Home Editorials General The Myth of Peak Oil
The Myth of Peak Oil PDF Print E-mail
Sunday, 02 May 2010 17:46

For decades, we've heard the call of "peak oil", that we're facing an ever-decreasing supply of oil.  The US simply cannot maintain it's current usage of oil because we are on the verge of a collapse of apocalyptic proportions because the last oil in the ground is being used right now.  Makes wonderful news copy, and is a great way to castigate the energy industry and justify entire reworking of the economy, but there's a problem: it's not true.



The solution actually lies within the US.  Actually, within Colorado, Utah, and Wyoming.  For we have 276+ YEARS of 100% of our oil needs within those three States alone.  That's right, we can eliminate 100% of the pumping going on now - Alaska, California, Pennsylvania, Texas, offshore, what-have-you - and supply 100% of our needs with just the states of Colorado, Utah, and Wyoming.


How?  It's simple.  It's called oil shale. And the US has enough to run 100% of our needs for nearly 3 centuries.  There are somewhere between 2.8 an 3.3 TRILLION barrels of oil in shale worldwide, and the US has 62% of that.  Assume the middle - 3 trillion barrels.  That means the US has about 1.9 TRILLION barrels of shale oil.  And nearly all of it is within the three states listed above.


Consider that number.  One point nine trillion. 1,900,000,000,000.  It's a mind-boggling number (well, maybe not so much any more, given that our budget deficits are around the same size!).  It would be 271 barrels of oil for every single person on the face of the earth, or more than 6,300 barrels per person in the USA.  Since there are 42 gallons per oil barrel, this represents about 266,000 gallons of oil per person in the US.  Think about it.  You know what a gallon of milk is like; imagine just over a quarter of a million of them!  If you used a gallon a day every day, it would take 728 years for you to use it all.


What does that scale up to?  Well, we use about 20 million barrels a day as a nation.  Divide 20 million into 1.9 trillion and we find we have oil for 95,000 days.  Or at least 260 years.  And remember, this is the middle estimate value.  Yes, we have oil shale for 260 years, minimum.  A truly staggering timeline.  If we started 100% of our consumption of oil from this reserve, and started in 2020, we'd finally be running out around 2250, sometime around the 110th President of the United States is elected.


\Many will talk about how it's too expensive.  But is that correct?  Consider that today, May 2nd 2010, oil is selling for about $82 per barrel.  Suddenly the estimated cost of $21-$25 per barrel, we could cut our oil expenses by 70% or more.  A massive savings for the nation, amounting to over $1 billion dollars a DAY in reduced oil expenditures.  Over $400 billion a year in savings, about 3% of our GDP.


And it goes beyond that.  Currently the US produces about 8 million barrels a day of oil.  Rather than consuming that oil, we could, in fact, sell it (since we get our oil from shale).  At a sell price of $82 per barrel, that would represent the ability to export $656 million dollars a day of crude, adding $240 billion to the positive side of our trade deficit.  And because we're no longer importing 12 million barrels a day, that reduces our purchases by nearly $1 billion a day, for a total change in our trade deficit by $600 billion.  The US nearly becomes a net exporter, and that would immensely improve our economic standing in the world.


And it goes beyond the change in the trade deficit; we could cut the costs of gasoline and heating oil by 4; the boost to our economy by bringing gasoline to less than $1.00 per gallon would be immense.  Remember the peak in 2008, when gasoline reached above the $4.00 per gallon barrier?  That - along with the housing crisis - was a prime reason the recession of 2008 hit so hard and so deep.  Cutting our internal energy costs by a factor of 4 frees up a massive amount of dollars internally for other economic activity.


The facts are clear: the US has nearly 3 centuries of oil sitting within its shores; we have the ability to tap that massive reserve in 10 years; we could become one of the largest exporters of oil in the world; we could nearly eliminate the trade deficit; and we could severely cut the dollars we spend on energy within these United States.  Peak oil - and the hysteria that goes with it - is a myth within at least the borders of the US.

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Jack  - It's About Time   |64.246.136.xxx |2010-05-02 12:43:41
It's about time someone had the guts to say the obvious.

Well, maybe not so obvious...but lots of
us have known about oil shale. For some reason the crazy libs don't want to tap into that natural
resource. Must be it will disturb some Native American rock drawing or something.

Great piece.
Keep 'em coming!
Phil Clayton  - Cost a big factor   |76.101.13.xxx |2011-02-26 14:16:53
Good article, good point.

However I did some research and I find the price to refine oil shale is
still very dependent on the current market price per barrel of conventional oil.

Seems its still
more costly to refine Oil Shale vs conventional oil, so many countries knowing they have large
deposits of Oil Shale simply have stopped trying to find a more cost effective way to refine it. So
as long as we have cheap conventional oil flowing in from other countries this will not happen. Oil
companies are purely driven by market price, and it's presently cheaper to pump it out of the ground
than the complicated and costly process required to refine Shale. Also some talk of the energy and
labor required to just refine a single gallon of Shale Oil to Gas to easily exceed its present
retail value at the pump.

However as I write this on 2/26/2011 conventional oil is on the rise due
in part to the civil war in Libya, and middle east instability.
In fact as I am typing it has risen
at the pumps 20 cents per gallon, and some predict it to hit $4.00 a gallon very soon.
Time will
tell how this plays out.

Steve  - Rate is key   |62.231.147.xxx |2011-04-27 06:32:22
Nice idea, but how fast can you produce from shale oil? Is there anywhere in the World that can
produce 20 million bbls a day from shale oil?

The answer is no, not even close!
Shanghai Dan  - Rate comparison with Canada   |68.68.39.xxx |2011-04-27 06:58:52
Canada does around 1.6 million barrels a day, and is on their way to 5 million barrels a day
(by 2020).

They have ~54,000 square miles of oil sands, we have ~17,000 square miles of oil shale.

They get about 100 BOE/acre, we get about 1,300 BOE/acre.

Taken together, we have
13 times the energy per acre, but 1/3 the acres. So we should be able to produce ~4 the
amount of oil per acre as Canada.

Add that with their current production, and output
target for 2020, we should be able to reach 20 million barrels per day.
Luke  - Energy Output v. Energy Input   |99.102.140.xxx |2011-06-27 17:17:37
Good article, but you miss some points:

1) Even with unconventional oil such as shale and sand, it
is still a finite source. Including such would extend peak oil production to 2300. However
conventional oil, better known as sweet crude never exceeded 73 million barrels/day in 2005. Which
means conventional oil has peaked.

2) Crude is called "Black Gold", however only 2% of the
world's water supply is fresh water. Where shale is located, you named it WY, CO, UT have a lack of
fresh water, where residents of those states still depend on well water. In those regions, water is
the new gold. It takes a lot of water to operate shale refineries. These states also tend to vote
conservative, yet the farmers and ranchers along with the hippies in boulder would both tell you
they don't want anything seeping into their drinking water.

3) It takes energy to produce
energy. To produce the product, about 40% of energy produced is consumed in the production process.
Americans want the bang for their buck, ideally if you can use no energy, little input and produce
energy, the science is called "efficiency".

The huge supply is certainly there and it is
a source of energy, however the bottom line is production of the more difficult unconventional oil
is dependent on the production cost of conventional oil since it's a high-yield energy with low
production costs. In fact when research in shale boosts such as the 70s during the energy crisis and
recent years during our recession, it's generally not a good sign.
Christian  - ......   |81.25.45.xxx |2011-07-14 05:17:55
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Last Updated on Sunday, 02 May 2010 18:28