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opposing views on peak oil from Google News

deconstructing Daniel Yergin, the "Energy Pope"

Sooner or later, proponents of peak oil inevitably run up against Daniel Yergin, who Der Spiegel in a July 16, 2006, article entitled "The War over Resources: Energy Security Will Be one of the Main Challenges of Foreign Policy" says "has been known as the 'Energy Pope' since the 1991 publication of his book 'The Prize: The Epic Quest for Oil, Money, and Power,' which won him a Pulitzer Prize."

In this recent interview, Mr. Yergin makes a number of statements that deserve close scrutiny.

During this interview, Mr. Yergin says:

"The Chinese are new players in the world economy and they have a high degree of urgency to obtain resources. It would be much more worrying if they were sitting on hundreds of billions of dollars in their central bank and not spending the money to add barrels of oil to the world's supply [bolding added]."

How does China spending billions of dollars add a single barrel to the world's oil supply?

Yergin says:

"I think the shock of demand from China has passed now. In 2004 we had this amazing 16 percent growth in Chinese consumption. But now the focus is shifting to supply. We are currently experiencing a slow-motion supply shock, the aggregate disruption of more than 2 million barrels per day. This has a lot to do with the unrest in Nigeria, but also with the production loss after the hurricanes in the Gulf of Mexico, the decline in Iraq since the 2003 war, and the decline in Venezuelan output since 2002. So today we're standing at a historic juncture: After a quarter century, the great cushion of oil surplus production capacity that was created after the turbulences of the 1970s has been largely spent."

Yergin's "slow-motion supply shock" refers to geopolitical impediments to the operation of a frictionless free market in oil. He doesn't mention Iran's use of the "oil weapon" to defend its nuclear project, but that's clearly another part of the "slow-motion shock." As we'll see, Yergin establishes these bits of interference as the problem, not the steady decline in the amount of oil left in the ground.

But he does admit that "the great cushion of surplus oil production" "has been largely spent." This is why the shut-down of BP's Prudhoe Bay pipeline announced yesterday caused yet another spike in world oil prices.

Yergin's basic argument against peak oil is encapsulated in what is rapidly becoming his signature quote:

"This is not the first time the world has run out of oil. It is more like the fifth."

He says: "People always underestimate the impact of technology. To give you an example: In the 1970s the frontier for offshore development was 200 meters, today it is 4,000 meters."

Far from proving that technology will save the day, this comment instead testifies graphically to the (literal) lengths to which oil extractors now need to go to keep the crude coming.

Spiegel: So the whole idea of peak oil is nonsense?

Yergin: The image is misleading. A more relevant description would be a plateau in production capacity that might be reached in the fourth or fifth decade of this century. So the major obstacle to the development of new supplies is not geology but what happens above ground: international affairs, politics, investment and technology.

Having already acknowledged, then minimized, the inevitable decline in production ("Nobody thinks that oil supply is infinite, but the point is: The sky is not falling."), Yergin here flips the question of "the development of new supplies" into a geopolitical, not a geological problem, conflating "discovery" and "access" in a way that sets the stage for his solution to the non-problem of peak oil: making sure that the supermajor U.S.-centric oil companies retain or obtain control of the oil wherever it happens to be, regardless of "resource nationalism" or other impediments to these companies ability to extract, refine, sell, and profit from this non-renewable, once-in-the-planet's-lifetime resource.

As Yergin says, "Getting access to fields is on top of the oil companies' agenda. We see a substantial build-up of supply occurring over the coming years. But, after 2010, that growth is concentrated in a fewer number of countries, this is what is causing the unease and is accentuating security concerns."

What he's saying is that when oil has peaked everywhere but in the Middle East, the relatively low-intensity warfare now wracking the region is likely to be replaced with some REAL fighting, as "accentuating security concerns" and a death-grip on the US government by the "supermajors" causes an even more transparent dedication of US resources (trillions more in taxpayer money and borrowed-from-the-Chinese debt; countless more dead and maimed soldiers) to the single purpose of securing access to declining supplies of oil. As Yergin himself puts it: "it's important to acknowledge the fact that the entire energy supply chain needs to be protected."

Spiegel: This kind of security isn't cost-free.

Yergin: Securing pipelines and chokepoints will require increased monitoring as well as multilateral rapid-response capabilities. Both the private and the public sectors need to invest in building a higher degree of security into the energy system.
Spiegel: In the end the supply with oil and gas is more a question of diplomacy rather than business?

Yergin: In a world of increasing interdependence, energy security will depend much on how countries manage their relations with one another. That is why energy security will be one of the main challenges of foreign policy in the years ahead. Oil and gas have always been political commodities. But right now, it is more political than it has been for years.

Whose "foreign policy"? "Energy security" = U.S./supermajor access to everyone else's oil

If the most prominent opponent of peak oil is a consultant who argues that the problem is not the inevitable and possibly imminent end of (relatively) cheap oil on geological grounds, but insufficient dedication and commitment to paying any price and letting others bear any burden of eternal war for access to the (allegedly not-in-any-danger-of-running-out) supplies of crude, one should probably ask the most basic of questions: "Who benefits from this analysis?" and "Who's paying this guy to say this?"

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