Editorial Comment

	Vol. 225 No. 3
PERRY A. FISCHER, EDITOR

Doom! The end is near. “Doom” has become a buzz word around the office lately. It's from one of those TV ads that are played ad nauseam, only we've been applying it as a running gag ever since a few of us attended a speech where the subject was, paraphrased and parodied, “The world will soon run out of oil, followed by anarchy and chaos; then it will blow up!” 

Like the world itself, which has been ending ever since it began, world oil production will fall off permanently someday. The soothsayers of both events are perennial and have a colorful history, and they always say the end is nigh. Of course, the end will come sometime, say, within five billion years for the planet and within a couple of centuries for oil. Narrowing those times to a few years intuitively seems impossible, although predicting them can be fun and lucrative (selling books). For now, let's avoid religious prophesy and stick to the slightly less politically risky topic of: Doom: The end of oil. 

The history of oil doom began soon after oil was discovered in Pennsylvania. In 1874, the state geologist of Pennsylvania – then the largest oil producer – estimated that only enough oil remained to keep the nation's kerosene lamps burning for four more years. 

Seven such oil shortage scares occurred before 1950. As a writer in the Oil Trade Journal noted in 1918, “In the 25 years that I have been following the ins and outs of the oil business, there has always arisen the bugaboo of an approaching oil famine, with plenty of individuals ready to prove that the supply of oil would be exhausted, usually within a few years.” 

The head of the US Geological Survey said in 1919 that the end would come within nine years. In fact, the 1920s saw a global oil glut. In 1989, one expert foretold that 1989 would be the peak year in production and that oil prices would hit $50 a barrel by 1994. 

In October 1995, World Oil published an article by respected geologist Buzz Ivanhoe, who said that world oil production would peak in 1996 or 2000. These doomsayers are just a brief sampling. There are many more, and they continue to this day, simply pushing the date farther into the future. 

At the risk of thoroughly ticking off some of these folks, I'll reveal some tricks of the trade. There are three guiding principles for successful soothsaying: don't be too specific in time or details, and make many predictions – one of them is likely to come true, and the others will be forgotten. As examples, let's examine Jean Dixon, Nostradamus and M. King Hubbert. Admittedly, this comparison is a bit strained, like TV evangelist Rev. Eugene Scott's infamous sermon, “Let us compare and contrast Spiderman and Jesus.” And I should mention that I have nothing personal against these folks, nor their followers, especially the Hubbertites. They just happen to be – completely wrong. 

Jeanne Dixon was an astrologer and a pretty prophesier who wrote books, co-starred in a few B-grade movies, and made many wonderfully vague predictions, mostly in pulp newspapers. She is best known for predicting the Kennedy assassination, even though she did not. In 1956, she had said, “As for the 1960 election, I think it will be dominated by labor and won by a Democrat. But the president will be assassinated or die in office, though not necessarily in his first term.” The president's name is not mentioned, and the rest is delightfully specific, yet vague. Unfortunately, she later admitted that she “saw” Nixon winning the presidency. Also, based on 20th century experience, the odds were 3 to 7 that a US president would die in office anyway. Finally, she made hundreds of predictions, and this one was the most accurate. Beginning to see how the game is played? 

Nostradamus was the master of vagueness and lack of timing, and the most prolific, having written 942 prophetic poems, which is why his legacy will undoubtedly outlast all of us. Consider this one: 

The rose upon the middle of the great world,
For new deeds public shedding of blood:
To speak the truth, one will have a closed mouth,
Then at the time of need the awaited one
will come late.

Kind of sticks in your craw, eh? You could spend days dwelling on the meaning of this – if you're an idiot. 

By all accounts, King Hubbert was a good geophysicist, having worked as a research scientist for USGS and Shell. He was persuasive and made many forecasts, so much so that pundits routinely vary his doomtime predictions. Let's go with 1965 – 1970 as the range of years that he predicted US oil production would peak, in part because that makes him correct – US oil production did indeed peak in 1970. What's unremarkable is that this was only 11 to 16 years from when he made the call in 1956. He then went on to foretell that world oil production would peak in 1995, 1990 – 2000, 2000, or some year soon thereafter. 

Hubbert used a simple bell-shaped curve for his predictions and assumed that it was symmetric. The idea that a small, simple reservoir ramps up production to some peak, and then begins to decline is obviously correct; but it cannot be extended to the entire planet in a predictable way. You have to assume how much the total world endowment is, what future recovery factors are, and that the earth is maturely explored. Even US production, which has been nearly flat in recent years, is now 1.75 times higher than his predictive curve indicated. 

In 1920, USGS said the world's total endowment of oil was 60 billion barrels. By 1950, that figure had increased to 600 billion. It now stands at 2,000 billion barrels. Just as important, whatever the amount of oil that can be economically recovered, much more can be brought to surface if the price doubles. Overall, the cost of bringing oil to market has declined from an average $21 a barrel in 1979 – 1980 to less than $6 in 1997 – 1999. Over the same period, recovery rates have increased to 35% from 22%. 

There are many reasons why the world should begin the switch away from fossil fuels toward alternatives. The certainty of impending shortage is not one of them. I prefer what Hubbert originally said about fossil fuels in general in his 1949 Science paper, “How soon the decline may set in, it is not possible to say.” 

Unfortunately, we could delay the switch much too long and get caught in a real bind with very high oil prices, which would dramatically increase the transfer of money from oil importing nations to OPEC and other exporters, and all the geopolitical nonsense that goes with that. The risks are not technical or geological, but rather, political.