Behind the “good news” story of the US fracking boom is a darker problem that haunts us all.

The mainstream narrative is that advanced recovery technology has allowed US oil companies to unlock vast reserves of newly discovered shale oil. This has brought about a rapid volte-face in American economic fortunes as they have gone from a net oil importer to an exporter rivalling the Kingdom of Saudi Arabia.

The latest US oil production statistics certainly seem to put paid to the doom-laden narrative of “peak oil” that became popular in the 1970s following the peak of US conventional oil production. As Ed Crooks reports for the Financial Times:

“Soaring output from shale wells has put the US on course to overtake Saudi Arabia and Russia to become the world’s largest crude producer, shaking up oil markets and the geopolitics of energy.”

There is a problem with the narrative, however. Contrary to the early warnings regarding peak oil, the 1970 US peak was, in a sense, artificial. The oil companies were fully aware of the shale oil deposits, and had access to technology to drill them. What stopped them was an abundance of cheaper oil elsewhere in the world. It was (and remains) cheaper for the US to import oil than to attempt to produce all of its oil domestically.

Consider for a moment, however, what would have happened if US oil was all that there was. Imagine, that is, that there was no oil anywhere else in the world. In those circumstances, and facing an imminent oil shortage, the oil companies would have done whatever it took to recover the remaining reserves. The US shale plays – which only became viable after prices rose above $100 per barrel – would have been drilled in the mid-1970s.

As it is, US shale has been a relatively brief upward tick in production that, while not to be sneezed at, is far from the “century of energy independence” that US policy makers are hoping for. Indeed, in many ways, they are a part of the global equivalent of what would have happened if the US in the 1970s had been the only source of oil.

As the entire world exhausts its cheap and abundant oil reserves, it is increasingly falling back on expensive and relatively small unconventional deposits that only become profitable when prices spike upward. Crooks begins to glimpse the implications of this:

“Unlike conventional oil projects, which can take many years to come into production, shale wells can be drilled in a couple of weeks and cost a few million dollars each, meaning the industry can respond more rapidly to market fluctuations…

“Shale could end up increasing oil price volatility by deterring investment in longer-term oil projects. Investment in oil and gas production plunged 44 per cent between 2014 and 2016, according to the International Energy Agency.”

The basic idea of peak oil was that production would follow a bell curve shape – it would rise to a peak and then decline in a symmetrical pattern. Between 1900 and 2008, that is more or less how US production behaved:

The current boom in shale oil production demonstrates that this pattern was allowed to occur:

If the alternative after 1970 had been for the USA to get by on declining volumes of oil, the “shale revolution” would have happened there and then. On a global level, however, we will not be so fortunate. Because, as global output peaks, there will not be some cheaper and relatively abundant source of oil that planet earth can import. Instead, we will begin to unlock the smaller, harder to extract and expensive to produce resources… like… er… US shale deposits; in a last ditch effort to keep production increasing.

There will, however, come a time when it is no longer economically possible to maintain production. To some extent we are seeing this in the low levels of investments in recovery projects that might take 5 to 10 years to produce. we also see it in the declining amounts of new oil being discovered – now far less than is needed to replace the oil we are consuming.

What this all means is that the decline in production, whenever it comes, will not follow a symmetrical bell curve shape; because, in a sense we will have brought forward oil from the back side of the curve in our attempt to keep production growing. Instead, we can expect to fall over the edge of a Seneca cliff in which production falls suddenly, with potentially catastrophic consequences for economies still dependent upon fossil fuels.

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