Sunday, November 22, 2009

The greasy Malthusians and Mother Earth's oil

The eternally pragmatic and often wretched conservative columnist George Will finally nailed a good one.

You remember Thomas Malthus, right? He's the early 19th century guy who predicted that the Earth's population would soon outpace agricultural supply, and human beings would be forced to return to an agrarian/subsistence Medieval/primitive living. He proved embarrassingly wrong when the inventive mind of man and the concomitant industrial revolution allowed for excessive agricultural supply, far exceeding the pace of population -- and still doing so with 6.5 billion voracious human beings.

The Malthusians weren't limited to just agriculture, however. From early in the oil-production era, the Chicken Littles raised hue and cry about the alleged apocalypse of a vanquished Earth, siphoned of her rich oil reserves. Mr. Will gives a brief accounting of this lunacy, correctly connecting the hysteria not to rationality, but to big-government types seeking to aggrandize political machinery by fiat environmentalism and scare tactics.

Each generation since the 1859 oil discovery in Pennsylvania has had its prognosticators of doom, predicting a final depletion of oil and gas within a decade or so. Each time they've been grossly mistaken, and each time they do not learn from earlier doomsayers and the evident wonders of capitalism. They do not wish to learn, of course, because they seek to shackle corporations and liberty.

With recent technology, huge discoveries have been made in Northeast America, the Rockies, Canada, the Gulf of Mexico, near Australia and many other places, with current estimates on supply going out well over 100 years (and probably much longer in reality since the middle oceans and much of dry land haven't even been touched yet). Giant oil companies are now building $1 billion "capture" ships that make it possible to pump oil and gas directly onto the ship instead of having to lay expensive pipeline, thereby opening up vast expanses of ocean that until recently lay beyond the viable reach of man.

It is an exciting time for exploration -- if we can keep the Malthusians and their political keepers at bay in Copenhagen, Kyoto and beyond.


Daniel said...

The point that people have been wrong before about a peak in oil does not necessarily mean there will never be a peak.

Given the nature of any resource as finite, it actually has to be true for the whole planet at some point.

I don't bring this up because I think the world is in danger of running out of oil, but because I think the argument here is often used wrongly.

Consider: why were many of these people proven wrong? Contextually, many were right. Regional areas within the US peaked and then the US itself did (despite many advances--like tertiary recovery, offshore drilling, etc).

The error that many made was to extrapolate the peak of a region to the world.

Looking forward, I totally agree that man's mind is fully capable of finding energy (of one kind or another--and for a long time this will be oil).

There are major issues with this, however. For example, the industry's best minds are nearing retirement at the same time that the best fields are nearing retirement.

On the former point, I think we have to look at where the reserves are located that we are expecting the minds of men and their accumulated capital to produce. I am not that optimistic after this.

On the latter point, the aging of "the elephant" oil fields is of the utmost significance.

The world isn't doomed without them but talking about "reserve life" without mentioning the poor quality of new reserves (especially long-lived ones) is a mistake.

Finally, none of this disagrees necessarily with your main point. In some ways, it advances it. The mind of man will be able to develop the amount of energy needed (and paid for). If, that is, it is left free.

The doomsayers wouldn't be so gloomy and they damn sure wouldn't be calling for government interference if they had a proper respect for man's mind! :-)

David Elmore said...

Hey Daniel,
My blog article on this doesn't suggest that there will never be a peak or that the reserves are infinite. In fact, I say that projections are now 100 years plus, implying that resources are indeed finite and that a peak will occur at some point.
Besides the political shenanigans that I point out, one of the main problems has been exactly that prognosticators have evaded context on this issue. No one in his right mind could possibly rationally drop context on the fact that much of the world simply had not even been explored for oil/gas yet, so any extrapolation of scarcity was ridiculous.
I happen to think there is at least 500 years of oil/gas left, but I think technological advances will make this moot soon enough, as you suggest. I figure hydrogen energy will be a daily fact of life within 50 years at the most.
I agree, of course, about man's mind staying ahead of the depletion curve (way ahead, actually), as long as government keeps its fascist nose out of our business.

Daniel said...

On reserves being finite: you're right. I didn't mean to suggest that you were implying otherwise.

One point I'd add to this is that reserves are a function of the price as this necessarily sets the standard for what amount of oil is economically extractable.

On context being dropped: I think that given what many at that time knew it wasn't ridiculous to call for a peak in production at all.

It was somewhat foolish to assume that what oil was found there was all there was, but it took a man like Rockefeller to go out and find it--and then make the much crappier oil that (finally) was found workable.

Rockefeller and the collection of brains he gathered actually all saw the peak in Pennsylvania--and by extrapolation worldwide, as you can't produce oil that hasn't been found yet.

In modern times, we're reliant on old fields (just like in Pennsylvania) and are in a race to find new reserves that can be extracted economically.

My guess is that a peak in production is going to happen within our times--but it has to remain a guess given that the reserve data from most of the OPEC producers has to be taken lightly.

(The more reserves they say they have, the more they are allowed to produce--an agreement which, when it was decided, immediately led to all the OPEC nations "discovering" that they had multiples of oil in the same place they previously said they had far les.)

Anyway, my guess as to the peak in production would be because: the huge amount that has been added to reserves is of poor quality, it's in hard-to-extract places, in politically insecure parts of the world, and the most important resource in getting it out (man's mind) is increasingly shackled.

More important than reserves, in other words, is whether the reserves are economically extractable. More important here is whether it is light, sweet crude or requires significant refining. And most important of all, is whether the government takes the ropes and chains off the producers, consumers, and lands.

David Elmore said...

I agree about Rockefeller, Daniel. Great man and a great time! But "peak," in my definition, refers to the pinnacle of oil/gas production, which will be affected by a lack of reserves, politics or viable energy alternatives. As long as there is nothing to competitively challenge oil/gas, then the price necessary for exploration will always occur as known supplies dwindle and price increases. The latest technology is making shale and other sources viable, so light sweet will soon be just one of many sources.
Even those who underestimate the new finds state that there is at least 100 years of oil/gas reserves available, which far underestimates what is actually out there.
If researchers and scientists create a viable alternative to oil/gas, then, yes, a peak will probably occur in our lifetimes.