Ars Technica via Wired: Researchers Argue Peak Oil Is Here, Bringing Permanent Volatility
By John Timmer, Ars Technica
January 26, 2012
The global production of oil has remained relatively flat since 2005 and peaked in 2008, declining ever since even as demand has continued to increase. The result has been wild fluctuations in the price of oil as small changes in demand set off large shocks in the system.It's not just the scientists in Nature and the geeks in Ars Technica and Wired that are recognizing that peak (conventional) oil is here. The hard-headed businessmen at Forbes have realized this, too.
In Wednesday’s issue of Nature, James Murray of University of Washington and David King of Oxford University argue this sort of volatility is what we can expect going forward, and we’re likely to face it with other fossil fuels as well.
The notion of peak oil is fairly simple: Oil is a finite resource and at some point we simply won’t be able to extract as much as we once did. There is no getting around that limit for any finite resource. The issue that has made peak oil contentious, however, is the debate over when we might actually hit it. Murray and King are not the first to conclude that we’ve already passed the peak. Even as prices have climbed by about 15 percent per year since 2005, production has remained largely flat.
“We are not running out of oil,” the authors argue, “but we are running out of oil that can be produced easily and cheaply.”
The End of Elastic Oil
By Tim Conrad
January 26, 2012
The last ten years have brought a structural change to the world oil market, with changes in demand increasingly playing a role in maintaining the supply/demand balance. These changes will come at an increasingly onerous cost to our economy unless we take steps to make our demand for oil more flexible.The Forbes article isn't explictly about Peak Oil, but it does discuss what happens when supply has reached the bumpy plateau and what can be done about it. One of the best lines involves reducing demand by living closer to work, including the line "the most fuel-efficient vehicle is a moving van." I resemble that remark.
We’re not running out of oil. There’s still plenty of oil still in the ground. Oil which was previously too expensive to exploit becomes economic with a rising oil price. To the uncritical observer, it might seem as if there is nothing to worry about in the oil market.
Unfortunately, there is something to worry about, at least if we want a healthy economy. The new oil reserves we’re now exploiting are not only more expensive to develop, but they also take much longer between the time the first well is drilled and the when the first oil is produced. That means it takes longer for oil supply to respond to changes in price.
In economic terms, the oil supply is becoming less elastic as new oil supplies come increasingly from unconventional oil. Elasticity is the term economists use to describe how much supply or demand responds to changes in price. If a small change in price produces a large change in demand, demand is said to be elastic. If a large change in price produces a small change in supply, then supply is said to be inelastic.
From 2000-2004, I regularly put 40,000 miles on my car. In 2005, I began driving 1000 miles a week when school was in session to three different colleges and a tutoring service. Then on the weekends, I'd judge marching bands or cover drum and bugle corps shows. From May 2005 to May 2006, I drove 48,000 miles. That was the year I put my house up for sale, stopped seeing my long-distance girlfriend, and eventually sold my house. In June, I moved to the middle of my jobs and cut my driving down to 700 miles a week. Then I changed one of my jobsites and cut it down to 500 miles a week. Then I got a full-time job and quit my part-time jobs and dropped to 300 miles a week. Finally, we moved and I now drive 70 miles a week. I'm so close to work I could ride a bike on a good day.I still haven't put another 1000 miles on my car since my last update. That was in September. Look for the next one within a week.