No Peak Oil to Yergin Who Sees Years of Rising Supplies: Books
The son of one of Napoleon’s ministers of war, Carnot was convinced that an important reason for Britain’s victory over Napoleon was “its mastery of energy, specifically the steam engine.” In 1824 he published a study on this theme called “Reflections on the Motive Power of Fire,” which Yergin calls “almost certainly the first systematic analysis of how man had actually harnessed energy.”
For more than three decades, Yergin has been Carnot’s heir, cutting through fog and emotions to provide lucid analysis of energy issues. He emerged on the public stage in the wake of the 1973 oil embargo and its gas lines, which sparked a persistent feeling of unease about energy security in the U.S.
He has been a consultant to industry and governments, most recently as chairman of IHS Cambridge Energy Research Associates. At the same time he has continued to address a wider audience through his writing.
Yergin is best known for “The Prize” (1991), his Pulitzer Prize-winning history of the oil industry. “The Quest” is in some respects a sequel, but it’s not in the same league. The new book is too long and lacks a compelling narrative thread.
More worryingly, Yergin seems overly gentle with major oil- market players such as BP, which was at the heart of the 2010 Gulf oil spill. In a section on the feverish oil bubble of 2008, those analysts predicting ever higher prices aren’t identified in the main text, their names buried in footnotes. Perhaps Yergin’s business interests are conflicting with his reporting.
Peak Oil Theory
“The Quest” is still worth reading for Yergin’s erudition and insight. For instance, he debunks the peak oil theory, which says world gas and oil production may soon top out and then rapidly decline. (This idea helped lead to the price spike of 2008.) Yergin notes that such fears have cropped up before.
“This is not the first time the world has run out of oil,” he writes. “It is the fifth.”
Yergin is confident that the industry will be able to keep up with growing demand. He says an IHS CERA study of some 70,000 oil fields reveals that “the world is clearly not running out of oil. Far from it.”
Supply is growing, not shrinking, Yergin says. This is due not only to new discoveries but to an even more important source: additional oil found in existing fields. The big question, he implies, is not whether the oil is there but whether the political climate will foster the massive investment -- $8 trillion is one estimate -- that is needed to satisfy demand over the next quarter century.
Plateau, Not Peak
Yergin concludes that rather than collapsing, world production is likely to grow about 20 percent over the next two decades and that a plateau “is a more appropriate image for what is ahead than the peak.” Twenty years may not seem so far away, but Yergin believes that new energy sources such as shale oil will be found to keep pushing that expected plateau “into the horizon.”
The central message of Yergin’s book is reassuring. Yes, the world faces enormous challenges in finding ways to satisfy the demand for energy and tackling climate change. Yet human ingenuity offers hope.
Yergin tells the story of the determined experimenting by George P. Mitchell of Mitchell Energy, which eventually produced the shale gas revolution that has transformed the U.S. natural gas supply in the last few years. “Perennial shortage gave way to substantial surplus,” Yergin writes.
The hydraulic fracturing and horizontal drilling used in recovering gas from shale could also lead to huge new supplies of oil, despite environmental concerns, he says.
Other parts of the book are less satisfying. A chapter called “Supermajors” revisits the takeover wave of the 1990s that created Exxon Mobil, the current version of BP and France’s giant Total. Yet one longs for more analysis of whether these takeovers worked.
His writing on climate change, probably the biggest energy challenge, lacks a punch line. He capably surveys the world of renewables: Wind power, solar power, bio-fuels and what he calls “the fifth fuel”: efficiency. He is wishy-washy on whether investment in these areas will be enough to head off climate disaster.
With the caveat that “things can go seriously wrong,” Yergin places his bets on a “globalization of innovation” that will “fuel the insight and ingenuity that will find the new solutions.” There is an old saying that “oil is found in the minds of men.” Yergin is confident that the solutions to our energy conundrums will be found there also.
“The Quest: Energy, Security and the Remaking of the Modern World” is published by Penguin Press in the U.S. and Allen Lane in the U.K. (804 pages, $37.95, 30 pounds).
(Stanley Reed is a reporter-at-large for Bloomberg News and co-author of “In Too Deep: BP and the Drilling Race that Took It Down.”)
To contact the editor responsible for this story: Manuela Hoelterhoff at email@example.com.