Peak oil "wrong," says Schwartz

“The peak oil people simply don’t know what they’re talking about,” said environmental futurist Peter Schwartz today at the Cleantech Forum in Washington, D.C.

Forget everything you’ve heard about peak oil as a driver of clean technology, said futurist Peter Schwartz today in a provocative closing session at the Cleantech Forum XVIII in Washington D.C.

“The peak oil people simply don’t know what they’re talking about, they don’t know the facts,” claimed Schwartz, co-founder and chairman of the Global Business Network and author of five books.

“Peak oil is wrong. We really don’t know how much oil there is in most of the oil reservoirs of the world. Oil reservoirs are complex geological structures, and most of the data is in private hands, or in state governments, and they are not particularly forthcoming about how much is there.”

The theory of peak oil, credited to M. King Hubbert, theorized that United States oil production would peak between 1965 and 1970. His model, now referenced as Hubbert’s peak, is widely touted to suggest that world oil reserves are now declining and that demand now outstrips humanity’s ability to deliver the amount of oil required. The peak oil model is cited by many as a fundamental driver of development of non fossil-based sources of energy, such as wind and solar.

From 1982 to 1986, Schwartz headed scenario planning for the Royal
Dutch/Shell group of companies.

“We don’t know how much is out there,” he said today. “And they tend to be very conservative, these estimates. And technology changes, and that opens up new reserves deep offshore. When I was at Shell, we could only drill into a thousand feet of water. Today, they’re drilling into 10,000 feet of water, and 20,000 feet below that.”

Peak oil proponents point out that no meaningfully-sized new reserves have been discovered in years, that the oil that is known is relatively finite, and believe it will become too expensive and resource-intensive to produce meaningful amounts of petrochemical products from other known sources of oil like the Canadian tar sands.

“We are not going to run out of oil before the issue of climate change drives change. It’ll be costly oil. But it’ll be climate change catastrophes [such as sudden, unexpected displacement of large numbers of people, and massive property damage], and more expensive oil, not the fact that we’re running out of oil, that will drive change,” according to Schwartz.

Schwartz wasn’t afraid to directly provoke venture capitalists in the crowd. He drew a pointed comparison with Internet investing.

“Before the dot com bust, there was an enormous amount of money chasing good ideas and stupid ideas … the fear I have is that we’re going to have a similar bust here. How many of you have ever worked in the energy industry? [about ten percent of hands were raised.] That’s my concern. That means most of you don’t know what you’re doing.”

“If you’ve never built a power plant, if you’ve never run a refinery, if you’ve never installed solar panels yourself, if you’ve never worked in a lab, these are the things I worry about.”

While Schwartz’s ideas often bordered on confrontational, they were roundly applauded by attendees, even when edging into political and religious territory.

“Governor [Sarah] Palin doesn’t believe we have a fossil fuel problem, because, as a creationist, she doesn’t believe in fossil fuel. If five thousand years ago, God created Earth, he should very well be expected to create more oil reserves when we really start to need them. The point is that climate change is real, no matter what Sarah Palin may think.”

In the end, concluding his remarks, Schwartz characterized himself as an optimist overall.

“I think 50 years from now, we’ll be looking at a much cleaner planet than today. It’s just going to be a rough ride getting here,” he said.

Schwartz is the author of Inevitable Surprises, a look at the forces at play in the world today and their implications for business and society. His first book, The Art of the Long View, focuses on scenario planning. He’s also the co-author of The Long Boom, When Good Companies Do Bad Things and China’s Futures.

Schwartz is also a venture partner of San Francisco-based Alta Partners, a member of the Council on Foreign Relations, and a member of the board of trustees of the Santa Fe Institute, the Long Now Foundation and the
World Affairs Council.

By Dallas Kachan

You can return to the main Market News page, or press the Back button on your browser.