Thursday, February 14, 2008

Hey! Wanna Make a Bet on Peak Oil?

So if you're arguing with someone, and you're sooo sure that you're right and they're wrong, do you ever bet them on it? You might actually be wrong, so you're not betting your entire savings, but maybe 5, 10, or 20 bucks right?

My point?

Well, that's almost exactly what some members of the Association for the Study of Peak Oil & Gas (ASPO) did on Feb. 6*. These individuals, obviously proponents of peak oil theory, told Cambridge Energy Research Associates, Inc. (CERA) that if the CERA prediction of a 21 million barrels per day (bpd) increase in oil productive capacity** is true, these peak oil gamblers will send them $100,000. CERA has yet to respond to the bet, but if the ASPO representatives/friends are wrong, the $100,000 will go to an energy-focused non-profit.

Current worldwide productive capacity sits at about 91 million bpd, so CERA is talking about a 23% increase over 10 years in lieu of their own data presenting an average reservoir decline rate of 4.5% per year. So that means we're going to bring 55 million new bpd online in 10 years? Maybe if the ice melts and we find a black ocean underneath.

Now I'm aware that the peak oil argument can go back and forth, and the ASPO gamblers are not betting on peak oil to occur by 2017; the sole issue is the 21 million bpd increase. Both companies count among their ranks experienced professionals, so their technical arguments are far sounder than any I could presume to make in this post.

Regardless of the realities of this complicated issue, I find it fantastic that the debate has prompted a gamble of company bragging rights. In ASPO's newsletter, co-founder/co-director Steve Andrews asserts, "... the idea here isn’t to flex muscles and pound chests like a couple of twenty-somethings on steroids." I don't know; it sure sounds like it to me.

*ASPO co-founder Steve Andrews was clear to state that the bet is supported, but not made by ASPO, and that non-members are included amongst those contributing to the wager.
**"Oil productive capacity" in CERA-speak is the oil we could get out of the ground if we wanted (i.e. if politics, economics, etc. allowed). So actual production would be less, but the amount of increase is expected to be roughly the same.

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