Thursday, November 15 , 2018, 10:40 pm | Fair 52º


Joe Sparano: The Facts about the Peak Oil Theory

Consumers, not unproven theories, should drive the ultimate decisions on what fuels they want and will accept

The “Peak Oil” theory surfaced recently during an event in Santa Barbara. Some people use this theory to argue against continued support for and development of our petroleum-based energy resources. I would like to share a few facts that may help put the issue in a more balanced perspective.

Joe Sparano
Joe Sparano

Peak Oil theorists usually neglect to mention that the Peak Oil theory is just that — a theory. It is based on a belief the world has reached the point of maximum production of crude oil, and is used to predict painful and disruptive catastrophes as the world adjusts to the alleged decline of this critical source of energy.

Unfortunately, arguing about Peak Oil is like arguing about how many angels can dance on the head of a pin. It’s a theory that cannot be proved. Worse, those individuals who embrace the Peak Oil theory frequently also promote energy policies that can have costly and disruptive impacts on consumers and businesses.

In fact, until recently, the petroleum industry was prevented by U.S. policies from accessing much of the undiscovered, technically recoverable resources of more than 115 billion barrels of oil and 650 trillion cubic feet of natural gas estimated to be located on federal lands, much of it offshore. Whether those valuable energy resources will someday be available to American consumers remains in question.

Here’s what we do know about the world’s supply of petroleum-based energy:

In 2007, the highly regarded Cambridge Energy Research Associates, or CERA, a firm led by Pulitzer Prize-winning oil expert Daniel Yergin, reported that worldwide oil reserves had been vastly underestimated.

CERA estimated remaining global oil resources at 3.74 trillion barrels — three times the 1.2 trillion barrels estimated by the proponents of the Peak Oil theory. That finding led CERA to conclude that “the ’peak oil’ argument is based on faulty analysis which could, if accepted, distort critical policy and investment decisions and cloud the debate over the energy future.”

Yergin noted, “This is the fifth time that the world is said to be running out of oil. Each time — whether it was the ‘gasoline famine’ at the end of World War I or the ‘permanent shortage’ of the 1970s — technology and the opening of new frontier areas has banished the specter of decline. There’s no reason to think that technology is finished this time.”

To illustrate that point, advanced extraction technologies such as Enhanced Oil Recovery, using steam or carbon dioxide, along with four dimensional seismic and other reservoir-mapping techniques plus improved drilling technologies, are constantly expanding our industry’s ability to identify and extract new reserves.

Using these advanced technologies has allowed the petroleum industry to access reserves previously not identified or that we were unable to produce economically.

In 2000, the U.S. Geological Survey conducted an exhaustive survey of world oil reserves and concluded they were far larger than previously thought. Of the total world endowment (potential supply) of 5.6 trillion barrels of oil, the USGS calculated that humans had consumed a total of just 18 percent as of 2000, leaving 82 percent of endowed crude oil to be used or found for future energy needs.

The Peak Oil theory also ignores the enormous energy resource available to the United States and the world in the form of natural gas stored in shale deposits. The Energy Department estimates the nation’s natural gas resources, using current recovery technology, could supply the country with all of its natural gas needs for another 90 years. Historically, estimates of the size of a particular recoverable resource have grown over time as knowledge of the resource has improved and recovery technology has advanced. 

Natural gas is a petroleum product that is already used to replace other fossil fuels in certain energy supply applications such as electric power generation. It is also expected to be available in future commercial-scale processes involving conversion of natural gas to cleaner burning liquid fuels and as compressed natural gas for vehicles.

Petroleum companies are also taking a leading role in research, development and deployment of an exciting and promising array of unconventional, renewable and alternative fuels.

Some of them already are in use and are commercially available. Some are not yet ready for prime time. But many have the potential to play an increasingly important role in our energy future.

We risk damaging our economy and quality of life if we continue making petroleum products more difficult to obtain and more costly to use before we have determined which of the many promising alternative fuels are technically feasible, scientifically sound, cost-effective and ready for commercial-scale use.

Consumers should drive the ultimate decisions on what fuels they want and will accept — not policies based on unproven theories. Markets have proved to be very equitable and efficient at identifying and selecting new products and energy supplies.

If allowed to function without interference, markets will guide us to new petroleum-based fuels and the alternative energy sources we’ll need for a secure energy future.

— Joe Sparano is president of the Western States Petroleum Association. The Sacramento-based nonprofit organization represents the petroleum industry in California and five other Western states.

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