Quick Summary of My Main Personal Take-home Messages from ASPO 2012

This is guest post by Christian Kerschner. Christian is a PhD Candidate of the Institute for Environment and Technology (ICTA) at the Autonomous University of Barcelona and a Researcher at SERI Vienna. In his PhD he focuses on a multi-method analysis of Peak Oil, mainly using Input Output Approaches. Moreover, he published scientific articles on the steady state economy and degrowth. His latest work centres around attitudes towards technology.

ASPO is a no-budget loose association of people interested in studying Peak Oil. It was formed in 2002 (10th anniversary this year) by Colin Campbell and Kjell Aleklett, both petroleum geologists. The term Peak Oil (which often creates confusion - I don't know how many times I had to say "no, not Pig Oil - Peak Oil") by the way, was "created at that moment". They thought that ASOP (Association for the study of the Oil Peak) did not sound so good, so they changed the word order. The community meets yearly and consists of scientists and analysts /consultants. All speakers are on invitation only and there are mainly plenary sessions. Many speakers are contributors of the community's main communication platform, The Oil Drum, a high profile, quite strictly edited blog and one-stop-shop for everything related to Peak Oil (PO).
[Editors note: many talks mentioned below are available on the ASPO YouTube channel. Several links for specific speakers are given at the end.]

The conference was organized extremely professionally and had top sponsors and speakers:


  • Austrian Environment Ministry
  • Ministry of Traffic
  • Innovation and Technology
  • City of Vienna
  • The province of Lower Austria
  • Austrian Chamber of Commerce (WKO)
  • Austrian Energy and Climate Fund


  • Politics
    • 2 Austrian Ministers (Pernkopf and Berlakovich i.V)
    • Vice mayor of Vienna (Vassilakou) Christoph Chorherr (Green Party President Vienna) Yves Cochet (EU Parlament member)
  • Science
    • Robert Hirsch
    • Dennis Meadows
    • Helga Kromp-Kolb
    • Nebojsa Nakicenovic
    • Wolfgang Streicher
    • Werner Zittel
All presentations will be on the web and YouTube soon.

The following represents a bullet-point style summary of my main take-home messages.

  • Main drivers/issues for Oil and Energy at the moment
  • The state of the Peak Oil Debate in ASPO today
  • The lack of appropriate official institutional and policy response
  • Possible Impacts
    • Climate Change: Helga Kromp-Kolb
    • Geopolitics: Michael Klare – Resource Wars
    • Financial - Monetary System
  • Solutions are easy
    • The golden age of Shale oil (Schiefer gas)
    • Renewable Energy (RE) affluence vs. sufficiency
    • So if it's so easy, why is it not happening already?
  • Solutions are difficult but possible
    • Systemic-Change, Collapse, Economic crises, End of Capitalism
    • Reiner Kuemmel: Thermodynamics Entropy and the Origins of Wealth
    • Nate Hagens
Main drivers/issues for Oil and Energy at the moment
  • Arab Spring (supply disruption)
  • Fukushima (higher fossil fuel demand by Japan),
  • 2011 first year in history with oil prices above 100 US$/barrel on average,
  • 2-5 Million barrel/day decline of supply per year,
  • the world in recession, OECD countries consuming less - all and more absorbed by India, China, etc. (10% growth = 1-2 million barrels/ year more)
The state of the Peak Oil Debate in ASPO today

A nice summary of the main discussion points was presented by Paul Hohen:
  • Peak Oil is now! (true but there is some delay due to unconventional oil and gas)
  • Plateau Oil now! (true, since 2005 at just above 80 Mb/d, but not for very much longer as the potentials of unconventional oil and gas are extremely limited)
  • The precise moment of PO is not so important anymore, as we are probably already at or closely before the peak according to many. (Robert Hirsch: Peak is likely in 1 to 4 years).
  • Peak Myth (i.e. there is plenty still): not true - good news trump bad ones - new finds exaggerated (e.g.: shale gas hype)
  • Peak Demand: (False - demand is still rising, especially in Asia. As Bob Hirsch says - there is a 100 trillion US$ infrastructure installed on the planet which works on oil - changing this will take many years - 20 or more).
  • Peak Price (or Peak Economics): (also true but there is a maximum price the economy can take before it goes into recession and the oil price falls – 6-7% of GDP according to Euan Mearns). Price should not be overemphasized - according to Meadows - the main issue is Exports! For producers of oil the market price is not that relevant.
  • Peak Emissions: (True? IPCC seems to overestimate available hydrocarbons for its scenarios (only 3 of 37 are within realistic ranges according to Aleklett), but there are other drivers for green house gas emissions too). According to Nakicinovic, there is still 30000 Gt of C02 in Coal left. Only 850 are allowed to remain below 2 degrees.
  • Peak Insecurity: Political insecurity is on the rise, which explains the rush of the oil industry to invest in shale gas/oil which is technically difficult but in politically safe places, where they can own assets.
According to Hohen, the main Analysis Gaps are:
  • Information (lack of reliable oil data)
  • Awareness (politics, business, investors, media, consumer)
  • No structured discussion (IEA denies PO)
  • Communication: not attractive for media - bad story with no happy ending
  • No official policy response
The lack of appropriate official institutional and policy response

The reasons why politicians do not want to touch PO are mainly two:
  • Jeremy Leggett: There is nothing of interest in PO for a politician - if in opposition - (s)he will be attacked for scare-mongering; if in office - unraveling an issue for which one cannot present credible answers is political suicide.
  • Robert Hirsch: Politicians react only to what is there as people prefer to deal with problems of today, not with those of tomorrow. Peak Oil is a very bad news story that people don't like. The climate change story on the other hand has been communicated better - everyone can do something about it. With regards to PO we have failed. I am not sure what we should do.
This of course would explain why official statistical bodies (IEA & EIA) are put under pressure, not to unpack the issue publicly. If someone "important" would use the word Peak Oil publicly that would cause chaos and confusion on the markets.

Rainer Kummel: Politicians are smarter than the general electorate. They know about Peak Oil. But if they would propose any measures the tabloids would beat them.

Michael Cerveny: People are made to believe that high oil prices were due to speculation. Hence many think it was a temporary phenomenon. Now SUV sales are going up again. And people continue to install oil heating systems. Policy makers should warn people that high oil prices are here to stay.

Another problem is mainstream economists, who advise governments and politicians. They insist that there are no risks and that there are still 40 years of supply (Jeremy Leggett, UK industry task force on PO). According to one UK secretary of state, tar sands still offer vast amounts of oil. When Jeremy asked, if he/she knew about their actual flow rates, he/she replied: We are economists, we don't do such details. Moreover Jeremy reports from a secretary of state which first agreed to an oil shock response plan, but 6 months later denied everything.

Possible Impacts

Robert Hirsch: Important: Peak Oil is not an energy crisis but a liquid fuels crises!

There will be many similar phenomena to those seen during the 1970s oil crises: lines at the petrol station, public anger, rationing. People will be in pain.

Climate Change: Helga Kromp-Kolb

We should stop talking about % decreases of emissions. It's the absolute numbers that count! Even 2 degrees temperature rise may be too much for tipping points. 1,5 would be better - but both are below most optimistic IPCC estimates. Changing that is said to be economically not feasible - but a safe operating space for humanity is more important than temporal economics.


Michael Klare presented a very gloomy outlook for what's going to happen in his book "The Race for What's Left: The Global Scramble for the World's Last Resources". He explains the Oil factor behind wars - from WWI and how the "Carter Doctrine" justifies US military intervention if the free flow of oil from the middle east is in danger. This discourse was quite open until the campaign "no blood for oil" with Bush I. Then however the discourse changed to that of weapons of mass destruction and fighting terrorism. Another speaker - Daniele Ganser - said there were people who therefore doubt the official 9/11 story.

According to Karin Kneissel - WWI is still not over. The territorial fragmentation continues. Borders in the middle east were drawn according to pipe lines. Nevertheless, future resource wars are not going to be located there, but in the South Chinese Sea, where large gas fields are. There is a certain sentiment of the revenge of the colonized against the former colonizers. China is much faster in securing resources. Europe took 10 years trying to reach consensus over building the Nabucco Gas-Pipeline and failed. The Chinese on the contrary just built a 8000 km pipeline in only 11 months.

Resource Nationalism is a useless concept which does not explain the increasing control over natural resources according to Olivier Rech. Moreover it a dangerous concept, as it sounds like countries should be forced to share their resources freely. Different cultures have different ways of viewing intergenerational equity. In the US, UK and the Netherlands for example individualism is dominant - not so in Saudi Arabia - where decisions should be taken for the good of the community.

According to Alexander Pöegl, oil markets are manipulated purposefully by the super powers:
  • If oil prices too high - "we release strategic reserves" - gives an impression of safety.
  • Too low - FBI issues warning over .....

Financial - Monetary System

A wide consensus emerged that the financial system will inevitably collapse, because outstanding debts are borrowed future growth, which will not happen anymore as it was fueled by cheap resources. Fiat money is no longer working if energy prices increase constantly. Hence many European countries are now printing money for buying the oil they can no longer afford – the EURO crises being a direct effect of the oil crunch.

Fiat money is no longer working if energy prices increase constantly. Many European countries are now printing money for buying the oil they can no longer afford.

Nate Hagens: Money is created through loan. This wasn't a problem before. Money was scarce and there were many opportunities; now this has changed. Debt is a reallocation of resources over space and time: from the periphery to the center and from future to present generations. Now every dollar of debt produces only one dollar or less. The problem is that standard economists thought that oil would behave like any other product - become cheaper and cheaper. Without debt we would be in recession since 2008 - what we do now will make the fall sooner and steeper - debt speeds up extraction process.

One possible remedy for one part of this problem was presented by Thomas Bachheimer (Gold Standard Institute): The big problem is that we have limited sources of oil (energy) and an unlimited yardstick to measure it i.e. US$. The amount of the latter is increasing, while oil is decreasing. Instead Oil should be traded in gold as no other commodity is relatively so stable. At the moment we have the unacceptable situation that the US as the only country in the world can print money to buy oil.


Thinking about solutions is the main challenge for ASPO according to many of the present speakers and participants. The Association was formed to warn about Peak-Oil not to present solutions. If this does not change quickly ASPO will remain publicly irrelevant (just like the Club of Rome) according to Meadows.

"Prediction is difficult especially about the future!" (Niels Bohr)

Solutions are easy

The golden age of Shale oil (Schiefer gas)

This is not a golden age, but the retirement party of the oil age (Arthur Berman). "If something sounds too good to be true, it probably is."

The industry is losing money with it (Arthur Berman), because the wells are extremely expensive and have very fast decline rates (Euan Mearns). This is particularly the case since gas prices in the US have collapsed. Temporarily some good wells may still be subsidizing bad ones.

Disadvantages of shale gas:
  • Fast decline rates
  • Expensive wells & technology
  • Danger of groundwater contamination by chemicals added to fracking- water (2 tons per well!)
  • Large land-mass necessary, because many boreholes necessary - this is a problem for Europe, which is much more densely populated than the US

Renewable Energy (RE) affluence vs. sufficiency

Obviously everyone is in favor of renewables, but there is big tension between those who preach "100% renewable is possible without radical systemic changes" (Jeremy Leggett, Peter Droege, Karen Smith-Stegen, Claudia Kemfert), and those who only see a limited scope for RE of around 10% of the current energy mix and therefore a need for (and desirability of - Hagens) sufficiency (Nate Hagens, Pierre-René Bauquis, Yves Cochet, Jeremy Gilbert, Rob Hirsch, Meadows, Reiner Kummel). Austria, for example, has a strategy to become Energy autarkic by 2050 including a complete restructuring of the energy system and Electricity autarkic by 2012 according to the ministries. Berlin for example is apparently already Energy-independent (Peter Droege). Wind alone, so it is argued by another speaker, could provide 4-5 times global conventional energy demand. Berlin is already Energy-independent (Peter Droege). To many (e.g. Michael Klare), RE are the only hope for avoiding collapse and resource wars.

The middle ground of these positions is covered by Nakicenovic's idea of "transition", driven strongly by efficiency and maybe Wolfgang Streicher's "100% Renewables for Austria by 2050" (the study does not include the Rucksack of imported goods which amount to about 44%). On the technological side of renewable Audi is currently working on combating the main problem of RE - cyclicality, with its system of power-to gas conversion (Hermann Pengg).

Pierre-René Bauquis is the only one in favor of Nuclear due to the limited scope of RE. Even though he claims that with solar energy we might have a "wild card", as progress is difficult to predict. Total (which he worked for) is still the only oil company which openly talks about Peak-Oil. Gilbert and Hirsch would be among those being in favour of more exploration of fossil fuels. Hirsch would also be in favour of pushing Coal-to-liquid. Gilbert calls the media and public reaction after the Gulf of Mexico an exaggeration (new technology inevitably has risks and costs - if we want more oil we have to accept that). The Rimini (oil cap) protocol, which he recalled himself, is an unrealistic dream, as we do not want to reduce our consumption voluntarily.

Not surprisingly, many "100%-no-problem people" have vested interests in the renewable energy industry or work within the framework of such projects (e.g. Smith-Stegen for Desertec , which is according to critics - despite the good intentions - solar colonialism - this caused quite some debate).

So if its so easy, why is it not happening already?

The answer given throughout was the huge power of the oil lobby, which is interesting, as many people at the conference work or have worked for that industry at some point (insiders). The energy industry, the incumbency, works hard to keep us in the fossil fuel age in order to keep power production centralized says Jeremy Leggett for example, The hope/assumption of many (e.g. Aleklett) is that a new energy system will be democratised. This however is exactly what "Big Oil"does not want. So every new small find of oil or shale continues to be celebrated like a new Quatar (The Economist: Drowning in Oil).

Fossil fuel subsidies are still 312 Billion US$ compared to 57 Billion US$ for RE (Claudia Kemfert). A major problem of the renewables industry and for investors is that banks don't provide loans at acceptable rates.

Solutions are difficult but possible

Systemic-Change, Collapse, Economic crises, End of Capitalism

Even though the IMF just reaffirmed that high oil prices have nothing to do with the economic crises, many of the most prominent speakers agree that PO is a major game-changer and means the end of Capitalism at least in its present form.

Meadows compares the economy to a race car which goes at 200 km/h. Taking off one tire does not mean it will go at 150 km/h - it will not go at all. The economy cannot take an oil price of above 200 US$ - it will collapse. The Eurocrisis to him is due to high oil prices.

Euan Mearns: Capitalism is based on cheap fossil fuels and a free licence to pollute. Both are changing now, being the death knell of capitalism - the fall over the net energy cliff. It is clear that the economy can only take certain levels of oil prices. If it's more than 6-7% of GDP, then the economy goes into recession.

Reiner Kummel: Thermodynamics Entropy and the Origins of Wealth

According to the cost-share-theory the energy sector has no importance as it only represents about 5% of costs. Hence only capital and labour were included in the production function. This neoclassical cost-share weighting always resulted in a 0,5 % residual (Solow residual), which is traditionally attributed to technological progress (liker manna from heaven). In fact only 50% of GDP growth can be explained that way. Professor Kummel produced a model (KULEC model), with which he shows the true contribution of the Energy sector to the productive powers of Germany (almost more than the other factors together: capital, labour and creativity).

He concludes: Energy is cheap and productive while labour is expensive and "unproductive", which explains why the latter is replaced by the former wherever possible. Wealth goes to those who own, control and use resources. He is critical of the "Energiewende" as hasty decisions could lead to dirty outcomes. He proposes most of all taxing energy instead of labour.

Petro Prieto: But that would cause capital flight, energy should be taxed globally. Kummel: Yes but thats even more difficult.

Nate Hagens

Energy Slaves: It takes a human being 11 years to provide the same amount of energy contained in one barrel of oil. Energy is the largest driver of economic growth - more than technology.

A lot of consumption is due to status - the peacock-phenomenon. The problem with easy solutions (i.e. renewables, electric cars, etc.) are the externalities e.g. high water footprint of electric vehicles. The current economic activities make it difficult to satisfy important human needs: being social, empathy ... A lot of consumption is due to status - the peacock-phenomenon. We should work to consciously change that, which however is difficult – similarly to telling a teenage girl to dress ugly.

On pessimism vs. optimism, he argues that the former is a kind of cowardice, as it often implies no action. He is pessimistic about our current economic system, but optimistic about what comes after. Less does not have to be bad. A systemic alliance is needed. We know if 10% understand this well the rest follows very quickly (critical mass). He used to be a Wall Street broker and earned lots of money, he now has spent most of it, owns a house in the countryside, spends a lot of time gardening and with his dogs .... is happy. It should not go unmentioned that this last presentation received by far the longest ovation of all.

Selected YouTube Links

ASPO was chosen because it had a nice acronym! Every time I see it I think asbo


and while OP is fairly neutral, PO is mildly offensive. You can't expect people to respond positively when the message is that you are a bunch of hoodies telling them to PO.

True, but there is also a more simple explanation for the term Peak Oil, Aleklett thought it simply sounded better and more fluid than 'Oil Peak'. And I think he was right.

I've watched at least half of the videos by now. For me, the big disappointment was Robert Hirsch who spent a lot of time psychoanalyzing and a lot less talking about the facts. It was mostly a shortened re-run of his previous talks, but with a lot of science cut out and for some reason he spent most of his time reciting old newspaper articles about the 1970s. A flop.

The most interesting presentation to me, by far, was Arthur Berman's contrarian take on U.S. shale natural gas which everyone predicts will become a huge, cheap and abundant source. Berman says, not so much. And he has done his math. It was a very fact, math and science-heavy, which I enjoyed because there's too much loose talk on some ASPO talks these days.

Werner Zinn also talked a bit about the European prospects of the same phenomenom and he threw could water on it. However, although I agree with him on the basic premise, I did find his analysis to be slightly more loose than Berman's. Another aspect is that his analysis isn't nearly as contrarian, so perhaps he didn't feel he had to go the extra mile to prove his point, but that also suggests the room for error is wider. Berman, on the other hand, came with a much more thorough presentation in my view, even if his views are still quite isolated, I found his take to be persuasive. I've done a lot of independent factchecking since I viewed his talk and a lot of his points are valid, although a lot of them are also hard to check due to a derth of data in some areas.

Oliver Rech had a good talk, which was also heavy on geology, but he was a bit vague. He decided to cut out some categories of liquid fuel, bunch together oil and natural gas and because of all of this, his predictions were a bit messy and tangled up in one another. Still, throughout his talk he did focus on specific areas, and oil was one such area where he was pretty pessimistic.

Steve Mohr did a good talk, but it was a bit controversial among the chemists/petroengineers there. Still, I felt he held his ground. He gave a prediction that by 2016, at the latest, we'll see a decline.

Mikael Höök spoke about CTL and GTL in one of the most understated, yet important talks. He methodically went through it all(he's working on, in fact finishing, a metastudy on all the studies done on these two areas the past decades) and basically told the audience that it's very unfeasable for larger scale projects. China tried it, experimentally, but abandoned it very quickly. It's a great talk. Again, at least to my liking, clear, concise and a lot of data and less speculation.

Kjell Aleklett, however, did one of the best talks not only of the entire conference but of all I've seen. He gave a pretty scary chart which showed that, according to BP, their 2007 'low case' was actually where the world was going on conventional oil production. Kjell, which has had pretty stark words in the past for the oil production, but a strangely sanguine and optimistic tone about our ability to handle this did finally yield a little and there were times throughout his talk that were marked by a slight dampaned tone of alarm, if ever so quickly extinguished.

A general theme for the entire conference was indeed denial about the role of unconventional. There was more talk about it, but the tone is still very much denialist. A lot of people didn't even want to talk about how the unconventional production had screwed their predicitons. And even with talks that were not focused on unconventional, you had weird exclusions based more on a whiff of convenience than anything else(Oliver Rech was a good, but not the only, example. Aleklett was also guilty of this.)

I still think that unconventional won't determine future oil production in the end, but it's potential, as we've seen the past few years, is larger than many skeptics want to admit. What I'd like to see isn't some cornucopian fantasy talk, rather a more realistic 'alternative scenario' where unconventional, toghether with depressed economic conditions and increasing efficiency, would be able to hold off and mitigate a peak. But alas, no such luck. Still, things are improving in this area.

Finally, there were loose talk about 'political implications' which contained a lot of fluff. I would certainly like to see a more rigorous discussion of the dangers of stagnating oil production(which seems the fate the next few years, if not decade) or at least slowly growing(but not fast enough) production. What these effects do to a society, not only politically, but what will that reaction force people to do geopolitically and perhaps even militarily, and what will that then in turn affect oil production? See invasion of Libya. How will Iraq turn out. What will the crushing debt and slowly rising misery in the West lead these nations to do? And how will that affect the Western/Saudi alliance as well as the gulf states?

And what about the fact that Egypt is now no longer a net exporter of oil, as of 2010? It's the largest importer of wheat in the world. Egypt isn't a player in OPEC, but it's the 'cultural capital of the Arab world' and whatever happens there has important implications for the entire Middle Eastern area. And again, what does this do to oil production? The lack of discussions between the explicit link between political constraints and geological oil production isn't explored well enough. A lot of talk about 'we must find a sustainable future' and other sloganeering. A lot less about the specific, right-here-and-now geopolitical effects. This, the dangers of social unrest as a direct threat to geological oil production in of itself is still underserved.

All in all, a pretty good ASPO summit. A bit more self-reflection/self-criticism in their own forecasts is needed, a bit more substantive discussion on the political implications with a direct focus on oil production and the importance to bring in fresh talent is all welcome. I do see improvements in all areas and would like to see more. Finally, if you had to watch just 3 talks, then I'd recommend Arthur Berman, Kjell Aleklett and Mikael Höök. Steve Mohr is a 4th(if you have the time), in part because it was a controversial talk and it was stimulating to watch.

Regarding the Robert Hirsch talk: I think of the 70s oil crisis as a general rehearsal of what we're about to go through today. Getting a feel for what people were thinking back then is important. Whenever I read history books I want to know the facts but also the perception of those facts, because the people's perception of the facts shapes their reaction. Therefore I thought the talk was quite interesting, even if rather unusual.

bv - I understand Leiten's POV. I like lots of data to chew on. But as we've unfortunately seen so many times facts aren't considered by many Americans during a time of crisis. A good example is the long lines at gas stations during the embargo of the late 70's. The fact was simple: gas stations had very little to no fuel in their tanks. The MSM had many stories about tankers cruising in circles waiting for prices to rise and huge secret storage facilities where the govt/TPTB had huge reserves hidden. I still have a vivid memory of Rivera in a helicopter hunting down all those stealth Exxon tankers off the CA coast. Then came one govt response" alternating fill up days based upon you license plate. And, of course, numerous congressional hearings/investigations.

Long after the situation died down the answer was determined: all that suddenly missing fuel inventory was, in fact, locked up in storage. Tens of millions of storage facilities: the majority of US vehicles. Instead of filling up when their tanks as usual when fairly low most folks filled up when they were down to a half a tank or so. Multiply that effect by the millions of vehicles and the number matched the nearly over night loss of supplies perfectly. The public had just as much fuel as they did before the embargo panic.

The fact was simple: there was no shortage of motor fuel. But the psychological state of mind of the public created an apparent crisis. I suspect even some politicians who were aware of the facts chose to feed the public's paranoia for their own gain. Since there's been no change in human nature (including that of politicians) we should expect similar "gut reactions" to ignore the facts of the situation. But, that being said, I gather Mr. Hirsch beat that dead horse a tad too much. It doesn't take much time to understand human nature...we each carry it with us daily. Having recognized the problem some time might have better spent on developing a method to deal with it. OTOH I doubt there's any way to do this effectively. Where various negative effects of PO arise the usual suspect will likely be trotted out and used as sacrificial lambs to satisfy the public's demand to punish someone for the problems they themselves have created.

About the 70's oil crisis or first oil shock, maybe the most important thing, and especially for Americans would be to stop refering to it with the so called "oil embargo".

The real trigger of the first oil shock is US 71 production peak, the embargo really an epiphenomenon (lasted 3 months anyway, and never effective from Saudi Arabia to the US, see James Akins interviews in "la face cachée du pétrole" for instance).

And if you look at below graph :

The important point is clearly 71, not 73

What the first oil shock is about is :
- US production peak in 71 (and there has been some shortages at that time)
- Akins auditing US capacity for Nixon, results : we are in a mess
- From that point US diplomacy, the majors, Akins, knew that oil price had to be higher, especially for them to be able to start more expensive plays (Alaska, GOM, North Sea)
- US diplomacy (and Akins in particular) **pushed** OPEC towards the price rise and quotas

The embargo is just a practical label to be used for the general public, suggesting an "offensive" move from OPEC Arab countries, that's all, in reality a complete no event (and tankers kept going from KSA to the US through Barhain), with the price rise being a complete common interests thing between OPEC and oil majors/US diplomacy.

Maybe things would be a bit different today if the first oil shock was associated to its key cause which is "US 71 production peak"(US still number 1 producer of the time by far), starting by people knowing that US production peak was in 1971 ...

Looked at the two talks on oil geopolitics (Karin Kneissl and Michael Klare), quite interesting, seem to remember Robert Hirsch also mentioning US peak as key aspect in his talk.

But isn't it time to change the label on the first oil shock(from "oil embargo" to "US production peak") ?

Yves - "The embargo is just a practical label to be used for the general public, suggesting an "offensive" move from OPEC Arab countries".

Exactly. I didn't emphasize that aspect but it's also part of the psychological reaction to higher oil prices. A cynic might also call it psychological warfare in part instigated by US politicians. Given a choice of taking the blame for not preparing the public for domestic PO and blaming those "dirty sheet covered Arabs" the choice was easy for our leaders IMHO. Some of that manufactured anger was even turned inward: "Let those Yankees freeze in the dark." Or "Let's put those dirty greedy oil company execs in jail". OTOH it did give the US govt cover to spend the better part of $100 billion (2012 $'s) on our Strategic Petroleum Reserve. Of course, it would have more financial sense to begin that effort at least 10 years earlier but that would have meant explaining the coming domestic PO. What politician wanted to deliver that depressing message? Better to let the situation come to a crisis level and then our govt heroes could step in and save us.

But that's old history...but still a good lesson. Given human nature and politics haven't changed (at least not to the better) what should we expect from the public and govts as global PO begins its significant impact? As I pointed out to spec in another post I'm fairly sure we'll look back at the reactions of the 70's as a kinder gentler time. Especially in the US. The perceived threat/injustice of the oil exporters ended relatively quickly 40 years ago. I don't imagine this next phase will pass as quickly.

Rock, yes, and about "A cynic might also call it psychological warfare in part instigated by US politicians. Given a choice of taking the blame for not preparing the public for domestic PO and blaming those "dirty sheet covered Arabs" the choice was easy for our leaders IMHO. "

What makes things also very strange about this story is that from the Arabs point of view, somehow it was also about some form of "domestic psychological management", typically showing the "Arab street" that they were "doing something" for the palestinians/against Israel. For instance the Saudis would probably have been the most pissed, if it had been known that they were not really enforcing the embargo at all towards the US.

And true that it is an old story, but really a key one if not the key one with respect to PO "perception history" for me.

Note : not sure why the image is not showing up in my previous message, it is below one :
or :

I do NOT think the 70's are a good general rehearsal. Nixon did price controls and that would NEVER happen today. Neither Rs or Ds would do such a socialist thing.

So no long lines at gas stations. Instead you'll get high prices that many people can no longer afford. I think European-style high-MPG cars would be popular, hyrbids would dominate over normal ICE, the public transport system would see millions of new riders, a lot of unnecessary transportation would be cut out.

Spec – I was focused on short term psychological reactions. Your much longer term vision may develop eventually but a more logic driven response than emotional. I agree…the 70’s weren’t a good rehearsal. They were freaking child’s pay compared to where we are and where we’re likely going IMHO. Consider a few comparisons. In the late 70’s folks got very upset when they could only buy fuel every other day. They were consumed with news reports of gasoline laden tankers circling offshore. Today there’s no huge outrage about sacrificing over a $trillion of borrowed money, thousands of our service personnel lives and the lives of tens of thousands of civilians on the falsehood of bringing democracy to the ME. IMHO the majority of Americans think they know exactly what the motive was and give silent approval. In their opinion any amount of money/blood is worth spending if it maintains BAU. Of course, if true, it cannot be admitted out loud. That wouldn’t be civilized.

You probably familiar with “The Art of War”. I’ve always felt one of the most critical proposals was to always leave the enemy with a way to withdraw when he begins to feel a serious threat. I take it to mean your enemy will never be more dangerous than when he feels there no way out and nothing to lose. I wonder how many of the global power brokers appreciate how a USA would respond if it felt there was nothing to lose in an energy starved world. If you accept my premise of our motives in the ME and consider how little real pain we’ve felt from PO so far then how might one expect this country to react when times become truly difficult?

BTW a few years ago when a hurricane brushed past Houston the gas stations were drained of fuel overnight. For the better part of a week 100’s of cars lined up at stations all day long. And yes: a local reporter polled folks at several stations and discovered that the average vehicle had at least a half tank. And yes I continued my daily commute to work without a worry about fuel. By the weekend the stations were topped off with fuel and hardly any buyers. As I implied: human nature hasn’t changed. Some are able to learn from history. Many won’t IMHO.

Neither Rs or Ds would do such a socialist thing.

Never say never.

The mood of an entire country can change overnight.

I have also watched about half the videos. I thought Robert Hirsch's gave the most interesting presentation of all. In the first few minutes of his talk he said all that was needed to be said. We have a liquids fuel problem, not an energy problem. And worldwide there is 50 to 100 trillion dollars worth of liquid powered capital equipment in use. That will not be replaced with equipment powered by hydrogen, coal to liquids, natural gas or renewables any way soon.

Of course that was just his opinion, and it happens to be my opinion also. But I would think a majority of contributors to The Oil Drum would argue with that point. Perhaps that's the reason you didn't like it.

Ron P.

What I'd like to see isn't some cornucopian fantasy talk, rather a more realistic 'alternative scenario' where unconventional, toghether with depressed economic conditions and increasing efficiency, would be able to hold off and mitigate a peak. But alas, no such luck. Still, things are improving in this area.

For a future oil scenario which models considerable production from Canadian oil sands and the Orinico belt (an estimated 640 Gb URR for both added together.) see the following:


note that if you think shale oil from kerogen is unlikely, just ignore the orange dotted curve and focus on the total-shale curve (purple dashed) which assumes zero production from kerogen.

further explanation here: http://www.theoildrum.com/node/9282#comment-901805

and here: http://www.theoildrum.com/node/9282#comment-901815

This only addresses the first of your three points, I agree that improved efficiency and a depressed world economy will help on the demand side and might allow us to thread the needle where a slow deline in demand and supply if matched well might avoid a crisis. I am unsure how this would be modelled.



Meanwhile, the combined net oil exports from the seven major net exporters in the Americas, inclusive of rising net exports from Canada, fell from 6.1 mbpd in 2004 to 5.0 mbpd in 2011 (BP), although their combined net exports were flat for the last couple of years.


The oil market is worldwide as I understand it. What has been happening to worldwide net exports lately?


Here is a copy of a missive I sent to the ASPO-USA discussion group:

The Few Becoming The Fewer

Following is a recollection of a scene from the movie “The Longest Day,” (about the Allied invasion of Normandy in 1944). Richard Burton played a British pilot, and a veteran of Battle of Britain. From memory, the dialogue went something like this, “What concerns me about being one of The Few (a reference to Churchill’s Battle of Britain Speech) is how we keep becoming the fewer.”

Our net export data base, which calculates the individual and combined net exports from the top 33 net oil exporters in 2005, has been updated to incorporate the 2011 BP data base. I define Global Net Exports* (GNE) as the combined net exports from the Top 33 in 2005. The updated 2011 data base showed that 22 of the 33 had flat or declining net exports from 2010 to 2011, as Brent averaged $111 for 2011. Of these 22, three of them (14%)--Vietnam, Argentina and Malaysia--slipped into net importer status in 2011, i.e., “The few becoming the fewer.”

There was a small year over year increase from 2010 to 2011 in GNE, from 43.3 mbpd in 2010 to 43.7 mbpd in 2011 (versus 45.6 in 2005). Note that this can be solely attributed to the year over year increase in Saudi net exports (up from 7.2 mbpd in 2010 to 8.3 mbpd in 2011). This was above my upper end estimate of 8.1 mbpd, but they were still well below their 2005 annual net export rate of 9.1 mbpd. In other words, the Saudi post-2005 net export decline rate slowed from 4.7%/year (2005 to 2010) to 1.5%/year (2005 to 2011).

We have seen six straight year over year declines in Available Net Exports (ANE, or GNE less Chindia’s combined net imports), with ANE falling from 40.4 mbpd in 2005 to 35.4 mbpd in 2011 (because of data revisions, the volumetric decline didn’t change much versus 2005 to 2010).

Given a steady decline in the ratio of total petroleum liquids production to domestic liquids consumption in an oil exporting country (P/C), one can extrapolate and estimate when the P/C ratio (which I have renamed ECI, or Export Capacity Index), hits 1.0, which means production = consumption, which of course means zero net oil exports. Given net exports at peak, we can do some simple integration and estimate total post-peak Cumulative Net Exports (CNE). Using this approach and extrapolating the initial three year rate of decline in the ECI for Indonesia, UK and Egypt (IUKE), I estimated that the combined post-peak CNE for IUKE would be 4.0 GB. The actual combined post-peak CNE number for IUKE was 4.0 Gb.

I plan to do this same exercise for the three new members AFPEC (Association of Former Petroleum Exporting Countries)--Vietnam, Argentina and Malaysia (the VAM case history).

In any case, if we extrapolate the 2005 to 2008 rate of decline in the ECI for GNE and for Saudi Arabia, the predicted and actual results for 2011 are shown below:

Actual 2005 Data:

GNE ECI: 3.75
Saudi ECI: 5.60

Predicted and Actual 2011 Data:
(Predicted values based on 2005 to 2008 rate of change)

Predicted GNE ECI: 3.29
Actual GNE ECI: 3.24

Predicted Saudi ECI: 3.80
Actual Saudi ECI: 3.91

So, the 2005 to 2011 rates of change indicated that the GNE Export Capacity Index fell slightly faster than predicted, and the Saudi Export Capacity Index fell slightly slower than predicted, relative to 2005 values (again, predictions based on 2005 to 2008 rates of change). As noted above, at a 1.0 ratio, net exports = zero.

The ratio of GNE to Chindia’s Net Imports (or GNE/CNI) is a related metric. The GNE/CNI ratio fell from 11.03 in 2002, to 8.88 in 2005 and to 5.28 in 2011.

Based on the 2005 to 2008 rate of change in the GNE/CNI ratio, the predicted value in 2011 would be 5.57. The actual ratio in 2011 was 5.28, so the actual ratio of Global Net Exports to Chindia’s Net Imports in 2011 was 5% below the predicted value, based on the 2005 to 2008 rate of change. At a 1.0 ratio, the Chindia region would consume 100% of GNE.

GNE/CNI chart:

*Top 33 net exporters in 2005 (countries with 100,000 bpd or more of net exports in 2005), BP data base + Minor EIA input, total petroleum liquids

Just got some numbers on the VAM (Vietnam, Argentina, Malaysia) case history. They had a combined production peak (total petroleum liquids) of 1.94 mbpd in 2004, with liquids consumption of 1.22 mbpd, and net exports of 0.72 mbpd. Their ECI (P/C ratio) in 2004 was 1.60. From 2004 to 2007, the ECI decline rate was 8.8%/year, which suggested that they should hit combined zero net oil exports this year, 2012. They hit combined zero net oil exports last year, when they net imported about 70,000 bpd.

Note that VAM's combined 2011 production was 1.51 mbpd. So a production decline of 22%, plus rising consumption, completely wiped out the combined net oil exports from three of the top 33 net exporters in 2005.

When we plug in the "Chindia Factor," this is why I continue to use the "Midnight on the Titanic" analogy:

Late on the evening of April 14th, 1912, at 11:40 P.M., the Titanic struck the iceberg. At around midnight, it seems likely that only about one-tenth of one percent of the people on the ship knew that the ship would sink, but that did not mean that the ship was not sinking. The ship’s pumps helped, but they were not sufficient to fully offset the flood of seawater coming into the ship.

I believe that the slow increase in US crude oil production is to the ongoing decline in global net exports of oil as the Titanic’s pumps were to the flood of seawater into the ship, and I suspect that perhaps one-tenth of one percent of the people in the world have some appreciation for the global net oil export situation, but that does not mean that global net exports are not declining, with the developing countries, led by China, so far consuming an increasing share of a declining volume of global net exports of oil.


Thanks for the reply. What % of actual GNE do the top 33 net exporters represent? How much has this changed from 2005 to the present? So that the comparison is the same from 2005 to the present have you considered using the top 30 from 2005? Do you only look at crude plus condensate when looking at GNE or do you include NGL as the BP database does? Do you adjust for the reduced energy per barrel in NGL? If not, you might consider using the data in tonnes of oil rather than barrels because this gives a closer match to energy content than volume.

One would expect that fast growing economies like China and India would continue to claim a larger and larger share of global oil. This is why prices may continue to rise even though the higher income countries are growing more slowly. It is possible (though optimistic) that the higher prices will lead to a change in behavior in high income countries so that we become more fuel efficient. It is also possible (pessimistic view) that the higher prices will crash the economies of the high income countries which may lead to a downturn in the BRIC countries and a worldwide depression. This would solve the high price problem due to lower demand for liquid fuels, but it might kill investment in liquid fuel production and lead to lower long term supply (the investment effect takes 5 or more years to play out). The reduced supply would lead to an increase in oil prices as the world economy recovers. As GNE approached zero, the price oscillations due to the scenario outlined above will become more severe because there will be no swing producer to reduce or increase output to keep prices under control (the role once played by the Texas RRC and now played by OPEC). I am not very clear on what happens at that point, but it is unlikely to be pleasant. Those nations that have invested wisely and anticipated such a future will suffer a little less, if wide scale war is avoided.


In 2005, I estimated that the net exporters that were (net) exporting less than 100,000 bpd represented less than 1% of total Global Net Exports. Here is a chart showing the 2005 to 2010 rates of change in net exports for the top 33 in 2005 (not yet updated to incorporate 2011 data):

We define Net Exports as Total Petroleum Liquids production less liquids consumption. It's not perfect, but it's at least consistent. We used the BP data base, with some minor input from the EIA.

As noted above, three of the countries on the above list are now in net importer status--Vietnam, Argentina and Malaysia. Is anyone aware of any countries that are now (net) exporting 100,000 bpd or more that are not on the above list?

A link to my comments down the thread:


"The industry is losing money with it (Arthur Berman), because the wells are extremely expensive and have very fast decline rates (Euan Mearns). This is particularly the case since gas prices in the US have collapsed. Temporarily some good wells may still be subsidizing bad ones"

What is the source of this assertion? I'm not aware of many active US-based operators (in liquids-rich plays) that are losing money right now.

"A major problem of the renewables industry and for investors is that banks don't provide loans at acceptable rates."

This is because most renewable companies cannot operate without subsidies of some sort (e.g. the solar rebate program that was recently transitioned from hard cash to a tax credit - financing is near impossible to come by now). Furthermore, loan standards at banks post-crisis are decidedly more rigorous than pre-crisis. On a relative value basis, it's just a hard sell for many banks.

Arthur Berman has made a number of posts here at TOD, for example these:

Lamb – Difficult to document each trend as far as profitability. I’ve seen some very profitable wells in the trends and many dogs. Without tracking down every well you can’t get to the bottom line. Some of the best profit margins were made by operators who drilled very few wells but sold their undrilled acreage for a bundle. And did you know an operator can make a nice profit by drilling a money losing well? We generally call them “promoters”. We have been hip deep with promoters from Day One in the shale plays. The trade varies some but often goes like this: the working interest (WI) partners reimburse the operator for the lease costs, over head expenses such a salaries, etc. And there’s usually another chunk of cash added on. And the WI partners pay for 100% of the cost of the well but earn only 75% of the net revenue. The operator collects the other 25%. We call this a “third for a quarter” deal. So if a well cost $10 million but only nets $8 million the operator makes $2+ million profit and the WI investors lost $4+ million. Would you classify that as a successful well? About 30 years ago I saw first-hand when a promoter drilled 18 dry holes in a row and he walked away a millionaire.

Also consider the public company angle. What if Pubco A spends $200 million drilling Eagle Ford wells but only nets $160 million back during the years following their 5 year drilling program. But during those first 5 years the market cap of the company increased $100 million due Wall Street’s satisfaction with Pubco A increasing their reserve base y-o-y. The effort was successful for the original shareholders but would you call it profitable?

Then there’s a question of what rate of return you feel is sufficiently profitable. My company is private so no stock to hype. I’ve reviewed Eagle Ford prospects that appeared to be profitable. But I’ve yet to see one with a ROR acceptable to my owner for him to justify the risk. Until NG prices collapsed we could make a better ROR drilling deep conventional prospects.

Then there’s a question of sustainability. The bust in the dry NG shale plays is a good example. Many $billions were invested in the E Texas shale trend. And it looked rather profitable…until NG prices fell. Suddenly many of those profitable wells became unprofitable and many of those very expensive lease positions became worthless and were never drilled. That bust nearly wiped two of the largest US independent companies, Chesapeake and Devon, off the map for good. And did completely destroy many smaller companies.

The question of sustainability may be rising again with the oily shale plays. A public company may actually have a net profitable drilling program in the Eagle Ford but to maintain share value they must drill even more wells to increase their reserve base y-o-y. But the cash flow from their efforts, though profitable, is insufficient to fund an ever expanding drilling program. This may be the situation Chesapeake is facing today. Over the last two years they sold over $12 billion in assets to fund drilling operations but they still admit they are at least $10 billion short of their required budget. And now they are facing falling oil prices that are reducing income even further than previously projected. I have seen more than one company with a profitable drilling program (though perhaps marginally so) fail because cash flow was unable to cover debt payments and their drilling budget.

I hope you get my long winded point: profitability of any play is not as straight forward and readily calculated as many might presume. Some of the negative comments about the shale plays may come across as the plays not being profitable when the real objection is their potential lack of sustainability.

Comments regarding Peak Oil:

1. While the physical peak of global oil production must occur at some point - finite world, finite # of oil pools, all of finite size - that physical peak is NOT the event of concern, as most of the synopsis of the APSO meeting indicates. The condition of interest is [oil supply <= oil demand] regardless of whether or not the physical peak production has occurred. Just a little thought about the inequality above will convince you it can occur with production continuing to increase if demand rises fast enough. Further, the present global economic condition has certainly delayed the occurrence by reducing consumption. This inequality is the condition leading to global resource war, not the physical peak.
2. Summarily dismissing shale oil development is a bit weak. The Bakken Shale development has led to a 1MMBO/d increase in US production over the last 4 years after 25 years of falling rates (EIA). Other countries have shale oil and gas potential. The technology will be exported. Building a good oil or gas well and having regulatory bodies capable of knowing the difference will eliminate substantive environmental concerns.
3. Terms like "proven reserves" and "ultimate recovery" refer to forecasts. Like all other forecasts they have that problem in re predicting the future. They invariably project conditions of today. They always leave out the unknown unknowables of technological advance. And they are subject to yearly revisions. Recently, those revisions making the news have been mostly negative. As a former reservoir engineer responsible for devising such forecasts, I know it's also true that the revisions can go the other way.
4. Regardless of profitability, there is an oversupply of natural gas in North America due to shale gas. More is being discovered and brought online every day. Last week Apache announced a well in a British Columbia shale gas fairway tested producing at extraordinary rates. There is much opportunity to substitute NG and liquids made from it for transportation hydrocarbon liquids. That would help the inequality a lot, not to mention reduce the carbon footprint.
5. The comment to the effect that what these people really mean is "sustainable" is dead on. Sustainable is a desirable goal, but it won't be brought about with apocalyptic scares about only semi-relevant issues. Such threats only first frighten people; then, when they fail to obtain, destroy credibility.

If the debate over RRC versus EIA data for Texas demonstrates anything, it is that the most (semi) reliable data are the annual average data bases. In any case, the annual EIA data show that the largest recent year over year increase in US crude oil production was from 2008 to 2009 (0.4 mbpd), and all of the increase is equivalent to increasing Gulf of Mexico production, as production rebounded following the hurricanes and as new (quick to peak and decline, e.g. Thunder Horse) deepwater projects came on line. The increase in annual US crude oil production from 2009 to 2010 was 0.1 mbpd, and the increase from 2010 to 2011 was 0.2 mbpd, to 5.7 mbpd, which was only 0.3 mbpd above the pre-hurricane production rate of 5.4 mbpd:

If we use the annual RRC data for 2010 and 2011 Texas crude oil production and EIA data for other regions, there was no increase year over year in US annual crude oil production from 2010 to 2011, but at the end of the day, the difference between no increase (RRC + EIA) versus an increase of about 200,000 bpd (EIA) is really pretty trivial.

Regarding the RRC data bases, the RRC appears to be quickly and routinely updating the monthly and annual data at the following link:


I took the annual Texas natural gas well production data from the above link (for the key 2006 to 2011 years) and I took the Barnett Shale annual gas production numbers from the RRC Barnett Shale data base, to generate the following chart:

Commentary: America’s new energy reality - A bidding war for declining global net oil exports

Americans are reading, almost on a daily basis, about increasing oil and gas production in the US. For example, Daniel Yergin wrote about his optimistic outlook for increasing US oil and gas production in an OpEd piece in the June 10, 1012 New York Times entitled “Americas New Energy Reality.”

It’s certainly true that US oil and gas production has rebounded from the production low following the 2005 Gulf of Mexico hurricanes, but a careful analysis of the production data suggests that the production outlook it not quite as rosy as most people seem to believe.

The primary new energy reality facing the US is an ongoing post-2005 decline in the supply of global net exports of oil, which we abbreviate as GNE, with the developing countries, so far at least, consuming an increasing share of a declining volume of GNE . . .

Note that the same RRC database shows a steady year over year increase in Barnett Shale gas production from 2004 to 2011. So, a common database shows increasing natural gas production from a large shale gas play, but declining overall total natural gas well production.

Absolutely love the last graph here!

Oof. Not a good prognostication, though. China and India take all GNE by 2030? That's not a good situation. Jeffrey, have you written any formal pubs on this stuff? I'd love to include as a reference for a current project.

Best wishes to you,


I'm working on an updated net exports paper, incorporating the 2011 data points and the ECI (P/C) concept, but it's not ready yet, but I did briefly discuss the concept in this article:


Note that there are certainly case histories of a declining ECI that were "false negatives," e.g., Saudi Arabia in the early Eighties and Russia in the early Nineties, but in the former case Saudi Arabia was cutting exports in response to declining oil prices and in the latter case the decline in the Russian ECI was clearly related to political unrest following the collapse of the Soviet Union.

The recent decline in the Saudi ECI, from 5.6 in 2005 to 3.9 in 2011, corresponded to a doubling in annual Brent crude oil prices.

I agree that China & India won't be consuming 100% of GNE in 2030, but on the other hand, it sure is one heck of a trend line, and it looks like China's oil production may be peaking. Note that at the 2005 to 2008 rate of decline in the GNE/CNI ratio, the Chindia region would be at a 1.0 ratio (consuming 100% of GNE) in 2033. At the 2005 to 2011 rate of decline in the GNE/CNI ratio, the Chindia region would be at a 1.0 ratio (consuming 100% of GNE) in 2030.

US net oil imports increased at 11%/year from 1949 to 1970, when we peaked. US net oil imports then increased at 14%/year from 1970 to 1977 (doubling in about five years).

In any case, the projected post-2005 Cumulative Available Net Exports (CANE) number is particularly jaw dropping. We take ANE at peak in 2005 (14.6 GB/year) X 25 years X 0.5 (area under a triangle) less ANE at peak (14.6) to get a post-2005 CANE estimate of 168 Gb, with about 80 Gb already having been shipped, through 2011.

As I noted the other day, if the GNE/CNI ratio continues to fall anywhere close to the projected curve, we are to quote President Bush 41, "In deep doo-doo."

"US net oil imports increased at 11%/year from 1949 to 1970, when we peaked. US net oil imports then increased at 14%/year from 1970 to 1977 (doubling in about five years). "

By the way, when did the US stopped being a net exporter ? Was trying to look for a net export plot for the US and couldn't find any, during WWII ? Right after ?
(Venezuela was a major provider at that time also I think).

And looking for a net export plot of the US, say starting around 1920 or something, you of course run along these recent things :


The US was already a net oil importer in 1949, so I generally use 1948 as when the US became a net oil importer. Lots of historical data:


Note the sharp increase in US net imports after we peaked in 1970. I believe that oil started to flow in the Trans-Alaska Pipeline System in 1977, and then US consumption started to fall, both of which (for a while) contributed to declining net imports.

"Note the sharp increase in US net imports after we peaked in 1970. I believe that oil started to flow in the Trans-Alaska Pipeline System in 1977,"

Yes, and when you think about it, Alaska came online, together with North Sea (start around 1975), really at the right time to "smooth out " the second oil schock (collapse/shut off of Iranian production).

But would be interesting to find data say for the 1900 1949 period for US production and export, with other key producers of the time.

Yves - This isn't what you asked for but it may give some hint to the significance, or lack thereof, of the answer you're looking for.


The first chart shows global oil production in 1945 was about 6 million bbls/day. Or about 7% of current consumption. Whatever global oil production looked like over the previous 45 years and which countries were importers/exporters seems not very significant in the grand scheme. I don't have the numbers handy but do know the discover of the giant east Texas Oil Field in the 30's had a significant impact on global production as well as US production. Some historians credit the field with greatly aiding the victory in WWII.

I also pointed out in another post that Texas accounted for 20-25% of the 10-15 million bbls/day of all global oil production in early 50's. The Texas Rail Road Commission, through its proration regulations, attempted to control (read: increase) oil prices by restricting oil production in the state. As wt points out, with the US being an oil exporter at that time it allowed the TRRC to have a significant impact on global oil prices: restricted Texas oil production limited the volume of oil the importing countries had available due to increased imports by the US. In effect, even though a net importer, the US was doing that which OPEC was originally designed to do: maintain higher oil prices. One can make the point that the US, India and China are effectively doing the same today: if these three countries were to significantly reduce imports over a very short time frame oil prices would crash...at least for a while.

"I don't have the numbers handy but do know the discover of the giant east Texas Oil Field in the 30's had a significant impact on global production as well as US production. Some historians credit the field with greatly aiding the victory in WWII."

Yes for instance in below :
"Now, it cannot be stated too forcefully, American oil, which amounted in all to 6 billion barrels, out of a total of 7 billion barrels consumed by the Allies for the period of World War Two, brought victory!"

And for sure the volumes were much less, but in terms of respective powers and geopolitical dependencies, the proportions and "market share" is the key point.
And as Karin Kneissl is saying in below talk :
The Irak wars are also a legacy of the framework defined after WWI, already about oil.

By the time that a person born in 1930, when the East Texas Field was discovered, had graduated from high school, in 1948, the US was a net oil importer.

And of course, in one of life's little ironies, the US had extensive electrified rail systems in the Forties*, which began to be dismantled** in 1948, just as the US became a net oil importer.

*Up until 1948, the Dallas/Fort Worth area reportedly had about 350 miles of electrified street car lines, with a an electrified Interurban regional rail system.

**Reportedly with lots of encouragement from the oil, auto and tire industries

Well, I wonder what the folks on TOD who insist that electrified heavy inter-city and light intra-city rail can't be done have to say about the fact that its was, indeed, widespread. Heck, my little home town of Altoona, PA (Pop ~ 60,000, sa-lute) had a streetcar system back in the day.

H - Maybe it's the way the statement is qualified. I certainly agree with you that it can be done from a technical stand point. But the same question remains: is there sufficient capex do it? Maybe...if you take the entire DOD budget and convert it to such projects. But back to the same question: But how this acomplished? Until someone can show a certain path by which such adjustments WILL BE MADE then such proposals still amount to nothing more than good ideas that won't be implimented. Unfortunately.

Until someone can show a certain path by which such adjustments WILL BE MADE then such proposals still amount to nothing more than good ideas that won't be implimented. Unfortunately.


Alan Drake has some ideas about how it could be accomplished. Essentially we need to divert some of the current spending on roads to rail and light rail. I agree with your basic premise that it is not likely to happen until TSHTF(stuff hitting fan) and then it will be too late. I think AD's ideas for transportation and freight are excellent, but I may be in the minority.


That's more of a reminder that in the past we used to actually be able to get things done without it costing billions of dollars. Not so much now.

Rockman and simkin,

I will ape Alan Drake's saying, to wit:

Why can't the U.S. move with at least half the efficiency of died-in-the-wool French bureaucrats?

Not talking about billion-dollar-per-mile subways or equally egregious inter-city 'high-speed rail'...just talking about surface-street-level trams.

H – “Why can't the U.S. move with at least half the efficiency of died-in-the-wool French bureaucrats?” Most excellent chief! Seriously. Before one can fix a problem you must ID the cause. It’s easy to say we are where we’re because politicians cater to the public and the public is illogical/selfish/ignorant… take your pick. But how do you fix that problem? Sure…we could kill the vast majority of the population, mate the most attractive women with the smartest group available (geologist, of course). And then in 10 or 15 generations we’ll breed a responsible group of citizens. But I can see a few flaws in that plan.

OK…back to serious. We’ve had gasoline prices drop a better part of $1 since the last high. So how easy should it be to sell the politicians/public on a $0.02 per gallon increase this year? Sure it would have minimal effect on fuel consumption. But also a minimal effect on drivers’ purchasing power…less than 0.7% of their fuel bill and way under 0.1% of their total expendatures.

And have you heard even whisper of such a proposal? Oh yeah, increase the CAFÉ standard…years from now. I’m pretty sure PO will take care of our fuel gluttony anyway. DC made my point perfectly above. I can’t guess how many reasonable, affordable and technically possible great ideas, small and large, I’ve seen on TOD. But I’ve repeatedly asked someone, anyone, to offer a plan that would lead to the deployment of such ideas. I’m still waiting.

Perhaps Jedi Drake will pull a rabbit out of his hat...

...it will take one or more large forcing functions to get folks to wake up and bust a move. If we have plans in place, implementation will be easier.

"Americans can always be counted on to do the right thing...after they have exhausted all other possibilities."

-- Winston Churchill

Best hopes for some rabbits...

H - Exactly. For those of us that feel we have a handle on the current situation most probaly feel we should have been making serious adjustments at least 30 years ago. And yet we see no serious effort even today IMO. Lots of talk...very little effective action.

"Americans can always be counted on to do the right thing...after they have exhausted all other possibilities." Particularly noteworthy given the source. Brings to mind a theory I once read about an alternative outcome to WWII: had Germany not over reached and not chosen to fight on multiple fronts at the same time they could have won in one region at a time. And the US, as it had been doing prior to our involvement, had just sat back and waited to see when this expansion would end. And as the theory goes, waited long enough that the ultimate result would that everyione in the US today would be speaking German.

After all the back and forth upthread about the organization's acronym, I got a smile out of your mention of "APSO". That of course is the other group that meets in Lhasa.

It was formed in 2002 (10th anniversary this year) by Colin Campbell and Kjell Aleklett, both petroleum geologists.

Uh . . . I believe Kjell Aleklett is actually a nuclear physicist. He just became really interested in peak oil.

Yes, and Jean Laherrère, another geologist and ASPO founder, shouldn't be forgotten !

The problem with easy solutions (i.e. renewables, electric cars, etc.) are the externalities e.g. high water footprint of electric vehicles.

Can someone explain to me what a "high water footprint" is?

Is he saying electric cars use a lot of water? Which I guess could be somewhat true if coal & nuke plants are used to charge them. Natural gas plants (which are quite popular these days) use much less water. Wind and PV don't use any.

My guess is that it refers to the amount of water used in the battery manufacture or some such aspect.

Maybe the cooling water used by the coal/nuclear power station used to make the electricity to charge the batteries.

In a climate changing world, even France can run short of nuclear energy if their river water flow rates fall too low.

Good, well structured summary.

peak oil is now

Exactly. There are so many countries peaking and/or becoming net oil importers, with subsidy and budget problems as oil prices go up because of the global peak. Shortages already in many countries. Refineries are closing. Airlines in trouble....armed conflicts about oil.....

Even though the IMF just reaffirmed that high oil prices have nothing to do with the economic crises


I have summarized their modelling here:

IMF team warns of global economy entering uncharted territory with US$ 180 a barrel in 2021

There is nothing of interest in PO for a politician

It is amazing that no top politicians like Prime Ministers or Presidents ever think how they will enter history books by failing to prepare for declining oil production. I have started to document this in the case of Australia:

"Yes, Prime Minister", peak oil 2006 under your watch

I can imagine that our "leaders" will get grilled when it dawns on motorists what is really happening. Millions will have bought the wrong cars, the wrong houses in the wrong suburbs. At present, the public in Australia is absolutely cynical about politicians but this will change when peak oil turns into a real physical problem.

When finally looking for alternative fuels, they will realize this, for example:

Australia's natural gas squandered in LNG exports

All these wrong decisions will pop up. Politicians must think it won't happen during their term or they won't be around anymore....

Interesting article on squandering LNG which I've bookmarked for further study. This issue will soon come to a head with Australia's carbon tax which starts Sunday. The politicians think of gas like the inexhaustible food supply in the kids book The Magic Pudding. Somehow gas will replace coal fired baseload, balance wind and solar, make ammonia for fertiliser input and there will still plenty for export. Already gas supply fears are holding back plans to replace brown coal fired power stations with combined cycle gas, nuclear being illegal in Australia.

There's every chance that the leftish government will be thrown out by the end of 2013 followed by attempts to repeal the carbon tax. However the conservatives seem unlikely to restrict LNG exports just because truckers and power stations want cheap gas fuel. The cornucopian world view is going to be put under severe strain in coming years.

I think you might not have a good grasp on how a post-peak-oil world progresses. The very notion of "History Books" is a product of the leisure-time made available by industrial society. It won't exist in the future.

Check out this video. It's quick, catchy, and makes whole-lotta sense:


It's quick, catchy, and makes whole-lotta sense:

No it doesn't make much sense at all! Furthermore it suggests that the 'FACTS' can be found at their site http://www.fuelfreedom.org/

If their myth busting section is any indication they are mostly BAU promoting techocornucopians who seriously believe that alternative fuels such as ethanol and domestic US oil production will save the happy motoring way of life, It seems they have never heard of EROEI...

Have to agree with Euan on the issue of % GDP. Posted on it before:


"So if its so easy, why is it not happening already?"

It's not easy. You have an entrenched industry with a boatload of money and a huge amount of invested capital. They want their profits. They've put huge effort and money into their machines, pipes, people and resources. They are not going to give this up easily and if you'd done the same as them you probably wouldn't either. It would take extreme heroism for much of the oil, gas, and coal industry to act in a fashion that didn't immediately support their short to medium term interests. They are huge, huge, huge. The smoking industry was chump change compared to these guys. They directly influence huge chunks of the media and the political system.

And changing the 100 trillion in sunk infrastructure is a huge barrier as well. The fact that RE has only just become competitive doesn't make it any easier. And political, economic, and social change always creates crisis. So you have crisis on top of crisis.

It's easy when you just look at hard figures and hard facts. But when you start to include human systems and understand the irrational nature of powerful institutions when power bases are perceived to be threatened, then it becomes pretty clear how ridiculously difficult it really is. Climate change is a huge problem, resource depletion is a huge problem, changing people's expectations and attitude is a huge problem, and dealing with the politics of an immensely powerful industry under threat is a huge problem.

Nuclear arms control was much easier than this stuff.

This publication presents a radically optimistic view, when compared with most of the ASPO presentations.




Based on original, bottom-up, field-by-field analysis of most oil exploration and development
projects in the world, this paper suggests that an unrestricted, additional production (the level of
production targeted by each single project, according to its schedule, unadjusted for risk) of more
than 49 million barrels per day of oil (crude oil and natural gas liquids, or NGLs) is targeted for
2020, the equivalent of more than half the current world production capacity of 93 mbd.

After adjusting this substantial figure considering the risk factors affecting the actual
accomplishment of the projects on a country-by-country basis, the additional production that
could come by 2020 is about 29 mbd. Factoring in depletion rates of currently producing oilfields
and their “reserve growth” (the estimated increases in crude oil, natural gas, and natural gas
liquids that could be added to existing reserves through extension, revision, improved recovery
efficiency, and the discovery of new pools or reservoirs), the net additional production capacity
by 2020 could be 17.6 mbd, yielding a world oil production capacity of 110.6 mbd by that date –
as shown in Figure 1. This would represent the most significant increase in any decade since the


Any comments?

The author appears to have good "street cred" with the mainstream press. Coverage appeared in major news sources such as Reuters, the Wall Street Journal, and the New York Times.


One of the world’s foremost experts on oil, gas, and energy, Leonardo Maugeri has been one of the most distinguished top managers of Eni (the giant Italian giant oil&gas, ranked 6th among the largest international oil companies), where he held the positions of Senior Executive Vice President of Strategies and Development for about ten years (2000–2010),



(Reuters) - Global oil supplies are growing so fast that they could outstrip demand and lead to a collapse in world prices, a former energy executive who is now a Harvard research fellow said on Tuesday.



Most of the new projects examined in Mr. Maugeri's report should be developed or close to completion by 2015. If demand doesn't keep up beyond then for whatever reason—say, a Chinese slowdown—the second half of the decade could be a real downer for peak oilers. Long-term price expectations would follow.



A Fresh Look at Oil’s Long Goodbye

My bedtime reading tonight is “Oil: The Next Revolution – The unprecedented upsurge of oil production capacity and what it means for the world.” This mind-bending report points to a prolonged period of rising oil production, particularly in the United States (for reasons laid out below), and a potential collapse in oil prices, with all kinds of implications for security, international politics, the economy and, without doubt, climate.


To quote my father - "its all a bucha ...."

And again: "The unprecedented upsurge of oil production capacity". A completely absurd statement easily proved by looking at global oil prodcution increases during the 50's and 60's. The most extreme optimistic projections of future increase don't come close to what we experienced a half century ago...right before the US hit PO. Perhaps someone should consult the dictionary for the definition of "unprecedented". It may make for a flashy headline but it is easily proved to be a gross misrepresentation of the historical FACTS.

Five extra Saudi Arabias, isn't that exactly the amount needed to continue BAU?

Hmm. I did a word search for "population" on this page, and...nothing.

Nate's talk has almost unintelligible sub-titles. They barely make sense most of the time. Pity, as it's a great talk.

Actually they were completely unintelligible - I didn't have any subtitles/words on the slides - only pictures. I am writing it up as a (last) summary essay here. But Ive been saying that for months...

Nate's talk was brilliant and is the best big picture summary of our predicament that I have seen.

Nate stated that pessimism is cowardice. I think understanding leads to pessimism. So does that mean to understand is to be a coward?

I don’t want to be a coward. Anyone have any thoughts?

The nice part about being a pessimist is that you are constantly being either proven right or pleasantly surprised. - George F. Will

Kye - I suppose it depends upon how one rates the probability of success. If I jump out of an airplane w/o a parachute the odds are highly likely I'll die. So if I chose to not jump am I being pessimistic about the outcome? At the other extreme, of course, is a 100% certainty such as flipping a coin and expecting it to land on either heads or tails. There is some very small possibility that it will land on its side and not fall over. Worrying that it might do so would be a rather extreme pessimistic view. Now everything else is life typically falls between those two extremes.

Is it being pessimistic to not accept the possibility that we might discover enough oil in the US over the next 10 years that we could supply all our needs w/o importing any oil? There are probably more than a few J6P's that believe this is possible and that anyone who disagrees is "being a pessimist". OTOH many would classify such expectation as foolish. So is J6P a hero and the detractors cowards? Kinda depends on which side of the fence you agree with.

A critical factor IMHO is "skin in the game". For 37 years I've reviewed hundreds of drilling proposals. Without exception there were always two camps of optimists and pessimists. And not very surprising the optimists almost never stood to lose a penny if the prospect was a dry hole. In fact, in most cases they got their initial investment back and made some profit before the well was drilled. The pessimists were the ones risking their money: drill a dry hole and they might lose $4 million. Or $150 million if it's a Deep Water GOM well (like the last DW dry hole I worked on). Obviously Devon managment was optimistic about the outcome of that particular effort. They were wrong.

I tend to view folks who complain that others are being pessimistic about the future in the same light: what are they actually risking via their optimistic POV? It seems in the great majority of cases they are risking little. Especially when the actual outcome may not come for many years, if ever. If some wants me to accept their expectation of energy independence all they need do is throw a few millions at $20/bbl oil on some 10 year futures. I still wouldn't agree with their expectations but I would accept their feelings as honest. Walking the walking is fine but it still doesn't prove you're correct.

Optimism or pessimism? In the end it just boils down to one's expectation of a realistic outcome.

Wise words. Thanks Rockman.


I believe the issue of safety and advances in safety measures, is a topic that warrants greater discussion. I don't mean this in a activist tone!

However a healthy discussion on best practice and a sharing of Emergency response knowledge would be more then worthwhile. There is a huge amount of tacit on the job knowledge that existis among the Emergency Response community that if shared would reduce accidents and possibly save lives. I have dealt with some of the finest Emergency Responders in the business and have compiled a collection of insights

I have included four quick steps to improving your Emergency Response for Oil, Gas or Mining

Whether your involved in Emergency Response or work behind an desk at executive level an active and innovative approach to improving safety can improve:
- Employee Motivation
- PR and Corporate Social Responsibility
- Overall Efficiency
- Reduce down time
- Avoid costs associated with accidents