Hofmeister v. Simmons

Short video from CNBC with John Hofmeister explaining why peak oil isn't a problem, and where Matt Simmons went wrong. They also get in a dig about the "religion" of climate change at the end.

And here's Matt's response (text not video): http://www.cnbc.com/id/23728987

Dear Matt:

Regarding your question "do you know anything other that crude oil that sells for 15 cents a cup?"

Yes, corn sells for about 5 cents a cup.



5 cents for a cup of corn is all well and good, but it will only provide .34 cups of ethanol, and that’s before you subtract the fossil fuel imbedded in it. That seems to make crude and ethanol both about 15 cents a cup.

1 bushel = 8 gallons dry
1 bushel = 2.72 gallons of ethanol

Ugh, Why is that just painful to watch?

Because it's wearing thin - very, very, very thin.

Excerpt of a review of “Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy” (Published in May, 2005)

bad news from the SPE, via a Texas investment banker , June 16, 2005
By R. Hutchinson "autonomeus" (a world ruled by fossil fuels and fossil minds)

. . . The consequences of all this, needless to say, are grim. It's been increasingly clear in recent years that oil had peaked everywhere else, but there was still supposed to be a vast reserve under the Saudi sands. Apparently this was a mirage.. . .

How do you say 1972 in Saudi Arabia?


I thought he was pretty radical stating
growth will come from unconventional oil.

I agree Izzy. It seemed like he was substantiating crude oil peak, of course without stating when, but then saying other forms of oil would replace crude. Really, we're going to replace crude reductions in production with other forms of oil? How much food production will have to be diverted to accomplish that, and as a result how many people will starve?

...we keep pumping CO2 into the atmosphere, we don't know for certain if it makes the climate change...

"Continued growth of greenhouse gas emissions, for just another decade, practically eliminates the possibility of near-term return of atmospheric composition beneath the tipping level for catastrophic effects."

Target Atmospheric CO: Where Should Humanity Aim?

James Hansen, Makiko Sato, Pushker Kharecha, David Beerling,
Valerie Masson-Delmotte, Mark Pagani, Maureen Raymo, Dana Royer, James C. Zachos

Whether the issue is Peak Oil or Global Climate Change, the Iron Triangle cannot integrate information that shows the status quo for what it is: a one-way trip to Ecological and Geopolitical Armageddon.

Some people will insist that Hansen, et al, are simply whoring themselves for bigger grant money.

My guess is that if they wanted to make the most money they would simply hire themselves out to the Heartland Institute or some other propaganda wing of the petroleum industry, the coal industry, the nuclear power industry, or the ethanol industry.

We need radical and immediate culture change. This is not at all likely, and so we will all ride through a violent and volatile time as our species enters the bottleneck of the next 20 years.

Even were we to achieve fast, radical change to a permacultural orientation, times will be difficult.

The Iron Triangle cannot accept the very changes we must make, and so marginalizes those who point out any need for such changes.

We have created a fragile artificial cocoon for those of us who are part of the industrialized nations. We mistake the cocoon for an independent reality when actually it is absolutely dependent upon the planet. Our denial of this relationship is precisely what imperils us, and yet we are so frightened of this that we encourage intentional ignorance.

Scientists are mocked while shrunken men with everything invested in the superstition of traditional economics are idolized.

Well said.

We're marginalised now, but will be persecuted later....

It never ceases to amaze me how the least qualified to answer questions like these get to the top and the mental midget media ask them to answer the difficult questions. We are at or near peak oil. What Mr. Hofmeister fails to mention in his ramblings is that alternatives to conventional oil are EXPENSIVE and will only get more expensive as time goes on. Tar sands release A LOT of CO2 to the air during extraction and processing not to mention the extraction process has laid thousands of square Kms to waste in Alberta. He also fails to mention that new fields being found are meager compared to the finds of the 50s and 60s and that most of them will also be EXPENSIVE to get at. There is a lot of oil left in the ground - undoubtedly more than has been pumped out. But the remaining oil will get tougher and tougher to pump out of the ground, hence what Matt Simmons says, time and again, is that the ability to produce oil will drop as time goes by and therefore by definition we have or sill soon reach a peak in oil production.
Sometimes the pickle heads of CNBC just amaze me with their 7th grade grasp of the world...

What TOD needs is a NO "EASY OIL" button similar the the Staples ad. Maybe like (EASY)OIL

John Hoffmeister seems to be at odds with Jeroen Van Der Veer's idea of Scramble or Blueprints. John seems to be pushing BAU but maybe that is just the nmessage for the American market. At the same time he says "sure we gonna peak someday" but then gives the impresion that it's not anytime soon. As for that idiot journalist at the end who couldnt string the words together to make his point, get rid of him.

John seems to be pushing BAU

He has no option as he is trying to grow his company and maximise profit, and, like you and I he doesn't know for sure when we will peak - at least he admits production will peak!

As usual he says peaking won't be caused by lack of oil in the ground - we know this, it isn't what causes the world peak - just the normal old smoke and mirrors!

The peak is caused by inadequate investment in production to ensure that the price of oil constantly falls in real terms - so that we can all afford to demand more (~2% more each year for BAU.) The reason the investment isn't made is because the costs are rising as the oil gets ever more difficult to find and to make a profit the price the product must sell at must keep going up in real terms - this is very risky for an oil company since they don't know the shape of the future demand curve.

We (and Hoffmeister) know for sure that at some stage demand will fall away - for more than three years now the price has been such that demand for 'all liquids' has been flat.

Demand for exported crude (the market that Hoffmeister mostly deals in) is actually falling at current prices - if they only rely on imported crude (and not alternate liquids) somebody somewhere doesn't have BAU growth.

The steeply rising crude prices (in real terms) indicates the oil companies, in total, can't or won't pump any more at the moment.

If a world recession causes the demand to fall below what the oil companies are willing/able to produce at maximum, then the price of oil will fall - this is very risky for oil companies when a deep water oil well can cost >$200 million just to drill the hole - if the price falls so far that the oil company doesn't make a profit it's bye bye oil company.

These are dangerous times for oil companies as each new well gets ever more expensive at the same time as the overall business climate deteriorates - in order to maximise profits in the long term it might be better to hoard the oil and not drill too many new holes at the moment, which would imply a very steep decline rate in a few years.

My mother always told me to watch what they do, not what they say. While Hoffmeister trumpets there's no peak in sight and unconventional oil will save us, he maintains a rolling mill and farmland in Lancaster Pennsylvania, a fact that was removed from his Shell bio, but still referenced here http://www.eenews.net/tv/transcript/483

The President of Shell America is a doomer.

So is the president of what is a shell of what it once was, G. Dumbya Bush. Lives in an off-grid home while telling us all to eat cake.



"Peak Oil" just needs to be changed to "Peak Oil Flow" so people will always question what the flow part is about and not concentrate on what is left in the ground, however large that may be. Instead of PO lets all use POF.

No, let's just use POOP.

Peak Oil On Parade?

Peak Oil On Purpose?

Or POPP -- Peak Oil Peak People.

How about PONYPD -- Peak Oil Now You've Peak Denial....?

POMEO -- Peak Oil Means Expensive Oil.

No, I don't have a great new acronym that everyone will understand -- not yet, anyway. :)

Unconventional oil is most of what is left.
Most of it is located in Canada, Venezuela and US.

I find it strange that Shell sees unconventional as the future but isn't fully developing it in politically safe North America. This fact alone proves the hollowness of his argument against Peak Oil (the tar sands is hardly another Saudi Arabia or Russia).

The brain-dead media never seems to ask them why? They must give TV personalities IQ tests to screen out basic reasoning skills.

Who is the ape at the end who starts hooting about a Global Warming 'religion'?
He 'hijacks' the interview ( what's Hofmeister's time worth--$100 a minute?)to sympathize with Big Oil having to kowtow to environmentalists. Hofmeister just sits and smiles.

Majorian, Actually Shell is developing tar sands in Canada and will more than triple and may even quintuple tar sands oil production. But that takes years to do.

Shell is also in the lead developing technology for oil shale extraction. But they do not believe they can get oil shale into production before 2015. It is their long schedule for oil shale combined with the constraints on Alberta tar sands production that makes me believe unconventional oil sources can't delay Peak Oil.

According to the article you posted they currently produce 155000 barrels per day and are seeking licenses to increase that to 770000 barrels per day. I find that laughable. The GOM Mars field 130 miles off the coast of Louisiana is designed for 250000 barrels per day with expansion to up to 500000 barrels per day.


Hofmeister talks big about unconventional but the big money goes to conventional oil drilled in horrible places.

The last I heard, Shell had pulled their heaters out of Mahogany(temporarily).

If you are buying the press releases I think you should dig a bit deeper.

IOW, something doesn't add up.

Who is the ape at the end who starts hooting about a Global Warming 'religion'?

He's right about that. The warming has stopped


Sigh! The "controversy", it grows!

Please see a reputable climate science source, e.g.

"No, actually, there has been cooling, if you take 1998 as your point of reference. If you take 2002 as your point of reference, then temperatures have plateaued. This is certainly not what you'd expect if carbon dioxide is driving temperature because carbon dioxide levels have been increasing but temperatures have actually been coming down over the last 10 years."

Cherrypicking. Here's the actual data:

GISTEMP temperature record

The red line is the annual global-mean GISTEMP temperature record (though any other data set would do just as well), while the blue lines are 8-year trend lines - one for each 8-year period of data in the graph. What it shows is exactly what anyone should expect: the trends over such short periods are variable; sometimes small, sometimes large, sometimes negative - depending on which year you start with. The mean of all the 8 year trends is close to the long term trend (0.19ºC/decade), but the standard deviation is almost as large (0.17ºC/decade), implying that a trend would have to be either >0.5ºC/decade or much more negative (< -0.2ºC/decade) for it to obviously fall outside the distribution. Thus comparing short trends has very little power to distinguish between alternate expectations.

Yes, an excellent idea. Otherwise, we get something like a comment I got from one of my students a few days after my peak oil lecture "...but my dad said that we have 80 years of oil left."

Somehow the term "peak oil" doesn't convey enough information about flow rates and EROEI.

These concepts must be understood so that even the average person can watch the video clip and realize that the prez of Shell Oil is full of baloney...

“The peak oil theory has really swamped the world — God bless Matt Simmons,” Hofmeister told CNBC.

I think that is a pretty amazing admission. He seems to be saying that acceptance of peak oil is now the dominant intellectual position with the people he deals with. Have we really made such progress?

Hofmeister sees himself as fighting a rear guard action against an overwhelming idea. Simmons has really been an incredible leader on this issue. I wonder how he/we will weather the production uptick we now seem to be seeing? Is the momentum such that it will not even matter if the prices stay up?

If intelligent well off people start flocking to carbon capture and storage based agriculture (permaculture), laptop battery driven electric retrofitted cars, and solar panel investments, the dog and pony show of the "media" will be dumbfounded into asking why. If millionaires and billionaires enmasse migrate to a low carbon lifestyle without sacrificing their quality of life it doesn't become ridicule, but instead how can I also join the crowd?

As the saying goes, don't argue with a fool, someone might not know the difference. Talk is cheap. Actions are priceless. Since we can't expect everyone to think (alas), time to set the new trend instead. Then it's no longer why, but why haven't you?

sorry off topic... btw, the al gore ad on the left can't accept canadian postal codes (maybe british as well?). You want to save the world but you can't bother to hire someone to test your website haha



I agree with you. Build it, don't talk it. That is why my respect grows daily for the firms involved in PV solar cells, and for groups like Calcars who build instead of talk.

But, I have to say I think you missed the single essential point of the CNBC interview. If we were to look for consensus across the board, from the posters who expound daily at The Oil Drum, to the executives of the oil companies, to the commentators/hosts at CNBC, we get one absolute wall of agreement: The alternatives will not work. Solar, wind, renewables were dismissed in one breath by Hoffmeister, and it was interesting to hear the host of "Squack Box" use the term "silver bullet" in regards to the alternatives to petroleum. In the term, and in his dismissive swiping away of the alternatives to oil, he could have qualified himself as an able TOD poster, having passed the litmus test: IT'S PETROLEUM, OR NOTHING. In this, the debate is essentially declared over, the argument becomes about the details: Will it be conventional or unconventional oil? Natural gas? Coalbed methane? Shale oil? Coal to liquid? It matters not, in the end, because it will be petroleum, fossil non-renewable energy. There is simply no other choice.

The "religion" of the world is not "global warming", it is simply this: Fossil Fuel Is God. Anyone who thinks otherwise is deluding themselves. In the Medieval mind of the "modern" age human, to consider sailing away from fossil fuels is to sail off the end of the Earth into oblivion. The mantra is repeated at TOD "there is no choice", at the oil companies, "there is no choice", at the business journals and broadcasting outlets, "THERE IS NO CHOICE". All ye who dwell in the darkness of believing in false gods who would dare to defy the one true God of Oil, hear ye, repent and accept THE ONE TRUE CHOICE. There is no point in debating, the fates were sealed long before this age, the prophecies were written by the prophets of the petroleum industry, the only true seers such as Hubbert and Deffeyes, and the modern seer Simmons, all patron prophets of the petroleum industry, the One True Church.

This is what has been referred to, with due appreciation to Alvin Toffler (seen as a "false prophet", he not being of the Church of Petroleum) for coining the term, as the "Coming Superstruggle".

There are many who think they are the voice of the future (some even here at TOD) but at the end of the day, they are voicing the same old message, Petroleum Is God. They are terrified of it, and even more terrified of being deprived of it. It is the manifestation of religion, in which one fears the creator God (oil, the creator of an age), but is even more terrified of separation from the God force, of being deprived of the Godlike power that only the one true creator can bring. Thus, the haters of the oil age share in common with the lovers of the oil age (and those who fear it being deprived from them) a worship of the force, the one true force that has created them, and thus can destroy them. The worship of oil is indeed manifested with all the trappings of a religion, with it's own language, it's own rituals, and it's own prophecy.

There is a small group who have dared to think out of the box, that threatens this order as surely as Martin Luther once threatened the one true church. A group of thinkers who see oil/petroleum for what it is, a convenient combination of the two most abundant elements in the universe and upon the Earth, a force that can be freed by way of one of the most ancient rituals of humankind, burning. This group of thinkers see oil as convenient yes, but carrying with it many liabilities. They also see the elements of the God, hydrogen and carbon, everywhere, being combined and separated by nature with no problem. Hydrocarbons are indeed not rare at all, but are the very building blocks of life, as much a part of nature as the air and the water. These are the heretical pioneers in the labs and the shops of the world, in the PV solar factories, in the fabrication shops designing components for Concentrating Mirror Solar installations, designing nanotech batteries and materials for advanced energy storage.

These are the heretics who dismiss the worship of oil as displayed at TOD, at the oil companies and in the business press as part of the long powerful wall that is, part of the one true church of petroleum, now facing the rumblings of a reformation, or should I say, a Reformation.
These heretics, exiled from the petroleum church must surely at times feel as Martin Luther did, overwhelmed, overpowered, and themselves in awe of the one true church of petroleum, the very church of creation of our whole modern age.

But, with each passing day, the power of the heretics grow. Just as the earthly princes came over to the Reformation, one by one, and then brought their wealth and armies to the side of the heretics in the days of Martin Luther, so the earthly princes of commerce are seeing the age of the one true church beginning to pass, beginning to recede into the past. Simmons, Hoffmeister, TOD, and the printing presses of commerce are all on the same side, the side of worship of petroleum and the power of creation it once possessed, and fear of what seperation from the power of creation it seems to alone possess might bring. These priests of The Church Of Petroleum throw forth the last defense of THE POWER OF PETROLEUM.

Though seemingly in division, seemingly in argument, seemingly at odds with one another, the oil executives, TOD, and the peak oil theorists such as Simmons are actually united in their devotion to the one true God.

On the other side of the coming superstruggle are the heretics, who believe the unbelievable, who accept the unacceptable, who preach the sacrilege: THERE ARE ALTERNATIVES. There are other ways to proceed into the future. There is a future outside of the one true church.

This is the two sides of the conflict fast approaching, The Coming Superstruggle. To use a fitting apocalyptic analogy, the Superstruggle will be so great that even the powers that be in heaven will be shaken.

Thank you.


ThatsItImout , thank you for this alternative read.
Fossil is king !

( OFF TOPIC, if anyone need a laugh .. then this is it, skip to halftime onwards .. http://my.break.com/content/view.aspx?ContentID=467869 )

I appreciate the Martin Luther analogies. I'm more partial to Dilbert myself, given our collective deer-in-the-headlights future ;)

If what we want is a hot-swappable replacement for oil, it doesn't exist. No renewable can give us that, not solar but most certainly not tar sands or unconventional oil as it relies on natural gas (Canada).

Also there is no pipeline going East West in Canada. When the Eastern provinces go cold while oil is still being pumped to the USA, this will cause a North American crisis which the US is not prepared. Quebec for example received 90% of it's oil from the Middle East. (Ref: Gordon Laxer, Alberta Parkland Institute). Is the US prepared to invade Canada too?

Everyone is just going to have to scale down and go on less stuff. It is possible. Not live worse, mind you, just less stupid junk. Noone ever talks about living with less or can even accept the idea. Is a duel of twits equal to a ship of fools?

I was watching this and wondered who in the group would bother to learn for a year how to be a gardner? Or even repair a bike? Or use a hammer? Maybe when they're abandoned by the rest of us?

The multipliers are there, closer communities, some low tech, some high tech. However it'll work out; at some point the sudden pop of hubris will render the debate away from nice quaint sniveling chuckles to real hard action. Something resembling sincerity might return.

I actually think it'll be fun. People are mostly marginalized in their lives and jobs. We didn't win the lottery today. We're all just mulling about. Suddenly we'll be working together and finding common ground as we re-plan our urban disaster areas. We'll have a purpose for once. A sense of civility and community not seen for 50 years will grow like a new seedling. I was thinking of the movie 12 Angry Men. There's a sense of civility in that movie that just does not exist today.

By the time our change or Reformation occurs, anyone would rather not be a blow-hard loser who want his oil, hence my comment above on moving forward as a "trendy" thing to do now while they babble on. Civility and community, whatever shape it takes, is likely to be the only true renewable resource that always works. A strength we used to have can be found again. Everything else is just details.

This video is a reminder of the depth of the problem.

I'm not much for the Puritan model, more a mixed modern science educated 21st century pioneer style. Say, Firefly without the ships?


(Long time reader first time poster)

PhilR I'm not sure if you are support nuclear energy or are criticizing it. Personally I'm pro nuclear energy. This is a result primarily of reading the prophetic 1956 paper 'Nuclear energy and the fossil fuels' http://www.energybulletin.net/13630.html by King Hubbert the chief geologist of Shell at the time.

In this, the original peak oil paper, that correctly predicted peak oil for the US in the 1970's, and predicated would peak production by about 2000, Hubbert explains how we are not all doomed due to peak oil and how nuclear energy is a feasible replacement for fossil fuels. (It's true there are waste disposal/storage issues, but at least nuclear waste isn't pumped directly into the atmosphere like coal power plants and cars do with their waste).

Now please allow me to defend Hubbert, (Deffeyes), and Simmons against ThatsItImout's ridiculous attacks.

In defense of Hubbert, he was not a "IT'S PETROLEUM, OR NOTHING" believer at all. In fact nothing could be further from the truth, he's an early (the original?) alternative energy guy. Later in life Hubbert warmed up to the idea of solar energy. But in my view at this current time nuclear energy is the only known to work for sure replacement for fossil fuels (this includes automobiles as electric cars are now feasible for short trips and railways and waterways never stopped working for long hauls, so good news we are not all doomed due to peak oil).

Simmons is the head of the largest investment bank for the energy industry. He is funding research on cutting edge alternative energy technologies like wave power. The idea that he is a "IT'S PETROLEUM, OR NOTHING" believer is just as ridiculous as for Hubbert.

Unfortunately I'm not so familiar with Deffeyes so don't have knowledge of his position.

Now I would like to address the original topic of this top level news item the CNBC video segment.

As a futures trader (including crude oil futures) I have CNBC on most of the time (usually on mute). The guy who referred to 'global warming religion' was Joe Kernighan, he's a leading anchor on CNBC. Personally I find Joe likeable, pretty quick and entertaining to watch. I also share Joe's skeptical view of imminent catastrophic climate warming due to man made greenhouse gas emission. I'm skeptical of this view because I can't find scientific evidence to support it.

If anyone knows of a compelling scientific paper that supports the idea of imminent catastrophic climate warming due to man made greenhouse gas emission I would really like to know about it! Please, please, please send me a link. Honestly I am open minded, but I need to find a scientific paper like 'Nuclear energy and the fossil fuels' before I can believe. I'm even willing to read something from the (increasingly discredited) IPCC as long as it's science based.

To summarize.
Hubbert, Simmons - good guys pro non fossil fuels energy
Peak Oil - credible theory support by scientific research
CNBC - entertaining and informative but somewhat anti peak oil
Climate change - Where's the science? I've read most of the related wikipedia pages, not convinced.

Thanks for reading, that's all for now.

I'm not sure if you are support nuclear energy or are criticizing it.

I'm criticising the new pro-nuclear religion, and all the deliberately dishonest hype that goes with it.

I'm not sure what dishonesty and hype you are referring to.

There is a medium term problem with uranium production, but in the extremely long term (1000 years say) there's plenty of uranium (let alone thorium) to meet our energy needs at say 2x the current world consumption rate (see graph at end of this comment). The uranium spot market is currently tight, but in the medium term (5-15 years) supply problems can be solved by expanding existing mines. The main resistance to expansion is political opposition but public education may help address this.

Waste disposal is a problem, but there's hope "plasma gasification" converts nuclear waste to harmless road fill see http://en.wikinews.org/wiki/Israeli_company_develops_new_radioactive_was...

Even without plasma gasification it may well make sense to replace coal power plants with nuclear ones. (Having said that I'm very pro coal except for the pollution, we may have to heavily depend on it for a decade or so if oil production drops of precipitously. Better coal than a permanent black out).

Nuclear power plants blowing up and spewing radiation into the atmosphere is something to be concerned about. I've heard that modern pebble bed reactors shouldn't do this - but I haven't had time to research that deeply. OTOH apparently the fall out from Chernobyl wasn't nearly as damaging as the media made it out to be. I can't find it now but there was an article (here on the oil drum?) about how the fall out from media declaring that people were going to die was actually worse than the direct effects of the meltdown itself.

I think I would be ok living 30km away from one, but the further away the better.

Having said all that I'm not stuck on nuclear. Definitely solar and renewables in general would be superior if they worked as well (reliability is a big problem). Also there's still the problem of converting the transport fleet to electric, there's a real shortage of lead and nickel for batteries. Basically no lead mines are coming on line any time soon. (And electric planes, does that even make any sense?).

If I'm wrong and we are headed towards power down, then that may still be a positive in the long run. As after a very painful period and die off we may go back to our traditional (pre-industrial revolution) way of life and this could result in spiritual advancement (turning away from material things) and an increase in happiness (for those who survive).

One final comment, I'd just like to apologise to ThatsItImout for labelling his criticisms of Hubbert, et al ridiculous attacks. Yes I think he's dead wrong on this point, but rereading his post I agree with his general theme. People here are too hooked on fossil fuels. There are feasible alternatives (electricity) and we need to adapt and move into the future (electricity) and beyond the past (fossil fuels).

In my opinion the best thing people can do (at least those who can afford it) from a humanitarian perspective is to bid up the price of commodities futures (crude oil, food etc). If we can get the price of food and oil higher now that will help conserve them and mitigate the danger of wide spread power down and famine.

Hubbert uranium reserves

I wrote "In my opinion the best thing people can do (at least those who can afford it) from a humanitarian perspective is to bid up the price of commodities futures (crude oil, food etc)."

Alternatively sell stocks and urban real estate. Many global stock indices have fallen about 20% from last years top. If we can get another 30% decline and continued long term declines in urban real estate values then that loss of wealth is as good as a rise in commodity prices. Since the (loss of) wealth effect will help to curb consumption of scare resources.

For instance currently S&P500 futures are at 1331.8 bid 1332.4 offer, if we can get those down into the 700's over the next 12 months that would be a great service to the people of the world IMHO.

PhilR I'm not sure if you are support nuclear energy or are criticizing it. Personally I'm pro nuclear energy.

Watch this video of Amory Lovins testifying before Congress.

For better detail, watch this interview on Charlie Rose from last year. Start at about 31:56 into the interview.

He reveals a couple things I'd not known:

1. Nuclear absolutely sucks economically. **Every** nuclear power plant ever built has been built with taxpayers funding it. Then we get to pay for the power!

2. No nuclear power plant has ever been built with private funding, which blows DaveMart's and others arguments right out of the water on future funding. Why would we expect investment where it has never existed previously?

3. The next six nuclear plants built in the U.S. of A? That's right: already funded by the government. None of them will be via investment, but will come directly out of MY taxes. Screw that.

Raises the questions: If nuclear is so great, why will nobody invest in it? More importantly, what would the true cost of nuclear power be without government subsidies?


Hi again ccpo,

Thanks for you links, I do appreciate your taking the time to find and list them and I will watch them. (I've watched Charlie Rose interviews in the past and liked them).

Personally I'm in 100% agreement with you that nuclear power plants shouldn't be paid for by the government. Instead that should be done by the private sector.

But at first blush I wonder if the reason why no nuclear power plants have been built privately is because historically it's been difficult to get legal permission to do so, (that and they cost a lot to build). Even if I had enough money I doubt the government would let me build a nuclear power plant in my back yard any time soon.

Here are some relevant links:
http://www.forbes.com/markets/feeds/afx/2008/03/24/afx4807041.html "Turkey invites bids to build first nuclear power plant" ... "the nuclear plant would be built by the private sector at no cost to the state."

and from the much loved wikipedia :)
http://en.wikipedia.org/wiki/Economics_of_new_nuclear_power_plants "To date all operating nuclear power plants were developed by state-owned or regulated utility monopolies " which verifies/supports your claim.

I watched the Amory Lovins congressional testimony and the Charlie Rose interview. Basically IIRC Amory Lovins is advocating 'micropower' (like solar cells on houses), better efficiency (better insulation on houses, lighter more fuel efficient cars built out of space age materials) and biofuels.

I'm a bit confused about how a person can support biofuels but be against nuclear because it is dependent on government support.

But basically it's all good news as far as I can see. The more options we have the better. Personally I think nuclear is viable and efficient but I'm not stuck on nuclear, if there are better alternatives great.

Climate change - Where's the science? I've read most of the related wikipedia pages, not convinced.

Christ almighty... you searched wiki? REALLY? I am ever so impressed!

That is the most pathetic thing I've ever read someone say about what they think of Climate Change. Wiki....

Anyone else think this is DaveMArt in disguise? The following is almost verbatim the type of thing DaveMart was saying just weeks ago.

I'm skeptical of this view because I can't find scientific evidence to support it.

If anyone knows of a compelling scientific paper that supports the idea of imminent catastrophic climate warming due to man made greenhouse gas emission I would really like to know about it! Please, please, please send me a link.

"A" paper? Are you serious? Do you expect to be taken seriously with an opening like that?

"Imminent catastrophic climate warming"? I repeat, are you being serious or just that uninformed? If you mean "imminent" literally, you're just looking for an argument because I've never seen that word used talking about Climate Change. Even denialists don't make such ridiculous claims.

Do yourself a favor and look at the research, not Wiki... Start with a recent thread on TOD titled something like, "We can't stop global warming"


Hi ccpo,

Thanks for taking the time to respond to my comment.

Personally I regard wikipedia highly. I think there are many good articles on it including several of the climate change related entries. The global warming page http://en.wikipedia.org/wiki/Global_warming is the top google hit for 'Global warming' and http://en.wikipedia.org/wiki/Global_cooling is the top google hit for 'Global cooling'. I don't think these pages would rank so highly if they were nonsense.

Let me assure you that I am completely serious in my search for the truth. I don't understand why you think my requesting a scientific paper supporting the hypothesis of man made climate change is anything other than serious. What I'm after is something like the classic Hubbert paper on peak oil. A convincing paper that doesn't require a higher degree to understand.

I've looked at http://www.theoildrum.com/node/3610 the 'We can't stop global warming' thread you mentioned. But unfortunately it definitely isn't what I'm after. Rather than a free for all debate between supporters and dissenters that took place over only a few days, I'm looking for an argument consisting of stated assumptions (like the amount of oil in the earth is finite) followed by a sequence of logical arguments (given our exponentially increasing use of oil and probable reserve estimates) and coming to a convincing conclusion (we are going to hit world peak oil production in the 21st century).

Regarding the wording 'imminent catastrophic climate warming', by imminent I basically mean within my own life time, let's say within the next 30 years. Otherwise let's focus on peak oil first (instead of global warming) as I believe that is an imminent threat.

Finally, no I'm not DaveMart in disguise. However I tend to think that if multiple people are independently making similar claims then that gives weight to both their arguments.

Anyway thanks for responding and I'm still looking for that classic global warming caused by man made greenhouse gas emissions paper. I am honestly interested in the truth if for no other reason than that I'm trying to allocate capital as efficiently as possible.

On the other side of the coming superstruggle are the heretics, who believe the unbelievable, who accept the unacceptable, who preach the sacrilege: THERE ARE ALTERNATIVES. There are other ways to proceed into the future. There is a future outside of the one true church.

Roger, thanks for the sermon. It would make Jeremiah Wright proud. You have been preaching for about two years now about the ALTERNATIVES that will replace oil. The SOMETHING that will free us from the slavery of crude oil. But you have never, to my knowledge, expounded on just what those alternatives will be, how they will be developed, what they will cost and most important of all, at what volumes can they be supplied?

A few days ago Stuart Staniford wrote a piece called Food to 2050 in which he laid out exactly how he thought fossil fuels would be replaced without the the economy even skipping a beat and allowing the population to keep right on growing. However Stuart's predictions depended on almost everything coming out perfect. Agricultural production per acre would keep on growing just as it has for the last fifty years, nitrogen fertilizer would continue to be produced with hydrogen electrolyzed from water, soil would be built up instead of being washed away, climate change would be controlled, etc. etc. In other words, we would see the problem coming well in advance and do everything we must do to solve the problems and everything would work out just perfect. And of course, the oil supply would decline very slowly, no interruptions because of hording or war, giving us time to adjust on the way down.

Stuart's critics were devastating however it must be said that Stuart did give it the old college try. That is, he laid out his entire scenario for all to see. You have not done that Roger. You have only screamed from your pulpit "THERE ARE ALTERNATIVES! Only one cubic mile before forced to replace oil WITH SOMETHING ELSE!" True, you have talked about solar, wind and other things that you think perhaps might replace crude oil. But you have never laid out a plan, as Stuart did, as to exactly how and why alternatives would work. But you are a True Believer Roger, you believe THERE ARE ALTERNATIVES and arguments to the contrary are nothing but doomer porn that should be ignored.

It is the true believer's ability to "shut his eyes and stop his ears" to the facts that do not deserve to be either seen or heard which is the source of his unequaled fortitude and constancy. He cannot be frightened by danger nor disheartened by obstacle nor baffled by contradictions because he denies their existence.
Eric Hoffer: The True Believer.

Ron Patterson

The whole point is that the alternatives have to be ADEQUATE - as Hoffmeister correctly says any future growth of all liquids will come from alternatives.

The available historical data shows the alternatives (ie: the gap between all liquids and crude + concentrates) have NOT actually kept up adequately for around three years now, far from it, they are hundreds of millions of barrels short!

The actual facts so far are that what needs to happen and what is actually happening are two totally different things and are diverging, for there to be the desired happy ending this needs to be turned around.


You ask "But you have never, to my knowledge, expounded on just what those alternatives will be, how they will be developed, what they will cost and most important of all, at what volumes can they be supplied?

Indeed, you are in a way correct. I have never laid out one "master plan" the type you are describing, or even of the type that Stuart did in his "food to 2050" post.

There are two main reasons for that. First, I have posted what I feel is the general direction we are already beginning to move in several smaller posts. One of my earliest posts on TOD was a post I called "convergence" in which I made the argument that electric grid based automobiles were the way forward, and in combination with electrified rail (the great work by Alan Drake continues to show the way) would remove most of our essential transportation from being based on oil burning, which is where most of the oil consumed in the world goes. The initiatve of the Club Of Rome
shows a path of development forward, for example, and the Calcars group and the Chevy Volt type of idea are demonstrations of what can be done. What will it cost? I don't know, but the EROEI of petroleum continues to drop while the EROEI of the alternatives continues to increase. This is what must be of greatest concern to the petroleum industry. At some point, the alternatives which they declared impossible will not only prove to be possible but actually cheaper. I have learned that any time a person at or beyond middle age declares something technically impossible, they are almost certain to be mistaken. When I was young, I told my dad that computers would soon be everywhere, even in homes. He asked, "What would you do with one?"

The second reason that I have not given an overview of the path forward is that the technology simply moves too quickly. Only three years ago, I would have dismissed solar as "pie in the sky". But the development of solar energy, batteries, distributed energy systems, computer controlled energy management, etc, has simply outrun my ability to make projections that would be valid for more than a few months. I have moved in the opposite direction philosophically from the one described by most folks at TOD. I had long been depressed about the future energy situation, a pessimist in many ways. In the last three years and after being exposed to what is already happening, I am much more optimistic than I was 2 or so years ago.

At at the end of the day, when you take out short term ups and downs and setbacks, the BIG picture wins. http://upload.wikimedia.org/wikipedia/en/3/35/Available_Energy-2.jpg

Our current Rube Goldberg contraptions, the ethanol boondoggle in particular, are just a political mechanism to extract money from those who would lead us down the path of waste by one thousand conversions. We are already beginning to see that the best bet is to go directly to the big source.

But Ron, your idea prompts me...let me see what I can do about laying a "big picture" view of what I see as the path forward. Just don't expect it to be as ritzy as the stuff Stuart Staniford does, at least not without a lot of practice!


For some countries - the net exporters - peak energy will be a bonanza.

For some countries that have adequate energy life will continue as normal.

For some countries without adequate FF resources - the net importers - peak energy will be difficult to handle, change will be required.

So, by your reckoning we can expect countries like South Africa, Pakistan and many others already with inadequate energy to move to a wide range of alternates and all will be well - I have been watching them with interest to learn from the experts who are having to cope with the situation now - so far, it seems you are incorrect.

It is not change that is the problem but the rate of change - tell us how the poor of the world are going to turn this around - there are still more than a billion people in the world who have never seen anything powered by electricity for example.

But Ron, your idea prompts me...let me see what I can do about laying a "big picture" view of what I see as the path forward. Just don't expect it to be as ritzy as the stuff Stuart Staniford does, at least not without a lot of practice!

I am very much looking forward to it Roger. I will withhold comment until then. And don't worry about the composition, none of us are professional writers here. I am sure you will get your point across.

Ron Patterson

Roger, thanks for the sermon. It would make Jeremiah Wright proud. You have been preaching for about two years now about the ALTERNATIVES that will replace oil. The SOMETHING that will free us from the slavery of crude oil. But you have never, to my knowledge, expounded on just what those alternatives will be, how they will be developed, what they will cost and most important of all, at what volumes can they be supplied?


electric cars and plug-in hybrids.

next question.

I think our inability to develop substitutes is much exaggerated by the extreme doomsters. We might be headed for a 25%-50% dip in GDP. But I see no reason why we should experience a complete collapse.

Look at the prices of substitutes as they exist right now. We could run most of our economy on wind, solar, nuclear within 10-15 years. It would be more expensive. The cost of ground sink heat pumps and batteries for cars and lots of wind towers and nuclear plants will lower our living standards. People who live in far suburbs with long commutes will have to shift to buses or motorcycles or trains or a mix thereof. A lot of houses would have fewer rooms heated in winter. But this is not the end of an industrial society.

What I'd like to see: A chart showing per capita energy usage over the last 100 years. How far down the Peak Oil production decline to we have to go to hit, say, 1950 or 1925 or 1912? When we hit those points we'll have better living standards than those people did because we'll have more technology such as better insulating materials. So I don't see total collapse.

Pundit, you forgot one little tidbit. If we get back to the energy usage of 1950,1925 or 1912, then all we would have to do is get back to the population we had in those years and we would be all set.

Ron Patterson

I specifically stated I'm referring to per capita energy usage. What I want to know: How far down in oil imported and produced do we have to go to get to, say 1925 per capita energy usage again?

Keep in mind that some of our energy comes from nuclear, hydro, wind, solar. If we stopped using all fossil fuels what year would that take us back to for per capita energy usage?

I have just finished reading "Confessions of an Economic Hit Man" by John Perkins and the statements by Hofmeister now make sense. Working for shell requires him to calm the investor and inflate statistics or he will lose his job. I believe that if more investors like T Boone Pickens understand the reality of PO then they will pull their money and invest elsewhere.

Just a reminder that we've been lied to since at least 1979.

Hofmeister's just the latest incarnation.

Cheney, "So?"

While the Carter administration was telling Congress and the public in the spring of 1979 that a 2 million-barrel-a-day world shortage existed, it had access to IEA reports saying there appeared to be no significant shortage. The IEA Secretariat’s confidential analysis on March 28, 1979, said: "Oil is flowing from the wells and being imported by consuming countries but, through justifiable prudence perhaps reinforced by a speculative element, it appears to be sticking in the distribution system." DOE proprietary figures show many major companies in the U.S. held more gasoline in storage during the May and June gas lines than they had had the previous year. A Texaco spokesman said: "There were, in retrospect, sufficient oil supplies in the first half of 1979 to have avoided the shortages that occurred."

The administration stuck with its assertion of a 2 million-barrel-a-day shortage to justify price decontrol for crude oil even though it knew a key assumption behind that figure was wrong. Peter Deutsch, a Senate Judiciary Committee analyst, discovered an internal DOE paper saying that the 2 million figure depended on the assumption that "Iran will produce only enough oil for domestic consumption, about 800,000 B/D, through the first quarter of 1980." But by April, 1979, Iran was producing 4 million barrels a day. Deutsch wrote a detailed study of the shortage concluding: "Since the shortage due to Iran was not significant and at worst was only a temporary aberration in the international petroleum system…the rationale for the Carter energy plan is flawed."

Throughout the shortage, senior DOE officials remained ignorant of basic facts necessary for evaluating what was happening in the world oil market. On July, 16, 1979, after the U.S. gas lines had largely disappeared, Harry Bergold, assistant secretary for international affairs, admitted to a Congressional hearing that DOE still did not know what criteria the companies used to allocate oil among their subsidiaries around the world. Bergold said: "We have tried to find out…I cannot testify to what they are doing for sure."


"The energy that is consumed to get oil out of the oil sands of Canada — in massive amounts of potable water and natural gas — is so vast you are really turning gold into lead. What you get out is a very low quality amount of oil that has to be upgraded and diluted with high quality oil to get synthetic crude. What I can’t figure out is why the executives of these oil companies don’t understand that."

Please recall that as the price of oil rises MORE oil becomes available. That's becuase the oil that is difficult to pump or process at a lower expected price per barrell becomes cost effective at a higher price per barrell.

I'm not saying there isn't "peak oil" but you have to get to the maximum price that the market will pay before demand decreases then figure what oil deposits are profitable to pump and process...then you might know where we are as far as "peak-oil" goes.

Just my 2-cents from econ-101.

~Foo Fighter~

Please recall that as the price of oil rises MORE oil becomes available.

Texas and the North Sea are two good examples of the production response that conventional post-peak regions demonstrate, in response to higher prices.

Oil prices went up by about 1,000% from 1972 to 1980, and the Texas oil industry responded with the biggest drilling boom in state history, resulting in a production decline from 3.5 mbpd in 1972 to 2.5 mbpd in 1982.

Brent crude oil prices averaged $18 in 1999. Prices had quadrupled by 2007, averaged $72. In response, North Sea crude oil production has declined at a rate of -4.5%/year.

So, what happens when the world is at the same stage of depletion at which the North Sea and Lower 48 peaked? So far, we have seen a slow decline in world crude oil production, -0.3%/year, since 2005 (EIA, C+C). This is quite similar to the initial two year Lower 48 decline, -0.8%/year.

If we look at the two largest sources of nonconventional production--Canada and Venezuela--we are hardly seeing any net increase in oil production, between the two of them.

Higher prices doesn't always mean more oil - for a producer it's profits (selling price of goods minus costs of production) not prices that are important. There has to be an excess of production available now.

For the case of North Sea oil there are too little reserves left to make it worth while investing much more to increase the rate of extraction and thus slow the ~8% annual decline rate - even the UK government thinks all the oil will be gone by ~2020, and all the UK gas by ~2020, and all the UK nuclear by ~2020! But there's nothing to worry about - party on!

What the fuck? Where'd these peak oil deniers and preachers come from? Next they'll be saying creationism is science and the Earth is flat. I feel like I'm on YoungRepublicans.com.

There is an extensive review of their outlook published as a glossy company booklet and as a PDF. This was mailed to some academics. Lots of pictures about the town meetings and what not. I emailed some questions to the addresses on the booklet and never heard from anyone. I assume I'm now on some watch list.

Isn't this just typical MSNBC "reporting" about energy? I have heard the same stuff on their "Today" show many times also, the level of misinformation is mind numbing (isn't that the point?). As the economists tell us, the earth just magically makes as much of this stuff as our economic engines require: Repeat until critical thinking stops, "We believe in the TechnoFIX". Glad to see this posted.


The young Republicans want to believe in the infinite power of markets (held back only by evil socialist Democrats of course).

The young Democrats wants to believe there's so much oil left that we need to ban evil SUVs (owned by evil old rich Republicans of course) to save the polar ice caps.

Meanwhile those with a more reality orientation see that oil production is going to start declining and that we are therefore in deep trouble.

I think CNBC has the potential to be used as a tool for moneyed interests that thrive on market volatility. The timing of this interview with Hofmeister comes at a very opportune moment to turn public sentiment, or at least provide a plausible explanation for forward market behavior. Certainly crude as well as other commodities were overbought recently, providing a perfect time to go short.

For those of us thinking in geologic time parameters, recent market action is a blip. The trend in price is up, there is no doubt. The invasion of Iraq is proof positive.