[Marxism] Mike Davis on Hubbert's Peak

Jon Flanders jonathan.flanders at verizon.net
Wed Jun 2 06:50:49 MDT 2004

>  The “crisis” theses just serves to anesthetize the 
> consumer while the international oil cartel extracts super-profits.
> I include below a recent article published in Science. I recommend it. 
> Also see "Bottomless Wells," LeMonde Diplomatique, June 2002. I cannot 
> reproduce the charts because we don't have attachments.
> —rod
>Science, Vol 304, Issue 5674, 1114-1115, 21 >May 2004
>Oil: Never Cry Wolf--Why the Petroleum Age Is >Far from over
>Leonardo Maugeri*

The Supply Side: Before It's Too Late
The author of 'The Coming Oil Crisis' defends his doomsday warnings, and
issues an urgent call to face the facts
By C. J. Campbell
Newsweek International

Feb. 16 issue - Leonardo Maugeri belongs to the camp of classical
"flat-earth" economists who believe that markets and technology will
always solve the problem of limited resources. But we agree on one
thing: we are not about to run out of oil. What I think we face is a
decline in supply, which is defined by the record of discovery.

It is hard to track exactly what kind of oil has been found around the
world, in what quantities, because of loose definitions and reporting
practices. The U.S. Securities and Exchange Commission demands strict
reporting for financial purposes: proved reserves means proved-so-far by
current wells or firm development plans, saying little about the full
size of the discovery. Naturally, the estimates are revised upward as
fields are drilled, giving a misleading impression of "reserve growth."
While not globally significant, Shell's recent cut in proven reserves
that are not yet in production suggests that companies no longer have a
cushion of underreported reserves. Evidently reserve growth is now being
countered by reserve erosion.

Many countries report unreliable information. Last year 68 countries
reported implausible reserves. Some have remained unchanged for years.
Maugeri is right that OPEC countries had reasons to increase reported
reserves in the late 1980s, but the key point is that the revisions have
to be backdated to the discovery of the fields in order to build a sound
discovery trend.

This corrected trend line shows that world discovery reached a peak in
the mid-1960s, and fell below consumption in 1981. We've been in deficit
ever since. In 2002 we found about 7 billion barrels but consumed 25
billion. The decline continues despite the use of new technology in a
worldwide search encouraged by tax write-offs for most of the cost of

It is also true that some areas have been closed to exploration. The
Caspian was one such region, but its contributions turn out to be too
small to have much impact on the world total. The Middle East has been
partially closed to foreign companies, but most of its oil lies in a few
giant fields found long ago. It will take a great deal of time and money
to offset the decline of these fields and find new, much smaller ones.

The 1932 peak of discovery in the mainland United States was followed by
a corresponding peak in production 40 years later. The pattern is now
repeating itself worldwide. Discovery in the North Sea peaked in the
1970s and has now passed the corresponding peak in production. Maugeri
questions the bell-shape depletion profile, failing to grasp that it
depicts the unconstrained U.S. environment. Elsewhere, the curve may be
distorted for many reasons, from OPEC quota restraints to delayed
opening of offshore areas, but the overall pattern is immutable, being
imposed by nature.

The global peak in discovery came 40 years ago, so the peak of
production is imminent, or already upon us. Rather than deny it, we
should try to face it. For example, we could agree to coordinated import
cuts to match the world depletion rate. That is annual production as a
percentage of what remains, now running at about 2 percent a year. It
would encourage energy saving and substitution by renewable energies. It
would also help avoid destabilizing price shocks and geopolitical
tensions, as more and more countries become dependent on Middle East
exports. Above all, it would force consumers to face the reality of
their predicament, as imposed by nature. If Maugeri does not trust
geologists, he might listen to his own former chief executive, Franco
Barnabe, who predicted that oil would peak next year.

Campbell is Chairman of the Association for the Study of Peak Oil and
Gas, a network of European scientists

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