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Peak Oil Debunked

Daniel Yergin’s new book is a valuable guide to how energy drives the world’s economy.

The timing of Daniel Yergin’s new book, The Quest: Energy, Security, and the Remaking of the Modern World, could hardly be better. With oil prices remaining high, with new sources of natural gas and oil being exploited around the world, and with demand for energy expected to reach new highs over the next several decades, Yergin sets out to explain the history, economics, and politics behind the world’s continuing love affair with fossil fuels and show, too, just how hard it will be to end our dependence, given the earth’s surprising, and seemingly endless, ability to enable it.

If you’re a believer in “peak oil”—the idea that the world is on the verge of running out of oil—you will probably want to burn this book. But if you want to truly understand today’s energy problems and opportunities, there are few better places to start than with Daniel Yergin.

His classic The Prize: The Epic Quest for Oil, Money & Power, which won a Pulitzer in 1992, is a history of much of the late 19th and the 20th century, beginning with the wildly ambitious men who first drilled for oil in northwestern Pennsylvania and ending with Iraq’s 1990 invasion of Kuwait. It reads like a historical novel with oil as the main character. The Quest is a very different book. Because it covers energy in general, its scope is far broader and more diffuse. It doesn’t have the narrative drama of The Prize or the same logical narrative and tightly constructed storytelling.  But it does draw an outline that allows readers to understand the complex relationships between the pieces of the energy puzzle, from oil to electricity to renewables to climate change.

Make no mistake, Yergin is an oil man. Indeed, he is sometimes accused of being too closely aligned with the petroleum industry (he is chairman of IHS Cambridge Energy Research Associates, a consulting group that works with energy companies).  His true loyalty, however, seems to be to an enduring belief that technology, politics, and economics drive our opportunities and choices in energy.

It is that belief that leads him to clash so resoundingly with advocates for the idea of peak oil. Writes Yergin: “The peak oil theory embodies an ‘end of technology/end of opportunity’ perspective, that there will be no more significant innovation in oil production, nor significant new resources that can be developed.”  Such a perspective is to Yergin almost blasphemous, and he gleefully recounts how the world has worried that it was about to run out of oil at least five times, dating back to the 1880s when geologists fretted that the “amazing exhibition of oil” found in Pennsylvania was only temporary. 

Yet each time new sources were found. This is happening once again, says Yergin. With oil prices driven up in the early 2000s by increasing demand, particularly from an energy-hungry China, producers once against spent heavily to find new sources of fossil fuels. Enabled by increasingly sophisticated drilling and digital technologies, they have been remarkably successful around the world at tapping into vast quantities of “unconventional” gas and oil—resources that are economically viable to extract because of technological advances. The examples are numerous: deep undersea oil reserves off the coast of Brazil where one field alone holds 5 billion to 8 billion barrels of recoverable oil; oil sands in Alberta that contain an estimated 175 billion barrels of recoverable oil and an estimated 1.8 trillion barrels of oil in the ground, waiting for future technology to get them out; another 20 billion barrels of “tight oil” that is likely held in deposits scattered about the United States. And that’s just counting the Americas.

Yergin spends much of the second half of The Quest on climate change and efforts to develop and commercialize cleaner sources of energy. His descriptions of the seemingly endless international wrangling and politics over climate change are particularly fascinating. Included is a recounting of George H.W. Bush’s 1992 trip to the Earth Summit in Rio de Janeiro, where he was greeted as “Darth Vader,” and of Vice President Al Gore’s 16 hours at the Kyoto conference in 1997, where he helped break a deadlock on setting binding targets to reduce emissions—an agreement that the Clinton administration then scuppered.

But it is Yergin’s recounting of President Obama’s trip to the Copenhagen conference, in 2009, that perhaps best illustrates the sausage-making aspect of international energy policy. Flying into Copenhagen for only a day and hoping to get back home before a predicted blizzard hit Washington, Obama sat through a confusing meeting before deciding he needed to speak with the Chinese premier, Wen Jiabao. The president was at first told the Chinese leader had left the conference and then that he was “somewhere in the conference center.”  After tracking the premier down in a conference room and brushing past a panicked security guard, Obama “burst into a room” where the Chinese leader was meeting with the presidents of Brazil and South Africa and the prime minister of India. After much “give-and-take,” the group, now including Obama, drafted an agreement. Unsurprisingly, the agreement was received by the larger conference group “with no great enthusiasm and indeed with some irritation on the part of many of the delegations.”

The Quest is not without flaws. The concluding sections on recent advances in the development of renewable energy, in particular, cover ground that will be very familiar to many readers. And much of it lacks the insider’s storytelling at which Yergin excels. Yet even here, Yergin has valuable insight. Knowing the unpredictable history of energy, Yergin realizes that it is far too early to declare “winners” among the alternatives to oil. And, he argues, it will likely be 2030 at the earliest before alternatives begin to play a significant role. “By 2030, overall global energy consumption may be 35 or 40 percent greater than it is today. The mix will probably not be too different from what it is today…. It is really after 2030 that the energy system could start to look quite different as the cumulative effect of innovation and technological advance makes its full impact felt.”

Such declarations will be controversial. Critics—especially those who will argue we can’t wait that long to change our energy choices—will certainly challenge the conclusion. But at least Yergin has the lessons of economics and history on his side.

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