that the annual flow rate of oil into the human economy, like any finite resource being extracted from the ground, will eventually peak and decline. This is pretty elementary stuff; the fact that some find it a controversial “theory” is one indication of just how skewed from reality many of our “economic experts” are. Indeed, the derogatory phrase “peak oil” has been used to characterize an entire body of ri gorous scientific analysis as “fringe” science, even though it’s as basic as “can’t have your cake and eat it too.” It is true, the US has managed to temporarily reverse the trend of declining domestic production of total liquid fuels, which was apparent between 2005 and 2008. This has been achieved by significantly increasing the share of oil coming from unconventional sources, such as tight oil, oil sands, deepwater, etc. Unconventional sources depend on high energy prices — perhaps higher than society can afford — because they are so expensive to extract. Low prices in turn make them unprofitable. We are continuing to drain the declining, relatively large oil reservoirs of conventional oil while also returning to scrape the bottom of the oil barrel (the shale oil in the source rock). Fracking (or hydrofracturing ) has existed for many decades; it’s just that until recently we weren’t desperate enough to use it, and oil prices weren’t high enough to justify it. It was the high energy prices that prevailed between 2005 and 2008, and the cheap credit made available to energy companies from 2009 to 2014, that expanded fracking-based oil and gas production. This money was clearly not allocated wisely: from 2005 to 2013 oil and gas investments soared by over 60 percent, but supply only grew by 6 percent. 171 However, without the “shale revolution” (and tar sands), global oil production (as shown in above graph) would now be at 2005 levels or even lower. Oil from fracked shale has two important geological and geographic limitations. First, it must be thermally mature marine source rock — marine sediments compressed and cooked for a sufficient number of millions of years. Second, it must be buried at a depth of between 5,000 and 12,000 feet in order to have adequate reservoir pressure to force the oil to the surface (if deeper, it would be too hot for oil and would have been cooked all the way to natural gas). Existing US proven and undeveloped tight oil reserves are stated as ~20 billion barrels, or about five years of US consumption . 172 Shale oil depletes rapidly, as noted in the previous section. It can be argued, the Red Queen of US Shale, enabled by loans from Wall Street, singlehandedly extended the date of global Peak Oil (currently November 2018 and highly probable to stay that way). We will not know when oil truly has peaked until well in the rear view mirror.
Powered by FlippingBook