Guest Post: Peak Oil, Fact or Fraud? Climbing Mt. Hubbert


by Dale Ellis –

“A world become one, of salads and sun…”

This post is written for those who hold the view, understandably, that peak-oil may be a hoax. I sometimes forget that skepticism of corporate power distorted by bubble-vision makes the study of peak-oil seem like the quest of a knave.

But if it’s not a ruse, the ramifications are vast. And it’s my contention that most people view technology, energy, and its related solutions with an irrational, often theocratic belief. I want to skip the numbers, if possible, and simply suggest that the issue called peak-oil deserves serious reflection.

Some things just stick in your mind… I remember finishing Matthew Simmons’ Twilight in the Desert before the book was actually released in Great Briton. Apparently, I considered it that important. It was the most difficult book I’d ever read. Well written for the subject matter, but it was a mountain of data and dry as hell. I’d already digested other peak-oil related books; Kunstler’s The Long Emergency was the most enjoyable. But I needed to scrutinize Simmons to eliminate possible misinterpretations. His extensive and conservative background, as a high powered energy investment banker, was essential for balance. I’ve also read a few books regarding economic collapse and, in my view, the two are hopelessly interconnected.

First, the definition. Peak refers to the top of a standard bell curve, of production, formed on a chart. It goes up, rolls over, and then goes down. Oil refers to crude, coming out of the ground. It does not represent coal, tar-sand, corn, or solar cells. Peak-oil refers to the irrefutable fact that oil-wells are discovered, tapped, drained, then abandoned. And if something like “abiotic” oil is mysteriously refilling them, it’s painfully slow. Once you acknowledge a limit, the question on peak-oil becomes when – not if.

US oil production peaked around 1970, and it did this because America was first to explore and exploit crude-oil in a big way. This massive historical trend is essentially unaffected by environmentalists and regulation. US/Peak-oil/Historical fact; short & simple, but also understand that peak-production follows peak-discovery.

There’s no getting around it, the same fate awaits the rest of the world; as the planet wide drop in discoveries and aging production begin to confirm. But it’s the resurgence of nuclear and coal, plus the recent assumed cost effectiveness tar-sand and other solutions that sound the alarm. Regardless, the fact remains; no alternative exists to replace any reasonable fraction of 80+ million barrels of crude oil per day, every day.

It’s a bit early to check the rear-view-mirror, but… “Energy Information Administration data showed world supply of crude oil has declined to 83.98 million barrels per day in the second quarter after hitting 84.35 million bpd in the fourth quarter of 2005.” When the drop off occurs and continues, the affects cascade.

Obscuring this unfolding reality is a less-than-obvious industrial complex that renders copper, suburbia, wind turbines, and modern food production as products of a fossil fuel infrastructure. The list is long, the interconnections incomprehensible; because much of technology itself is a byproduct of energy derived from oil. Adding insult to injury, unrealistic expectations are propagated by failures to discern false alternatives. Case in point, tropical sugar cane biofuel for a country with a few cars vs. temperate corn biofuel for a country with a lot of cars.

Our civilization doesn’t just run on oil; it was built on, maintained with, and continues to function as a result of cheap-oil; and lots of it. Picking the low hanging fruit doesn’t mean you’re out, it means continued harvesting requires more work for the same yield. Regarding crude, once you’ve harvested half the deposit, energy input increases as petroleum output decreases. Energy Returned over Energy Invested.

We’ve been pulling oil from the earth for over a hundred years, and the current rate of over eighty million barrels per day is more than any period in history. Clearly the opposite of running out; but running-out isn’t the problem, at this time. It’s producing less that can be catastrophic. Remember, peak-oil refers to crude-oil max production; not tar-sands or coal. In some respects, it’s even a distraction to think of the down-slope as costing more money; as in money to produce oil-energy. More importantly, it costs more energy to produce energy. ERoEI

Notice also that the concepts of energy and technology are often used interchangeably. They go hand in hand, but they’re not synonymous. And how much clean natural gas are we willing to squander fabricating usable liquid fuels from tar sands? As I recently read, this may be akin to using “caviar to make fake crab-meat.” The upside of Hubbert Peak grew human population to levels never-before possible. On the downside we deal with it; a commodities bullfight.

History provides myriad examples of market bubbles. At the end of 2006 we consider the housing bubble. A larger bubble yet is the bubble economy itself, and an argument could be made for the largest bubble of all time. Spending half the earth’s endowment of ancient sunlight, in synergistic combination with an international, century long expansion-of-credit, produced the jet-powered Keynesian misallocation of resources – that is, the Bubble of Civilization.


SRSrocco comments:

The peak oil debate will continue until the day the world realizes we are heading down the downside slope of depletion.  I actually believe peak oil would have occurred a few years back if it wasn’t for the printing of $trillions of Dollars of added Debt.

Mike Maloney explained in his Episode 4 of Hidden Secrets of Money how the Fed basically creates IOU’s in the form of BONDS and FIAT MONEY.  He goes on to say, that these IOU’s are paid from taxes on future generations.

Advanced oil technology like Bonds, has stole oil from the future.  The world has no idea how bad things will get when we realize the downside of oil depletion will probably resemble a SHARK FIN and not a slow gradual decline.

God hath a sense of humor….

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13 Comments on "Guest Post: Peak Oil, Fact or Fraud? Climbing Mt. Hubbert"

  1. I particularly like the author’s expression, “the Bubble of Civilization.”

    Unfortunately “peak oil” has arrived (as it must) before “peak people.”

    The bio-mass of the earth has proven that it can support a human population, of about 2 billion people as it has done for over a millenia.

    Starting with the industrial revolution, the human population of the earth has kept pace with the useage of energy: first coal/steam then petroleum/internal combustion.

    To the point now, that the human population of space ship earth is about 8 billion people.

    The “SHARK FIN” of which you speak will be a “readjustment” of the earths human population load, from a human over-population of 8 billions back to a bio-mass based population of 2 billion.

    Again, unfortunately for human kind, when a population crashes to such an extent, it usually falls lower than the previous median, before it bounces back. Which means 6+ billions of humans must go. Returning to a “World Made By Hand” (Kunstler) indeed!

  2. I don’t buy either “peaks” . For a number of years oil insiders and others have stated that there is anywhere from 200-300 years worth of oil under Alaska and more oil under the Dakotas than there is in the middle east. However, if this was tapped into, oil prices would drop dramatically and thus oil company profits would fall. As far as the over population nonsense goes, if you took every man, woman, and child on the planet and put them all in Australia and gave them each 1/4 acre of land (person that is, not family) you would still have 250,000 1/4 acre plots left over and the rest of the world would be empty. Food and water supplies in the world are terribly mismanaged and exploited for profit and control of the masses. I believe the “peaks” are just another hoax being used to fool the general public and keep the powers that be in power.

    • List the “oil insiders” names

    • That’s a good idea. Lets put all the peak oil deniers in Austrilia and give them 1/4 acre of land each. That will be educational for them and help resolve the population overshoot.

    • Do you believe that oil is a finite resource or not? Belief in Peak Oil depends on very little but the answer to that simple question.

      And if not, how can you explain the fact that Peak Oil played itself out in North America in the 1970’s? I’ll be waiting for the Fox News-worthy sound bites about Alaska and “wacko environmentalists” with bated breath.

  3. The elites, it has been said , have an agenda of depopulation, incrementally poisoning our environment and food supply using fluoride, GMOs, chemtrails, psychotropic drugs, etc. under the overall Agenda 21 agenda. Whether or not this is true is largely immaterial because of the unsolvable and uncontrollable Fukushima radiation which, within just 50 short years, will ensure that a great percentage of the Northern Hemisphere will die of various cancers before ever reaching retirement age. In fact the truth is that Fukushima is quite probably the biggest danger ever facing animal life on this planet, other than a nuclear WWIII. But no mention in the MSM and in fact all US monitoring stations have been taken off line.

  4. Let’s make this a bit simpler and call the theory “peak CHEAP oil”…peak high quality, easily extractable oil that requires little exploration, little refining, little transportation and infrastructure build out…there is more “oil” out there but it is progressively harder to find, harder to extract, harder to refine.

    Maybe the idea that we live on a finite world and petro business just like any business goes for the highest margin business first and only moves to progressively lower as business requires.

  5. Should also include the concept for folks of “peak exportable oil”…as exporters use progressively more for their own economies and have less and less available for all those importer nations.

  6. Matt Simmons unequivocally opined, repeatedly, that the BP Macondo Blowout
    would NEVER be capped and would bleed out until the pool ran dry.
    The slick would be picked up by the Gulfstream and deposited
    into the Florida Straits, then, up the U.S. East Coast. The subsequent ridicule
    triggered a fatal heart attack. I never saw a man so wrong with so much conviction.

    • Joan Wall,

      While Matt did have had a heart-attack, I doubt it was due to his supposed “ridicule”. The man has been ridculed for his stance on peak oil for the past decade of his life. Furthermore, the man did not look like he was in great health. Anyhow, we are allowed to make mistakes. Matt Simmons company helped fund a lot of the companies & research that went into drilling the Gulf Of Mexico.

      Even though the worst case scenario did not occur in the Gulf from the blowout, I have been seeing a constant flow of articles stating that that well is still leaking and causing problems.

      Again, maybe Matt did push the Worst Case Scenario, but I have to say… you go down there and talk to the commercial fisherman and you will find out that there is something very wrong with the Gulf of Mexico.


  7. Peak Oil is a fact, at some point the peak in production of oil must occur since it is a finite resource. Hubbert demonstrated the path of various finite resources as they are extracted; he actually began looking at minerals before he ever looked at oil.
    Whether we have passed the peak of oil production yet is impossible to tell (however, as many will argue what’s more important is the end of cheap and easily-accessible oil–that’s what will impact us the most.)
    Our economic system has been living off cheap energy for the past 150-200 years but that era is coming to an end. We picked all the low-lying fruit and now have to scavenge what remains. The-powers-that-be have extended our party through deficit financing but that too appears to be reaching its limits.
    The decline of oil production and it’s impact on the world’s economic system will be significant, to say the least. We can only tell we’ve passed that point in retrospect but all the signs seem to be that we have and the turmoil roiling across the planet is likely a direct result of the end of cheap and easily-accessible oil. Some would argue we’ve overshot the carrying capacity of the planet by artificially and temporarily raising its capacity through use of fossil fuels. We have been able to exploit a one-time, limited windfall and now have to ‘revert to the mean.’ It’s sure to be a bumpy ride….

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