The Great Energy Resource Debate (Part I: Peak Oil was … is here!)

By Robert Bradley Jr. -- May 12, 2011

[Editor note: The posts in this series are The Great Energy Resource Debate (Part II: Neo-Malthusian Alarmism) and The Great Energy Resource Debate (Part III: Pessimists Turn Optimistic!). Part IV will look at the theoretical case for resource expansionism in light of the preceding posts.]

“It is clear that domestic [U.S.] oil, gas, coal, and nuclear cannot deliver vastly increased supplies, although it is equally clear that these sources cannot be ignored.”

– Robert Stobaugh and Daniel Yergin, “Conclusion: Toward a Balanced Energy Program,” in Stobaugh and Yergin, eds., Energy Future (New York: Random House, 1979), p. 216.

“The gas lines and rapid increases in oil prices during the first half of 1979 are but symptoms of the underlying oil supply problem—that is, the world can no longer count on increases in oil production to meet its energy needs.”

– U.S. Central Intelligence Agency, The World Oil Market in the Years Ahead (August 1979) p. iii.

From the beginning of the U.S. oil industry in the mid-nineteenth century, warnings have  heard from intellectuals, industry experts, politicians, industry practitioners, pundits, and novices alike that that oil (and natural gas) were physically in decline.

How many times have we heard ‘the easy oil is gone’ … ‘the low-cost oil has been found’ …. ‘the big fields are discovered’ … ‘costs and therefor prices must go up’ ….?

But the reality has been quite the opposite, particularly under free market conditions where resourceship (entrepreneurship applied to mineral resources) could reign.

This series on the great energy resource debate begins with a series of quotations from the beginning of the industry in the 1850s through the 1970s. Readers are invited to add other quotations as comments to further add to this collection.

I. Pre-1900 Pronouncements

“Hurry, before this wonderful product is depleted from Nature’s laboratory!”

– Advertisement for “Kier’s Rock Oil”, 1855, quoted in Edward Porter, Are We Running Out of Oil? American Petroleum Institute Discussion Paper #081, December 1995, p. 1.

“I take this opportunity to express my opinion in the strongest terms, that the amazing exhibition of oil which has characterized the last twenty years, and will probably characterize the next ten or twenty years, is nevertheless, not only geologically but historically, a temporary and vanishing phenomenon—one which young men will live to see come to its natural end.”

– Professor J.P. Lesley, State Geologist of Pennsylvania, 1886, quoted in Paul Giddens, Standard Oil Company (Indiana): Oil Pioneer of the Middle West (New York: Appleton-Century-Crofts, 1955), p. 2.

II: Pre-1970 Pronouncements

“We have anthracite coal for but 50 years, and bituminous coal for less than 2000. Our supplies of iron ore, mineral oil, and natural gas are being rapidly depleted, and many of the great fields are already exhausted.”

– Gifford Pinchot, “The Fight for Conservation,” 1906, quoted in Edward Porter, Are We Running Out of Oil? American Petroleum Institute Discussion Paper #081, December. 1995, p. 7.

“I’m sorry for you—coming to Texas [in 1915] to look for oil. Don’t you know there is no oil in Texas?!”

– Wallace Pratt, Consultant, “Oil Finding—the Way it Was,” Petroleum 2000 Issue, Oil & Gas Journal, August 1977, p. 144.

“The peak of [U.S.] production will soon be passed—possibly within three years.”

– David White, Chief Geologist, United States Geological Service, 1919, quoted in Edward Porter, Are We Running Out of Oil? American Petroleum Institute Discussion Paper #081, December 1995, p. 1.

“If the public some day in the near future awakens to the fact that we have become a bankrupt nation as far as oil is concerned, and that it is then too late to protect our supply by conservation measures, I am sure they will blame both the men of the oil industry and the men who held public offices at the time conservation measures should have been adopted.”

– Harry Doherty (1924), quoted in Daniel Yergin, The Prize (New York: Simon & Schuster, 1991), p. 222.

“[Current economic theory is] plainly inadequate for an industry in which the indefinite maintenance of a steady rate of production is a physical impossibility, and which is therefore bound to decline.”

– Harold Hotelling, “The Economics of Exhaustible Resources,” Journal of Political Economy, 1931, p. 139.

“It is unsafe to rest in the assurance that plenty of petroleum will be found in the future merely because it has been in the past.”

– L. Snider and B. Brooks, American Association of Petroleum Geologists Bulletin, 1936, quoted in Edward Porter, Are We Running Out of Oil? American Petroleum Institute Discussion paper #081, December 1995, p. 1.

 III. The Dark 1970s

“The early 1970s were a time of transition; humankind seemed to have entered a kind of middle age,” stated John Fowler. “We faced the disturbing fact that the abundance of the earth was limited; not only were diamonds and copper becoming scarce, but even the fossil fuels such as coal and petroleum were, in fact, limited and running out.” [Fowler, Energy and the Environment (New York: McGraw-Hill, 1975), p. 1.]

Many–practically all–were fooled by the belief that physical shortages of oil and gas were not only due to price controls but also due to physical resource constraints. Free market economists and Julian Simon were in a minority to remain resource optimists. And this remnant was proven correct beyond what almost all could imagine!

Here are a litany of quotations from prominent voices then (and some now).

Limits to Growth (Club of Rome)

“Population and industrial capital reach levels high enough to create food and resource shortages before the year 2000.”

– Dennis Meadows, et al., Limits to Growth (New York: Universe Books, 1972), p. 169.

Jimmy Carter/James Schlesinger/National Energy Plan

“Our energy crisis is an invisible crisis, which grows steadily worse—even when it is not in the news. . . . It will take decades to solve.”

– Executive Office of the President, The National Energy Plan (Washington: Government Printing Office, 1977), p. iv.

“The diagnosis of the U.S. energy crisis is quite simple: demand for energy is increasing, while supplies of oil and natural gas are diminishing. Unless the U. S. makes a timely adjustment before world oil becomes very scarce and very expensive in the 1980’s, the nation’s economic security and the American way of life will be gravely endangered.”

– Executive Office of the President, The National Energy Plan (Washington: Government Printing Office, 1977), p. vii.

“Within about four generations, the bulk of the world’s energy supply of oil, created over hundreds of millions of years, will have been substantially consumed.”

– Executive Office of the President, The National Energy Plan (Washington: Government Printing Office, 1977), p. viii.

“The diagnosis of the U.S. energy crisis is quite simple: demand for energy is increasing, while supplies of oil and natural gas are diminishing. Unless the U.S. makes a timely adjustment before world oil becomes very scarce and very expensive in the 1980’s, the nation’s economic security and the American way of life will be gravely endangered.”

– National Energy Program, Executive Office of the President, 1977, quoted in Edward Porter, Are We Running Out of Oil?, American Petroleum Institute Discussion Paper #081, December 1995, p. 39.

We have a classic Malthusian case of exponential growth against a finite source…. Since World War II, we have had a phenomenal rate of mal-usage so that in each decade—the ’50s and the ’60s—the world consumed more than had been used up in all previous human history. Oil production should peak out around the world in the early 1990s. The world, which is now consuming about 60 million bbl. a day, faces a limit on production somewhere around 75 million or 80 million bbl. a day. That means in five years’ time we may have chewed up most of the possibility of further expansion of oil production.”

– James Schlesinger, quoted in Time, April 25, 1977, available at

National Academy of Sciences/National Research Council

“It will take only another 50 years or so to use up the great bulk of the world’s initial supply of recoverable petroleum liquids and natural gas.”

– Committee on Resources and Man (National Academy of Sciences—National Research Council), “From Resources and Man: A Study and Recommendations,” in John Holdren and Paul Ehrlich, eds., Global Ecology (New York: Harcourt Brace Jovanovich, 1971), p. 58.

“Since resources are finite, then, as population increases, the ratio of resources to man must eventually fall to an unacceptable level. This is the crux of the Malthusian dilemma, often evaded but never invalidated.”

– Committee on Resources and Man (National Academy of Sciences—National Research Council), “From Resources and Man: A Study and Recommendations,” in John Holdren and Paul Ehrlich, eds., Global Ecology (New York: Harcourt Brace Jovanovich, 1971), p. 58.

“It is becoming increasingly apparent that the consumption of petroleum products in lower-valued uses (such as space heating) must be curtailed to ensure a continued supply of feed stocks for petrochemical industries as a group.”

– Panel on Renewable Energy Resources, Energy for Rural Development: Renewable Resources and Alternative Technologies for Developing Countries (Washington: National Academy of Sciences, 1976), pp. 5–6.

Daniel Yergin (circa 1979)

“It is clear that domestic [U.S.] oil, gas, coal, and nuclear cannot deliver vastly increased supplies, although it is equally clear that these sources cannot be ignored.”

– Robert Stobaugh and Daniel Yergin, “Conclusion: Toward a Balanced Energy Program,” in Stobaugh and Yergin, eds., Energy Future (New York: Random House, 1979), p. 216.

“The range of energy possibilities grouped under the heading ‘solar’ could meet one-fifth of U.S. energy needs within two decades.”

– Robert Stobaugh and Daniel Yergin, “The End of Easy Oil,” in Stobaugh and Yergin,  eds., Energy Future, Report of the Energy Project of the Harvard Business School (New York: Random House, 1979), p. 12.

“Domestic oil and gas, coal, and nuclear power as a group can increase their contribution to cover, at most, one third to one-half of the nation’s additional energy needs over the next decade.”

– Robert Stobaugh and Daniel Yergin, “The End of Easy Oil,” in Stobaugh and Yergin,  eds., Energy Future, Report of the Energy Project of the Harvard Business School (New York: Random House, 1979), p. 11.

“One should remember how limited the potential of atomic power is under the most bullish of circumstances: If nuclear power capacity doubled in ten years, it would still be providing less than 7 percent of America’s total energy.”

– Robert Stobaugh and Daniel Yergin, “The End of Easy Oil,” in Stobaugh and Yergin,  eds., Energy Future, Report of the Energy Project of the Harvard Business School (New York: Random House, 1979), p. 10.

“The higher U.S. oil imports, the higher will be world oil prices. There is no accepted theory about the exact nature of the link.”

– Robert Stobaugh and Daniel Yergin, eds., “Conclusion: Toward a Balanced Energy Program” in Stobaugh and Yergin Energy Future, Report of the Energy Project of the Harvard Business School (New York: Random House, 1979), p. 223.

“Without a transition to a more balanced energy program, the market system itself in the years ahead will inevitably become increasingly constrained by regulation and disruption.”

– Robert Stobaugh and Daniel Yergin, eds., “Conclusion: Toward a Balanced Energy Program,” in Stobaugh and Yergin Energy Future, Report of the Energy Project of the Harvard Business School (New York: Random House, 1979), p. 225.

[NOTE: Yergin reversed his views in the 1980s and has been a forceful resource optimist ever since as a future post will show.]

Industry Voices of Fear

“Planning is going forward for the day when the market may require a versatile substitute fuel for natural gas. [Houston Natural Gas] engineers are keeping abreast of developments in synthetic fuels, while monitoring market potentials.”

– Robert Herring, Chairman of the Board, President and Chief Executive Officer, Houston Natural Gas, in Houston Natural Gas Corporation 1981 Annual Report, p. 2.

“Domestic oil and gas will never be in an oversupply position.”

– Jack Bowen, chairman, Transco Companies, Inc., “Presentation before The New York Society of Security Analysts,” September 15, 1981 (Houston: Transco Investor Relations, 1981), p. 28.

“We’ve embarked on the beginning of the last days of the age of oil. . . . Embrace the future and recognize the growing demand for a wide range of fuels, or ignore reality and slowly—but surely—be left behind.”

– Michael Bowlin, CEO, ARCO (now BP), quoted in Worldwatch Institute, News Release, May 15, 2001.

“Although we in the oil industry have known it for a long time, most Americans only recently became aware that petroleum is a limited resource and that the era of ‘cheap energy’ has ended.”

– Maurice Granville, Chairman, Texaco, “Petroleum’s Role From Now to the End of the Century,” Petroleum 2000 Issue, Oil & Gas Journal, August 1977, p. 57.

“It is probable that 1985 to 1990 will be a watershed period in which a worldwide shortage of petroleum will develop, with production of oil limited by physical capabilities,”

– Maurice Granville, Chairman, Texaco, “Petroleum’s Role From Now to the End of the Century,” Petroleum 2000 Issue, Oil & Gas Journal, August 1977, p. 59.

“When future historians look back on our times, they are likely to see the age of petroleum as a brief interlude between the wood-burning era that lasted well into the 19^th Century and the era of nuclear, solar, and other energy sources that will characterize the 21^st Century and beyond,”

– Rawleigh Warner, Jr., Chairman, Mobil Corp., “Petroleum Faces Transition Period,” Petroleum 2000 Issue, Oil & Gas Journal, August 1977, p. 66.

“It is also interesting to contemplate the possible strains on our oil and gas resources had nuclear not been commercialized, particularly if the gap between rich and poor been narrowed over this period of time.”

– Matthew Simmons, Revisiting The Limits to Growth: Could the Club of Rome Have Been Correct, After All?, unpublished, October 2000, p. 26.

 “The current strain on many of our precious resources is already becoming serious. . . . The world probably cannot wait another 30 years to begin pondering whether we could begin to experience problems and sheer limits to non-renewal energy consumption.”

– Matthew Simmons, Revisiting The Limits to Growth: Could the Club of Rome Have Been Correct, After All?, unpublished, October 2000, pp. 16, 38.

John Holdren

“[I]t is fair to conclude that under almost any assumptions, the supplies of crude petroleum and natural gas are severely limited. The bulk of energy likely to flow from these sources may have been tapped within the lifetime of many of the present population.”

– John P. Holdren and Philip Herrera, Energy: A Crisis in Power, (New York: Sierra Club, 1971), p. 29.

“Today the frontiers are gone, and the evidence is mounting that technology cannot hold the law of diminishing returns at bay much longer. Resources being stressed today are often being stressed globally; they will not be replenished from outside the ‘system.’”

– John Holdren and Paul Ehrlich, “Resource Realities,” in Holdren and Ehrlich, eds., Global Ecology (New York: Harcourt Brace Jovanovich, 1971), p. 8.

“The rapacious depletion of our fossil fuels is already forcing us to consider more expensive mining techniques to gain access to lower-grade deposits, such as the oil shales, and even the status of our high-grade uranium ore reserves is not clear-cut.”

– John Holdren and Paul Ehrlich, “Population and Panaceas: A Technological Perspective,” in Holdren and Ehrlich, eds., Global Ecology (New York: Harcourt Brace Jovanovich, 1971), p. 18.

Colin Campbell

“Some new deepwater areas with giant potential, such as the Perdido Trend in the western Gulf of Mexico, will no doubt be found, but generally the geology of most deepwater tracts is not very promising. Therefore, it looks as if most of what remains to be found will come from late stage exploration in the established provinces. Since most giants are found early, what remains to be found is likely to occur mainly in small fields or subtle traps. A prodigious exploration and drilling effort will be required to produce it.”

– Colin Campbell, “Oil Price Leap in The Early Nineties,” Noroil, December 1989, p. 38.

“Shortages seem to be inevitable by the late 1990s, but knowledge of an impending supply shortfall may trigger an earlier price response.”

– Colin Campbell, “Oil Price Leap in The Early Nineties,” Noroil, December 1989, p. 38.

“Within the next decade, the supply of conventional oil will be unable to keep up with demand. . . . The rate at which any well—or any country—can produce oil always rises to a maximum and then, when about half the oil is gone, begins falling gradually back to zero.”

– Colin Campbell and Jean Laherrère, “The End of Cheap Oil,” Scientific American, March 1998, p. 78.

“There is only so much crude oil in the world, and the industry has found about 90 percent of it.”

– Colin Campbell and Jean Laherrère, “The End of Cheap Oil,” Scientific American, March 1998, p. 81.

“There is no question that the resources are ample: the Orinoco oil belt in Venezuela has been assessed to contain a staggering 1.2 trillion barrels of the sludge know as heavy oil. Tar sands and shale deposits in Canada and the former Soviet Union may contain the equivalent of more than 300 billion barrels of oil. Theoretically, these unconventional oil reserves could quench the world’s thirst for liquid fuels as conventional oil passes its prime. But the industry will be hard-pressed for the time and money needed to ramp up production of unconventional oil quickly enough.”

– Colin Campbell and Jean Laherrère, “The End of Cheap Oil,” Scientific American, March 1998, p. 82.

“The World is not running out of oil. Or rather, not for a long time. What it is running out of is cheap oil, and soon. It will still be cheap to produce, but it will be expensive to buy because it will be increasingly scarce and controlled by a few Middle East countries.”

– Colin Campbell, “Preface,” The Coming Oil Crisis (Essex, England: Multi-Science Publishing Company & Petroconsultants S.A., 1997), p. 1.

“In an ideal world, government would properly study the resource base and understand the principles of depletion. . . . [But] it is most unlikely that the governments of either the United States or the European Union will adopt an energy policy with the aim of preparing for the inevitable peak in oil production and subsequent scarcity. It will therefore be left to the Middle East producers to alert the World to its predicament.”

– Colin Campbell, The Coming Oil Crisis, (Essex, England: Multi-Science Publishing Company & Petroconsultants S.A., 1997), p. 177.

“A permanent doubling or more in the price of oil, followed by growing physical shortages, must lead to a major economic and political discontinuity in the way the world lives. It heralds the end of rampant and mindless consumerism in the more developed countries and will bring great suffering to the Third World. . . . The transition will be difficult, and for some catastrophic, but at the end of the day the world may be a better and more sustainable place.”

– Colin Campbell, The Coming Oil Crisis, (Essex, England: Multi-Science Publishing Company & Petroconsultants S.A., 1997), p. 177.

“The proposition that the world is about to experience the end of the cheap abundant supply of oil, which has created what has been called Hydrocarbon Man, should come as no surprise: It is a pattern well-founded in history. Things change—and suddenly.”

– Colin Campbell, “Depletion Patterns Show Change Due For Production of Conventional Oil,” Oil & Gas Journal Special, December 29, 1997, p. 33.

“The world has been very extensively explored with the help of sophisticated technology and great advances in petroleum geology. It is accordingly almost inconceivable that any large provinces—that is to say, with a potential sufficient to supply the world for more than, say, a year or two—have been missed. It means that most of the future supply will have to come from known basins, most of which are very well known.”

– Colin Campbell, “Depletion Patterns Show Change Due For Production of Conventional Oil,” Oil & Gas Journal Special, December 29, 1997, p. 33.

“The world faces a two-stage oil crisis. The first will come when the swing share [of production from Abu Dhabi, Iran, Iraq, Kuwait, and Saudi Arabia] reaches a level to impose much higher prices, which is expected to happen before 2000. That should curb further demand. But 10 years later will come the second stage, when physical shortages begin to appear. By about 2015, the Middle East swing producers themselves will be past midpoint and into permanent decline.”

 

– Colin Campbell, “Depletion Patterns Show Change Due For Production of Conventional Oil,” Oil & Gas Journal Special, December 29, 1997. p. 37.

 

[Oil] production likely to peak around 2020 . . is not a doomsday message . . . because a more sustainable world may be a better place to live.”

 

– Colin Campbell, “Depletion Patterns Show Change Due For Production of Conventional Oil,” Oil & Gas Journal Special, December 29, 1997. p. 37.

“We are not used to depleting things, being confident that we can always run into the supermarket and replenish our stocks. . . . But in the 21^st century we will come to experience the virtual depletion of oil, an energy source that has become central to our way of life. We will have to change the way we live. It is not too soon to start thinking about what that may entail.”

– Colin Campbell, The Coming Oil Crisis, (Essex, England: Multi-Science Publishing Company & Petroconsultants S.A., 1997), p. 173.

Gregg Easterbrook

“Sometime in the next 20 years or less, global petroleum output may begin a permanent decline, even as world oil demand continues to rise. . . . This isn’t a doomsday concern, just a reason why a national commitment to alternative energy forms makes sense now, when there is time to work on the problem rationally.”

– Gregg Easterbrook, “Running on Empty,” Houston Chronicle, June 14, 1999, pp. 1C, 4C.