Is Peak Oil real?

There is a lot of chatter in the news from the neo-cornucopians about how "wait, resource scarcity was merely a false alarm, there's more than enough resources to keep growth going for years - like lots of new oil!" When you read the fine print, it turns out that the "new oil reserves" make very little mention of how much oil is going to flow each day, at what cost, and to replace what level of lost capacity in critical places such as Mexico, Saudi Arabia, Venezuela and the U.S. But for a truly powerful takedown of this meme, check out my friend Chris Nelder in the Financial Times:

Maugeri forecasts new global oil production capacity of 49 million barrels per day (mbpd) by 2020, a number that is “unrestricted” by real-world circumstances, and “unadjusted for risk.” This constitutes a whopping 53 percent increase over the current claimed capacity of 93 mbpd in just eight years. While impressive, this headline number obscures some important details. First, capacity is not production. The world has never produced 93 mbpd. Global oil production was 88.3 mbpd in 2011, according to the International Energy Agency (IEA), which uses a very liberal definition of “oil” that includes biofuels, non-associated natural gas liquids, and other liquids. Under a more restrictive definition used by the U.S. Energy Information Administration (EIA), which counts crude oil plus lease condensate (natural gas liquids that are produced and naturally associated with the crude), and liquids extracted from natural gas production, world oil production was 87 mbpd in 2011. Counting only crude oil and lease condensate, world oil production was 74 mbpd in 2011, a level it has maintained since the end of 2004 despite a tripling of oil prices since 2003.

Yes, Mr. Nelder does not meet happy talk with sad talk, he meets happy talk with crushing analysis.

Finally, Maugeri adjusts for the depletion of currently producing fields and reserve growth, to come up with a final projected increase of 17.6 mbpd and a total world production capacity of 110.6 mbpd by 2020. This is where the really squishy assumptions come into play, which are core to his forecast.

OWWWWW! Using the words "squishy assumptions" and "forecast" in the same sentence makes my futurist gland hurt. That's serious smack talkin', where I come from.

We must conclude that the key assumptions about reserve growth and its effect on decline rates in Maugeri’s report are muddled, speculative and unverifiable. And sprinkling those assertions with repeated declamations about how peak oil is a non-issue, insisting repeatedly that the only real constraints on his scenario have to do with political decisions and geopolitical risks, suggests that his report is more about grinding a political axe on behalf of the oil industry than offering a serious or transparent analysis. Finally we must note that Maugeri is well known for his hostility to peak oil, as is BP, which funded his report. After taking real-world risks, costs, and restrictions into account, the case for peak oil—which is about production rates, not production capacity or reserves—seems far more realistic.

AAAAAAARGH! In ultimate fighting, they let the other guy tap out! Point - Nelderini.