It's "how hard is it to get?"

Using high-pressure recovery gets more, using horizontal drilling gets more... and there are other more advanced techniques that can get more...

But they cannot get more oil out of the ground quickly.

Modern reserve estimates include oil found in deep-water resources - which is extremely expensive and the average well only yields for about 2 years before dropping steeply in decline...

The modern estimates also include heavy oil - which needs to be hydrocracked... tar sands, which needs to be processed then hydrocracked...

They include small pocket reserviors that would yield for only a few months before steeply declining... Reserves under hard rock formations, reserves in inaccessable terrain a hundred miles or more away from roads... etc.

Just saying "there's this much oil under there" is only a small fraction of the picture. In most cases there is a limit to how quickly oil can be pumped profitably... And no oil company will spend fortunes on rapidly developing the difficult and non-profitable reserves just to lower the price of oil and for whining Americans in their giant SUV's.

This is not a simple issue that can be resolved in by off-handedly stating "they should supply more".

For what it's worth, there are a lot of geologists that doubt OPEC numbers because they believe OPEC is dramatically exagerating their oil reserves. There would be more motivation for OPEC to exagerate their reserves than there is for them to understate them - as you seem to so badly wish.

"There would be more motivation for OPEC to exagerate their reserves than there is for them to understate them...."

I can see the motivation for understating reserves, that is, make an item seem scarcer than it is to try and control supply, thus it's price. Exagerating would seem to put them in a weaker monetary position. Maybe it allows them to act as an altruistic benefactor by agreeing to pump more oil? Generate good will? I must be overlooking something, can you elaborate?

It is very true that they are incentivized to understate their reserves from a supply and demand model, but the factor that you are missing is the OPEC regulations on drilling. The countries are only allowed to drill something like 20% of their proven reserves anually as to not flood the globe with cheap oil. In response to this rule the governments have taken to overstating their proven reserves in order to be granted additional drilling capacity under the regulations. Although there is a lot of oil in the mideast, because of this scary reality it seems believable that the actual reserves will be depleted much more rapidly than people estimate...

We may or may not have used half the oil on earth, but cheap petroleum has definitely peaked -- and for all practical purposes the flow of oil has probably hit the ceiling -- and cannot meet the global demand for all the uses that have historically grown out of it.

Why were the Saudis so reluctant to do what it is in their best interests -- and what they have often done before - increase supply and stabilize world markets? And why would they put a sharp stick in the eye of their friend, George Bush, and then later only grudgingly agree to a temporary, minor increase in production?

And why for the last many years haven't the major oil companies not made any new investment in their refining infrastructure in this country?

It's an open secret that cannot be gainsaid by the "deniers of peak oil." The myth has been shattered, and the first pyschological tremors from the realization that a key resource has its limits, is making itself felt in the marketplace.

The OPEC regulations have encouraged fantastically optimistic numbers from the members... but there is another key as well.

OPEC's entire goal was to stablize prices. In part this was to ensure that the market wouldn't crash, in part it was to encourage the industrialized world to grow in a manner that would remain dependent on oil, and in part to ensure that no other alternative was developed to compete. The last two were more security measures than anything else... (though it didn't work to save Iraq). But even if the costs were nearly free, industrialized nations would have worked diligently to develop efficiency and alternatives if everyone agreed the oil was running out soon. By expanding the timelines with exagerated reserve claims, OPEC is making us comfortable that the oil will always be there... Hell, even at 130+/gallon, there is still little support in really dumping money into mass transit, and no-one is car-pooling, and no-one wants to shift to a smaller car... etc...

If it was well known that Saudi Arabia was going to run out of oil in a decade (probably not the case, they aren't exagerating THAT much), then even the most dense anti-environment republican would be car-pooling in a plug-in Prius.

They make us feel comfortable by saying the oil will last 60 years. It won't.

when congress inacts some bullshit legislation against "those horrible speculators", and the price of oil continues to increase (the only thing that will change is who will make money off of it).

Peak oil always was and still is a question of the supply capacity, not "how much is still down there". If there is a huge oil reserve found under the Antarctic mountains (there almost certainly is oil under Antartica), then the global reserves will increase, but our supply won't. :)

Peak oil is happening, and has been happening, for 3 years... We've been stuck at an annual average of ~84.6 million bbls/day, even though demand has risen well above that level.

'We may or may not have used half the oil on earth, but cheap petroleum has definitely peaked ..."

I think the fact that peak domestic US oil occurred when half of the domestic supply had been extracted was coincidental. I don't think it is a relationship that can be applied to any other oil infrastructure. However, I do tend to believe that, as Deffeyes suggested, world Peak Oil occurred late last year.

It does seem to me that supply will track demand as long as it can and that Peak Oil will be delayed while supply capability outpaces demand so that a lowered demand would tend to delay Peak Oil. That, however, is in our past now so a true peak should be detectable.

tundra:

I profess to not having the insight that you have on peak oil and how long oil supplies will last. I really do not know and even the geologists do not know. Oil will always be there in some form or another; but just not in the greatest of abundance. On your side are the oil speculators who are betting that oil may not be in abundance or that the oil producers will not up the supply. On your side also is a bottleneck in refining, contrived and othewise. Oil production has not climbed as high as it should either because of a lack of investment by nationalized oil interests.

And prices? I still tend to believe we have caused prices to rise dramatically because of the cheapening of the dollar.

Contrary, smaller cars are steaming out the door and SUV/Truck operations are closing down even longer during the Summer. In Motor City, they are finally looking at Mass Transit from Ann Arbor to Detroit and Howell to Detroit and Ann Arbor. I think you may be over reacting to an under-reaction to the last 5 years.

Oh and OPEC? They have always be in this for themselves.

During the 80's after OPEC nations nationalized their oil fields (taking them from the majors like Exxon), their stated reserves mysteriously increased by over 300 billion barrels!

OPEC production quotas are based on the size of reserves reported. Those in the know cal this 'political oil.'

bobills:

"There would be more motivation for OPEC to exagerate their reserves than there is for them to understate them...."

I can see the motivation for understating reserves, that is, make an item seem scarcer than it is to try and control supply, thus it's price. Exagerating would seem to put them in a weaker monetary position. Maybe it allows them to act as an altruistic benefactor by agreeing to pump more oil? Generate good will? I must be overlooking something, can you elaborate?

Your analysis would make sense in a free and open market. OPEC is a price fixing cartel -- it is not a free market.

Overstating reserves has more to do with maintaining the Saudi position of control of the market than with pricing issues. This relates to national security -- not simple economics.

As is Russia.

I don't mean to imply that I know the exact amount of oil in the ground or can pinpoint the day that the last well in the ME is sucked dry. I don't know any more than what is published.

I do, however, know that at current production rates the U.S. will be dry in ~5-6 years.

North America - at current production rates - will run out of Natural gas in less than 10 years, so there's no great help on the horizon from tar sands or oil shale...

At least 40 other countries will also run dry at current production rates in less than 15 years.

So, the Middle East production will have to ramp up production like mad just to keep world-wide production constant over the next decade.

Yes, there are new oil discoveries every year.. but they are more and more remote, difficult, and low-yielding.

Last year the oil industry spent ~100 billion in oil exploration, and managed to find a whopping 20 billion barrels worth of oil - half of which was the poor quality fields that even now aren't profitable.

WE ARE RUNNING OUT.

That, I know.

As for the refinery issue. I believe our refineries are turning out a whole 88%. The high prices have reduced demand to such a point where there is no refinery problem anymore. I would support a few small, efficient refineries that are further removed from the gulf - so we're less vulnerable to a catagory five hurricane... but for the most part adding refinery capacity will just reduce the load on all the refineries. We aren't going to have more oil needing refined... ever. (the next source of transportation fuel won't use traditional refineries).

What I find fascinating is that what we are going thru now -- which are only the first tremors of what will inevitably become a global crisis in both manufacturing and agriculture -- has been so predictable, but so todgeschwiegen or taboo in public discourse (except on the Web -- and Slate, of course).

Kunstler's Long Emergency (and the novel that followed) make entertaining reading, but, unfortunately he is dismissed as a crank. As with Swift, when you make fun of a serious subject no one knows what to think.

For many of us it can be fun to play with what bizarre developments may come from all this: religious nuts taking over the airwaves (oops! this has already happened), gun nuts and vigilantes taking control of rural regions, the seat of government abandoning an untenable east coast and moving to middle America, a return to subsistence farming and self-reliance (very American), etc.

But of serious interest should be the real existential dangers we face in the next few years:

- pandering politicians promising unsustainable "energy independence" gimmicks, and no real plan. This will be reinforced by an unwillingness of the public to accept the new harsh realities, ending with a total cynicism about collective social action;

- a faltering economy that cannot even capitalize the development of or transition to new forms of energy, and thus a steady economic downward spiral;

- resource wars on a global scale, and nuclear proliferation;

- the breakdown in the production and wide distribution of agricultural products - and massive starvation on an unprecedented scale;

- the discovery that humanity and democracy are a luxury of "cheap" oil, and the acceptance of a more brutal policy enforcing order going forward;

- etc.

I know - this is terrible Doom and Gloom - not the type of thing we want to contemplate.

Unfortunately it's also real and true, and if we continue to put our head in the sand, we will be as unprepared for the next, very predictable problems as we are today for the end of the 40-mile commute to and from our MacMansion in the ex-urbs.

Let's start the challenging but interesting discussion now of the macro or meta-trends emerging from the end-of-the-era of cheap energy. What are the major problems we face for the next decades, and what can be done to mitigate them???

Our giant under water aquifers that water the midwest great plains farms are running out of water. If we run out of oil at the same time we lose most our crops, America will capsize.

And like you say; we know the oil and water are running out, but nothing is being done to prepare for it.

Knute does not paint a pretty picture with his list of 'existential threats':

But of serious interest should be the real existential dangers we face in the next few years:

- pandering politicians promising unsustainable "energy independence" gimmicks, and no real plan. This will be reinforced by an unwillingness of the public to accept the new harsh realities, ending with a total cynicism about collective social action;

- a faltering economy that cannot even capitalize the development of or transition to new forms of energy, and thus a steady economic downward spiral;

- resource wars on a global scale, and nuclear proliferation;

- the breakdown in the production and wide distribution of agricultural products - and massive starvation on an unprecedented scale;

- the discovery that humanity and democracy are a luxury of "cheap" oil, and the acceptance of a more brutal policy enforcing order going forward;

LeRoy: We have always had pandering politicians, so I don't have much to suggest about your first item above. Politicians almost always tell people what they want to hear, because that is what tends to get the most votes. They want to hear that "It's morning in America", or that, if we do have problems, they are all the fault of foreigners. How do we go about finding the mythical non-pandering politician? Or, to put the question differently: how bad will things have to get before the public is finally willing to listen to someone who is willing to tell them the unvarnished truth?

Your second existential threat is one that has been on my mind lately as well. To put it bluntly, we must not allow this to happen. You are perfectly correct that if we "cannot capitalize the transition to new forms of energy", then we face "a steady economic downward spiral"...and our civilization would ultimately collapse from the stresses and pressures. At some point, we need one of those non-pandering politicians to tell us that we need to stop such silliness as the waste of energy on display in all the NASCAR events, and, even more importantly, that Americans must give up their vast overseas 'empire', and reallocate those resources toward finding solutions to our energy crisis. The public does not appear to be at that point, yet---they are still in denial.

Your third threat is of "resource wars on a global scale", along with proliferation of nuclear weapons (and I would add other weapons of mass destruction). Here, too, we must avoid globalized resource wars, as I do not see how this could fail to be anything other than World War III. And, as Albert Einstein said, if there is ever a World War III, we will be fighting World War IV with sticks and stones. This, too, would lead, perhaps more abruptly, to a collapse of civilization. This is an issue which is crying out for more global cooperation. It will be a test of just how rational the human species has become during the course of our evolution.

Your fourth threat is of "massive starvation on an unprecedented scale", caused by breakdowns in the production and distribution of agricultural products. I in fact expect massive starvation in Africa in the coming decades, and in parts of Asia, and perhaps in parts of Latin America. I would like to think we could avoid it in Europe and most of North America. We have been seriously underinvesting in agricultural research for several decades now, and this too must end. There should be more research effort devoted to many local crops, to diversify our agricultural base, and make us less vulnerable to diseases of wheat, corn, and/or rice, the three major crops.

Your fifth existential threat is perhaps the most disturbing. You say: "humanity and democracy are a luxury of 'cheap' oil", and suggest there will be an "acceptance of a more brutal policy enforcing order". I for one hope that America does not become brutal in attempting to force its preferred policies on the world, but there is already some reason to suppose this might happen, with the evident American acceptance of torture as a policy of warfare. I say this because my reading of history tells me that only benevolent empires have any staying power, that malevolent or tyrannical empires are soon overthrown. One can only hope that the other suggestions I have made will help us to find a cost-effective energy technology before we lose those Enlightenment values that have sustained this republic.

I was a bit surprised that you left out the existential threat of rapid climate change, which I think is very real and will only magnify all your other existential threats.

A very thought-provoking post on your part, Knute.

Let's say, for example, we know that the Saudis will run out of oil next year. Think we will continue to sell them top shelf military hardware? No, hell, no, we will look for the next most oil rich country and try to buy THEIR friendship.