Once again, the gauge on our national economy is dropping dangerously to the red. So swears a spate of books and articles in the past few years, reviving '70s-era fears of impending oil catastrophe. The once-invaluable, now highly political, Scientific American ran an article in March 1998 declaring "The End of Cheap Oil." Fred Pearce similarly declared in a July 1999 New Scientist article, "Dry Future," that "the world is probably only two years off peak oil production, after which decline is inevitable." In his 2001 book Hubbert's Peak: The Impending World Oil Shortage, Princeton University Professor Kenneth Deffeyes found "that world oil production will peak in this decade—and there isn't anything we can do to stop it. While long-term solutions exist in the form of conservation and alternative energy sources, they probably cannot—and almost certainly will not—be enacted in time to evade a short-term catastrophe."
More recently, in January Caltech physics Professor David Goodstein upped the ante in his book, Out of Gas: The End of the Age of Oil, warning that the peak of world production is imminent and that "we can, all too easily, envision a dying civilization, the landscape littered with the rusting hulks of SUVs."
There is a choirmaster to this chorus of oily doom: the late geophysicist M. King Hubbert. In 1956 Hubbert (correctly) predicted that U.S. oil production would peak in the early 1970s. Like Hubbert, current doomsayers reach their grim conclusions of impending octane depletion by using estimates of the world's recoverable reserves of oil and comparing them with estimates of rates of future use. From this they derive predictions of when the demand for oil will outstrip the supply, and most suggest that dry pumps will greet us before the end of this decade.
Once the peak is reached, oil doomsters foresee skyrocketing prices leading to economic ruin and social and environmental collapse. One reviewer of Goodstein's book despaired, "If he's right, I'm sorry for my kids. And I'm especially sorry for theirs."
But we've heard it all before. "These kinds of doom and gloom energy predictions become popular every 10 years or so," says Michael Lynch, president of Strategic Energy and Economic Research, a Massachusetts consulting firm. "In this case there's very little original research and everybody is citing the same handful of articles. It's an example of how the herd instinct drives the psychology of scientific consensus." Lynch's new study "The New Pessimism about Petroleum Resources," pokes holes in forecasts of imminent oil doom. Lynch points out that the supply of oil is determined not only by geologic factors, but also by political, economic, and technological ones.
It's true that oil discoveries peaked in 1982, but Lynch argues that's because of politics, not geology. "The big factor in the decline in oil discoveries is that Saudi Arabia, Kuwait, Iraq, and Iran all nationalized their oil industries in the 1970s. Plus Iraq and Iran went to war and essentially stopped exploring for more oil," explains Lynch. "They have so much oil, why would they bother looking for more?" He adds dryly that Scientific American doomster Colin Campbell has been predicting that the peak of oil production is three to four years away for the past 15 years.
The fact is, we don't really know how much oil is left. "Available supply" is not merely a geological fact. It depends on technology and economics as well. But we do have some good guesses out there. Henry Linden, a professor of energy and power engineering at the Illinois Institute of Technology, just published an estimate of eight trillion barrels of oil, gas, and oil sand reserves in the Oil and Gas Journal. The U.S. Geological Survey (USGS) estimates of worldwide conventional oil resources range from 2.248 trillion barrels to 3.896 trillion barrels.
Annual global oil production these days is 24.5 billion barrels. At the current rate of production, oil supplies would last at least 90 years. Taking into consideration various scenarios for future energy use and based on those USGS estimates, the Energy Information Administration sees oil production peaking anywhere from 2030 to 2075. Hardly an imminent crisis.
Someday, of course, oil production really will peak, either for geologic or economic reasons, or most likely a combination of both. Instead of a catastrophe, Lynch expects a relatively smooth transition to new energy sources. And history bears out his optimism. Oil crisis mongers make the mistake of thinking that "markets are so myopic that they cannot foresee future supply trends; that markets won't realize when a resource is running out."
If demand for oil begins to outstrip the supply, prices will rise, signaling companies and consumers to use less, develop new technologies, switch to other fuels, increase their insulation, and so forth. "Demand for energy is going to move away from heavy hydrocarbons," Lynch predicts. "Coal is first, oil is next." He expects that our old hydrocarbon friends will be replaced in our affection by natural gas, nuclear, and other forms of energy as those technologies improve. "It will be much like the transition in the 20th century from coal to oil in the residential heating and transportation sectors or like the transition from horses to cars," he says. The Oil Age will end, not with a horrific screech leading to a destructive crash, but with a barely perceptible, well-lubricated, smoothly braked halt, one that is merely a prelude to moving smoothly and rapidly forward again.