Dave Cohen, someone I haven’t mentioned here in quite a while (mea culpa) has an excellent piece up on EnergyBulletin, talking about the current state of affairs in predicting future oil production, Staking Out the Middle Ground (emphasis added):

This week the Guardian followed up on their initial story by highlighting the far more pessimistic Uppsala University study The Peak of the Oil Age by Kjell Aleklett, Mikael Höök, Kristofer Jakobsson, Michael Lardelli, Simon Snowden, and Bengt Söderbergh. (Also see the Guardian’s Peak Oil: what does the data say?)

In my view, the Uppsala study is unduly pessimistic, implying an immediate crisis (in 2010 and thereafter) which is not in accord with reasonable expectations about future production levels both within OPEC and outside the cartel. In alerting the public to the peak oil issue, the Guardian is doing good work. But not knowing any bettter, they picked the wrong study in my view. The false choice the Guardian offers us between the IEA and Uppsala amounts to a kind of all or nothing proposition.

It is not the barrels-per-day figure for 2030 arrived at by the Uppsala team that I find objectionable. In fact, I think that ~75 million barrels-per-day in 2030 is probably too optimistic! However, I must remind you (and myself) of a fundamental principle about forecasts, including oil production forecasts—

* The further forward in time a forecast goes, the more worthless that forecast becomes.

We can not believe any number anybody gives us for 2030. The converse in time is also true—a study should be reasonably accurate within shorter time frames for it to have any value whatsoever. This latter consideration depends on the subject under study. For example, interest rates can change quickly (in a matter of days or weeks) whereas global oil production can not under normal circumstances (outside big, exogenous shocks to the system, e.g. a devastating act of terrorism or war).

The Uppsala reference forecast calls for global oil production to drop to a very low level in 2010 (approximately 77 million barrels-per-day, Figure 1, Figure 4) and decline over much of the next decade. I don’t believe that such a sharp drop-off in world productive capacity is possible next year or for some years thereafter. I do believe that Uppsala’s short-term views, in alignment with other catastrophic forecasts, are used by naive observers to support End of the World prophesies I don’t subscribe to.

My view does not reflect that of ASPO-USA, which is easy to say in so far as ASPO-USA does not have an official view. Also, I do not mean to single out Uppsala. There is no dearth of alarmist forecasts or Chicken Little predictions for true believers to choose from. The chances that oil will hit $200/barrel in 2010, as some have predicted, are vanishingly small, absent a geopolitical shock. I picked the Uppsala study because the Guardian featured it.

And one more caveat: do not mistake demand for oil with oil production capacity. This distinction seems simple enough, but in my experience people sometimes confuse these issues. Suppose, for instance, that the global economy Crashed Big Time, and oil consumption fell to 79 million barrels-per-day. That would certainly have a devastating effect on future oil production via low prices & investment, but it would not mean that the world oil production capacity had fallen to 79 million barrels-per-day.

…

If I am to take the Uppsala’s 2008 world oil outlook seriously, I would also have to believe that the world currently has little or no spare oil production capacity. No serious oil analyst believes this, and lately OPEC has been putting more oil onto the market because they fear that prices are too high for a weakened global economy to handle. OPEC has lost control of the situation, however, because the continuing devaluation of the dollar has overwhelmed the supply & demand fundamentals in the oil markets.

By all means go read it all, and grab a copy of the Uppsala report (linked in Cohen’s article).

I’m highlighting this article because I think it bears repeating endlessly that the peak oil situation has not gone away, and that it will be a very serious problem without being exaggerated by doomsday predictions.

One key difference between peak oil and climate change has to do with predictions and projections[1]. We can make projections much easier in climate change than we can regarding peak oil. Climate change has some well understood physics as its foundation, so we can say things like, “if atmospheric CO2 goes to X ppm by 2100, then global temperatures will rise by Y degrees”. While it’s clear that we don’t fully understand all the feedbacks involved–hence the steady thrum of “it’s worse than we expected” news items–but we’re in the ball park. Peak oil has not only the slight addition of new reserves (as Cohen points out), but the possibility of dramatic changes in the amount of oil recovered from existing wells (currently only about one third). And on top of that we have the mother of all uncertainties, economics, driven by public policy and market psychology.

Cohen also mentions one of the real problems we face in trying to get the world’s attention about peak oil: The combination of the doomers and Google. Newcomers do what most of us would do when finding out about something new (to us): We Google it. Do that with peak oil and you can very easily wind up on some howling at the moon sites that make one wonder how tough it could be to understand the concept of “self-parody”. This is a huge problem and not simply yet another an Internet freak show simply because peak oil is a real, near term, and very serious problem. Even the “middle ground” view that Cohen and I and others are convinced is accurate leaves us facing one heck of a big problem in the next few decades, a problem we definitely don’t need on top of the other monster under our bed, climate change.

[1] For those not familiar with the nuances of those words, “X will happen” is a prediction, while “if trends Y and Z continue, then X will happen” is a projection. Consider yourself nuanced. And euphemised.

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