Peak Demand Before Peak Oil?

There has been a lot of talk in the media lately about the possibility that oil demand will peak soon (or has peaked already), which will render a geologically-induced peak in oil production irrelevant. In other words, peak oil is a non-issue because people won’t be demanding as much oil as can be produced (which is true presently). In fact, I just did a Google search of my blog, and the phrase “Peak Demand” shows up 239 times over the past 2 years. Regular reader Benjamin Cole was beating the peak demand meme long before I heard the media start to pick it up. (Here he is arguing this point two years ago).

Over the weekend I saw a new article that argued this point:

Study predicts oil demand will peak well before supplies run out

I think calling this a ‘study’ is being very generous, and I have some big problems with multiple aspects of the article. Let’s have a look:

Management consultancy Arthur D Little has turned peak oil fears on their head with a report suggesting that the global economy will have begun to abandon oil well before supplies peak.

A bit of hyperbole, don’t you think? If anything has turned peak oil fears on their head it has been the collapse of oil prices – not the opinion of someone I never heard of. Hard to be concerned that there is a crisis around the corner when oil prices reflect a belief of an abundantly supplied market.

The Beginning of the End for Oil?, written by Peter Hughes a former executive at natural gas giant BG Group, address the prospect of falling demand for oil, rather than fears over dwindling supplies. It suggests that a mixture of drivers is forcing a broad policy change that will continue to reduce consumption. Fears over climate change, security of supply, and price volatility, will form a holy trinity to drive policy redirection, he said.

There are significant drivers for policy redirection, but working against those drivers is the issue of oil prices. They have already fallen to the point that they have spurred a recovery of demand. This is why I don’t subscribe to the peak demand > peak oil argument. We just don’t have anything that can compete with oil, especially at current prices. Crude oil is like a giant lake of underground energy that nature already did the heavy lifting on. Even though the lakes are becoming harder to access, they are still more economical than processes that require that humans do the heavy lifting (e.g., you have to input a lot of energy to turn straw into a liquid fuel). Peak demand is only going to occur if there are alternatives with low fossil fuel inputs that are competitive. Those are not on the immediate horizon, therefore demand is going to recover before it starts to shift to something else. Because I believe we will reach peak oil before anything is competitive with oil, I think peak oil will occur before peak demand.

Hughes also points to the Energy Information Administration’s (EIA) reduction of long-term oil consumption forecasts last year. It said the world would be using 10m barrels less per day in 2030 than it had predicted previously

Yet still more than we use today. And the current version of This Week in Petroleum reads “Under almost all EIA long-term projection scenarios, global demand for crude oil and petroleum liquids increases through 2030.”

But why does the EIA predict slower growth in petroleum demand? Because they are predicting that the ethanol mandates will result in production of almost 30 billion gallons of ethanol per year in 2030 – most of it cellulosic. (Less than two years ago the same agency was predicting less than a billion gallons of cellulosic in 2030 – amazing how effective mandates are at creating new technology!)

Despite the huge increase in ethanol production, they forecast a very modest rise in natural gas consumption. This begs the question “Where are all the energy inputs going to come from to drive production of 30 billion gallons of ethanol?” Because of the nature of ethanol production – which unlike oil does not comes to us as an underground lake that nature has largely processed – it takes substantial energy inputs to produce finished ethanol. That is not reflected anywhere in the EIA forecasts. It appears that the assumption is that it will take no incremental fossil fuel production to produce this much cellulosic ethanol. The problem is that no such technology has been invented, so the peak demand argument has to rely on new technologies yet to be invented. That is an incredibly weak argument.

Oil industry experts have predicted that any decline in oil demand in developed economies will be more than compensated by increased consumption in China and other BRIC countries as disposable income rises.

But Hughes argues that these emerging economies would be driven by the same desire to cut oil demand that is already being felt in developed economies. “The Chinese think very coherently and very long term,” he said. “They have identified the threat to the long-term sustainability of their growth path by relying increasingly on imported energy.”

I can’t make too much sense of this. China’s plan for long-term sustainability involves relying increasingly on imports? Wow, then the U.S. is really on their way to a sustainable future. We have increased our imports to something like 2/3rds of our liquid fuel needs.

The report has little in the way of numbers, and insiders admit it is more an opinion piece by Hughes based on almost 30 years in the energy business.

That’s pretty obvious.

But Hughes is not alone in predicting that fears over peaking oil supplies are largely unfounded, on the grounds that economies will find replacement sources of energy at a faster rate than the oil industry expects.

Amory Lovins, co-founder of the Rocky Mountain Institute, has been similarly outspoken on the subject of oil demand. “Oil is going to become, and has already become, uncompetitive, even at low prices, before it becomes unavailable even at high prices,” he said in a 2007 Newsweek interview. “So we will leave it in the ground. It’s very good for holding up the ground, but it won’t be worth extracting.”

Yes, Amory Lovins predicts the same. Now there is a great endorsement. As Robert Bryce pointed out in a 2007 article on Lovins, Lovins does not have a good track record with his predictions. Some of his past predictions:

1. Renewables will take huge swaths of the overall energy market. (1976)
2. Electricity consumption will fall. (1984)
3. Cellulosic ethanol will solve our oil import needs. (repeatedly)
4. Efficiency will lower consumption. (repeatedly)

Bryce systematically demolishes Lovins’ predictions in his article, and wonders why people still listen to him.

So I am firmly in the camp that we are going to see a peak in oil production before we see a massive move to alternatives. On the topic of peak oil itself, my current thinking remains as it has for several years. We are close, but not there yet. I have said several times that I expect oil to peak at around 90 million barrels per day (for ‘all liquids’ production). Christophe de Margerie, the CEO of Total, was recently quoted as saying he thought 89 million barrels per day will be the peak. Jim Mulva, CEO of ConocoPhillips, has expressed similar sentiments. After the IEA came out and predicted oil demand of 116 million barrels per day in 2030, Mulva said he didn’t see how we would ever get past 100 million barrels per day.

I do continue to be bemused by those who suggest that oil production peaked in 2005. When I was posting regularly at The Oil Drum, this was an issue that frequently found me at odds with many of the readers. I felt like there was insufficient evidence, and that many of the arguments suggesting an immediate peak were flawed. That didn’t stop people like Matt Simmons and Ken Deffeyes from making definitive statements that peak oil has passed. Both have been saying for several years now that we are past peak. Here’s Deffeyes in February 2006 saying that oil peaked in December 2005 and claiming “I can now refer to the world oil peak in the past tense. My career as a prophet is over. I’m now an historian.” JD at Peak Oil Debunked points out that peak oil has been a moving target for Deffeyes. Here’s Simmons in early 2007 saying that the world has peaked. T. Boone Pickens called the peak in 2004. Here’s one of the TOD contributors calling “Peak Total Liquids of 85.52 million barrels/day on Aug 2006.”

So where do things stand? All of these guys were wrong. Per the EIA database, 2008 eclipsed 2005 as far as total oil produced, and the present monthly record is now July 2008 for crude production plus condensate. In the ‘all liquids’ category, daily production in 2008 was about a million barrels per day higher than it was in 2005 at 85.6 million barrels per day (and several months checked in just short of 87 million barrels per day).

If anyone can point me to a place where any of the “Peak Oil Historians” admitted to being in error, I would appreciate it. Prior to the credit crisis I thought we would see peak by 2012 at no more than 90 million barrels per day. With the crisis, it may delay peak by a year or so, but also make it less likely that we make it to 90 million barrels per day. We are certainly knocking on the door of peak oil (IMO), and if someone suggests that for all practical purposes we are there I couldn’t disagree. But I think it demolishes credibility to go on TV and make a claim like “Peak Oil occurred in May 2005.” I have advised people that no matter how sure you are about that, if you stick your neck out and are wrong, you are the boy who cried wolf and your message will lose any semblance of credibility.

At the present time, demand has been destroyed the point that there are several million barrels per day of excess capacity. I think that most of the rise in oil prices since 2002 can be explained by my Peak Lite scenario, which boils down to erosion of excess capacity. When prices got out of hand, significant demand was destroyed and we find ourselves with 2002-like spare capacity. I think going forward, we are going to see the gradual return of Peak Lite. The only question in my mind is when the climb begins. But since I am a long-term investor, I have the patience to wait it out.

29 thoughts on “Peak Demand Before Peak Oil?”

  1. Hughes: “They have identified the threat to the long-term sustainability of their growth path by relying increasingly on imported energy.”

    R-Squared: “I can’t make too much sense of this. China’s plan for long-term sustainability involves relying increasingly on imports?”

    I can’t either, but I think the problem isn’t in his reasoning, but in his grammar. I can’t find any verb that “by relying on” could modify other than “identified”, and I don’t think that can be what he intended.

    My guess is that he meant something more like this:

    “They have identified reliance on imported energy as a threat to the long-term sustainability of their growth path.”

  2. Great post. Perhaps with age sometimes comes impatience. When one strongly feels a sense of righteouness that is being ignored by others one feels a strong urge to press on. What I am saying is that there are lots of sociological implications when we deal with issues of grand scale. Dire predictions from religious adherents are not uncommon, so if you replace religion with science, you surely have a more potent elixir for teleological discussions.

  3. What we are seeing now is demand destruction brought on by the collapse of a credit bubble, IMO. The credit bubble was essentially fueling an unsustainable, debt-based economy in the States and was propping up, currency-pegging, export-based economies like China. All that consumption is now coming back to earth and we’re seeing the results in energy prices as there’s less fuel burned for transportation of goods and services.

    There’s a ton of fat in our lifestyles that can be trimmed away easily and that’s happening right now. However, efficiency improvements only push forward the day of reckoning. Actually shifting from oil to electricity will require sustained, stable, and high oil prices.

  4. Well, I am red-faced with embarrassment that RR quotes me high in this post. And yes, I do contend that global peak demand is a possibility, and is already a reality in Europe, USA and Japan.
    I think the prime weakness in the Peak Oil or Peak Oil Lite scenarios is too-little appreciation of the price mechanism.
    Higher prices both suppress demand, while encouraging the full range of new supplies. The PHEV also promises to be a game-changer, if oil prices ever stay above $100 a barrel.
    The world has enormous deposits of heavy oil, but they will cost more. The problem is most oil is in politically unstable or corrupt thug states.
    The complete lack of will in the USA for gasoline taxes is discouraging–such taxes would ensure we had passed Peak Demand in 2007. China shows little interest either, although they may mandate PHEVs at some point. It is a fiat country.
    Whole nations, such as Indonesia, Thailand and Sweden, are moving energy independence by fiat.
    I think it is clear, the world’s consuming governments could engineer Peak Demand through tax policies (basically, taxes at the pump).
    In the end, what I most militate against is not RR’s shrewd and extremely knowledgable insights, but rather doomsterism. The price mechanism will ensure a robust response to higher oil prices, especially within the context of a free enterprise, well-capitalized society.
    I see a better world ahead, especially if PHEVs become the norm. Cleaner city air, and fewer dollars sent overseas to thug states, but rather recycled at home to create jobs.
    We can seize that better world, if we have the smarts and determination.

  5. Lovins was required reading for my undergraduate engineering degree. So I’ve followed his wrongheaded ideas for going on 30 years.

    Somebody better explain this to the Obamabots. It seems they have all been drinking the green Kool Aid. Like Lovins they not only believe in the free-lunch but that someone will actually pay you to eat the free lunch (green jobs).

    You can find these idiots hanging out at grist.org and other places on the left end of the dial.

  6. Can I propose a hybrid theory? Benny’s Peak Demand at high oil prices and RR’s Peak Oil at low oil prices.

    For the most part I think RR is closer to reality, although he too seems to neglect the effect of price on demand. 90 million bpd @ $150/bbl would be plenty for several decades, IMHO.

    What happens if production drops to 80 million bpd? There is a price ($200/bbl? $250/bbl? $300/bbl) where that is sufficient too.

    Benny, allow me to burst your bubble: the recent price collapse had less to do with the high prices that preceeded it, and more with the Great Recession (Depression?). You seem to well appreciate the effect of high prices on Demand, but you seem to forget that $40/bbl is going to create a bunch of new Demand, especially if the economy ever recovers.

    RR has a pretty clear eyed view of the alternatives too. He does seem to overestimate the effect of oil prices on alternatives. Not all alternatives are as dependent on energy inputs as ethanol, RR! High oil prices, IMHO, is a requirement for alternatives to get established. Just look at recent history: at low oil prices we pretty much drop alternatives like hot potatoes. So high oil prices do have their advantages.

    …what I most militate against is not RR’s shrewd and extremely knowledgable insights, but rather doomsterism.
    I must agree with that comment. I know you’re not as bad as many (especially at TOD) when it comes to doomsterism, but you do have that flavor of I think we’re screwed either way about your observations, RR.

    For the most part I suspect you underestimate the innovation (and conservation) that $300/bbl (or more?) will unleash…

  7. You can find these idiots hanging out at grist.org and other places on the left end of the dial.
    Spot on, for the most part, King.

    I just have to point out that these days the idiots seem to have the microphone at both ends of the political spectrum. And the silent majority is getting killied…

  8. Can I propose a hybrid theory? Benny’s Peak Demand at high oil prices and RR’s Peak Oil at low oil prices.

    I almost elaborated on this, but I felt the post was already getting a bit long. It is true that if oil is at $300 and stays there, we have probably seen peak demand. At these prices some alternatives, and a big dose of conservation will start to become important. I am just surveying the scene right now. At $40 oil, I don’t think any alternative is competitive. Probably not even at $80 oil.

    know you’re not as bad as many (especially at TOD) when it comes to doomsterism, but you do have that flavor of I think we’re screwed either way about your observations, RR.

    Depends on your definition of screwed. Do I think we are destined for big problems; even bigger than we are seeing today? Yes. Do I think there will be a multi-billion person die-off? No. I am of the view that we will muddle through, but it will be a difficult transition period. I think the next 20-30 years are going to be much more difficult than the past 20.

    Cheers, RR

  9. Optimist-
    Yes, the Great Recession killed demand…but oil demand had flatlined even with a growing world economy, due to higher prices.
    Together, I anticipate a 10-15 reduction in global oil demand from 2007 peak, and $10 oil, as a result.
    Oil demand is price inelastic short-term, so lower prices will not reignite demand, unless sustained for several years. An improving economy (please, please) will.
    Speaking roughly, the price mechanism works in the world of crude oil, but it takes five to 10 years. Then it works like the tide, relentlessly. Almost inevitably, gluts are the result of sustained higher prices.
    Optimist, my bubble burst long ago, not by the lack of man’s creativity or technical innovation. That man has in spades.
    It is the lack of sane, civil government and society that burst my bubble.
    Sadly, many regions of the world will endure cruel and corrupt regimes for generations to come, I fear. Those regions also happen to have the oil.
    A small ray of hope is the example of Libya, and perhaps Iraq.

  10. Optimist – true. But only one side is saying we don’t need fossil fuels because we are going to conserve our way out of the problem.

    When engaging them I like to say I’m in the organic solar energy business. It is just that the solar energy I’m harvesting is a couple of million years old. But no pesticides or synthetic fertilizers were used in producing my energy!

  11. Of course oil demand will peak well before supplies run out. As the former Saudi Oil Minister said “The Stone Age came to an end not for a lack of stone, and the oil age will end, but not for a lack of oil.”

    But that doesn’t mean that peak demand has trumped peak supply yet, anymore than it did back in 1982. Demand for whale oil dropped before we ran out of whales, not because demand for oil had reached a permanent peak, but because we found kerosene to be a cheaper oil alternative to whale oil. So I agree with RR. “Peak demand is only going to occur if there are alternatives with low fossil fuel inputs that are competitive. Those are not on the immediate horizon.

    The price mechanism will likely to continue with oil prices rising higher, demand dropping, oil prices dropping, demand rebounding, and oil prices rising even higher, continuing the cycle until petroleum prices become so high that an alternative finally appears that is cheaper than those high petroleum prices. Maybe PHEV will be it, but affordable ones are not here yet. Maybe if gasoline hits $10/gal. In the end I expect peak demand and peak oil to be nearly indistinguishable with both sides claiming vindication or validation.

  12. When engaging them I like to say I’m in the organic solar energy business.
    King,
    That’s almost as funny as those products loaded with organic evaporated cane syrup in the health store!

    Together, I anticipate a 10-15 reduction in global oil demand from 2007 peak, and $10 oil, as a result.
    IMHO those two are mutually exclusive, Benny. 10 – 15% reduction in demand won’t get you to $10/bbl. $10/bbl is going to lead to an EXPLOSION in demand.

    Look, I know you hate what this will do for the Thug States (or as Tom Friedman calls them: the petro-dictators), but without high oil prices we ain’t doing squat. Look back 20 years.

    Of course, the European example suggests that a mere doubling of price won’t get us there. Better fasten those seatbelts…

  13. Lots of generalizations going on, such as the projections of various scenarios unto the life of the average Joe. Well guess what, average Joe does not exist! The reperscussions will be severe for a great number of people while for others, well pepared and in very different settings, not so. It depends on the context. Some even forget to take into account overpopulation and climate change; unlike some tweeked scientific model these issues wont just disappear. So think about that too in the long run.

  14. Optimist:
    Oil hit $10 a barrel in 1998, and demand grew after that, but did not “explode.” After all, just bacuase gasoline is $1 a gallon, do you buy more of it than you need?
    If you are running a business, it still makes some sense to not blow money out your rear end.
    Demand for oil is somewhat price inelastic. It takes years for responses to accumulate.
    That is why oil could be cheap for a long, long time.

  15. “That is why oil could be cheap for a long, long time.”

    Harold Wilson, once Prime Minister of Britain, famously said — A week in politics is a long time.

    Supply of oil, and hence price, is very susceptible to political factors just now. Predicting oil price is therefore almost impossible.

    The frustrating thing about leftie energy pontificators is that they have apparently never run the numbers on global energy use. We are using +/- a cubic mile of oil each year. No number of windmills or solar panels is going to replace that. We already have the technology & the resource to replace it — nuclear fission — but leftie politics prevents its widespread use.

    That willful stupidity will change. The human race will continue to move forward, but the path is going to be a lot rougher than it needs to be.

  16. Kinu-
    Another reason the Peak Oil story is deader than yesterday’s newspaper: Natural gas.
    The new drilling techniques evidently open huge reserves globally.
    Shell is building a 650 tbd GTL plant in Qatar, but evidently there is enough natural gas everywhere to build many more of these plants. Sheesh, 10 such plants, and you get another 6.5 mbd of production. That is the difference between global tightness and a glut.
    As for lefties, actually our new Energy Sec’y, Chu is a big advocate of nukes. I like mini-nukes, myself.
    There is a problem: Even when Nevada was redder than a bleeding Indian in a St. Louis Cardinal uniform, it did not want nuke waste.
    Just like Florida is pro-drilling, except for off the coast of Florida. So it goes.
    Personally, I think oil/gas has decades to play out yet. France (talk about lefties) is building nuke plants big time. Maybe we just need to go to full-on socialism.

  17. If anybody thinks oil is going to rebound soon, I suggest you read about Japan’s exports in Jan. Down 40 percent.
    That is breathtaking. I would expect such a figure if a foreign power attacked Japan’s harbors. I mean by naval bombardment.
    This oil glut will have mor legs than a centipede. Get ready for $10 oil. Maybe we will see single-digit oil in cheaper grades.

  18. There is an alternative that isn’t dependent on energy inputs. Advanced geothermal is the answer for the future imo. Heat is energy. And,there’s enough heat beneath our feet to run the planet for 50,000 years. It also happens to be clean.

    That said,we’re still a decade or two away from profitable exploitation of deep geothermal resources. And when it does happen,”big oil” will be a major player. Oil prices did another pole vault today on yet another weak inventory report. Gasoline demand is up strongly. The recession is over,and the markets are about to take notice. Oil will head back over $100 fairly quickly.

  19. Maury-
    I love your optimism, but when exports from Japan fall by 40 percent, how on earth are we going to see a fast “snap back” in oil demand?
    Even if Japan’s exports grow by 10 percent a year going forward, it will take six years to get back to 2008 levels of exports. That may be a proxy for when Japan againconsumes as much as it did in 2008. Or, perhaps by then, more Japanese drivers will be using PHEVs or other high mpg cars–meaning Japanese oil demand continues its deccades-long decline.
    In addition, after previous oil price spikes (1979 and others), oil demand came back at increasingly diminished rates.
    Every price spike is another nail in the coffin of the oil business. People switch away, and those switches become embedded in the economy.
    Even in the best of times (strong economies, low prices), oil is a very mature industry, with slow growth in demand.
    The oil glut is a centipede–it has legs.

  20. “but when exports from Japan fall by 40 percent, how on earth are we going to see a fast “snap back” in oil demand?”

    The same way Japanese exports will see a fast “snap back” Benny. This wasn’t a typical recession. Credit markets suddenly seized up last fall and shipping is very reliant on credit. Credit markets are almost back to normal today. And it’s a good thing. If those kind of export figures lasted more than a couple of months,Walmarts’ shelves would be bare.

  21. “Or, perhaps by then, more Japanese drivers will be using PHEVs or other high mpg cars–meaning Japanese oil demand continues its deccades-long decline.”

    I am no expert on Japan, Benny. But people who are tell me that the Japanese domestically already use cars very much smaller than they export. Key factor is apparently the lack of parking space.

    But leave that aside. Assume the Japanese do adopt Plug-in Hybrid Electric Vehicles. That will increase their electric demand. Where will the power come from to run their grid? Only serious options are oil, gas, coal — and nuclear. And oil is the cheapest fossil fuel to move around the world to Japan. PHEVs may simply change Japan’s oil consumption from gasoline to distillates.

  22. Yes, and Japan is building more nukes. They use coal as they have domestic supplies. Japan’s oil consumption is back to levels of the early 1970s. (Check out BP world stats). That is more than 30 years–and I think they will adopt PHEVs. In 10 years, they may go back to levels of the 1960s, and certainly will if there is another price spike.
    Look, Japan is not run by weenies, ala the USA. They have a terrific industrial base, and they can make the best effing cars in the world. They can make PHEVs.
    I suspect China will too.
    This may turn out to be the “centipede glut.” It has legs,legs and more legs.
    So, Europe’s demand for oil is declining, the USA’s is going down, Japan is retreating, and China is one policy change away from flatlining.
    Meanwhile, we have a long, long, long term glut of natural gas shaping up, due to shale-cracking. GTLs? Cars that run on NG?
    Peak Oil was scare-mongering, manipulation and worse. It shifted hundreds of billions of dollars out of U.S to thug states.
    Makes you wonder who was behind the PO scare.

  23. Peak Oil was scare-mongering, manipulation and worse. It shifted hundreds of billions of dollars out of U.S to thug states.
    Makes you wonder who was behind the PO scare.

    Keep thinking it over, Benny, because that boomerang is coming back…

    And, BTW, have any proof about those rather serious manipulation charges?

  24. Robert: If I recall correctly (don't know offhand what data sources they used) I believe Simmons & Deffeyes were talking about a 2005 peak of conventional crude, not all liquids.

    The EIA data you linked to for C+C only would support the claim that world production peaked in 2004, if you allow +/- ~2% for the "bumpy plateau":
    Year Max Production (mbpd)
    2004 73.4
    2005 74.2
    2006 74.0
    2007 73.8
    2008 74.8

    That brings me back to Campbell's point, which I assume you agree with: The date of the absolute peak is basically irrelevant when you take into account the long slope on the backside of the curve.

    Put another way: Do you see C+C (only) growing past, say, 76 mbpd? If not, then why even talk about all liquids? We all agree (I think) that biofuels, xTL, etc. can't substantively change the picture.

  25. There are a couple of problems with this argument, Chris. First, nobody ever said “We have peaked, within plus or minus 2%.” People like Deffeyes made very definitive statements, so they should not be surprised at all that the media would point to those statements as just another example of an overreaction by that crazy peak oil cult. “Peak Oil isn’t a problem; they have been predicting that for 30 years. Just look at the latest predictions by Simmons, Pickens, and Deffeyes. Already falsified.”

    Second, several of these guys have given specific numbers associated with their peak predictions. When they talk about a peak of 82 or 85 million barrels per day, they are talking about all liquids. As I have argued before, this isn’t the right metric for what we are trying to measure, but neither is crude plus condensate. The appropriate metric would be something like “Peak Net BOE.” But that’s too complicated, so we go with all liquids or C+C. The problem is that both of these measures have now broken the previous records, and the silence from those making those unequivocal claims of a 2005 peak has been deafening. I just think it destroys credibility, and detracts from our ability to get people engaged in serious discussions. I have had this exact conversation with someone who doesn’t take peak oil seriously. He always points to these failed predictions as evidence that these guys are always wrong about this.

    That brings me back to Campbell’s point, which I assume you agree with: The date of the absolute peak is basically irrelevant when you take into account the long slope on the backside of the curve.

    That’s right, but when the sensationalists try to bring attention to this by making high-profile announcements that peak has happened, the argument is diminished as soon as a new record is set. The media points and says “You were confident once before, but you were wrong.” I think it would be far more effective to stop this business of “Peak in May 2005” or whatever, and just acknowledge that we are close with no good transition plan. This is one reason I really liked the Hirsch Report. Bob didn’t try to call the peak, and to my knowledge never has. But he did try to highlight the serious issues in front of us.

    Cheers, Robert

  26. I agree with RR, the obsession with “the Peak” is misleading. There is nothing magical about the Peak. The peak only appears as a point of inflection when you look at the rate of extraction. In terms of cumulative extraction, it’s just a point on a curve. It’s not like we reach peak and then *blammo* oil price rockets.

    We will get an increasing squeeze on supply/demand differential as the peak is approached and for a long time afterwards. This will cause a volatile price/supply regime. Most doomers agree with that scenario, but still get overly worked up and about what the exact Peak date is. It may be of academic interest, but in practical terms doesn’t really matter.

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