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I've learnt something very important during these past few months: Never trust a partisan source. It doesn't matter whether it's leftist or rightist, it always has an agenda, and has incentive to misrepresent or selectively present data. Never draw a conclusion without a credible source.

A corollary principle is not to trust the internet: It's too easy to disseminate information over the internet, which is why rumour and propaganda reign supreme. A book is at least edited before publication, vanity publishing excepted.

Finally, don't trust journalists. Even if they don't have an agenda they can either misunderstand an event or negligently miss important information. They mostly aren't experts and can't be expected to do better, bless their hearts.

When FOX manipulates, we gleefully point out the vices of our political opponents. However, when political allies manipulate it's a much more unpleasant event. Surely, they must do it for a good cause (that's what the other side thinks, too)! However, the effects of reporting stories of dubious accuracy can be devastating, as far as the media shapes public opinion and, by proxy, public policy, which is why I won't sit idly by when a newspaper on our side does it. Today's object of criticism is the Guardian for its representation of the Pentagon report on the looming oil shortage.

The Guardian's article rightly notes that the Pentagon is predicting that surplus capacity in oil production will disappear by 2015. Then it quotes a postgraduate student who is researching peak oil theories (no mention whether he's a geologist or an economist, a peak oiler himself, or a sceptic):

Lionel Badal, a post-graduate student at Kings College, London, who has been researching peak oil theories, said the review by the American military moves the debate on.

"It's surprising to see that the US Army, unlike the US Department of Energy, publicly warns of major oil shortages in the near-term. Now it could be interesting to know on which study the information is based on," he said.

"The Energy Information Administration (of the department of energy) has been saying for years that Peak Oil was "decades away". In light of the report from the US Joint Forces Command, is the EIA still confident of its previous highly optimistic conclusions?"

Succint, clear. What is the problem? That the report actually claims the opposite: That peak oil won't be the cause of oil shortages: Instead, a lack of drilling platforms, exploration, and refining capacity is seen as the culprit.

Absent a major increase in the relative reliance on alternative energy sources (which would require vast insertions of capital, dramatic changes in technology, and altered political attitudes toward nuclear energy), oil and coal will continue to drive the energy train. By the 2030s, oil requirements could go from 86 to 118 million barrels a day (MBD). Although the use of coal may decline in the Organization for Economic Cooperation and Development (OECD) countries, it will more than double in developing nations. Fossil fuels will still make up 80% of the energy mix in the 2030s, with oil and gas comprising upwards of 60%. The central problem for the coming decade will not be a lack of petroleum reserves, but rather a shortage of drilling platforms, engineers and refining capacity. Even were a concerted effort begun today to repair that shortage, it would be ten years before production could catch up with expected demand. The key determinant here would be the degree of commitment the United States and others display in addressing the dangerous vulnerabilities the growing energy crisis presents. (p. 24)

To be fair, the Pentagon's report uses the term "peak oil," somewhat misleadingly given the tone and substance of the report. It uses the EIA's projection of oil (not just conventional) production through 2030 and suggests major new discoveries are unlikely (sensible, since easily extractable oil was and is the first to be exploited). It predicts that by 2030, oil production will plateau at 100 MBD with demand at 118 MBD... unless immediate changes are made in investment and drilling capacity. (p. 24)

At present, investment in oil production is only beginning to pick up, with the result that production could reach a prolonged plateau. By 2030, the world will require production of 118 MBD, but energy
producers may only be producing 100 MBD unless there are major changes in current investment and drilling capacity. (p. 26)

Thoughout the section on energy, the conclusion of the report seem to echo the USGS's claim that total world petroleum reserves total amount to around 8 trillion barrels (of which 1.3 trillion have been exploited) with problems being essentially aboveground and upstream: Exploration, development, refining, securing supplies. It notes that new exploration outside the currently available zones could offset these trends:

Non-Organization of Petroleum Exporting Countries (OPEC) oil: New sources (Caspian Sea, Brazil, Colombia, and new portions of Alaska and the Continental shelf) could offset declining production in mature fields over the course of the next quarter century. However, without drilling in currently excluded areas, they will add little additional capacity. (p. 26)

Energy production and distribution infrastructure must see significant new investment if energy demand is to be satisfied at a cost compatible with economic growth and prosperity. Efficient hybrid, electric, and flex-fuel vehicles will likely dominate light-duty vehicle sales by 2035 and much of the growth in gasoline demand may be met through increases in biofuels production. Renewed interest in nuclear power and green energy sources such as solar power, wind, or geothermal may blunt rising prices for fossil fuels should business interest become actual investment. However, capital costs in some power-generation and distribution sectors are also rising, reflecting global demand for alternative energy sources and hindering their ability to compete effectively with relatively cheap fossil fuels. Fossil fuels will very likely remain the predominant energy source going forward. (p. 28)

In fact, the Pentagon's report echoes Maugeri's (2010) position in the book Beyond the Age of Oil remarkably well. In short, based on past trends, past peak oil predictions, and exploration rates, Magueri claims that petrol supplies are sufficient for the time being but that fluctuations in oil price are due to fluctuations in spare capacity: Spare capacity depresses prices, which in turn leads to a drop in exploration rates and investments in refining capacity. That results in a tightening of spare capacity, which leads to a price spike, which spurs investment in exploration and production, which results in a price collapse.

To  his point, Maugeri notes that exploration rates in oil-rich regions have historically been pathetically low. The US has seen hundreds of thousands of wells drilled, and the majority of oil exploration since the 1970s has focused on the United States and Canada, mature regions. How many exploratory wells have been drilled in Saudi Arabia since the 1930s? 300. Iraq and Kuwait have seen even lower exploration rates. There was no need to explore. Oil price reached its lowest level in real terms in 1986 and 1996/9, meaning there was a supply glut even when "working old deposits with outdated technology." (p. 11)

I think a direct quote regarding exploration is warranted:

/.../ Furthermore, vast areas of the planet have yet to be explored. Today, only one-third of the sedimentary basins of the world (the basins where hydrocarbons may be found) have been properly explored. Exploratory activity is based on a number of new wildcats (exploratory wells during a given period. [Emphases are the author's - D.]

A few numbers can shed some light on this little-understood phenomenon. Between 1980 and 2006, about 70 percent of the exploratory activity worldwide took place in the United States and Canada, mature areas that contain only about 3 percent of the proven world reserves of crude oil. On the ther hand, the Middle East was involved in barely 1 percent of the oil exploration, although it holds more than 65 percent of the proven reserves.

Oil exploration trends are even more surprising if we look back through history. For example, since the 1930s only three hundred exploratory wells have been drilled in Saudi Arabia, compared to several hundred thousand in the United States. There has been even less exploration in Iraq, Iran, and Kuwait. To complicate the picture, we exploit only a fraction of what is known to be there. On average, no more than 35 percent of the oil in the known deposits of the world is currently being recovered with existing, cost-effective technology. (p.7)

However, Maugeri does not sing praises to these cycles. He claims it is vitally important to impose a tax on petrol, either directly or through a carbon tax, which would equalise its price with about $60-70 a barrel, since he notes that periods when the oil price spikes bring fears of peak oil to the fore and encourage investment into alternative energy, while price collapses bring expectations of low prices, stall investment, and also "foster unacceptable consumption habits" (Magueri's words). What's worse, most alternative energy is competitive at oil prices higher than $50 per barrel, which ensures that periods of low prices make it impossible to break the lock-in. If we are serious about fighting climate change, that is disastrous.

While Maugeri's predictions are more optimistic than the Pentagon's, especially regarding exploratory and refining capacity, the reason for this lengthy excursion was to show how closely Maugeri's and the Pentagon's predictions match (Magueri predicted another price spike during this period). Both are concerned with exploration and drilling, both believe that the quantity of reserves isn't the problem, and both note the uncompetitiveness of alternative energy sources during certain conditions. Of course, their perspectives differ - the Pentagon is concerned with security and Maugeri with alternative energy, after all - but the parallels are remarkable.

However, the Guardian's intrepid journalist needn't have known all that. He should've simply looked beyond the big, shiny words peak oil and note that the Pentagon predicts production of 100 MBD in 2030, while we currently produce 85.5 MBD. That should be proof positive that the Pentagon's peak is not a Hubbertian peak. Instead, the Guardian not-quite-said but implied the Pentagon is predicting peak oil for 2012.

To be fair, I'm not accusing the Guardian's reporter of mendacity. He could've simply been overworked or has been caught in a trap well-known by the police. The police tend to investigate with the assumption that a crime has been committed and that a certain person committed it. They will be more predisposed to see facts which support that hypothesis (version) than facts that don't, as well as negative facts (which should be there if a hypothesis's true but aren't there, which means that a version is less likely).

However, what all Kossacks can learn from this is not to trust journalists, nor anyone else, to boot. Don't trust bobswern, New Deal democrat, bonddad, nyceve, Meteor Blades, kos, or Jerome a Paris, don't trust me. Always - always - refer back to the primary source. Else you'll simply be prey for the first half-baked propagandist, half-cocked yokel of a fanatic, conman, or a negligent, dipshit journalist that comes along. You have been warned.

The floor is yours.

Originally posted to Dauphin on Fri May 07, 2010 at 09:42 AM PDT.

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