Technology & the Trouble with Peak Oil

There is a useful new CERA report out strongly critical of peak oil theory. Instead, the report’s authors argue, technology advances mean we are set to see a near-doubling in oil supply by mid-century, and then an “undulating plateau”, before decline begins toward the end of this century.

But as CERA Chairman Daniel Yergin points out, technology innovation could make even this muted scenario too pessimistic:

“This is the fifth time that the world is said to be running out of oil,” says CERA Chairman Daniel Yergin.  “Each time — whether it was the ‘gasoline famine’ at the end of WWI or the ‘permanent shortage’ of the 1970s — technology and the opening of new frontier areas has banished the specter of decline.  There’s no reason to think that technology is finished this time.”


  1. The concern isn’t about running out of oil, it’s about running out of CHEAP oil. Barring a major tech breakthrough (such as yesterday’s unconfirmed announcement by Israeli scientists that they’ve supposedly found a way to extract oil from Canadian tar sands for $17 barrel), most of the production from now on will be difficult and far more expensive than before. The CERA report doesn’t address that point.

  2. Jon Husband says:

    Here’s another pretty interesting take on the CERA report, from The OilDrum blog/site. Not quite as upbeat.

  3. Terry Foecke says:

    Whether you hew to the line of peak oil theorists, or see the CERA analysis as predicting a more probable oucome, it seems that this is the century when supplies of oil become more expensive AND more scarce. And while coal is undoubtedly more plentiful, concerns over acid rain, mercury emissions and global warming will bring politically-driven cost increases to this fuel source as well.
    Where then to invest? Most biofuels are quite dependent on fossil fuels for their production, and use early-stage technologies (in terms of efficiency) to boot. True renewables like solar, wind, waves and so on are constrained geographically and by a lack of balancing grid capacity and energy storage. All are long-term bets at the very best.
    Good medium- and short-term bets can be found in demand destruction applied to energy, of two types: 1)companies that are reducing their energy costs per unit product aggressively enough that it confers a competitive advantage, and 2)companies whose products and services enable that demand destruction. This has been happening on its own since the last “oil shock”, but is certainly picking up pace, from injection molders dumping hydraulics in favor of electric molders (30-50% energy savings) to Baldor (BEZ: NYSE) selling a whole suite of energy-efficient motor systems.