About That New Energy Revolution

It’s not in the headlines or on the evening news, but there’s a big story that some people are discussing. And it’s going to get bigger and matter way more than the heat waves and extreme weather that everyone in climate circles is buzzing about this summer.

To catch up on this story, you should read the series of posts in July by Walter Russell Mead, which he has titled, The Energy Revolution. From part one:

A world energy revolution is underway and it will be shaping the realities of the 21st century when the Crash of 2008 and the Great Stagnation that followed only interest historians.  A new age of abundance for fossil fuels is upon us.  And the center of gravity of the global energy picture is shifting from the Middle East to”¦ North America.

In part two, Mead writes that, “we are now entering a time when energy abundance will be an argument for continued American dynamism.” The bright future for America he foresees is based on this:

By some estimates, the United States has more oil than Saudi Arabia, Iraq and Iran combined, and Canada may have even more than the United States. A GAO report released last May (pdf link can be found here) estimates that up to the equivalent of 3 trillion barrels of shale oil may lie in just one of the major potential US energy production sites. If half of this oil is recoverable, US reserves in this one deposit are roughly equal to the known reserves of the rest of the world combined.

Mead’s posts (he is now up to part 3) follow a report published in June by Leonard Maugeri titled, “Oil: The Next Revolution.” Skeptics of Maugeri’s bullish analysis might point out that he is a former oil industry executive. He is currently a Research Fellow of the Geopolitics of Energy Project at the Harvard Kennedy School’s Belfer Center for Science and International Affairs. The Project, incidentally, is funded by BP.

Be that as it is, Maugeri’s analysis has convinced George Monbiot that the world is not about to run out of oil anytime soon. His recent Guardian column on the report is headlined: “We were wrong on peak oil. There’s enough to fry us all.”

A more guarded outlook of the projected “energy abundance” (including the implications for climate change) is offered by energy policy expert Michael Levi in the current issue of Foreign Policy. For example, Levi writes:

As a mere matter of scale, projections that the United States will reclaim the title of world’s largest oil producer are entirely plausible, though hardly guaranteed.

Last week, Levi was one of the assembled experts for a panel at the New America Foundation called, “Scrutinizing a Potential New Golden Age of Oil, and What it Could Mean for the Next President.”

At his Foreign Policy blog, journalist Steve LeVine (who convened the New America panel) writes:

A growing number of key energy analysts say that technological advances and high oil prices are leading to a revolution in global oil. Rather than petroleum scarcity, we are seeing into a flood of new oil supplies from some pretty surprising places, led by the United States and Canada, these analysts say.

LeVine’s post is titled, “The Era of Oil Abundance.”

You getting the picture?

Now this is not exactly news to those who have been following stories like this (in the NYT) and this (in the WSJ). And there’s the new gas age already well underway, of which The Economist takes stock of in its current issue. Combined, these developments have me recalling this Salon piece from Michael Lind last year, which begins:

Are we living at the beginning of the Age of Fossil Fuels, not its final decades? The very thought goes against everything that politicians and the educated public have been taught to believe in the past generation. According to the conventional wisdom, the U.S. and other industrial nations must undertake a rapid and expensive transition from fossil fuels to renewable energy for three reasons: The imminent depletion of fossil fuels, national security and the danger of global warming.

What if the conventional wisdom about the energy future of America and the world has been completely wrong?

If this proves to be the case, then will it really be–to borrow from James Hansen–game over for the climate? Faced with such a prospect, might we soon be forced to take geoengineering seriously? Oliver Morton of The Economist is at work developing this argument. I think he’s on to something here:

At a recent meeting Rob Socolow suggested that we should divide the world into people who do or don’t think the risks of climate change are an urgent matter and people who do or don’t think decarbonisation is difficult (pdf). A lot of the green movement is in the do/don’t quadrant ““ do take climate change seriously, don’t think getting rid of fossil fuels is all that difficult (“just needs political will,” dontcha know). People opposed to current or intensified action on climate (sceptics, lukewarmers, status-quo-ers, whatever) are in the don’t/do quadrant ““ don’t see climate change as a serious risk, do think decarbonisation is difficult, or at least costly.

Like Rob, I am in the do/do quadrant. I do think climate change poses serious risks, and I do think decarbonisation is difficult. That is why I think it is worth taking the possibility of geoengineering seriously enough to see how well it might be done.

If a new era of oil abundance is truly upon us, we may have no choice.

28 Responses to “About That New Energy Revolution”

  1. Dean says:

    The potential for non-traditional (converted) oil is not new, but the fracking experience is making it look much more realistic. The main question is what will the cost of that conversion be. While the peak oil theory was based on peak production, the impact of it was based on the rising costs that would result. If converted oil remains fairly expensive, it still could have that impact. The other cost is AGW from it. I’ve tended to believe that the game was over for some time, so this is not news to me, and that will eventually add to the overall cost of this emission-heavy energy. What ever the debates about how bad AGW will be that we are having now, if you’re young enough to be around for a while, you will live to find out. But I don’t see a plausible political scenario where humanity turns down this energy specifically because of AGW. Geoengineering? Reflectors in the sky or contraptions to soak up billions of tons of CO2 from the atmosphere seem truly fanciful.

  2. MarkB says:

    “If a new era of oil abundance is truly upon us, we may have no choice.”That assumes that you’re right on that apocalyptic climate change thingey. If the positive feedback value is lower than claimed, like many of us lukewarmers believe, then we’ll be able to have that cake and eat it too. I”ll take the ‘world is not about to end’ bet any time – it’s on an amazing winning streak, and I see no reason to bet against it now.

  3. Marlowe Johnson says:

    It’s Michael not Steven Levi Keith ;).

    Those interested in a more technical rebuttal to Maugeri’s bullish forecast might enjoy a look here. For those that are too lazy to follow the link here are the money quotes:

    Maugeri’s projections are very sensitive to the assumed rate of decline of production from currently producing fields – and his assumptions appear inconsistent with the available evidence…The bottom line is that Maugeri has made some very optimistic assumptions about global average decline rates, failed to provide adequate justification for them and misrepresented the estimates made by others.Adopting more realistic estimates would significantly change his results.

    A couple other points. 

    First, Hubbert’s Curve is just that, a curve; not a cliff. On that basis, the fact that we are still near $100 barrel even with anemic global economic growth should tell you something about the constraints on the system. Another way of thinking about ‘peak’ is in terms of energy return on energy invested (EROI). On that basis, global oil production ‘peaked’ a long time ago…

    Second, not all types of energy are fungible in a practical sense. Oil is far more important to the transportation sector, and its most relevant substitutes are biofuels and electricity. Natural gas is crucial to electric power generation, heating, and heavy industry and the most relevant substitutes are coal, nuclear, and in some cases renewables.So, all in all it’s a mixed bag for climate mitigation hopefuls. While high oil prices make the economics of hybrids and EVs much more attractive, the low price of natural is making the economics of renewables in the power sector much more unattractive (even if it is also accelerating the closure of some older coal-fired plants) .

  4. Marlowe Johnson says:

    Readers interested more on EROI and its implications for economic growth might want to check out the article here.

  5. Dean says:

    @2You lukewarmers who think sensitivity is low remind of of those who refuse to believe that birds evolved from dinosaurs. There is that odd ankle bone that doesn’t look like it came from a dinosaur . . . – damn the overwhelming preponderance. In the mean time, I am curious about this winning streak. Because the world hasn’t ended yet? Or because no civilization has ever declined? Oh yeah, the Romans, the Maya, the Khmer, and on and on (oddly, many during that wonderful MWP). The point isn’t that climate did them all in, but that human civilizations do seem to have a way of collapsing and disappearing. It’s happened many, many times. As a species we adapt quite well. Our societies are another matter.

  6. Tom Fuller says:

    There are more fossil fuels available than previously thought.

    There will be more demand for them than previously estimated.

    We’re still going to need all the tools in the toolkit.

    This planet’s inhabitants burnt 3,700 quads in the decade between 1990 and 2000. That’ll be a good year after 2050. 

    Bring on the nukes…

  7. Jarmo says:

    It is obvious that unconventional oil is going to be a bigger player than previously thought. Just how big, we’ll see soon. 

    However, the biggest question mark is coal. If the developing countries continue to increase their use of coal, whatever happens with oil is a sideshow. China will have double the enissions of the US by 2015.

  8. Tom Scharf says:

    Quoting WRM now?  I have shamelessly lifted his labeling of the environmental movement policy prescriptions as the “great green unicorn hunt” myself several times.  An apt description of some players who keep chasing economically punitive global treaties and so forth.

    I believe his next installment deals with how this will affect the environmental movement, so that should be an interesting (but predictable) read.

    One should note that OPEC’s typical response to these situations is to drop the price of their more easily extractable oil below the cost of what we can extract ours for.  This kills off the competitive threat.

    But in the end the end, this works to our advantage.  Lower prices now, and when gulf oil finally runs out, it will be us and our allies with the bulk of oil that’s left.  A win for the home team in the long run.  

    As for geoengineering, the law of massive unintended consequences comes into play, and get less thought than it should.  But on the good news front I did hear we found an earth like planet only 33 light years away recently…

  9. Tom Scharf says:

    @5  Maybe if you looked at estimates of climate sensitivity given observations, you might understand better.  You know, actual data.

    You choose to believe modelling projection, predictions, simulations.  So be it.  Many do not for very legitimate reasons.  Just remember that simulations are not scientific evidence, and observations trump simulations in honest science.

    In fact, if you cruise over to Climate Etc., the latest post is on how climate sensitivity estimates have actually become even more uncertain since AR4, not less.  Not confidence building.


  10. John F. Pittman says:

    I would not be either pessimistic or optimistic about shale oil. It really is a function of technology advances and ROI. But the recent glut in facked NG was due to EPA and NE US states declaring, with little justification, that fracking needed to be regulated. Those who had the loans and permits started drilling as fast as they could rather than lose loans or have the regulations chnage. Now that the EPA has withdrawn, and the initial glut is over, prices are going up. However, don’t expect that they will go up to the heady price of 2009. The banks and investors will need to paid, so expect NG to stay somewhat below the frac cost of about $5/DecaTherm. Oil will likely be in the same boat. A recent study indicated that reserves in the middle east and South America are somewhat less, but the actual export has been lowballed. The expected result is that oil prices will continue upward, and only small innovations are needed to make shale oil profitable. How much will be useable/profitable will depend on the energy mix and demand. With China’s and India’s economies growing, expect that sooner or later the large NG/oil shale reserves in NA, China and bordering areas of the Arab pennisula will become profitable and will be brought to market. Some would be profitable now, just that the politics of the regions, religous and regulatory, have made them artificially more expensive.

  11. Keith Kloor says:

    Maybe I should have titled my post, “How Times Change.” Somehow I missed this good write-up of the New America event.

  12. harrywr2 says:

    The key quote

    A growing number of key energy analysts say that technological advances
    and high oil prices are leading to a revolution in global oil.

    The idea of geologic peak of any mineral resource had been proven wrong more times then I can count. There is no such thing as a geologic peak of any mineral resource. Claiming there is and then claiming that since there isn’t a peak that it’s a problem is a straw man argument. The ‘economic peak’ always occurs well before the geologic peak and always will occur well before the geologic peak.Almost no one cares how their car is powered or how their home is heated and cooled. All they care about is that it is cheap and convenient.Transportation fuel already commands a hefty price premium. Sooner or later someone will figure out that transportation fuel is a $10 billion/day market and find an alternative to oil.

  13. Marlowe Johnson says:

    Harry, I don’t think anyone is actually suggesting that ‘peak’ oil refers to a geologic peak. It has always be understood in terms of geological reserves that are economically recoverable. What is economically recoverable is intimately tied to technological innovation and the cost of relevant substitutes.

    I think your point, which is also made by Levi in the post that Keith links to above, is well taken though; namely, that the evolution of the energy technology landscape is highly volatile and very difficult to predict. This makes rational decision making on the climate front all the more difficult, especially when it comes to producing credible emission forecasts out beyond 5-10 years.

  14. jeffn says:

    The Walter Russel Mead comment on the collapse of Europe’s carbon trading market was an interesting preview of the next installment. He notes that, contrary to years of green posing in Europe, fracking has reduced emissions in the US and reduced cost…

    “Follow green advice and build a complicated and expensive system that constantly threatens to fall apart and doesn’t reduce emissions; ignore the greens and have falling energy costs and declining carbon emissions at the same time.
    Interesting choice. Interesting movement.”

  15. MarkB says:

    @5 – “@2You lukewarmers who think sensitivity is low remind of of those who refuse to believe that birds evolved from dinosaurs”That’s what we call a ‘you’ problem. I majored in biology and went to a major research university to study evolution in graduate school. That was where they taught me the practice of rigorous thought, and constant questioning. The currently popular estimate of sensitivity is not a measured value. It is a guess, pure and simple. The contribution of water vapor to positive feedback is being examined in the literature right now – it is not settled science.

  16. David Palmer says:

    I sincerely hope not too much effort will be expended on geoengineering. Beware the Big Fix, the subtitle of Claire Parkinson’s “Coming Climate Crisis?”.

  17. harrywr2 says:

    #13Harry, I don’t think anyone is actually suggesting that “˜peak’ oil refers to a geologic peak

    I’ll respectfully disagree. The refining costs of Canadian Oil Sands has been known for decades. The costs of converting coal to transportation fuel has been known since WWII. Shale is in a similar boat.

    On the flip side GM, Ford et al also know the costs of various ‘mileage improvement’ technologies and at what price point the ‘average consumer’ will pay for those technologies for decades.There is nothing new about regenerative braking technology…(the basis of hybrids)…it’s been around since the 1970’s. What is new is that the price of transportation fuel is high enough for the average consumer to justify the additional costs as ‘hybrid’ becomes standardized. (Honda sells hybrid motor scooters in Asia…hybrid is most effective in urban use vehicles).

    Even more exotic technology like using the waste heat from the catalytic converter to produce hydrogen that can be used as a flame speed optimizer has been sitting on the shelf for decades.(Internal combustion engines have an ‘optimum’ RPM for a given flame speed…standard pump gasoline has a fixed flame speed…spiking the fuel with a small, variable amount of hydrogen to optimize the flame speed improves MPG). You can buy a kit mail order for $50 but to make it work properly you need some pretty sophisiticated  electronics.

    If you want to cut 1,000 pounds of weight out of an automobile without sacrificing size,comfort,convenience or safety then the price of carbon fibers needs to be south of $8/lb and gasoline needs to be north of $5/gallon. You can cut maybe 200-300 pounds out of the weight of an automobile substituting steel with aluminum with gasoline at $4/gallon. Weight is a big MPG determinant in predominately urban driving, the European’s and Asian’s will adopt carbon fiber cars before American’s.

    It should not be a ‘surprise’ to anyone that as various price boundaries are exceeded that markets transition. If central Appalachian steam coal was still trading at $40/ton no one would have invested in ‘fracking’.

    If oil was still below $60/barrel no one would be investing in shale development or oil sands refining and automakers wouldn’t be fitting cars with ‘MPG’ extenders

  18. Dean says:

    @15 — Not sure what you mean by a measured value – since humans haven’t caused AGW before, we can’t exactly have measured it. It’s fine if you want to disagree with the current best estimate range. It’s always good to have a few contrarians. But public policy needs to be based on the best estimate. With over a century of rigorous study of the issue of sensitivity, the best estimate/guess – whatever you want to call it – is what should be the basis of public policy. If most people who studied airplane safety thought a plane was unsafe but a few thought that it was, should it be approved for use?

  19. huxley says:

    KK: In case you hadn’t noticed, you and your blog got a big thumb’s up from Steven Hayward, a conservative writer interested in environmental issues, on the well-known conservative blog, Powerline.

    I’ve been remiss in bringing to the attention of Power Line readers an equally worthy blog of another environmental writer who departs frequently and pointedly from the party line: journalist Keith Kloor, whose Collide-A-Scape blog is definitely worth bookmarking and following on a regular basis.

    Hayward is a cheerful climate skeptic, no doubt a “denier” by some standards, but always a clear writer with a good eye.

  20. Tom Scharf says:

    Off topic…

    Had a hardy laugh at this term:

    “But researchers in the burgeoning field of climate psychology…”


  21. James Evans says:

    “I am in the do/do quadrant…”

  22. Fred says:

    From a news story: “On March 7, 2012, Obama declared: “We’ve got 2 percent of the world oil reserves; we use 20 percent. What that means is, as much as we’re doing to increase oil production, we’re not going to be able to just drill our way out of the problem of high gas prices.”

    KK: Are you saying not to believe the president and his energy advisors on this? And how about all those environmentalists who argued in support of “green energy” projects on the basis of dwindling supplies of fossil fuels. If they were so far off the mark on this can they be believed on anything?

  23. Keith Kloor says:

    Fred (22) “…can they be believed on anything?”

    If you want to play that game, there’s a lot of politicians and parties and institutions that we shouldn’t believe.

    People in favor of green energy projects have used more than “dwindling supplies of fossil fuels” as a reason. You obviously know that since climate change is a recurring topic at this blog.

    huxley (19)

    Yes, I saw that Powerline post from Steve Hayward. As I said to my wife, my fan base has expanded, but as I also joked on twitter, Steve’s praise won’t help me with the Grist crowd.

    I should also say that I didn’t coin the “climate porn” term. I know I heard/picked it up from somewhere, probably here. 

  24. Fred says:

    KK (23): Your story documenting ample U.S. oil supplies suggests assigning greater credibility to those politicians who espoused the “drill, baby, drill” mantra on this issue.
    Yes, green energy adherents have used more than “dwindling supplies of fossil fuels” as a reason for sucking up government subsidies and to justify their business plans. Given the spate of bankruptcies and squandered government monies in this sector they were just as fallacious as the “dwindling supplies” argument.

  25. Marlowe Johnson says:


    if easily recoverable supplies aren’t dwindling then why is oil selling for close to $100 barrel when the global economy is entering another recession? Fallacious indeed.

  26. Fred says:

    Marlowe @ 25: If you would read Keith’s article above, you would understand that economically recoverable supplies of oil are on an upward slope due to technological advances in the production process. Of course, shortsighted governmental policies like the recent limitations on offshore drilling do not help. And then there is the Iranian crisis.

    To think that the current price of oil is somehow an argument against the long-term technological trends that will dramatically increase the supply of oil is stupid.

  27. Jarmo says:

    China wants a share of Canadian oil:


    The deal would give Cnooc greater access to hot offshore areas such as the Gulf of Mexico and West Africa, and would increase its presence in potentially lucrative but capital-intensive projects such as shale gas and Canada’s oil sands.

    Cnooc and Nexen are already close. Cnooc last year agreed to acquire announced the acquisition for $2.1 billion of Canadian oil sands producer OPTI Canada for $2.1 billion, making it a partner with Nexen in the Long Lake oil-sands project in Alberta, Canada. Cnooc deepened its relationship with Nexen in December 2011, when the two agreed to a joint-venture deal which gave Cnooc stakes in six deepwater Gulf of Mexico wells operated by Nexen.

  28. jim says:

    I think Marlowe’s point re: prod decline rates in new fields is sound.  Tight oil fields decline much faster than trad fields.OTOH, current oil prices are supported mostly by factors not related to scarcity: a) geopolitical tension; b) infrastructure constraints [tar sands oil is landlocked]; c) overly optimistic proj of long run developing country (china, india, brazil) growth rates; and d) general fear of scarcity causing excessive market speculation. 

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