00s flashback: peak oil

I know that the previous decade wasn’t that long ago, obviously. But it’s starting to feel that way now and then. Consider, for example, “peak oil.”

I can’t be the only one who recalls this meme, but again, it sure can feel that way. I swear that it has been years since I’ve seen any reference to peak oil. Which on one hand is not so mysterious; for various reasons, oil prices proved no more a one-way phenomenon than did house prices. But we still reference the housing bubble now and then. Peak oil, for all that I’m sure there are corners of the internet where it remains a hot topic, seems all the same to have vanished down the memory hole about as completely as anything does these days.

This is at the very least curious given that it was such a popular theory, particularly on the internet. I could probably find other looks-back at the issue, if I searched for them, but again it seems odd that I have not come across one. I read quite a bit of online crap, and I don’t recall seeing even one headline.

Therefore, if only for my own benefit, I’m preparing this brief examination, because: as much as I can be certain about anything, and to the extent that these words have any non-wriggly firm core meaning, “peak oil” scenarios were way, way wrong.

Once more, without looking I feel all the same certain that there are still people who would vehemently argue the contrary. I don’t want to get into that argument, though, so let me narrow down my thesis even further. “Peak oil,” as I understood the significance of the term back in the mid-00s, now looks to me like a thoroughly misguided concept.

This is what I really want to explore, anyway. How did many people, including a lot of sources that I considered entirely worth listening to, go so badly wrong? And what might I learn from this?

Yeah, just to make this clear as well, this is another quasi-confession. There were certainly much more rabid true believers in peak oil than me, but I still took the idea much more seriously than now seems even remotely wise. (One might say that I “didn’t inhale,” but otherwise…)

I think I have achieved a bit more wisdom, since. I’m now pretty confident that peak oil—again, as I understood it in its heyday—not only appears an intellectual bust on the surface but was in fact structurally unsound the whole time. With minimal further ado, then, it’s my thesis that 00s peak oil worries were bad science, bad economics and suspiciously wishful thinking, all at once.

Science, first. I’m not going to worry about a complete summary of peak oil—JFGI—but as I recall the conceptual kernel was an established model of oil deposit production. Basically, the model said, discrete oil deposits always reach a peak output and thereafter decline rapidly. Peak oil theory proposed 1) that the same model could apply to Earthly oil production as a whole, 2) that the peak was near if not already past, and 3) oh shit.

This, I think, was just a highly questionable leap of logic from the start. I shouldn’t need to list examples of a reliable model at one scale failing to apply at a very different scale; there are lots of them. Many of which analogies, like peak oil, nonetheless seem persuasive to many people, e.g. equating a national economy with a household budget. Such persuasive analogies are nonetheless often wrong. This should have been a tip-off.

That said, peak oil had a bit more supporting it than just simplistic powerpoint hackery. Proponents had some deeper reasons why the underlying mechanics of the peak-plummet model might be applicable to a larger system. The key to this acknowledged that neither individual wells nor Earth as a whole would suddenly run out of oil entirely, all at once. Instead, so the theory argued, the most difficult-to-access oil would very reasonably be the last extracted. And would, once more referring to the smaller-scale model, potentially get a lot more difficult and thus more expensive to extract, fast. Too fast, in fact, for society to cope with when the long-reliable answer of “move to another well” did not apply because, in this case, the “well” was Earth as a whole.

Humanity’s record at resource management suggested that such a scenario was entirely possible. As just one example, I recall the first episode or two of Swamp People describing how Louisiana swampers hunted local alligators almost into extinction before adopting any real conservation measures. Consider that oil—unlike alligators—is a nonrenewable resource, and it doesn’t seem farfetched that humanity as a whole would go right on consuming it until we meet a sudden shortfall.

Except—here’s the other, deeper science problem with peak oil—what is and is not “oil” is a much more fuzzy boundary than what is and is not an alligator. There are two living species of alligator. For alligator products, they are the only source. For petroleum products, by contrast, there are a lot of sources.

True, there are other crocodilians besides alligators, and even more sources of meat and leather. But, the pattern of humanity rapidly driving animals into extinction even when those animals provide valuable resources still depends, I think, mostly on our conceptual system of species. One can list plenty of species that humanity has wiped out, let alone nearly wiped out, but once you shift into thinking of animals as resources with more fuzzy boundaries—like oil—I think this model goes equally soft and ambiguous. Humanity has not yet afaik consumed whole natural categories, like say edible fish or fruit-bearing trees. I submit that, upon sober reflection, oil is actually more like such broad categories than it is like discrete species.

This doesn’t completely invalidate the argument that oil won’t run out suddenly—indeed may never be used up entirely—but will get a lot more expensive, because the market won’t realize the price of remaining hard-to-get stuff until drillers have no other option. I think that argument looks less persuasive without the extinction parallel, but to completely expose its flaw we need to proceed into…

Economics. I might best introduce the economic flaw with peak oil predictions by noting that I’m a market skeptic, big time. More so with each year that passes, lately; at this point I really feel like market failures are not only real but in fact constitute more economic activity than do satisfactorily working markets. Despite all of which, recent years have also led me to the conclusion that oil is just about as good an example as exists of a market working like markets are supposed to.

This may seem to fly in the face of not only plenty of unpleasant, lived experience, but also one of the most basic and mainstream truisms about the oil market: “demand for oil is very inelastic…” It is, and much of the peak oil worrying focused on this very characteristic. Again, concern was less about suddenly running out of oil than about production falling faster than the inelastic demand of our economy for oil can adjust.

The main problem with this is that “demand for oil is very inelastic…” should be, and I think by most knowledgeable economists usually is, continued with “…in the short term.” What’s more, just to be absolutely clear, we should really specify that this particular short term really is, in practice, the short term and not simply everything short of that notorious long term in which we’re all dead. For once.

On this apparently pedantic detail, I believe, peak oil stumbles badly. Yes, in one sense which is a significant sense, humanity’s total supply of oil is finite, and yes, humanity’s demand for oil is “very inelastic.” But only in a short term short enough that, strange to say, most of us are still quite alive when demand for oil starts to become noticeably elastic after all. Yeah, it pinched badly when gas cost $4/gallon, but I think the fact that this proved to be a short-term situation was because it pinched and people did something about that.**

Beyond that type of short term situation, the oil market appears as noted almost a model of markets. Many buyers. Many sellers. A standardized commodity end-product, which if not super cheap or easy to transport long distances is still economical at such ranges within real, demonstrated market-clearing prices. Finally, most important of all, there are in the less-short-but-still-fairly-near term a whole lot of substitutes.

Yes, in one sense oil has limits, but in another sense the exact limits of “oil” are difficult to define and, in fact, not really even finite limits. Tar sands and oil shale aren’t exactly oil… but they’re close enough that it doesn’t require vastly more magic to get refined petroleum from them than from “light sweet crude.” Other even less oil-like fossil fuels can also provide a supply for oil, I believe. Biofuels, meanwhile, offer a genuinely renewable source of a passable substitute for gasoline, with caveats, as well as a source of the other big petroleum product, plastic.* As, for that matter, does old plastic.

All of this, of course, was known 10 years ago. Peak oil theory just held that all of it would remain too expensive to support falling crude output substantially, for so long that civilization itself would be imperiled. Well, that was a theory; it was simply hugely wrong. Probably because it was just really, really far-fetched to suggest that technology would not make any of the above substitutes significantly more economical, or provide other relevant technological responses (e.g., a big boost in cheap natural gas production), and meanwhile culture would prove unable to adapt readily to constrained oil production, either.

Wrong, too. As with oil supply, I think many peak oil pundits understood that humanity could significantly cut back on oil consumption without catastrophe, at least in theory. We knew full well in 2004 that a great deal of oil was burned just in moving individual people around developed urban settings in absurdly large metal boxes… we knew that even absent substitutes for oil supply, industrial society had plenty of potential substitutes in the form of using oil less wastefully… I suppose that many of us just convinced ourselves, to a greater or lesser extent, that humanity would in practice fail miserably to apply these adaptations until it was too late. A big supposition, which seems now and should have seemed then awfully questionable. To understand why it was nonetheless made, by so many, requires proceeding to the last big error in peak oil…

Wishful thinking. As I typed the preceding paragraph, I realized that I inadvertently captured this facet of the peak oil craze perfectly: “…until it was too late.” Just read out the words. Could anything sound more simultaneously foreboding of both doom and some god-awful righteous moralizing?

This, I think, is the most important factor in understanding how people believed that scientifically and economically dubious peak oil forecasts were valid: because we wanted them to be.

I very much include myself, here, despite the fact that this was also the only thing I correctly suspected about peak oil at the time. Even amid my most eager consumption of peak oil news and blog posts, I was consciously aware of an evangelical “…and the last shall be first” theme running through most of it. I’m sure that few if any wanted society to collapse; nonetheless, if we were being honest many of us believed all the same that peak oil was going to put some things seriously right.

So many deep grudges and cultural criticisms came together in peak oil. In the dimmest depths of the Bush administration. Oil-powered industrial civilization encompassed so many other complaints. The frustration of environmentalists. Dismay at the smirking, demonic oilmen in the White House and their murderous wars for oil. Regional resentment of America’s drift from older northern cities to air-conditioned sunbelt suburbs.

Capitalist greed. The aesthetic monstrosity of suburban sprawl. The hollow soullessness of consumer society itself. Peak oil was going to be a big, brutal, long-overdue comeuppance for all of these evils. Humanity had taken the wrong path, and ignored the protests of the righteous, and therefore would not leave that path before it was too late, because justice. If the righteous paid a price along with the rest, well, hey; we didn’t want to but y’know, we were just convinced that’s how it would go… which was by complete coincidence in so so many ways the way that we knew it should go.

Yeah. As I say, I recognized a good deal of the warning, here, despite which I still felt the appeal. Which, to close out, is what I consider the number one lesson of peak oil: all else aside, always beware of wondrous revelations that neatly conform to a lot of things you want to believe.

This is one reason, maybe not the best reason but an important reason, why even after concluding peak oil was a serious error I’m as convinced as ever that humanity is still walking into consumption-driven catastrophe in the form of climate change. I think the arguments are better, here, and they’re certainly more mainstream than peak oil ever became. I would still be a lot more suspicious, however, if this concept seemed to offer solace for my sense of justice. Sadly, not a bit of it; the consequences of climate change seem likely to fall heaviest on those societies which did least to incur them. Being wary of things that seem too good to be true, in this case, actually recommends skepticism of the “skeptics.”

So, then, I think I’ve learned something from the peak oil years, and I think that more understanding is on the whole something positive. I could, all the same, wish that it weren’t a new understanding of “trust not the easy path.”

* Just to make absolutely sure, I do not advocate let alone celebrate exploitation of tar sands, oil shale, or “fracked” natural gas, or ethanol subsidies. The fact that I think these particular options are rubbish, however, does not mean that there are no other alternatives let alone no effective alternatives to crude oil at all.

** Another model about oil consumption that I encountered, somewhere, may still be more sound. It think it was someone on NPR that suggested our relationship with oil follows a “shock-and-trance” pattern, i.e. the price becomes a big concern for a while, then as soon as adjustments restore downward price pressure we all go back to sleep rather than thoroughly proofing our economy against future oil shocks. This could well describe the response to those mid-00 years of pinch; we may well go through it all again. But, y’know, if repeatedly failing to prevent occasional such oil shocks seems to me like needlessly poor policy, it’s hardly an apocalyptic problem.

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