One of my favorite news sites The Oil Drum will stop posting new material at the end of the month. It was a great site for all topics energy related for over 10 years. During the BP Gulf Oil Spill and the Fukushima meltdown crisis (a crisis that is still ongoing by the way), the website was easily the best source of real intelligent news of what was really going on instead of the hyped up spin fed to us by mainstream media.
I believe the decline of the website is that the topic of “Peak Oil” isn’t very interesting anymore, but probably not for the reasons you think. Despite the daily articles that “Peak Oil” is no longer a thing to worry about, the real truth that for all intents and purposes, “Peak Oil” happened in 2005.
Now I know what a lot of people will say about that statement: Isn’t the definition of peak oil when world oil production peaks and then starts to decline? If so then we can’t have reached peak oil yet because oil production in 2013 is higher than it has ever been.
2005 was the peak of conventional oil, the peak of cheap and easy to produce oil. The decline of conventional oil sources worldwide that started in 2005 led to a quadrupling of oil prices in 2006, as predicted in the peak oil model, a level that it is still at today. Pre 2005 oil normally sold at around $20-25 a barrel. Today it is around $90-100 a barrel.
One of the principle themes of The Oil Drum is that energy is far more important to the economy than money supply. Economists scoff at that notion, but the energy track record is too good: Since 1970, every recession in America except the dot com bust of 2000 was preceded by an energy crisis. For example, oil prices spiked to $145 a gallon, just before the crash of 2008. The crash of 2008 is often blamed on a real estate crisis, which might have been the fuel, but the oil price spike was probably the match.
What this all comes down to, in very simple language is this: The quadrupling of oil prices in 2006 due to the peaking of conventional oil sources in 2005 has effectively killed the ability for developed countries (North America and Europe mostly) to grow economically because the capital that would have been used to grow the economy is now tied up in energy production. “Peak Oil” has already done its damage: It has effectively killed economic growth, and until we find and/or develop new energy sources, we will never see real economic growth again.
Now that oil prices are stable at near $100, it has become economically viable to extract unconventional oil from sources that were too expensive, like deep water drilling, shale oil, and tar sands. Unconventional oil has replaced conventional sources enough that over all oil production is slightly higher than 2005. Oil production has basically held steady at 2005 levels (plus or minus 5%) now for 8 years. Oil prices have held fairly steady for at least 3 years.
It is all of this steadiness that has led to less interest in energy issues with the general public. Hence the decline of The Oil Drum. One day the steadiness will end. Hopefully, there will be another well informed website to tell us what is really going on.
