‘Peak Oil’ is a Political Statement

The words ‘peak oil’ are a close second to ‘climate change’ when it comes to getting me worked up. For more than a decade, I have been writing articles about peak oil and how it simply isn’t going to happen anytime soon. Despite, being quoted sarcastically in books by left wing environmentalists and vilified in certain quarters, I’m having the last laugh. Even back in 2005, when I worked with Peter Fusaro on the Energy Hedge Fund Center, I was trying to explain why peak oil is nonsense and he and I wrote extensively about it in our book, Energy and Environmental Hedge Funds – The New Investment Paradigm (Wiley, 2006). Today, I posted a Reuters article which essentially says that peak oil is dead, at least for another 10-20 years and that oil demand is forecast to rise.

I am a geologist by training and I started my career as a petroleum geologist with BP. I have seen first hand the many rapid advancements and innovations in discovering and extracting crude oil and my argument about peak oil has aways been simple if not politically correct. It is that economics (the rising price of crude over time) and humanity’s ingenuity will ensure that there is no peak in my lifetime. I have been proven right over and over again as new plays were discovered using new seismic techniques, enhanced recovery methods used and shale oil exploited. I expect this trend to continue. The term peak oil is a politically charged term that actually means anti fossil fuels. It has no reality in fact.

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What many people forget, especially the ardent environmentalists that appear to want us all to live in caves again, is that crude oil is the life blood of humanity. It isn’t just a fuel that releases trapped CO2 into the atmosphere when burned. It is the basis for everything we know and do. I had to laugh recently when I saw a photo on Facebook of environmentalists attempting to blockade oil exploration at sea. There they all were in their plastic canoes and boats wearing their plastic clothing and undoubtedly, some of them taking pharmaceuticals for any number of health complaints. They probably drove therein their mostly plastic cars, consuming gasoline or diesel from their largely plastic homes, filled with plastic furniture. Yet, they don’t want crude oil in their futures? There must be something wrong with our education systems that they seem to be unaware that they are the very essence of crude oil consumers!

OK, I see and in many ways support the move to renewable energy. Crude oil is too precious to burn but burn it we will according to all the data I have seen, and for many years to come. The fact is that hydrocarbons still account for the vast majority of energy usage around the globe and the transition will be a long one. Peak oil is fiction and peak demand has not yet been reached. Both terms are political speak anyway.

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