David Strahan recently interviewed Chris Skrebowski about his comments at the recent ASPO conference that we have about 1,200 days before the worldwide peak in oil production. See that page for a link to the 7:48 interview in mp3 format.
This situation leaves me deeply conflicted. While I agree with Skrebowski’s bottom-up methodology and his general conclusion of a 2010-to-2012 peak, I have a serious philosophical disagreement with the faux precision tactic of nailing it down to “1,200 days”. I think it needlessly implies a degree of accuracy that’s unwarranted, and it also opens up the possibility for the cornucopians to ridicule the prediction and the efforts of all of us writing about this issue. Imagine, for example, that the actual peak comes in about 1,300 days. You can bet your Internet connection that starting on the day the stats are released showing that new, all-time high, in 1,300 days we’ll hear endless drivel from the extreme optimist end of the spectrum about how wrong the prediction was, how oil is yet again denying the pessimists, etc.
But if Skrebowski does a detailed analysis, and it say we’ll hit the peak in roughly 1,200 days, shouldn’t he simply say, as he does, that’s what the numbers say and we’ll find out in time if they’re right? Listen to the interview, and you’ll hear that Skrebowski is his usual reserved self; he’s clearly no wackjob attention whore pulling scary numbers out of his hat.
Not to be overlooked in all of this is the value of making an attention-getting prediction, in terms of helping to educate people, ala Ken Deffeyes’ famous prediction that the peak would fall on Thanksgiving Day (US version) 2005.
So, let me ask: If you had Skrebowski’s expertise and relatively high profile in the oil world, would you have made the 1,200 days prediction? Leave aside the issue of whether you believe it’s correct; assume for the moment that you did the best analysis possible, using whichever methodology you preferred, and came up with a date 1,200 days in the future.
I probably wouldn’t have done it; I’m not convinced that’s the right decision.
You must be logged in to post a comment.
October 26th, 2007 at 1:00 pm
If I were him, I would try to give the estimate some context by providing a range that I thought was likely. Maybe he could say he is 80% sure the peak would be between 2009 and 2012, or whatever. It’s not as colorful but it would be more accurate. OTOH there is something to be said for fame - sometimes fortune does follow.
At the same time I do not find these bottom up analyses particularly convincing. They seem to assume a degree of technological determinism that takes decision making out of the hands of human beings and assumes that oil fields build and operate themselves. Now I understand that as the time window shrinks there is less and less opportunity for changing course, due to long lead times and large investments. Nevertheless over two or three years we might see differences in strategies being applied by oil producers which could substantially change these production estimates. As a most obvious example, a massive worldwide recession in 2008-2009 would likely reduce production below Skrebowski’s estimate and might cause a much earlier peak. And while I know it goes against Peak Oil dogma, it’s also possible that sustained increases in oil prices over the next couple of years could increase investment levels enough to raise production above what is in the current planning stages.
October 26th, 2007 at 3:29 pm
I don’t think we have a snowball’s chance of solidly going above 85mbpd. Therefore, by that measure, we already hit peak. But even if we briefly went to 86, to me it still wouldn’t prove that we weren’t on that undulating plateau, which if you shrink the X axis would look like a peak. To prove this wrong, we’d have to go to like 90 or better for a year or more before starting to drop. Then I would say we’d all made a mistake.
October 27th, 2007 at 8:09 am
Your analysis on being accurate as to what the data reflects without being so precise is right on. It does, however, get the media’s attention about the crisis we have coming, as if the intraday European trading high of $92.20 yesterday didn’t help to get the point across. As close as we are to $100, for whatever reason, should attract MSM attention, and perhaps crossing that threshhold will be helpful in that regard.
I still follow the reasoning of a longer-term undulating plateau. My own feeling is that the higher the price, the quicker the super expensive deep water prospects will find technology which will allow production of, for instance, Jack #2. The metallurgy which is needed will become available and this will help mitigate the overall numbers.
What we will have trouble with however is the quality of the oil which is being brought onstream. Let’s say for instance that I told the planners in Atlanta that I had 42,000 gallons of water that they could have every day, free, and I’d help pay for the transport, but left out that it had 40,000 ppm dissolved solids, mostly sodium, I’d be guilty of misleading those troubled souls. For OPEC to jump up and say that we will ramp up production and deliver oil unto the world without saying that it is heavy, sour crude is almost the same thing. It is oil, but we can’t use it like we have been using what they were selling us. So, I see a lot of the semantics on all sides as misleading and to have each of who care (not those who should care, which would be 98% of the US population for starters) the distinction should be made. It is still the problem that the low-hanging fruit is virtually gone, and there will not be many new sources of the same quality oil, not just to replace the existing declines, but to sate the increasing demand.
Add to that the consideration being put forth that exponential growth in domestic demand by exporting nations is going to use much of the supply, both new and existing, and the volumetric expression of the peak becomes meaningless, except as an intellectual pursuit.
And, to enunciate a projection which will be meaningless by the time it is a fact is in and of itself meaningless. Spend your time helping others get ready for shortages, for whatever reason we might have shortages, and be ready for the blaming of others to begin. But first prepare yourself. There is an old parable my Indian friends take credit for, which expresses the thought that while helping others, you should not sacrifice your own self.
October 27th, 2007 at 2:10 pm
The Mess That Greenspan Made links to a WSJ survey in which high numbers of people predict $100/BBL oil a year from now. (at the moment, 31% favor $110+, 23% favor $100)
What does that say about success or failure of “the message?”
You know my gig, I think that many are trying to bundle in other predictions with Peak Oil, and those are the folks disappointed that “Peak Oil” is not making headway.
… in the mean time peak oil (no caps) may be sinking in.
October 27th, 2007 at 7:10 pm
That’s interesting about the WSJ poll, because they run a poll every day on the futures market and make people put money behind their guesses. A year from now, that poll says oil will be $83, which got about the lowest number of votes in the WSJ poll. You can also buy a $100 call option for $2.23 which will be worth $7+ if oil hits $110 as the WSJ poll thinks is most likely, more than tripling your money. And if oil goes to $120 you’ll make eight times your initial investment.
It’s surprising how different the opinions are that people give when they know they’ll lose money if they’re wrong, vs spouting off with no consequences. Makes you wonder whether the extreme numbers in the WSJ are just people venting their emotions. Either that or else the markets mostly attract idiots who are there to lose money… hmmm, I don’t think so.
October 27th, 2007 at 9:05 pm
Hal,
Not all of the trades on the merc are by speculators. Producers had been selling out into the distance thinking prices would never be better. Buyers were buying contracts out into the future trying to protect themselves in case the price went sky high. After oil on the merc hit $80 the first time this year, the activity seemed to drop off, with everybody willing to take the market risk and the hedging stopped. What we have now is really from two groups - the industry and the speculators. At $90 a barrel, the speculators have given up the ship, for the most part, and what we are seeing, IMHO, is a true market, with the spot price ruling the day. I think that a lot of the speculators have seen contracts which are not closed out and they have to figure out how to deliver 1,000 barrels of 36 to 40 gravity oil into storage at Cushing on a given day. It is an education for speculators when they have to figure out how to move oil. Cattle are much easier.