Michael Lynch is the president and director of global petroleum service at Strategic Energy & Economic Research.
Another article has appeared in Nature magazine that argues that the world has entered a period of 'peak oil,' and it is more illuminating as to the nature than the content of the debate. The authors are James Murray, an oceanographer, and David King, former British science adviser and a physical chemist.
What would a physical chemist and an oceanographer know about forecasting oil production? Ay, there's the rub. The two have apparently read a number of articles, online postings, etc., and regurgitated it to make a case for global oil production having peaked. However, they are unfamiliar with the literature and more generally the subject, focusing only on those which agree with them. Cherry-picking is good for farmers, but not policy makers.
The list of mistakes included in their writing is enormous, but to focus on one, the confusion of physical science and economics. Tellingly, they comment that "the oil market has tipped into a state, similar to a phase transition in physics." Indeed, they ignore the reasons why production has declined, reminding one of Mary Shelley's Frankenstein, who complained about his colleagues who observed, but didn't try to understand the causes of, phenomena. "The most learned philosopher….might dissert, anatomize, and give names; but, not to speak of a final cause, causes in their secondary and tertiary grades were utterly unknown to him,"
This is in keeping with other peak oil advocates who are physicists, including Albert Bartlett and David Goodstein, and are applying aspects of physics to what is, mostly, economic behavior. Geologists complain that economists assume discovery, which is often true, but this is like assuming automobile production won't rise because you don't know where factories will be placed. There is no given where we'll necessarily find oil, but in aggregate, discoveries can be predicted.
Physical variables like gravity and chemical reactions do not respond to intangibles, like political uncertainty, and so can be safely extrapolated. And so here, the scientists are, implicitly, assuming that the decline cannot be resolved and will continue. In reality, it is due to first, weak demand as the result of high prices and the recent recession, but also political unrest in Libya, Nigeria, Iraq, and Venezuela, which at different times has taken 2-3 million barrels a day off the market.
This ignorance of causality also drives their presumption that a failure to increase for several years must be insurmountable: in other words, blind extrapolation of the current trend. In fact, global oil production has repeatedly peaked, dropped and recovered in the past, and no reason has been put forward to show this time is any different.
Their ignorance of the industry also shows when they discuss the production of a subset of petroleum production, namely, crude oil (plus condensate, which they don't mention), rather than total liquid fuels. While many other liquids (propane, heavy oil, additives, biofuels, etc.) are not precisely the same as crude, they contribute to the overall supply. Here, production has been rising, up three million barrels a day since 2005 and, according to latest estimates, setting new records.