Michael Lynch on Saudi Oil Reserves debunking Peak Oil

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ewilkerson's picture
ewilkerson
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Michael Lynch on Saudi Oil Reserves debunking Peak Oil

If you guys and ladies want something to chew on for a minute check out this article.  I know the the NY Times does not believe in Peak Oil, but this op-ed is quite a read.  I could go into  all the BS in it, but I'm sure you will need no help;

http://www.nytimes.com/2011/02/25/opinion/25lynch.html

Phil Williams's picture
Phil Williams
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Michael Lynch

Michael Lynch has been spewing this nonsense for awhile now. I would take everything he says with a grain of salt. Below is a link to a Forbes article from 2006.

Gasoline for $2? Michael Lynch says those good old days are just around the corner.

Don't sell that SUV just yet. Oil, at a recent $66.50 a barrel, will fall to $45 by mid-2007 and could dip briefly into the 20s in 2008. Sometime next year you are going to see a $1.95 price on a gas pump.

So says Michael C. Lynch, 51, president of Strategic Energy & Economic Research in Amherst, Mass. He swears he hasn't been inhaling fumes. His reasoning: New supply, coming online from all corners of the world, is more than ample to satisfy growth in demand and sufficient even to withstand an embargo against Iran, which produces 3.75 million barrels of oil a day. Lynch argues that the threat of disruptions--nuclear brinkmanship, war, terrorism, hurricanes, pipeline corrosion--has larded oil prices with a $20-a-barrel risk premium. As these perils recede, oil prices will fall.

A refreshing but distinctly minority view. Over the last two years, as prices have soared, proponents of the Peak Oil theory--which argues that we will soon pass the point of being able to replace reserves as fast as they are consumed--have resurfaced in force. Of course, folks have been predicting the end for 50 years. In fact, there's still plenty of fuel to be sucked out. Consider that over the past 100 years the U.S. has drilled 3.5 million wells into most of its oil basins yet still produces 5 million barrels a day. In the Middle East only 50,000 wells have been drilled into far more prolific basins, yielding 15 million bpd. While the world has consumed maybe 1 trillion barrels of oil in the last century, there are at least 1 trillion barrels waiting to be exploited, reports the U.S. Geological Survey. Add to that an estimated 1 trillion barrels of oil sands resources and another 2.8 trillion barrels of oil shale, and we can all afford to put down our "End Is Nigh" placards. "The oil price spike was caused by geopolitical issues that can be fixed or overcome," says Lynch. The real issue is geology. Recent discoveries--and the prospect of new ones--sketch a bright future.

One of the industry's most enduring optimists, Lynch spent 20 years working on energy policy at the Massachusetts Institute of Technology's Center for International Studies, his alma mater. Four years ago he opened his own shop to advise oil companies, governments and investment banks. While a student at MIT during the Cold War, he studied national defense. He became frustrated because "no matter how much we knew about the Soviets, we would never be able to fully predict whether a madman might launch a nuclear first strike. Psychology is not inherently knowable," he says. "Geology is." His abiding faith in technology's ability to wring oil from the most tucked-away places have put him on the outer margins of conventional thinking. He says, "I've been a gadfly since I started."

 

http://www.forbes.com/forbes/2006/1002/098.html

He is missing the point about peak oil, it is all about flow. The oil cornucopian business as usual people always talk about all the oil shale and oil sands that are available as reserves. They do not talk about the EROEI (Energy returned on energy invested). They also don't talk about the environmental devastation to accompany it. Maybe he should watch the Crash Course, Dr M has a nice chart for that. Also, the number of wells we've drilled in the US is extremely misleading. The wells that we have drilled in the lower 48 post peak were for smaller and smaller resevoirs. We have 400,000 stripper wells in the US each producing less than 10 barrels of oil per day. If the Middle East is lucky they will have the resources to drill their land like swiss cheese. Saudi Arabia has been drilling offshore as well, in fact they have more drill rigs today than 5 years ago, yet they are producing less oil. This graph is in Stephen Leeb's book "Game Over", I'm sorry, I could not find it to post.

 http://stripperwells.com/

Thanks

Phil

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ewilkerson
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Phil, Lynch makes me wonder

Phil,

Lynch makes me wonder about an MIT education.  I have an Economics degree from Duke and an MBA from Wake Forest, and the first time I read about Peak Oil it made perfect sense.   The graph showing when the easy oil was found, our growth of consumption, and the growth of production give you a good conception of what is happening.  It is interesting that I believe production will no doubt peak very soon, but there is the distinct possibility that consumption will outstrip production even before production peaks.  That's not even talking about depletion and the increased consumption in the oil producing states themselves.  There are a lot of trends coming together to create a possible catastrophe.

The only reason I say possible catastrophe is how the world handles it.  We could grow and come together or blow each other up...LOL

Thank for the response,

Ernest

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Damnthematrix
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Michael Lynch

When I first discovered PO in 2000, I joined a Yahoo group in which Lynch was a regular poster.  We crossed swords on many occasions, and I finally gave up, the man has unflinching belief in $20 oil, even in the face of the bleedin' obvious!  When the GFC first hit and oil collapsed from $147 to $30 in days, he was all "I told you so".  But I just checked, and doesn't appear to have posted much since oil went back up to $80+

In the NY Times he writes "While peak-oil advocates have in the past ridiculed optimistic industry expectations, the evidence continues to confound them. Over recent decades, the consensus estimates of the amount of recoverable oil on the planet have roughly doubled. And recovery rates — the percentage of those reserves that we are technologically able to collect — have grown from 10 percent a century ago, to 25 percent a half-century ago, to an estimated 35 percent now. In some areas, like the North Sea, the figure is above 60 percent."

But not at $20/barrel hey Michael.......

Mike

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Phil Williams
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MIT? Maybe he should get his money back.
ewilkerson wrote:

Phil,

Lynch makes me wonder about an MIT education.  I have an Economics degree from Duke and an MBA from Wake Forest, and the first time I read about Peak Oil it made perfect sense.   The graph showing when the easy oil was found, our growth of consumption, and the growth of production give you a good conception of what is happening.  It is interesting that I believe production will no doubt peak very soon, but there is the distinct possibility that consumption will outstrip production even before production peaks.  That's not even talking about depletion and the increased consumption in the oil producing states themselves.  There are a lot of trends coming together to create a possible catastrophe.

The only reason I say possible catastrophe is how the world handles it.  We could grow and come together or blow each other up...LOL

Thank for the response,

Ernest

Ernest,

I often wonder about the highly intelligent people we have that just seem to completely miss what is so obvious, and so important to the cushy lifestyle we enjoy. I am certainly no MIT grad, but I do have an open mind. In fact the funny thing is that I have found that younger people tend to understand peak oil and it's ramifications better than "educated" adults. I like to ask people why they think the price of oil is so high, and the responses that I get are astounding. Everything from the "greedy oil companies", to the "government won't let us drill". These people might be book smart, but they don't know jack about oil. By the way 2005 was the peak for conventional oil, although some argue it was 2006. 2008 was the peak for all liquids, although it would not be impossible to improve on that total, but I doubt we will. In my opinion peak conventional oil, and peak total liquids are in the rear view. It would not surprise me if the media never really acknowledges that fact. They might blame geopolitics or not enough capital investment, but the last thing they want to talk about is depletion rates.

Thanks

Phil

 

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Phil Williams
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Lynch
Damnthematrix wrote:

When I first discovered PO in 2000, I joined a Yahoo group in which Lynch was a regular poster.  We crossed swords on many occasions, and I finally gave up, the man has unflinching belief in $20 oil, even in the face of the bleedin' obvious!  When the GFC first hit and oil collapsed from $147 to $30 in days, he was all "I told you so".  But I just checked, and doesn't appear to have posted much since oil went back up to $80+

In the NY Times he writes "While peak-oil advocates have in the past ridiculed optimistic industry expectations, the evidence continues to confound them. Over recent decades, the consensus estimates of the amount of recoverable oil on the planet have roughly doubled. And recovery rates — the percentage of those reserves that we are technologically able to collect — have grown from 10 percent a century ago, to 25 percent a half-century ago, to an estimated 35 percent now. In some areas, like the North Sea, the figure is above 60 percent."

But not at $20/barrel hey Michael.......

Mike

Mike,

In the 2006 article he said that oil would be $20 a barrel because of increased supply, equal to Iran's production. As you know, the price of oil dropped because of decreased demand as the world economy fell apart. There was no huge supply increase. Correct me if I am wrong, but I think we only had one year of decreased oil consumption during The Great Depression. Maybe he gets paid to serve up the rosy forceasts. I'm sure companies would prefer to hear his forecast than someone like Jeff Rubin. In our short sighted culture, it wouldn't surprise me.

Thanks

Phil

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ewilkerson
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Posts: 390
He really does sound like he

He really does sound like he has Narcissistic Personality Disorder.  He has his opinion, and the truth no matter how obvious does not matter.  He believes his opinions are like a gods'.

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