Welcome to the age of diminishing returns

Wednesday, November 28, 2012

The devil's best trick applied to oil production forecasts


My Russian friends would often tell me that, at the time of the Soviet Union, nobody believed the official propaganda but they had no other source of information. In our times, we have plenty of sources of information, but it seems that most of us choose to believe the official propaganda.

I think it was Baudelaire who said, "The devil's best trick is to convince people that he doesn't exist."

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A Thermonuclear Energy Bomb in Christmas Wrappings

World Energy Report 2012: The Good, the Bad, and the Really, Truly Ugly

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Claiming that advances in drilling technology were producing an upsurge in North American energy output, World Energy Outlook predicted that the United States would overtake Saudi Arabia and Russia to become the planet’s leading oil producer by 2020.  “North America is at the forefront of a sweeping transformation in oil and gas production that will affect all regions of the world,” declared IEA Executive Director Maria van der Hoeven in a widely quoted statement.

In the U.S., the prediction of imminent supremacy in the oil-output sweepstakes was generally greeted with unabashed jubilation.  “This is a remarkable change,” said John Larson of IHS, a corporate research firm.  “It’s truly transformative.  It’s fundamentally changing the energy outlook for this country.”  Not only will this result in a diminished reliance on imported oil, he indicated, but also generate vast numbers of new jobs.  “This is about jobs.  You know, it's about blue-collar jobs.  These are good jobs.”

The editors of the Wall Street Journal were no less ecstatic.  In an editorial with the eye-catching headline “Saudi America,” they lauded U.S. energy companies for bringing about a technological revolution, largely based on the utilization of hydraulic fracturing (“fracking”) to extract oil and gas from shale rock.  That, they claimed, was what made a new mega-energy boom possible.  “This is a real energy revolution,” the Journal noted, “even if it's far from the renewable energy dreamland of so many government subsidies and mandates.”

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7 comments:

  1. And so, instead of taking a last chance at making reconciliation with reality, we embrace the path of collective delusion.

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  2. As I said elsewhere, Ugo: if this notion takes hold among American policymakers, and they start to believe that oil is no longer important in foreign policy, and stop messing with Latin American and Middle Eastern domestic politics--that could do more for world peace than just about anything else.

    Perhaps we shouldn't stand in the way of those spreading the idea, just because it is false.

    (On the other hand, maybe Americans will be really grumpy when the promised miracle does not occur. That would be bad. Very bad.)

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    Replies
    1. At some level, they must understand that it is not true..... perhaps. Or are they victim of their own propaganda? Who knows?

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    2. Ugo,

      why do you think they "must understand"? :)

      Alex

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    3. I mean.... there has got to be someone - a group of dark guys sitting in a smoke filled room - who decided something like "let's start a PR campaign to convince those morons, out there, that oil is abundant and cheap".

      Now, they should know what they are doing - i figure.... at least.... perhaps.... or maybe not.....hmmmmm......

      Delete
  3. Not to mention that even if you take the IEA "predictions" at face value, especailly for global production, they aren't that "optimistic" at all, as Antonio Turiel shows in a recent post :
    http://crashoil.blogspot.fr/2012/11/el-ocaso-del-petroleo.html

    And this is the part not relayed by the media ...
    As to the US shale oil and gas hype in the last report, to me it also has a quite deranging smell of "financial communication leaflet" (and of course doesn't change the fact that Exxon is heavily betting on Kurdistan oil for instance).

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  4. Yves, I think you can find all kinds of bad news in the IEA report just taking it at face value. Just the oft-quoted "The US will become the world's largest oil-producer by 2020 and a net exporter by 2030" is a good example. It will only take 7 years to become the largest producer but take a full 17 to become a net exporter, in a world where net exports are decreasing? Is the rest of the world really going to be able to keep filling that gap for 17 years?

    ReplyDelete

Who

Ugo Bardi is a member of the Club of Rome and the author of "Extracted: how the quest for mineral resources is plundering the Planet" (Chelsea Green 2014)