home » The bumpy plateau

The bumpy plateau

by Paula | 23 October 2008 | permalink | comments
Tags: peak oil,
Email this article

CNN is reporting that crude closed today at $66.75/bbl, its lowest price in 16 months. And my feed reader is going bonkers with “peak oil is a hoax!” -type posts from the blogosphere and articles from news media, legitimate and otherwise. It still astonishes me that people are so misinformed.

The dramatic rise and fall in oil prices is not a surprise to anyone who’s actually made an effort to bone up on the science and the money dynamics involved. We will undoubtedly see many more price spikes and dips for some time before production moves into decline-only mode. Price spikes destroy demand, which brings down price, which supports increased demand, which drives up price, which destroys demand, ad nauseum. This phenomenon is called the “bumpy plateau.”

For those who’ve forgotten or who perhaps have never heard of the “bumpy plateau,” here are some re-runs from past discussions on the matter.

Jim Kunstler, from a speech given in Hudson, NY, January 2005:

Now, some of the most knowledgeable geologists in the world believe we have reached the global oil production peak. Unlike the US oil industry, the foreign producers do not give out their production data so transparently. We may never actually see any reliable figures. The global production peak may only show up in the strange behavior of the markets.

The global peak is liable to manifest as a “bumpy plateau.” Prices will wobble. Markets will wobble — as the oil markets have been doing the past year. International friction will increase, especially around the places where the oil is — and two-thirds of the world’s remaining oil is in the states around the Persian Gulf where, every week, a half dozen US soldiers and many more Iraqis are getting blown up, beheaded, or shot.

The “bumpy plateau” is where all kind of market signals and political signals are telling you that “something is happening, Mr. Jones, but you don’t know what it is.” We’ll only know in the rear-view mirror.

Mike Ruppert @ FTW, 2006:

Recent price swings — both up and down — have been predicted as a part of the Peak Oil scenario for years. I saw the first hard predictions of the bumpy plateau in 2002, and they made good sense.

Here’s how Colin Campbell described it when FTW contacted him for this special report:

1. Price shock (as the capacity limit is breached)
2. Economic recession cutting demand
3. Price collapse (the market overreacts to small imbalances between surplus and shortage)
4. Economic recovery [followed by increased demand]
5. Price shock (as the falling capacity limits are again breached)

Simply put, everything is triggered by the inability of the planet to increase supply beyond a certain point, regardless of demand. That is the definition of peak.

Sonia Shah @ NewMatilda.com, July 2005:

In fact, the peak in oil production — and there’s little doubt one is coming, it is just a question of when — will not be a sharp point at the end of a cliff, over which civilization will plummet. More likely, the coming peak will play out as a bumpy plateau, as high prices and increased investment into R&D moderate demand and increase supply. The trend will be toward decline, but it won’t be rapid.

On the surface, this might sound better than the pointy peak. It isn’t.

The truth is the intense resource-consumption of Western society has always been unsustainable. It’s hung on for over a hundred years by placing the cost of unsustainable practices on people and places separated from consumers by space and time. Just ask the 12-year-old girls who toil in Chinese factories making our disposable plastic baubles, and the Indian villagers who sleep next to smouldering heaps of imported Western trash. When the pinch comes, the price is paid not in the radically restrained consumption, as presaged by the peak-oil doomsters, but rather in the livelihoods of distant others and under protected ecosystems.

Kunstler again, via Michigan Land Use Institute, July 2003:

The global oil peak will actually be more like a “bumpy plateau,” a period of a few years when worldwide oil production, while remaining robust, fails to keep with rising world demand. But on that bumpy plateau, economies will wobble and we will begin to see a process that might be called globalism in reverse.

Falling oil prices are no more proof that peak oil is a “hoax” than cool weather is proof that global warming is a “hoax.” All “hoax” claims prove is that cause-and-effect needs to be added to public school curricula.

comments

Name	Remember
E-mail
Website
Message	Textile Help