as a Model for Saudi Arabia and the World”:http://graphoilogy.blogspot.com/2006/05/texas-and-us-lower-48-oil-production_25.html,” May 25, 2006

See also Roger Blanchard, ““North Sea Oil Production and its Relationship to Global Oil Production”:http://www.energybulletin.net/17262.html,” June 19, 2006

3. Chris Skrebowski, ““Megaprojects Analysis Explained”:http://www.energybulletin.net/17422.html,” June 21, 2006

4. ExxonMobil PDF

5. ““Statements on Oil”:http://www.energybulletin.net/9824.html” Royal Swedish Academy of Sciences Energy Committee. (17 Oct. 2005).

6. More information will soon be available at www.oildepletionprotocol.org.

Richard Heinberg is one of the world’s foremost Peak Oil educators. He is the author of seven books including The Party’s Over: Oil, War and the Fate of Industrial Societies; Powerdown: Options and Actions for a Post-Carbon World; and the forthcoming The Oil Depletion Protocol: A Plan to Avert Oil Wars, Terrorism and Economic Collapse.

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Anthony Lappé is GNN's Executive Editor. He's written for The New York Times, Details, New York, Paper, The Fader and Vice, among many others. He has worked as a producer for MTV and Fuse. He is the co-author of GNN's True Lies and the producer of their Iraq doc,...

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