[ubernostrum]

I guess I don't really get it. Earth, the planet, is finite in mass and not all of that mass exists in the form of crude oil or equivalent raw sources of petroleum. Therefore there will be a point at which no further oil can be obtained.

One is of course free to debate when that point will come, or when the inevitable decline toward that point begins, but the simple fact remains that a finite resource is, well, finite. And given the difficulty of predicting exactly when its finitude will catch up to us (i.e., the theme of this op-ed piece), it seems only prudent to have contingencies and alternatives in place well in advance.

[patio11]

it seems only prudent to have contingencies and alternatives in place well in advance.

Meh, the market works. As the supply of oil at a given degree of extraction difficulty decreases, the price of oil increases, which brings additional oil at the next higher level of difficulty into the profitable-to-extract region. Repeat ad nauseum. Eventually, there will be disruptive innovation and we won't need oil anymore. Disruptive innovation is similarly triggered by the increasing price of oil: the lower the economically viable supply, the higher the price, the higher the price, the greater the return to R&D to replace it with substitutes.

All of this has happened before, and all of this has happened again. We used to use prodigious quantities of lamp oil, which was made from whale blubber. Kerosene happened. Then electricity happened to kerosene. We no longer have to worry about Peak Whale Oil.

[mechanical_fish]

the market works.

Sure. But that's like saying "gravity works". As I jump off of a ledge, I do so with perfect faith in gravity: There is almost certainly a time T after which I will be on the ground! [1] But whether I will be happy at time t > T depends crucially on the actual shape of the terrain in front of me. A 1% slope would be good. A ski slope, perhaps tolerable. El Capitan, not so much.

It will always be possible to buy some quantity of oil at some price. For example, although it turns out to be far more difficult than you would think, we can almost certainly synthesize oil from carbon and hydrogen. In theory. But you wouldn't necessarily want to burn the result: It depends on how much effort it took to build the stuff.

The important question is: What does the demand curve for oil look like? How much oil is available at each price point? And how long will it take to come online?

And even if technology will someday make it possible to run a society of 7 billion people on oil shale, or nuclear fusion, that won't necessarily be any consolation to us. Transition can be a bear. And real-world technology research doesn't work like Sid Meier's Civilization: It doesn't arrive on schedule, and it might not arrive when it is most needed. If a genius tech commentator of the 19th century had gone to famine-stricken Ireland and told the starving farmers that their problems were solvable, that there were technologies that could produce orders of magnitude more food than their current technology, he or she would have been correct. But it wouldn't have come as much consolation, because the agricultural revolution was a century in the future and their kids were starving right then.

---

[1] Unless I jump into a hole drilled completely through the earth. Or I manage to put myself into orbit.

[biohacker42]

The important question is: What does the demand curve for oil look like?

I think the sane peak oil advocates are asking exactly that. It's not that we are running out of oil, it's that we are running out of cheap oil. And that's going to mess up the world economy. Things don't look good when oil goes above $80 a gallon.

But I've heard that we can synthesis gasoline from air and water using electricity from nuclear power. Anyone know what that costs per gallon?

[m0th87]

But the problem is that it would take decades to go from R&D to a complete infrastructure that supplants the one we have in place for oil. Even now, the only legitimate substitute for gas-powered cars I've seen is Agassi's proposal: http://www.wired.com/cars/futuretransport/magazine/16-09/ff_...

The issues with a hydrogen economy have been detailed in the past on HN: http://news.ycombinator.com/item?id=688909

In a case like this that involves a massive lag time and an insanely complex upgrade procedure, I'd argue that planning ahead is way better than waiting for the onset of a slow-moving disaster. Not to mention we should probably be phasing out oil anyway for all the usual reasons (global warming, pollution, empowering dictatorships, etc.)

[chipsy]

This is a topic discussed in economics - reducing scarcity through technology.

For an example of how this has happened with other resources, look at metals. Aluminum and iron used to be much more expensive and scarce. Now they're pretty cheap, and to find out why, just total the savings of lots of tiny improvements like thinner soda cans, better sorting of recycling, lower-energy production methods, etc.

If 50 people come up with cumulative improvements of 2% to a process, you end up with a 269% improvement.

This is one of the reasons why software is so appealing - it's low-capital to distribute, and there are an unending number of tasks to automate, making it easy to come up with new approaches to improve productivity.

[sethg]

If the price of oil were rising steadily over time as reserves were steadily being drawn down, then anyone contemplating an investment in alternatives would have a pretty clear idea what kind of return to expect, and all would be well.

What concerns me is the combination of long-run rise and short-term volatility. When the price of crude goes up, small fuel-efficient cars become more effective and energy startups attract investment. When it goes back down, gas guzzlers come back into fashion and alternative energy is a hippie obsession that of course can't make money.

I fear that at some point in the future, the price of oil will shoot up and stay up and the infrastructure that can maintain a First World standard of living in spite of $500/barrel oil will simply not be in place yet. The market will sort everything out in the long run, but "in the long run we are all dead" and I would prefer to die in an air-conditioned room.

[fauigerzigerk]

Exactly. The peak oil theory is trivially true. It just says that oil production will eventually peak. I'm not sure why the author is unable to accept that fact and then just argue about the time frame.

I think the market works well in this case, including the part called speculation. $147 oil and the quick rebound from $30 something to $75 in the middle of the deepest recession since the 1930s should tell us something.

He claims that the oil price will go back to $30 and stay there. That's mad. The new discoveries, like the big one in Brasil, are not viable at that price level. Prices may go back to $30 but we will see new spikes as billions of people in Asia start to consume more and more oil.

[Nelson69]

I think much of the debates about peak oil revolve around this "finite" resource concept. The reality of peak oil isn't about running out of oil, there really is lot's and lot's of oil and we continue to find more all of the time, it's about the cost of that oil and getting it into a usable form. When demand exceeds supply, costs go up and as the cheap and easy oil fields deplete then you have to start using the small and more exotic sources of oil at a greater cost. The cost at the demand side goes up and at some point it just becomes nonviable. Fundamentally, there will still be oil though. It seems a lot of folks get bent around the "finite" aspect, it's only finite to make the math easier.

We already saw proof of this, $4+ US gasoline prices last summer resulted in a reduction in demand. There is some cost point where it just becomes too expensive to use. We also saw that a relatively small number of speculators and the limited oil reserves on hand make it possible for the demand side prices to spike in fairly short amounts of time which makes it nearly impossible to predict when "peak oil" will happen for good. There are just too many variables, not the least of which is the continual increases in extraction technology. Oil does get more expensive though and at some point it will be "too expensive" and that's peak oil.

[mseebach]

That is correct. The problem is that all the oil isn't lying around in great big underground lakes where it's just a question of sticking a pipe in and start pumping. There are different degrees of difficulty in getting to it.

We're well beyond peak $10/barrel oil, we're probably moving up on peak $40/b oil, but we're no where near peak $100/b and we're not even thinking about $200/b oil.

As patio11 said, the more expensive oil gets, the more expensive alternatives become viable.

[jimbokun]

"In the end, perhaps the most misleading claim of the peak-oil advocates is that the earth was endowed with only 2 trillion barrels of “recoverable” oil. Actually, the consensus among geologists is that there are some 10 trillion barrels out there. A century ago, only 10 percent of it was considered recoverable, but improvements in technology should allow us to recover some 35 percent — another 2.5 trillion barrels — in an economically viable way. And this doesn’t even include such potential sources as tar sands, which in time we may be able to efficiently tap."

So, yes, the author concedes that the supply of oil is finite. But he is arguing that "Peak Oil" is much less imminent than many claim. Specifically, that there is an extra 1.5 trillion barrels of recoverable oil that "peak-oil advocates" do not account for. I would like to see a peak-oil advocate's take on these numbers.