Jim Hamilton Dissects Dan Yergin

Jim Hamilton almost forensically takes apart Dan Yergin for the latter’s nonsensical anti-peak oil column in last  Saturday’s Wall Street Journal:

Yergin does not offer a statement of exactly what he means by “peak oil”, though his essay refers to it as a “fear” and a “specter”. Let me therefore begin my remarks with a clarification of exactly what I intend to discuss. I propose the following three propositions as the core claims that need to be evaluated:

1. The annual flow rate of oil production from a given reservoir eventually reaches a maximum, after which it declines.

2. The annual flow rate of total global oil production will eventually have to decrease as a necessary consequence of (1).

3. This peak in global production will be reached relatively soon.

Of these statements, I honestly don’t understand how a reasonable person could dispute (1). You could almost take it as tautological, and furthermore point to many, many examples of fields that passed their peak production long ago. I likewise see neither a conceptual nor an empirical basis for challenging (2). Thus it seems to me that the relevant debate is whether proposition (3) has any merit, and exactly what one means by “soon.” That question may or may not be what Yergin was intending to address with his essay. But since for me it is the core question, I would like to comment here on the implications of what Yergin wrote for what I perceive to be the main question of interest.

Read the rest here: More thoughts on peak oil.


  1. Would owning dividend-paying oil companies with big reserves hedge risk of peak oil? http://seekingalpha.com/article/292891-3-cheap-hi

  2. There is little logic in Hamilton's statement. 2 above.

    First, it assumes that there are new new reservoirs put into production. The addition of new reservoirs allows an increase in aggregrate production even though individual reservoirs decline over time.

    Next, a given reservoir is developed over time, so maximal production is not always achieved immediately at startup.

    Also, is the size of a reservoir defined by geology or economics? If by economics, then a reservoir can increase in size as price rises; witness the Alberta tar sands.

  3. what about advances in drilling/capture technology, i.e. directionaly drilling. Are we giving up on innovation? Maybe the definition of peak oil needs a "tweak".

  4. Actually, (1) is not true, unless you assume ceteris paribus. But technology changes and improves capture.

    I will say that I can *imagine* (1) to be true, but then I am still boggled at fracking, so I'm not the guy for that flight of fancy.


  5. there is one implicit assumption, which is that the earth (including its habitants) does not produce new oil (or not enough new oil) – i don't know if that will hold true in the future

  6. US Economic Data Site. Over 100,000 economic series.
    Custom charts, data download, economic calendar.


  1. […] thanks to ‘Infectious Greed’, one came across this succinct response by Professor James […]