[Update: Kevin answers with a crushing blow via Prudhoe Bay…]
I’ve been following Kevin Drum’s excellent series on ‘peak oil’ with a lot of interest; I think that Kevin’s interest in the strategic issues around energy policy is appropriate and significant.
But I’m less certain that his point – that we’re at or near an absolute level of peak oil production, and that an absolute decline in oil produced matched with increasing demand from an industrializing Asia risks severe economic dislocation – stands up.
I’m not an oil economist, but my guess is that as technology improves and prices rise, supplies do move upward. And we don’t eat oil. Economic efficiency – the unit of productivity per BTU – just keeps moving up.This weekend, I noticed a casual side note in an article about a local oil company, Occidental Petroleum:
Although the U.S. fields are mature, Occidental is known for using cutting-edge technologies to find more oil and pull it from the ground. It’s a key reason why its reserves keep growing faster than its production.
Take Elk Hills. When Occidental bought the field seven years ago from the U.S. government, its proven reserves were the equivalent of 425 million barrels of oil. Since then, the company has produced about 235 million equivalent barrels, yet its proven reserves now total 462 million barrels.
Occidental credits an aggressive program that included using 3D seismic surveys to find oil, drilling 1,200 new wells on the property and injecting water, carbon dioxide and acid into wells to stimulate output.
This doesn’t put paid to the concept of peak oil, nor to the very real issues our over-reliance on oil and particularly imported oil presents to our economy, environment, and security.
But my guess is that the notion of commodity catastrophe – one that has been raised since the 18th century – is one that takes place gradually, not in the short time span that leads to social collapse.
In a simple form, the auto dealership row near our home is a good example of that gradual change. All the SUV’s have promotional pricing on them. Good riddance.