Peak Oil News: The CERA Report

Friday, November 24, 2006

The CERA Report

By Jim Kunstler

Last week, Cambridge Energy Research Associates (CERA) released a report saying that there was no imminent global oil problem and that enough new oil would come on-line to permit current levels of consumption -- and beyond! -- for more than a hundred years into the future. CERA's stunningly disingenuous report flies in the face of everything that is known about the current world oil situation.

CERA is fronted by Daniel Yergin, author of the Pulitzer Prize-winning history of the oil industry, The Prize. Apparently, Yergin has parlayed his legitimacy as an historian into running a disinformation service wholly owned by the IHS Corporation, a lobbying and public relations firm serving the defense, oil, and automotive industries. Apart from making a lot of money as executive vice-president of a company with about $300 million in net annual profits over about $500 million in gross revenues, it is a little hard to discern what Yergin's motives might be in shoveling so much bad information into the public arena.

Much of CERA's "story" hinges on the supposition that snazzy technology will allow the recovery of "oil" (liquid hydrocarbons) from solids that require costly mining and processing operations to covert them to liquids. In effect, CERA says that tar sands, kerogen shales, coal-to-liquids, plus super-deep ocean drilling will not only make up for currently depleting fields of easily-acessed liquid sweet crudes, but actually surpass current total production. This would seem, on the face of it, to violate everything that is known about Energy Returns on Energy Invested (ERoRI). And, in fact, the very companies working the tar sands in Alberta, Canada, have just this year steeply raised their dollar estimates of what it will take to convert that stuff into usable liquids -- it ain't a pretty story.

CERA does not acknowledge some of the fundamental facts of the current situation, for instance that the world's four super-giant fields responsible for at least 15 percent of total global production since 1980 (Ghawar in Saudi Arabia, Burgan in Kuwait, Daqing in China, and Cantarell in Mexico) have all passed peak and turned down into depletion. CERA doesn't acknowledge that discovery of new oil peaked worldwide in the 1960s with more than 40 years of steady decline since then. Or that there has been almost no provable meaningful discovery the past several years (and Chevron's as yet unproved deepwater "Jack" claim of 3 to 15 billion barrels total is not significant in the context of a world that now burns through 30 billion barrels a year.) CERA doesn't acknowledge that the predicted US peak of 1970 was absolutely on target and that our domestic production of regular crude has fallen from around 10 million-barrels-a-day in 1970 to under 5 m/b/d now (still declining yearly, including the Alaska North Slope fields). CERA doesn't acknowledge that current total global oil production through 2006 is at least absolutely flat and more likely falling (depending on whose numbers you look at), which would tend to indicate that the world has bumped up against the ceiling of its all-time total capacity. CERA doesn't acknowledge that exports are down nine percent this year because the nations with export capacity have growing populations and economies that require more and more of their own oil.

The CERA story also tragically gives aid and comfort to those who deny that climate change needs to be taken seriously, since it is saying, in essence, that we can easily continue pumping carbon dioxide into the atmosphere -- by burning as much coal as we can. The CERA report amounts to "don't worry, be happy."

Perhaps most tragically, there is no corrective for this mendacious PR. It's not against the law to spread lies about a business venture -- which is what the oil industry is -- even if its truthful condition is critical to the functioning of our society. There's no oversight committee or agency authorized to investigate public relations activity. It's a basic case of buyer beware. Unfortunately, the buyers in this case are America's political leaders and the news media responsible for informing the public.

The mainstream media last week swallowed CERA's PR hook, line, and sinker, without a single reflective burp. It even drove the prices on oil futures markets down a few dollars a barrel -- though the price was back up by Friday. The only cogent analysis of the CERA report took place on the Internet, and for the most part on a single site:, which is the best-informed forum of debate on these issues operating in the United States.You can go directly to their initial response, composed by Dave Cohen by clicking on this link. It's worth taking the trouble to read.


At 5:05 AM, November 27, 2006, Anonymous Anonymous said...

When pondering the furious refusal of the uninformed to admit to the strong likelihood that we are at or even past peak, is not too difficult to understand. They of course would feel hammered in yet another way by current economic realities, let alone feel forced to admit that perhaps their consumption choices have not been the most astute. Heating and cooling 3 or 4 thousand square feet of living space plus a 50+ mile commute to work in something getting less than 15 mpg would not look smart.

However - for those that should know better, I imagine the gang of four horsemen chasing their feverish dreams (and gaining!) might look something like this:
1)The end of growth - for some strange reason economic activity has never been able to resolve itself outside the capital gains model....and if wealth is not created, at least it can be intercepted.
2) That most of what has been built in North America in the past 5 decades is horribly outmoded, incorrect, and just plain wrong. What a waste.
3) That the "American Way" (as invented by Americans with some kind of a holy sort of manifest destiny - sort of like those tablets Moses hauled down the mountain - might actually be regarded as the hoax of the millenium...
4) That global warming ain't the warm and gushy diaper-filling explosion of tree-hugging bearded and bossy holier than thou or thee, and might just be the honest and heartfelt reaction of a pissed off planet.

Some horsemen.

Right up there with Norman, is that You? It appears that Daddy's home...scary.

The globalized stranglehold on the planet has been created by the power of the neocons - using every single trick in the book.
I'm sure they are quite capable of using stupidity as well. Why not? Good brains and Billion$ are not necessarily a forgone conclusion.

At 8:08 AM, November 30, 2006, Anonymous Anonymous said...

CERA say

"As it is, production in 2005 in the Lower 48 in the United States was 66 percent higher than Hubbert projected."

So perhaps you would like to respond directly to that quote rather than just rant about how biased and wrong they are.

They are after all paid professionals which you amateur peak oil enthusiasts are not.

No offense.

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