Open letter to Duncan Clarke
Posted on Wednesday, August 15th, 2007

Dear Duncan,

I suppose advocates of peak oil should be flattered that they are now taken seriously enough for someone to launch such a laboriously researched attack as The Battle for Barrels: Peak Oil Myths & World Oil Futures. The idea that global oil production will soon ‘peak’ and go into terminal decline, with potentially catastrophic results for the world’s economy, has struggled to gain significant traction in the mainstream policy debate, but you are clearly alarmed at its progress. If we are to believe your book, what you characterise as the peak oil “movement” is evidently doing something right.

Peak oil forecasters should welcome the attention, and not simply because it publicises their work; you have correctly identified some obvious weaknesses. Unfortunately your analysis is undermined by factual errors, out-of-date or partial reporting of oil depletion models, a failure to examine the planks in your own eyes and – in contrast to your self-professed industry expertise – an extraordinary blindness to the significance of key events in the real oil world. All of which prevents you from tackling the bigger question raised by your critique, which is how much difference does this all make to the peak oil argument? And the answer, after all the huffing and puffing, is surprisingly little.

Although you start by claiming yours is genuine attempt to present the arguments fairly, you quickly dispense with the niceties, and for the first third of your book you ignore the real issues altogether. Instead, under the pretext of analysing peak oil’s “social model”, whatever that might be, you spend almost 60 pages deriding it as a delusional cult whose advocates are compared to “millenarians making their survival plans; occult groups searching for final redemption; even alien encounter schools promising lift-off to distant planets for the chosen and the faithful”. As a concept peak oil is obviously swivel-eyed and writes in green ink, you insinuate, because of the kind of people who attend its conferences.

On the fringes there may be some peak oil campaigners who evoke such caricature, but you smear a widely divergent group of people and approaches with the same tarry brush. And if you attack peak oil by the company it keeps, I am entitled to defend it on the same terms. So lets list some of its supporters that you forgot to mention: Bill Clinton, George Soros, William Rees-Mogg, former UK ambassador to Washington Sir David Manning, and Britain’s chief scientific advisor Sir David King, who told me in 2005 that the global peak would arrive “in ten years or less”. Worse, you also fail to acknowledge any of the senior oilmen who support the analysis: Richard Hardman, former head of exploration and production at Amerada Hess; former Shell chairman Lord Oxburgh; and Thierry Desmarest, the current chairman of Total, who last year declared the global peak would arrive “around 2020” and urged governments to find ways to depress oil demand growth to delay the event. None of these endorsements ‘proves’ peak oil is correct, of course, but it does make it rather harder to dismiss the idea as self-evidently deranged. Perhaps that’s why you left them out.

When at last you turn to the substantive issues, some of your arguments are well taken. It is perfectly true that a number of predictions of the global peak have come and gone without the sky falling in; that some peak oil forecasters have adopted apparently overly-conservative estimates of ‘ultimately recoverable resources’, the total oil that will ever be produced from the crust of the earth; and that one reason for both these failings may be a reluctance by some to acknowledge the role of ‘reserves growth’, the observed tendency for oil fields to yield more than originally expected, through some combination of technological advance and conservative initial estimates. I can agree with all of that in principle, but the world has moved on. The critique seems damning at first, but only because you ignore or misreport a slew of depletion models from forecasters such as Jean Laherrere, Energyfiles, Richard Miller at BP, and PFC Energy, which have already addressed these and other issues that you raise, and still produce a peak before or around 2020.

In any event, picking away at the forecasting record does nothing to disprove the concept of peak oil itself: the idea that global oil production will peak and decline at about the midpoint of depletion, which is to say when at least half the oil that will ever be produced is still underground. This pattern has been demonstrated repeatedly the world over; PFC Energy’s analysis shows that countries peak on average when they have produced 54% of the oil discovered so far. But by fixating on past forecasts you manage to avoid confronting the elephant in the room: the obvious facts that suggest the peak is close, with or without the help of any depletion model.

There are 98 oil producing countries in the world. Around 60 appear to be in terminal decline already – including once mighty producers such as the United States, Mexico, Norway, Indonesia and the UK, where North Sea production peaked in 1999 and has already fallen by well over 40%. Aggregate oil production in the OECD peaked in 1997 and has been in decline ever since. It is almost unanimously agreed that oil production in the entire world except for OPEC will peak soon after 2010. This view is held not only by ‘peak oil’ forecasters, but also major oil industry consultancies such PFC Energy, and even by notable opponents of the idea of an early global peak: the International Energy Agency, Shell and ExxonMobil – whose CEO Rex Tillerson told me recently that non-OPEC growth would be all over in “two to three years”. From early in the next decade, by common consent, the only thing standing between us and the conventional oil peak is the OPEC cartel.

This matters because there are severe and well-justified doubts about the true size of OPEC’s reserves, buttressed last year by the leak of internal documents from the Kuwait Oil Company. The documents revealed that although Kuwait has for two decades been telling the world it has about 100 billion barrels of proved reserves, the KOC’s internal assessment in 2002 was just 24 billion, confirming the widely held suspicion that the reserves of many OPEC countries were falsely inflated in the early 1980s when members were vying for larger shares in the new quota system, and that they have been stuck with the falsehood ever since. Yet you dismiss this evidence out of hand as “peak oil mythology” solely on the basis that it “was rejected by the oil minister”. Such credulity is laughable, and not widely shared in the oil industry. No senior oilman I have spoken to privately believes OPEC’s claimed numbers. Even the oilfield database run by your former employers IHS Energy discounts the reserves of the big-5 Middle East members by 100 billion barrels. In 2005 PFC Energy briefed Dick Cheney that on a more conservative reading of OPEC’s reserves, its production could peak in 2015. So, this is apparently not an obviously absurd view. When OPEC peaks, so must the entire world.

In this context your other arguments pale into insignificance or are simply wrong. You persistently mistake oil company exploration activity for evidence that lots of oil will be discovered. You claim that the bigger estimates of the global oil resource produced by United States Geological Survey and others somehow trounce peak oil – without apparently realising they are perfectly compatible with a peak before 2020. You somehow regard geopolitical difficulties as positive for future oil production without ever being specific (when exactly do you expect peace to break out in Iraq, the Russian authorities make nice with international oil companies, and the Nigerians to stop attacking production platforms and kidnapping foreign oil workers?) And you insist without evidence that a rising oil price will transform the supply picture. But at no point do you quantify how much difference any of this might make to the date of the inevitable peak – but then peak oil deniers never do.

Yours sincerely,

David Strahan

David Strahan is the author of The Last Oil Shock: A Survival Guide to the Imminent Extinction of Petroleum Man.

8 Comments on “Open letter to Duncan Clarke”

Scott Says:
August 16th, 2007 at 5:26 pm

There are actually people who think that oil production will never peak and go into decline. Geologists only need to show an approximate rate at which the oil is produced by natural forces and compare that to the rate we use it. I’m sure we are using oil at a much faster rate than it can be replaced by nature. How could we not run out?

Kevin Says:
August 17th, 2007 at 8:44 am

But David, isn’t the world a much rosier place when we can believe that the party will never end?

stephen ellis Says:
August 18th, 2007 at 9:54 am

I find it incredible that people such as Duncan Clarke and many others are blatantly ignorant and dismissive of the threat posed by peak oil. For the ordinary person trying to raise a family and get by, it is of massively important for our future. It is important for everyone to understand the concept of oil depletion, instead of having the wool pulled over our eyes by goverment ineptitude and academic sloppiness.

Gary McMurtry Says:
August 19th, 2007 at 7:20 am

All the evidence I’ve read points to global liquids (oil plus alternative fuels) peaking before 2010. Ken Deffeyes, using Hubbert Linearization methods, called the peak for global conventional oil in 2005. We seem to be on a brief plateau, with a slight downward trend, to now, mid-2007. Khebab at The Oil Drum (TOD) predicts the peak of global liquids at mid-2009, Colin Campbell of ASPO at 2010. I have not yet read Strahan’s book, but a global peak at 2015 to 2020 seems optimistic in light of the above, and it does not incorporate West Texas’ (Jeff Brown at TOD) Export Land Model, which predicts net exports will decline considerably faster than the production rates of exporting countries because of growing internal consumption, e.g., UK.

So, unlike Duncan Clarke, to me a Dead Man Walking, I would be wildly happy to learn we have even as much time as another 8 to 13 years before the peak, because quite frankly, we don’t, and we can all thank certain OPEC countries for the misguidance.

Oil investor Says:
August 20th, 2007 at 12:35 pm

I have studied the oil market for some time. It seems clear to me that cheap oil is an era over. Peak oil is gaining force, and it I believe that there is serious over-reporting of reserves coming from the main OPEC countries. Imagine what would happen the day that Saudi-Arabia officially cuts its recoverable reserves by 3/4. I become more and more convinced that the world will see an oil shock that will make 1929 pale in comparison. When this shock will come, I don’t know, but before 2025, I’m sure.

Kamau Beno Says:
August 21st, 2007 at 5:04 pm

This kind of exchange/dialogue is very healthy for the public discourse because as the author said, the critics of the “theory” do point out weaknesses and I think in the dazzling rebuttals we (Joe Public)get greater clarity of how the world oil machine works and why its demise is going to cause so much turmoil. However, I would hurry to add that too much time spent upon the deniers is counter productive unless it serves to further clarify the facts, tweak the analysis, and publicize the issue at large. Outstanding response Mr. Strahan.

Jason Kemp Says:
August 22nd, 2007 at 12:06 am

From previous shocks we should have worked out that it takes years/decades to change consumption patterns and so we had better get started now.

If we have a few extra years that is good – but the pricing and security of supply issues says cheap oil has gone. Now what is left is more expensive and harder to get at. Denial is not a useful form of risk management.

Looking at Dr Sadad-Al Husseini’s comments in the Four Corners video (called Peak Oil?) it seems like the formerly vast Saudi fields are being nursed along and no extra productionm is available. Given the dominance of those Saudi fields it is just not smart to pretend that peak oil isn’t real.

Tony Says:
September 13th, 2007 at 2:46 am

I was convinced years ago that peak oil is coming. The key question has to be – what are the long term implications for the world? Energy and resource crises are a pattern of our historical evolution (read Jared Diamond’s books). History shows how humans respond. Desperation leads to increasing violence by the have-nots against the haves. With nothing to lose and everything to gain, humans will do anything to ensure their survival and that of their families and their countries. Societies under threat draw together to face the peril and we look for a ‘saviour’ whether military, political or spiritual to protect us. We are already seeing signs emerging with the Iraq war and the rise in extremism of all persuasions throughout the world. The fundamental difference between the past and today is the number of people now on the planet. The destruction of the Aztec and Inca civilisations by the Conquistadors and the death of tens of millions will be as nothing now that there are over six billion people on this planet and our destructive weapons are immeasurably more powerful.

One thing that is clear is that when (not if) economic collapse hits us we have to expect an increasingly unstable and violent world where the strong will survive and the weak perish. All those apocalyptic dramas such as Mad Max, Waterworld, Postman etc could become reality. Should we allow that to happen? Can we stop it? History would suggest not.

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