A recent WSJ editorial page article, “The Oil Bubble,” put all fears to rest regarding the emergence of peak oil, casting all such pronouncements into the ash heap of similar Chicken Little like statements regarding such predicaments. While not disputing that technology can, and has, overcome similar past problems, the current situation is both unique as well as mischaracterized by this article.
The article states categorically that “…the world is not running out of oil.” It would be interesting to hear their explanation for just who, then, is currently making it. When geologists talk of MESO-CENOZOIC basins, I suppose they are referring rather to the middle and new lives of our existing fields that new technology is creating by extracting every last drop of the precious commodity, only to have those same fields precipitously run dry, rather than the geologic time scales required to produce the oil we are extracting. Approximately 70% of today’s production comes from fields that have been in use for 30 years. Improved hydraulic fracturing, seismic exploration, monitoring and directional drilling techniques are ensuring maximum exploitation of existing wells, but few new field discoveries. Estimates are that nearly 6 trillion dollars in new investment will be required between now and 2030 to sustain and further increase production. The fact is, neither we nor natural processes are producing even what we would consider as far time deposits of oil reserves for extraction. That oil is a limited, non-renewable resource is not disputed. The only question is whether technology will advance sufficiently rapidly to render the cost of extraction of alternate oil resources economically feasible. This, in fact, is what the article refers to when it claims that we are not running out of oil. That is different from the assertion that we are not at peak oil, or where production is in decline in traditional fields due to the current economics of extraction. With the high investment requirements to sustain and increase production, as well as the environmental impacts of continued reliance by ever expanding populations on this energy source, 6 trillion dollars could go a long way to fund a transition to alternative sources, which transition we know we will eventually have to make.
That we are at or quickly approaching peak oil is attested by both government and industry sources. Increasing demand is expected to continue its present course, with China’s 1.3 billion people consuming a larger and larger portion as they enter the age of mass car consumption and continue their industrialization, this at a time when oil production is in decline in 33 of the 48 largest oil producing countries. Considering the exponential increase in energy demand, and the finite nature of this source, it is foolhardy to rely predominantly on oil supply, be that traditional supplies or non-traditional, to fuel our futures.
The article goes on to explain how the free market will fix this problem. Although the free market is the most efficient means ever implemented for production and distribution of product to meet demand, it is not the most effective means of ensuring other things just as needful such as justice, equality of opportunity, not to mention the continuance of our nation, our communities and our way of life. Free markets take time to adjust, and these adjustments are based solely upon market forces, not social imperatives. It is evident to anyone who has studied history that free markets unrestrained produce social ills. Government still has a function to play in ensuring that free markets do not reduce us to the slavery of the marketplace or worse. To maintain that the free market system alone should be left to solve the problem of peak oil is both irresponsible and unthinking, especially in light of the lead time required to begin transition, the social impacts, and the costs involved.
The article goes on to assert that the
current price of oil is actually cheaper than historical costs. That we have increased our efficiencies of
extraction and production since 1900 is undoubted; however, the costs we are
paying at the pump are a fraction of the total costs for ensuring energy
access. Our military deployments in
While it is true that oil shale and tar sands are a non-traditional source that should be pursued, the article’s admission of this is also an admission that the high oil prices we are experiencing are not a market perturbation, but are rather long term impacts of shortages in traditional sources. Were this not the case, the non-traditional sources would remain uneconomical. To maintain that this oil crisis is analogous to previous oil crises is to discount the real differences which exist in terms of both technological challenges and well as geopolitical circumstances. I for not content to let market forces “work their magic” without at least a little slight of hand assistance from the government on an issue of such vital social importance.
Gould, “Extending Field Production Life,”
 Alexander’s Gas and Oil Connections, Retrieved on
 Chevron, Retrieved on
 Necla Tschirgi, “The Paradox of Development,” Retrieved from the World Wide Web 10 October 2005: http://www.idrc.ca/en/ev-29607-201-1-DO_TOPIC.html
 For a discussion of peak oil predictions, consequences,
and mitigation see “Peaking of World Oil
Production, Impacts, Mitigation, and Risk Management,” SAIC, Retrieved on