Imagining a $7-a-Gallon Future

Comments on an article in the New York Times by Daniel Yergin published on April 4, 2004

We hear again from the esteemed historian who substantiates his opinions, unsupported by science, with the opinions of others equally gifted at hyperbole. Mr. Yergin begins with a galvanizing preamble:

"No price in America is more visible, indeed inescapable, than that of gasoline. And Americans don't like the numbers they're seeing today, and their anger has turned high prices at the pump into highly flammable political fodder. OPEC's decision last week to cut production has further fueled the fire.

"But what are those prices telling us? That driving this summer will be expensive? Or that $3 a gallon, which spouted last week at a California station, is our future? Or more worrying, that after many years of false alarms, the world is truly beginning to run out of oil?"

We're off to a good start, Mr. Yergin. What next?

"... A major question concerns the real size of the Persian Gulf reserves. The world's proven reserves, in total, currently stand at 1.2 trillion barrels (almost double the level of the early 1970's). Of that, nearly 60 percent is in the Persian Gulf. But many worried about near-term oil shortages believe that the gulf reserves [have] been overstated for political purposes by Persian Gulf countries. [Indeed. Over 300 Gb are exaggerated, fictional reserves -- falsely stated during the OPEC quota wars of the 1980's. Editor.] Others believe that with so much still to be explored, the reserves will prove to be much larger. [Virtually all potential sources of oil have been explored. Over the past decade, discoveries have been running at an average of 10 Gb, less than half of annual consumption.. Editor.] Both views may be right."

Mr. Yergin, here you're sounding like the proverbial Delphic Oracle. Will you please make up your mind?!

"Meanwhile, technology is expanding the definition of oil. In the decades ahead, more and more of our gasoline, heating oil and jet fuel will be made of so-called unconventional oils. These include petroleum mined from Canada's oil sands, once prohibitively expensive to extract, and liquids derived from natural gas. Conversion of large, remote deposits of natural gas into usable liquids appears to be on the edge of commercial viability."

Nice try. What Mr. Yergin is calling "technology " is in fact a smoke screen for a desperate situation. While claiming that conventional oil will continue to be available at current levels for decades, Yergin covers for what are in fact serious looming deficiencies by redefining the resource (from conventional to unconventional), obfuscating this slight of hand with the term "technology". True, technology will make a difference, but at the cost of dramatically reduced efficiency of extraction and refining, dramatically reduced extraction rates, and dramatically increased amounts of pollution.

"The world will need all these sources of supply, since even with increased energy conservation, economic growth, led by China and India, could well mean that the world will use 20 percent more oil a decade hence."
The 20% increase of consumption that Yergin is waving around simply is not feasible (as shown by LaHerrere and Campbell), and tar sands (as well as oil shale and coal bed methane, for that matter) are extremely dirty and harmful from an environmental point of view. This is a "follow your nose" prediction with no attention given to geology. Under no circumstances can such production levels be supported by geological constraints.

"Yet it looks as if [rigorous science, Yergin style. Editor] supplies will meet that demand. If there is an obstacle, it won't be the predicted peak in production, at least in the next few decades. Rather, it will be the politics and policies of oil-producing countries and swings in global economic growth. And the extent of these difficulties, whatever they turn out to be, will register in the ups and downs at the gasoline pump."

Yergin is inferring that politics will define nature's endowment, not geology or even his beloved technology.

Daniel Yergin, chairman of Cambridge Energy Research Associates, is the author of "The Prize: The Epic Quest for Oil, Money and Power."

Ron Swenson, chairman of Swenson Technology, is the webmaster of, a.k.a., a.k.a.