[Peakoil] Energy Price & Supply Projections - How Good are Your Assumptions?

[Keith Thomas]

This is another useful article on peak oil. It is well presented with 
sufficient attention to the social, psychological impact. Its orderly 
layout makes it a useful reference for letter-writing etc. Part 1 
examines assumptions related to petroleum supply or production:

http://www.energypulse.net/centers/article/article_display.cfm?a_id=1286

Part 2 looks at assumptions related to consumption and balancing supply 
and demand.:

http://www.energypulse.net/centers/article/article_display.cfm?a_id=1287

Here are some quotations:

  Assumptions Related to Supply

  1. The downward trend in net supply additions will not reverse
  2. Production trends indicate we will hit peak oil production very soon
  3. Equipment and labor constraints will preclude expanding 
exploration, production, transportation, and refining oil and NG fast 
enough to avoid major supply shortages
  4. Net yield of useful fuels from new discoveries and unconventional 
oil sources will be far lower than expected
  5. Renewable resources cannot produce enough energy to replace current 
oil consumption
  6. Oil reserves probably are better and worse than one would believe 
from published statistics
  7. OPEC will not increase output sufficiently to support projected 
global demand growth
  8. Total output of non-OPEC producers will continue to decline
  9. Political instability and other “temporary” problems will cause 
periodic supply disruptions
  10. Competition from other countries will limit how much energy the US 
can import

Assumptions Related to Demand or, More Accurately, Consumption

  11. No country can grow or maintain a strong economy without large 
amounts of oil
  12. Liquid fuels for transportation are absolutely essential for 
health and welfare in the US
  13. Dramatically increasing the energy efficiency will require massive 
quantities of capital
  14. The biggest barriers to increased efficiency are behavioral, not 
technological

Assumptions Related to Balancing Supply and Demand

  15. Peaking of oil and/or natural gas production isn’t the problem. 
The gap between production and demand is the problem
  16. Small supply shortages will yield major problems
  17. Normal supply/demand balancing mechanisms will break down when 
large shortage appear
  18. Raising prices is the most effective way to reduce demand, but our 
leaders will not take this path until all other options fail
  19. Competition for oil and natural gas will intensify and could get 
very ugly
  20. The earth cannot sustain its current population in reasonably 
acceptable living standards without large quantities of fossil fuels

[The article spends time addressing each of these assumptions - KT]

Conclusions – What Should We Do Now

The debate over when oil production will – or did – peak is a 
distraction that needs to end immediately. There is no doubt that 
production will peak well before demand stops growing and major 
lifestyle changes will be needed to bring supply and demand into 
balance. We will face major upheavals as we adapt to post-peak 
production world. While we need optimists to build the future, we need 
them to focus on changing unsustainable practices, not keeping people 
on a path that can only end in even more pain and suffering. We need to 
start dealing with how to achieve sustainability rather than arguing 
over how serious the problem is.

The optimists argue that we don’t need to worry or do anything radical 
to prepare for shortages and price spikes as market forces will 
eliminate the problems quickly. If we do nothing and they are wrong, 
the impact will be devastating to the world. However, following the 
pessimists’ recommendations – i.e., immediately implement a massive 
efficiency improvement and alternative fuels program – does not have 
any significant downside. In fact there are several major benefits to 
following these recommendations including job creation, energy cost 
savings, reduction in harmful emissions, improved balance of trade, 
improved industrial productivity, and improved comfort. Why is this 
debate still going on?
  ………..
Sustainability is mandatory, not optional. Our current lifestyle is 
unsustainable and by definition, no one can live an unsustainable 
lifestyle indefinitely. The smart move is to start trying to change 
ASAP. The transition will not be easy or pleasant, but it will be made 
one way or another. Delaying action will limit options and make the 
task harder – you seldom have the luxury of being picky when you are in 
the middle of a crisis. Failure to deal with our energy problems now 
increases the likelihood that we will see more of these extreme crises. 
Procrastination that makes the problems worse – i.e., makes war or 
famine more likely – is not admirable, desirable, or smart.

--------------------------------------------
Keith Thomas
www.evfit.com
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