The Stone Age Didn't End for Lack of Stones

April, 16, 2013
Jordan Gerow
Energy and Climate Law Advisor
ClimateFuels & Transportation


Most experts have walked back the theory of peak oil, a dominant argument only a decade ago, contending that advances in tight oil exploration have largely mooted that school of thought (check out this survey of the remnants of that school). So the story goes, peak oil prognosticators had circled 2005 on their calendars as the latest date at which the effects of peak oil would begin to sink in. But as new sources of unconventional oil came online and allowed oil production to continue expanding into the present (and at least for another decade or so, according to the International Energy Association), 
This week, however, Brad Plumer at Wonkblog brings us an interview with Chris Nelder, and energy analyst, who notes that the current oil "boom" is not necessarily out of sync with the predictions of peak oil prognosticators. Specifically, Nelder contends that new oil production techniques are consistent with the idea that, as traditional oil reserves get tapped, new techniques will grow more expensive until they put such a drag on the economy as to become unfeasible. The ballooning cost of extracting oil, Nelder argues, has put a new functional floor on the price of oil at around $85/barrel (compare that to current prices fluctuating around $100, or 2004 prices as low as $40). He argues that perhaps peak oil enthusiasts in 2003 simply put too much stock in how quickly $100/barrel oil would shock the economy and force it to move. The diminution of cheap oil reserves, $100/barrel oil and actual declines in oil consumption may, in fact, play a large part in the stagnant world economy. What's more, even setting aside the higher cost of producing tight oil, the diminution of tight oil supply is within sight as well: the International Energy Association sees U.S. oil production rising briefly to 6.7 million barrels per day and then sinking back down to 6.1 million barrels through 2035 - about where we are today. 
So while the debate has shifted sharply since 2005, it's unclear as to whether peak oil has become a fanciful, discredited theory, is misunderstood in the context of global economic events, or if it's simply had its expiration date moved back. If I were a betting man, I might mark the latter. If so, advances in tight oil may have pushed the peak oil timeline back far enough as to be irrelevant in the context of climate change. As Bill McKibben pointed out to Rolling Stone last summer, recent estimates say that the world has only sixteen business as usual years left before 2 degrees of warming becomes inevitable. Oil companies seem pretty confident pocketing at least the next sixteen years of production right now, so climate change advocates should beware: as they say, the stone age didn't end for lack of stones.