Peak Oil on Forbes Wow

What’s that saying? "Communists read Forbes, and capitalists memorize Karl Marx." Well, what a surprise! Here I am reading Forbes.com, and I come across a news article titled "Peak Oil in America: Drilling May Be Hitting a Wall." Wow!

I’m going to read a couple of paragraphs from this article so you can get an idea of what’s going on. The turmoil has sparked debate for decades, fueling speculation and more than a few doomsday scenarios. Unfortunately, it remains a largely misunderstood concept. This is unfortunate because the idea of peak oil, both in theory and practice, still carries serious implications for the global economy and energy markets.

The phrase was very popular 20 years ago but faded when the shale revolution gained momentum. However, all good things eventually come to an end, and a growing number of voices are suggesting that peak production in the U.S. may be upon us as well. There’s a little problem...

The problem is this: you do not know you've hit peak oil until you’ve already passed it. The second issue is that when mainstream newspapers like Forbes, The Wall Street Journal, or any other major publication talk about peak oil— which is extremely rare—they often do so almost by accident. I think this is the case in this situation. When they mention it, they typically focus only on production values and the economy.

Unfortunately, peak oil does not exclusively apply to unconventional oil. The concept of peak oil primarily relates to conventional oil production. This is the type of oil that comes from drilled wells. It reaches a point where the natural pressure of the oil being pumped out of the ground declines, making it no longer feasible to extract. At that point, the economic value of the energy investment also decreases.

If you look at the bell curve of oil production, you’ll see it rises to a peak and then slides down. The whole concept is often misunderstood. Peak oil does not mean that oil is going to run out entirely. Even millions of years from now, there will likely still be oil available. The real issue is that the economically producible oil is reaching a point where it becomes increasingly difficult to extract.

Another secondary issue is that when discussing oil production, there is often no differentiation made between conventional and unconventional oil. For example, shale oil is considered unconventional oil, and its extraction process is more akin to mining. Think of it this way: coal mining has been around for hundreds of years, and people have been drilling for oil since ancient times. Oil has not run out because it is being regenerated; rather, the challenge lies in the economic viability of extracting it.

It's not that oil is no longer produced at the highest levels we once used; rather, the production value and economic viability of conventional oil are more stable compared to unconventional oil. When producing unconventional oil, such as shale oil or bitumen in Canada, significant resources are required, including large amounts of water and chemicals. The waste products from the conversion process create dried-up patches of oil that resemble thick, gray rocks. This process generates a substantial amount of waste.

In regions like Alberta or shale production areas in the U.S., you’ll notice massive waste sites filled with chemicals, which are reshaping the landscape. Additionally, these waste products can seep into the ground, leading to contamination of water supplies. There have been infamous cases where, upon turning on the faucet, the water could literally ignite when a match is applied. This highlights the serious environmental issues associated with shale oil production, which operates under a completely different dynamic than conventional oil.

While it is encouraging to see mainstream media bringing attention to these important issues, we find ourselves back at square one, much like the situation since the late 1990s and early 2000s. The only way we will truly know if we have reached peak conventional oil production—such as from major fields in Saudi Arabia, Alaska, or the UK—is when these significant oil fields pass their point of no return.

The dynamics of conventional oil production differ greatly from unconventional sources. The large, mechanized fields in places like Saudi Arabia and Mexico must reach their peak production levels before we can definitively say we have hit peak oil. Unfortunately, we lack the means to accurately assess what is happening in these fields. The only way to understand the situation is to compare current production levels with historical maximums. However, even if we were to investigate places like Saudi Arabia, transparency is limited, and we may never fully grasp the true state of their oil production.

In conclusion, while the conversation around peak oil is gaining traction, it is crucial to recognize the complexities involved. The distinction between conventional and unconventional oil production, along with the environmental implications, must be understood to navigate the future of energy resources effectively. As we move forward, it is essential to remain vigilant and informed about these dynamics to address the challenges that lie ahead.