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IEA's World Energy Report: The End of Oil as We Know It, Part 2


There will be an energy crisis in the near future that will make anything we've experienced so far seem like a pleasant memory.


A point that I try to make clear in my upcoming book (due out in March 2011 from Wiley) is that such an energy transition would be evident by such things as the trillions of dollars being dedicated to it, by eminent domain actions to secure new land for natural gas pipelines, and by vehicles that could run on electricity or natural gas being churned out by the millions. While we can debate whether we might get there someday, there can be no doubt that we are not there today.

So if one is a card-carrying member of the mainstream media, what does one do with such a major event as the World Energy Outlook (WEO) 2010 report? In the case of the New York Times, the answer is to run a completely schizophrenic pair of articles, but bury the supportive one deep in the "blogs" section while placing the one that completely ignores the WEO 2010 report prominently in the business section.

The first of these two articles, separated by only a day and centering firmly on the IEA report, is titled "Is 'Peak Oil' Behind Us?" to which the article correctly answers "Yes":

Is "Peak Oil" Behind Us?

Peak oil is not just here -- it's behind us already.

That's the conclusion of the International Energy Agency, the Paris-based organization that provides energy analysis to 28 industrialized nations. According to a projection in the agency's latest annual report, released last week, production of conventional crude oil -- the black liquid stuff that rigs pump out of the ground -- probably topped out for good in 2006, at about 70 million barrels a day. Production from currently producing oil fields will drop sharply in coming decades, the report suggests.

That's pretty accurate. You'd think that such a stunning admission by the preeminent body responsible for preparing such reports for the OECD would have sparked a fury of investigation and maybe even self-investigation by the New York Times, which through the years has pooh-poohed the entire idea of peak oil rather religiously. But that didn't happen.

The second article is entitled "There Will Be Fuel" and is chock full of comforting anecdotes and quotes from oil industry executives:

There Will Be Fuel

Just as it seemed that the world was running on fumes, giant oil fields were discovered off the coasts of Brazil and Africa, and Canadian oil sands projects expanded so fast, they now provide North America with more oil than Saudi Arabia. In addition, the United States has increased domestic oil production for the first time in a generation.

"The estimates for how much oil there is in the world continue to increase," said William M. Colton, Exxon Mobil's (XOM) vice president for corporate strategic planning. "There's enough oil to supply the world's needs as far as anyone can see."

Somebody get that man a pair of glasses!

Seriously, any country or corporation that cannot foresee the end of cheap and abundant oil is being run by dangerous people. To suggest that even the most optimistic assessment of oil, which has it peaking in 2030, is too far away to begin planning for today is just silly. Really, now...responsible planners considering major capital projects with multi-decade life spans (which can be 30 years or more for many things) should just ignore energy? That's the message here? Goodness gracious.

In fact, there are so many problems with "There Will Be Fuel" that I hardly know where to turn to next. I suppose we could note that the article quoted "100 years of natural gas" left in the US without mentioning the all-important phrase "at current rates of consumption." To those who are familiar with exponential processes, and who know that energy consumption has been increasing exponentially for decades, such an oversight is an enormous red flag. It betrays either ignorance or deception on somebody's part (perhaps the editor?), and neither are acceptable at this stage of the energy debate. Once we increase consumption at reasonable and prior rates, that 100 years can rapidly shrink to mere decades in a hurry.

What's the difference between "100 years of gas" and "maybe a couple of decades"? Night and day.

Next, we might note that the article goes out of its way to make the case that "estimates for how much oil there is in the world continue to increase," while somehow avoiding the essential point that it's not the amounts that matter, but the rates at which the oil can be coaxed to flow out of the ground. Peak oil is, has been, and always will be about flow rates, not amounts.

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