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Are the pipes calling?
Posted by Heading Out on August 4, 2005 - 5:47am
It is probably wrong to judge a person by comments made 27 years ago, but the quote will be related to a similar recent action that makes it worth bringing up for discussion.
During the 1970's an Energy Project was started at the Harvard Business School, and in 1979 Robert Stobaugh and Daniel Yergin reported on it with the book Energy Future. It is interesting reading, to see how the world was viewed, and what they recommended.
The authors built their case on the energy split in 1977 (in millions of barrels a day of oil equivalence, or mbdoe). This came from a domestic supply of: 10 mbd oil; 9 mbdoe natural gas; 7 mbdoe coal; 1 mbdoe nuclear; & 1 solar (including hydro) with imports of 9 mbd of oil for a total of 37 mbdoe.
If convention were followed they predicted that the supply by the end of the 80's would be domestic oil 10 mbd; gas 9; coal 12; nuclear 3 and solar 2; with imports of 14 mbd of oil and 1 of gas, and conservation over anticipated growth yielding 3 mbdoe to give a total of 54 mbdoe as anticipated demand. (Also predicting 34 mbd of OPEC production).
This reliance on foreign oil was considered dangerous
This was a fairly well argued case, but it hung on one awkward number – in all cases they projected that the U.S. would produce 10 mbd of domestic oil in the late 80's. The choice of this number is described
Why bring it up right now – well Daniel Yergin's Washington Post editorial, which concludes that we don't have to have any worries about oil supplies running out, includes this
Now what was that saying about "fool me once . . . ."
Oh, and the energy supply in 1990 turned out to be 7.5 mbd domestic oil; 7.9 mbd imported oil; 9.3 mbdoe natural gas; 9 mbdoe coal; 2.88 mbdoe nuclear; 1.44 mbdoe hydro; 1.26 mbdoe wood, waste etc; 0.16 mbdoe geothermal; 0.03 mbdoe solar and 0.01 mbdoe wind, for a total of 40 mbdoe. (Source Annual Energy Review, which can be found here, though I have converted the numbers from quadrillion Btu's to mbdoe for consistency).
Technorati Tags: peak oil, oil
During the 1970's an Energy Project was started at the Harvard Business School, and in 1979 Robert Stobaugh and Daniel Yergin reported on it with the book Energy Future. It is interesting reading, to see how the world was viewed, and what they recommended.
The authors built their case on the energy split in 1977 (in millions of barrels a day of oil equivalence, or mbdoe). This came from a domestic supply of: 10 mbd oil; 9 mbdoe natural gas; 7 mbdoe coal; 1 mbdoe nuclear; & 1 solar (including hydro) with imports of 9 mbd of oil for a total of 37 mbdoe.
If convention were followed they predicted that the supply by the end of the 80's would be domestic oil 10 mbd; gas 9; coal 12; nuclear 3 and solar 2; with imports of 14 mbd of oil and 1 of gas, and conservation over anticipated growth yielding 3 mbdoe to give a total of 54 mbdoe as anticipated demand. (Also predicting 34 mbd of OPEC production).
This reliance on foreign oil was considered dangerous
"The United States is at the center of the world oil problem, having failed to come to grips with the decline of its influence over the world petroleum market and the true costs of its oil imports. By ….ignoring the even larger external costs associated with imported oil, the United States has been encouraging a form of behavior that will drain the world of the commodity. This is a reckless course, increasing the vulnerability of the entire Western world and undermining the leadership of the United States within it. In short, increased dependence on imported oil poses a threat to American political and economic interests; that much must now be clear."To counter this they suggest a program that would encourage other energy sources and conservation, and that such a program be funded by the Government. With such encouragement, particularly of solar energy and conservation, they anticipated that the US supply could become: domestic – oil 10 mbd; gas 9 mbdoe; coal 11 mbdoe; nuclear 2 mbdoe and solar 4 mbdoe. With imports of 9 mbd of oil and 1 of natural gas, a conservation program that would save 8 mbdoe would total 54 mbdoe of demand.
This was a fairly well argued case, but it hung on one awkward number – in all cases they projected that the U.S. would produce 10 mbd of domestic oil in the late 80's. The choice of this number is described
"Thus, the total U.S. oil output in the late 1980's from both known and newly found oil fields and from enhanced recovery will likely approximate 10 million harrels daily, about the same as current production. Even this level is quite speculative and perhaps on the optimistic side. To maintain that production level would require the finding of almost four billion barrels annually; but there has been only one year in the last thirty in which more than three billion barrels of oil has been found."In other words they had built a whole case on a balanced supply of energy on a premise that they knew, even at that time, was likely false.
Why bring it up right now – well Daniel Yergin's Washington Post editorial, which concludes that we don't have to have any worries about oil supplies running out, includes this
Our estimate for growth in Iraq is quite modest -- only 1 million barrels a day -- reflecting the high degree of uncertainty there.But the reality of Iraq is that the likelihood of their being able to increase production by 1 mbd over the next few years is likely zero. (As was finding 4 billion barrels of oil in the U.S. every year of the 1980's). But by putting it in, and neglecting depletion, a very rosy picture of the future could be painted. What a pity that it is built upon such a dubious foundation.
Now what was that saying about "fool me once . . . ."
Oh, and the energy supply in 1990 turned out to be 7.5 mbd domestic oil; 7.9 mbd imported oil; 9.3 mbdoe natural gas; 9 mbdoe coal; 2.88 mbdoe nuclear; 1.44 mbdoe hydro; 1.26 mbdoe wood, waste etc; 0.16 mbdoe geothermal; 0.03 mbdoe solar and 0.01 mbdoe wind, for a total of 40 mbdoe. (Source Annual Energy Review, which can be found here, though I have converted the numbers from quadrillion Btu's to mbdoe for consistency).
Technorati Tags: peak oil, oil
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I seem to recall reading that Yergin/CERA made some optimistic projections on future domestic natural gas production within the past five years or so that also turned out to be spectacularly wrong (in the Hirsch report maybe?...I don't recall).
I suppose this is all the more reason why he should be quoted as an authority by every major paper and interviewed on CNBC and the Newshour with Jim Lehr every time people start to worry about energy!
As long as people are willing to listen to others interpretations of data and refuse to use their own brains, we will be stymied in any effort at getting their attention. Yergin is just another talking head, and while he did write a book, he is not an oil guy. When his data disagrees with ExxonMobil, one of the most conservative oil companies in the world, that should be reason enough to be circumspect.
But the general populace is given the programming which they want via ratings, including news. As long as people continue to abandon network newscasts in favor of alternative media, there is a shot at changing this. But it will have to become a big hole so that a "new news venture" can be created, complete with reporters that actually leave their office rather than logon to LexisNexis and parrot their work.
It isn't time yet, but somebody will reinvent the news in the next few years. It might even be PodCasting that replaces it via cellphones...
But IMO, Yergin is simply not credible when the cards are all turned face up. I am hoping that Simmons can get some airtime somewhere, and I would love to see him vs Yergin in a debate.
I stand by what I wrote yesterday - it isn't any conspiracy, it is just that the way every business operates in the oil patch, the "forward looking" data is always what is used. State-owned or private doesn't matter - both systems reward positive news and results. Thus the inherent reporting methiod is always that which will garner the most investment or reward. In turn, every number released is always the best-case, even the downgrading of reserves. It is always the least amount of downgrading they can get away with.
No company gives bonuses for depletion news. None gives rewards for downgrading reserves. No company honors increased costs and expenses. This means every manager within these companies is massaging numbers and spinning POV in a positive way.
Leave out the human factor at your own peril, people. Everything within the state and corporate system rewards positive news. This is the same type of data massaging the BEA does on GDP and CPI, only disclosure of the machinations is not required...
It isn't news, it's business as usual.
If you want to see a wrong prediction, look at solar! There has been essentially no change in solar output in the 27 years, not the X4 gain, even though they plumped the original number by lumping hydro under "solar".
This is one of the grievious errors of many when it comes to discussing energy options - the dubious fantasy of future solar power. Let's get real folks, solar has been oversold. A review of basic physics and thermodynamics will illuminate the problem and tell you why it has only niche uses. Poring yet more R&D funds into the field is a misdirection of resources.
SOLAR is just politically correct energy! Just ask Harvard!
Plus, this method of energy accounting conflates energy quality. Is nuclear counted as electrical output against barrels per day oil equivalent or as nuclear heat in the reactor, a number three times as high? Likewise, solar hot water is in no way equivalent to higher heating value of natural gas.
So far, Yergin has been a great historian ("The Prize") but a mediocre seer.
10m/bd in the 80's and now no peak for many years. Yergin can't get that undulating plateau out of his mind!
The CERA analysis rejects the current fear that a near-term peak in world oil production and a coming exhaustion of supply are near. The report indicates that the inflexion point will come in the third or fourth decade of this century. Moreover, rather than a peak, it will be an undulating plateau that will continue for several decades.
Back then he said "In short, increased dependence on imported oil poses a threat to American political and economic interests; that much must now be clear. Now, apparently, the much larger imported oil dependency is no longer a threat.
He's learned his ass-kissing lesson! You can't attend Bilderberg and rub shoulders with the Big Guys if you go around saying we've got energy problems.
It's interesting that he predicted 10 mbpd domestic oil and 9 mbpd imported oil; while the actuals were 7.5 mbpd domestic and 7.9 mbpd imported. He drastically overestimated the oil demand for the U.S.! He estimated 19 while the actual was 15.4. This does not quite fit so well into your story of Yergin as a rose colored glasses wearing Polyanna who constantly underpredicts the seriousness of the future situation. In this case he seriously overestimated U.S. oil consumption and the degree of dependency on imported oil.
It's true, though, nobody can predict the future accurately. Not I, and not you. Not Yergin, and not Colin Campbell, who has been particularly bad.
The truth is that the future is unknown. The only reasonable position is to say that we don't know if there will be a serious Peak Oil crisis in the next few years. That is the true lesson from the many failures of prognostication in the past.