'Peak' a 'boo'

A worker walks near the Marcellus Shale natural gas drilling work site in rural northeast Pennsylvania. By 2020, shale sources are predicted to make up about a third of total U.S. oil and gas production.

  • Title:

    Abundant Energy
  • Format:

    Paperback
  • Paperback Price:

    9.95
  • Paperback ISBN:

    978-0-8447-7204-2
  • 120 Paperback pages
  • Buy the Book

Article Highlights

  • Western energy giants are increasingly hunting for supplies in rich, developed countries

    Tweet This

  • Driving the change is the boom in unconventionals—shale gas and oil sands are being exploited on an unprecedented scale

    Tweet This

  • By 2020, shale sources will make up about 1/3 of total U.S. oil and gas production

    Tweet This

A favorite technique of people who want to promote option B over option A is to create fears of option A. Hence, for decades, opponents of fossil fuels have tried to promote alternatives by stirring up fears of depletion: they’ve been warning of peak everything since, well, Malthus. And, they have a nearly perfect track record in their predictions of peak oil, peak gas, peak resources, peak commodities...they’ve been wrong virtually every single time.

"Western energy giants are increasingly hunting for supplies in rich, developed countries—a shift that could have profound implications for the industry, global politics and consumers." --Kenneth P. GreenThe Wall Street Journal has an interesting article that shows the problems with predicting peaks: technology is not predictable, ingenuity is not predictable, markets are not predictable, global business trends are not predictable, and innovation is not predictable. From “Big Oil Heads Back Home:

Western energy giants are increasingly hunting for supplies in rich, developed countries—a shift that could have profound implications for the industry, global politics and consumers. Driving the change is the boom in unconventionals—the tough kinds of hydrocarbons like shale gas and oil sands that were once considered too difficult and expensive to extract and are now being exploited on an unprecedented scale from Australia to Canada.

The U.S. is at the forefront of the unconventionals revolution. By 2020, shale sources will make up about a third of total U.S. oil and gas production, according to PFC Energy, a Washington-based consultancy. By that time, the U.S. will be the top global oil and gas producer, surpassing Russia and Saudi Arabia, PFC predicts.

That could have far-reaching ramifications for the politics of oil, potentially shifting power away from the Organization of Petroleum Exporting Countries toward the Western hemisphere. With more crude being produced in North America, there's less likelihood of Middle Eastern politics causing supply shocks that drive up gasoline prices. Consumers could also benefit from lower electricity prices, as power plants switch from coal to cheap and plentiful natural gas.

And how big are these new “unconventional” deposits? Another article in the Journal points out that while we were worried a few years ago about running out of natural gas, and having to turn to imported liquid natural gas (LNG), now, the US could achieve energy independence: 
“the excess supply of cheap natural gas will lead to energy independence in the U.S., and stop the export of American petro-dollars.” said Mickey Cargile, managing partner at Cargile Investment Management.

Peak oil? Peak gas? More like Peak Prediction Fail.

Kenneth P. Green is a resident scholar at AEI.

Also Visit
AEIdeas Blog The American Magazine
About the Author

 

Kenneth P.
Green

What's new on AEI

How the Common Core went wrong
image Election countdown: The mood, measurements, and mechanics
image Rubio's defense speech: Fearless, informed, and refreshing
image Sorry Kerry, there is little role for Iran in fighting ISIS
AEI on Facebook
Events Calendar
  • 22
    MON
  • 23
    TUE
  • 24
    WED
  • 25
    THU
  • 26
    FRI
Monday, September 22, 2014 | 2:30 p.m. – 4:00 p.m.
Policy implications of the new US labor market normal

We welcome you to join us as a panel of economists discuss US wage and price prospects in the coming months and the implications for the Federal Reserve’s current unorthodox monetary policy.

Event Registration is Closed
No events scheduled this day.
No events scheduled today.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.