It’s the nett energy George…..

7 02 2016

George Monbiot

George Monbiot has written another piece on the current oil situation, but whilst I agree mostly with what he says, he still doesn’t ‘get it’………

Oil, the industry that threatens us with destruction, is being bailed out with public money

By George Monbiot, published in the Guardian 3rd February 2016

Those of us who predicted, during the first years of this century, an imminent peak in global oil supplies could not have been more wrong. People like the energy consultant Daniel Yergin, with whom I disputed the topic, appear to have been right: growth, he said, would continue for many years, unless governments intervened.

Oil appeared to peak in the United States in 1970, after which production fell for 40 years. That, we assumed, was the end of the story. But through fracking and horizontal drilling, production last year returned to the level it reached in 1969. Twelve years ago, the Texas oil tycoon T. Boone Pickens announced that “never again will we pump more than 82 million barrels”. By the end of 2015, daily world production reached 97 million.

Following one of those links, I have to admit, surprised me…..  I had no idea the US’ oil production had almost reached its 1970 peak….. I may have confused how much they were extracting with what they were consuming. And, that chart is already out of date, the extraction rate is now in freefall…


What everyone who comments on this fails to say is that whilst the numbers of barrels tabled in their spreadsheets might well be there, and they may be following the money, absolutely nobody is following the nett number of Megajoules.  A barrel of oil from the last dot on the above chart may well contain less than a quarter of the nett energy content of one from a dot at the toe of the curve.

George then adds….:

Saudi Arabia has opened its taps, to try to destroy the competition and sustain its market share: a strategy that some peak oil advocates once argued was impossible.

Methinks he should visit Gail Tverberg’s site for proper analysis….


Saudi Arabia has been pumping flat out for years, with no discernible market flooding power.  It may in fact be trying very hard to meet its own fast growing domestic demand which is having an obvious impact on how much it is exporting, which is discernably less than it was way back in 1980……. so how can you blame them for flooding the market?

George continues with…..:

Instead of a collapse in the supply of oil, we confront the opposite crisis: we’re drowning in the stuff. The reasons for the price crash – an astonishing slide from $115 a barrel to $30 over the past 20 months – are complex: among them are weaker demand in China and a strong dollar. But an analysis by the World Bank finds that changes in supply have been a much greater factor than changes in demand.

Whilst Gail Tverberg says…..:

Some people talk about peak energy (or oil) supply. They expect high prices and more demand than supply. Other people talk about energy demand hitting a peak many years from now, perhaps when most of us have electric cars.

Neither of these views is correct. The real situation is that we right now seem to be reaching peak energy demand through low commodity prices. I see evidence of this in the historical energy data recently updated by BP (BP Statistical Review of World Energy 2015).

Growth in world energy consumption is clearly slowing. In fact, growth in energy consumption was only 0.9% in 2014. This is far below the 2.3% growth we would expect, based on recent past patterns. In fact, energy consumption in 2012 and 2013 also grew at lower than the expected 2.3% growth rate (2012 – 1.4%; 2013 – 1.8%).

Figure 1- Resource consumption by part of the world. Canada etc. grouping also includes Norway, Australia, and South Africa. Based on BP Statistical Review of World Energy 2015 data.

Recently, I wrote that economic growth eventually runs into limits. The symptoms we should expect are similar to the patterns we have been seeing recently (Why We Have an Oversupply of Almost Everything (Oil, labor, capital, etc.)). It seems to me that the patterns in BP’s new data are also of the kind that we would expect to be seeing, if we are hitting limits that are causing low commodity prices.

Of course, people like George who want to keep growth going, only using wind and nuclear power, don’t understand we are hitting limits.

When oil hit $147 at the time of the GFC, it literally bankrupted the economy. Having hit peak conventional oil, trillions of dollars had to be invested (read, borrowed…) to capitalise on the much higher hanging and less energetic fruit. Which made us get less with more, when we should be doing the exact opposite, doing more with less…..

George then has a big whinge about fossil subsidies at the expense of renewables.  The way I see it however, is that as all renewables are manufactured with fossil fuels, as they get cheaper, the costs of making the renewables also goes down, so that to some extent, any fossil subsidy is a hidden renewables subsidy…..  Furthermore, without further subsidies, oil and coal companies will go bust to which George says….:

A falling oil price drags down the price of gas, exposing coal mining companies to the risk of bankruptcy: good riddance to them.

Which, George, unfortunately also means good riddance to renewables….  He then ends with…….:

So they lock us into the 20th Century, into industrial decline and air pollution, stranded assets and – through climate change – systemic collapse. Governments of this country cannot resist the future forever. Eventually they will succumb to the inexorable logic, and recognise that most of the vast accretions of fossil plant life in the Earth’s crust must be left where they are. And those massive expenditures of public money will prove to be worthless.

Crises expose corruption: that is one of the basic lessons of politics. The oil price crisis finds politicians with their free-market trousers round their ankles. When your friends are in trouble, the rigours imposed religiously upon the poor and public services suddenly turn out to be negotiable. Throw money at them, trash their competitors, rig the outcome: those who deserve the least receive the most.

At last……  George recognises systemic collapse, for all the wrong reasons unfortunately. It may look like corruption to him, but it sure as hell looks like limits to growth to me.




9 responses

9 02 2016

I think the problem for Geoge is that his understanding of ‘peak oil’ stems from an economic and market perspective when in fact, the term was originally coined to described a geological and engineering phenomenon. From the latter perspective peak oil must be applied to specific sources and not the general supply situation. Every historical (that is ‘produced’) source of oil – conventional and otherwise – has followed the rise, peaking and then decline predicted by the originators of the concept. The ‘glut’ that George and others are observing is simply reducing demand combined with market-share political shenanigans and (most importantly) the overlapping production of very different sources of supply as they are brought ‘on line’. Hence, while all the old sources of conventional oil (KSA, North Sea etc) are most definitely past-peak and declining at 4-6% p.a, their legacy production has now been supplemented in the declining market place by new and relatively short-term (and mostly unconventional) sources of supply. The ‘glut’ George is noting (and people like Yergin are trumpeting) is nothing more than the overlapping of production curves. If you over-lap and two (or more) sources of supply you get an additive effect – an increase! No more, no less. It’s very obvious now that the 10,000 or more wells that have to be drilled every year to keep the much lauded ‘new supply’ in the USA all have very short supply curves. Instead of the 60 year curves seen in sources such as KSA, we’re seeing peaks and declines in tracking wells of 1.5-3 years! That’s the reality of peak oil as much as the decline in conventional sources in KSA and North Sea is. As I said, George is simply looking at peak oil from an economist’s perspective, which is essentially non-scientific and trent/observation based. The key for such folk in understanding P.O is the reality that – when it comes to oil production – the past is no predictor of the future. We are dealing with unsustainable, limited and declining supply sources. No more, no less. It completely baffles me why an intelligent person like George fails to understand this. Someone send him a copy of Aleklett’s ‘Peaking at Peak Oil’ soon!

9 02 2016

Of course the above should read as follows:
“we’re seeing peaks and declines in tracking wells of 1.5-3 years!” should be ‘fracking’ &…
“non-scientific and trent/observation based” should be ‘trend’.

10 02 2016
It’s all happening. Still. | Damn the Matrix

[…] exactly what George Monbiot either can’t understand, or refuses to […]

10 02 2016
Chris Harries

Having followed Monbiot’s thoughts for a while, a long time ago he was preaching about climate change and in doing so he got annoyed that the concept of peak oil pulled the rug out of the climate argument, because in the eyes of some running out of hydrocarbons would put a stop to climate change and wouldn’t that be a good thing! In fact, a number of campaigners did hold this view.

Whether or not there’s some truth in that argument, it has ever since clouded Monbiot’s judgement on the issue. Peak Oil became a competitor.

That hard truth is that resource depletion looks likely to hit the world sooner and harder than climate change will. That’s not to put a scale of importance on one over the other, it’s just plain to see. For many climate campaigners this is not seen to be good news because it relegates the climate issue somewhat… but only if you allow it to.

To put this duality into perspective, climate change is manifestly a much more important environmental issue. There’s no need for tribalism, we need to press both buttons and the same lesson underpins both… the issue of limits.

12 02 2016

Indeed Chris……. I’d say there are three buttons actually, the perfect storm.

Peak Debt
Peak Everything
Climate Change

In that order.

So few people see the big picture.

4 04 2016
Eclipse Now

As individual items peak, substitutions become more cost effective, even if that substitution is inconvenient. Back on ROEOZ I suggested that when the scale of either the peak oil or climate crisis was truly recognised by governments, they would eventually act. If the marketplace couldn’t sort it out on its own, the government would LEGISLATE the answer.
Guess what the Netherlands just did? In just 9 years oil and gas cars will be ILLEGAL! Only EV’s will be sold. Comment?

4 04 2016
Eclipse Now

PS: You quoted Gail over George! Puuulllleease! Where oh where was the great crash of 2015? Got that wrong *again* did she?

7 04 2016

So she was a month of……… it’s all happening now, started January. Did you not notice?

7 04 2016
Eclipse Now

So where is her prediction? What was she actually predicting?

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