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Is Peak Oil Mainly a Cost Issue?

According to the following press report, the president of Hess Oil told a CERA audience that the problem of peak oil is not that there is an insufficient amount of hydrocarbons in the ground.   Rather, the problem is that the costs of recovering them is growing so rapidly that sufficient funds are not being expended.

I wonder if this is not a difference without a distinction - or whatever that phrase should be.  You understand.  In other words, if it takes too much money to recover sufficient "oil" (which presumably includes oil sands, oil shale, etc) to meet demand, is that very different from "peak oil"?

Purists will say that the above question muddies the difference between peak crude oil and peak "total liquids" which includes substitutes for crude like the oil sands and biodiesel.  That is true.  Perhaps what the speaker meant to say is that peak oil has arrived, or will soon arrived, but we could mitigate it by producing enough substitutes for crude.  If only we were willing to spend the capital to do so.

Here is a link to the full article.

More on this topic (What's this?)
Gold climbs to $1250, Oil at $200 (Investment U, 5/26/09)
Three Big Reasons Oil Prices Will Rally Back Big Time (Money Morning, 5/23/09)
Quick Layman’s Primer to Peak Oil (The Enlightened American, 6/6/09)
Read more on Peak Oil, Oil Prices at Wikinvest

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This entry was posted on Wednesday, February 13th, 2008 at 7:47 pm and is filed under Peak Oil. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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3 responses so far ↓

  • 1 Mike Krebs // Feb 13, 2008 at 9:28 pm

    You’re right Jim, the argument that we have sufficient oil - just need to pay a fortune to get it - is simply a different way to say that less of it will be coming to market. As an investor, that’s all I need to know. Interesting too to see the reference by the author to the possible decline in Saudi oil output, something that doesn’t get enough discussion or analysis in my opinion. To me, Saudi field maturity is the ultimate wildcard in the future price of oil. If Saudi Arabia goes into a confirmed production decline the price of oil is going to Pluto.

  • 2 Bruce Randall Miller // Feb 14, 2008 at 3:34 am

    Well Jim,

    Albert Einstein changed the way some people think. The field of study called Quantum Mechanics developed because of his insights. Jim, the closer you try to pin an oil peak point in time down the further you are from you objective. Perhaps you should start talking about the “oil plateau” which may last for a score or so.

  • 3 Ned Murphy // Feb 14, 2008 at 8:18 pm

    It’s in the boundary region where resources become reserves. As the price for oil increases and it becomes economically more feasible to recover material that was previously untouchable the reserves will plateau or slowly decline. With a sufficient price increase the amount of reserves will increase as well. However, the total available hydrocarbon mass composing the resource will not.

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