'Peak oil' theory runs out of gas

Published on Thursday, 1 May 2014 23:28 - Written by

The problem is, it’s just so hard to be an alarmist these days. Temperatures aren’t rising, U.S. emissions are down, and now it turns out that peak oil won’t peak.

What’s a scare-monger to do?

“Peak oil proponents — the guys and gals who believe overconsumption combined with scarce resources will lead to stratospheric energy prices — are now clinging to the hope that the shale oil and gas boom will fizzle out as the cost of drilling climbs,” reports Business Insider. “For the most part, the boom has held up, though no one believes it will last forever. But there is a fifth-column phenomenon this group has completely overlooked that will once-and-for-all obliterate their arguments: energy consumption efficiency.”

Put simply, we won’t run out of oil and gas (and other fuels) because we’re using less and less of them.

Not because demand is down, but because efficiency is up.

“Contained in Exxon’s new Outlook for Energy report is the following damning statistic: Electricity generation will grow by 90 percent by 2040, but the amount of fuel needed to generate that electricity will only have to grow by 50 percent,” the magazine reports. “And the projected increase in energy demand is 20 percent less than the demand increase seen from 1980 to 2010. The IEA has previously projected that electricity will become more affordable over time in most regions as income levels increase faster than household electricity bills.”

In one sense, this is a victory for the conservationists. It’s difficult to quantify, but the EPA’s Energy Star program no doubt played a part. Consumers were encouraged — but not forced — to spend their money on more energy-efficient appliances. Consumers were rewarded for their purchases with tax credits — and lower electricity bills.

Although the General Accounting Office has criticized the Energy Star program’s implementation, it was at least a free market approach to saving energy.

The free market deserves a lot of the credit for the failure of peak oil claims, as well. Companies, as well as consumers, seek to trim their expenses, and energy is always a big expense. There’s a built-in motivation for efficiency that everyone responds to.

Writing in the Dallas Business Journal, Nicholas Sakelaris says that efficiency can be seen as our greatest “green” energy source. He quoted Ted Pirog, an energy analyst with Exxon.

“Our greatest source of energy in the future is our ability to use it more efficiently,” Pirog said.

Don’t tell that to Daryl Hannah, the Hollywood star who has been arrested in East Texas protesting the Keystone XL pipeline.

“We should be starting to build some resilience and some self-sufficiency by developing renewable energy infrastructure,” she says.

And she’s right, to a degree. There’s nothing wrong with a true “all-of-the-above” energy policy.

But we can’t let the alarmists continue touting the peak oil theory, which was first expounded in 1956 by Shell scientist M. King Hubbert. He said U.S. oil production would peak between 1965 and 1971, and after that, costs would steadily rise until we’re out of oil completely.

It didn’t — and it won’t.