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[Episode #13] – The Oracle of Oil

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Many have heard of peak oil, but few seem to understand what it really means, and fewer still know much of anything about the father of the idea, M. King Hubbert. In this episode we interview science journalist Mason Inman, who has written the first biography of Hubbert: The Oracle of Oil: A Maverick Geologist's Quest for a Sustainable Future, which hits the shelves April 11. Deeply researched and rich with detail about the debates over our energy future (and energy transition) from the 1940s through the 1980s, the book is a terrific read for anyone interested in peak oil theory, what it is about, and what it is not about (for example, oil prices!). Today’s debates about the future of energy aren’t too dissimilar from the debates of 60-70 years ago…and that should make us think hard about where we’re going.

Check out the interview that critics are calling “way too long!” with the author of the book that Publisher’s Weekly called “tedious!”

No, seriously: Check it out. It just may be the best material you’ll ever find on what “peak oil” really is.

Plus: I explain why I’m skeptical about IEA’s new report on the decoupling of carbon emissions and economic growth.

Geek rating: 8

Guest: Mason Inman

On Twitter: @masoninman

On the Web:
http://www.oracleofoil.com/
https://www.beaconreader.com/projects/the-frack-lab

Recording date: March 6, 2016

Air date: March 23, 2016

Chris Nelder: Welcome Mason to the Energy Transition Show.

Mason Inman: Thanks for having me.

Chris Nelder: So let's, for the benefit of our listeners who may not know, who was M. King Hubbert, let's talk about who was the man M. King Hubbert.

Mason Inman: He was a geologist who worked for the government and in the oil industry for many decades. First he was working for the government during World War II. Then he was one of the top researchers at Shell Oil from the mid 40s through the mid 60s. And then he went back to the government to work for the U.S. Geological Survey and throughout this whole time he was developing these ideas about limits to oil resources and how much we could extract that, he became really famous for.

Chris Nelder: OK. So what exactly did he think? What was his conception of peak oil?

Mason Inman: So he was warning that there are limits to how much we would be able to extract per year. So the production at the point when he started talking about these things had been going up and up for decades, ever since the beginning of the oil age in the mid 1800s. And so the idea that the production would not keep going up and up and that it would reach some kind of peak was really counterintuitive to a lot of people. There had been some scares or you know some worries in decades past that the U.S. would reach some kind of peak like this before, and then those forecasts did not pan out.

Chris Nelder: So let's talk about why he thought there was a concern about this. Exactly how did his model work? I mean this is a geeky crowd here, don't be afraid.

Mason Inman: He developed these ideas over decades and so he didn't just have one single approach even though a lot of times people present it that way. So first he was just saying let's say there's a finite amount of oil that you have to extract and that the estimates at any given time are in the right ballpark for how much we're going to be able to pull up. Then what are the implications of that. So he started with this in 1949 when there was this big United Nations meeting that he went to where they gathered experts from all over the world to talk about resources. And the person that they chose to talk about oil was this guy who had been in the industry for many years and then became a professor at Stanford and it made sense to have an American give this talk about oil because America was the king of oil they produce more oil than anybody else. And this guy gave this talk where he says, 'well we can estimate that you know there's around 2 trillion barrels that we could extract but these estimates have kept going up and up in the past. So it'll probably go up a lot more in the future. And if there's any failure to produce enough to meet global demand in the next 500 years it will be because of some kind of failure of effort not because of any limits to what is in the ground.' And Hubbert was sitting there in the audience listening to this. And he wasn't expecting the speaker to say anything particularly surprising. And as he recalled it he almost fell out of his chair when he heard that this guy was saying there'll be no shortages for several hundred years. And so Hubbert had not really done any concrete analysis of when he thought oil production might peak but he just intuitively, that did not make sense to him. And so he decided I'm going to go argue with this guy. And he went down to the floor. And meanwhile all these other experts were coming up, like the head of the Geological Survey in Great Britain and so on saying, 'oh this is great news what the speaker has to say. I'm sure we're all welcome this news that there's not really any reason to worry about oil supplies.' This was coming at a time when there were some short term shortages because it was right after World War II. There's this big boom of consumption of oil after the war because consumption for regular people have been held down. Yeah, so the post-war boom. And so the Secretary of Interior at the time was warning that the U.S. was not going to be able to produce enough to meet its consumption. Up to that point, it had been an oil exporter was producing more than the country consumed but it was right on this verge of consuming more than it produced, then it would have to get oil from elsewhere. And the obvious place...

Chris Nelder: Now what year are we in now?

Mason Inman: 1949. The obvious point that the obvious place to get oil from that point was the Middle East. It wasn't huge then. Like Texas alone was producing more than the whole Middle East at that point. But the production was rising really fast and people realized that there was a really big potential in the Middle East. So the Secretary of Interior was trying to warn people we should be careful about growing dependence on Middle East oil in the decades to come. So there were some reasons to worry but basically the attitude at this meeting was hey there's nothing to worry about, so Hubbert challenged that, it spurred this whole debate at the conference. And in the end, nothing really got resolved because some people had this estimate some people had that estimate, and there was no real consensus about where things were going. And in the end people just wound up disregarding any warnings about a coming peak or coming shortages.

Chris Nelder: OK. So it was at that point then that Hubbert got much more serious about being empirical and analytical about his projections and proceeded with his method. So as I understand it you tell me if I'm wrong, as I understand it his method was estimate the ultimate recoverable resource, the URR, and then basically draw a bell curve of production around that quantity and then realize that wherever the midpoint of that bell curve is there's probably more or less when in reality you're going to have the peak of your production and it'll be about halfway through the total resource. So when your model shows that you're getting close to that point you realize that in reality your plus or minus a few years probably from that point. So it was supposed to be a useful policy tool. I mean he was trying to do modeling based on estimate of resource that would be useful to the U.S. government.

Mason Inman: Yes. So when the paper that he did that was the talk, and the paper that he's most known for was in 1956 and it was a speech he gave to the American Petroleum Institute. And he used that method that you're describing where he took mainstream pretty well accepted estimates for how much oil the U.S. might yield over the long term. And you know he made his own little tweaks to it but basically he used these numbers that were already out there and he came up with this value of a 150 billion barrels that the U.S. would be able to yield. And just to be clear this is talking about conventional oil the kind where you just drill into the ground. And oil comes out or you can pump it out. We're not talking about oil shale or tar sands or anything we have to do more complicated stuff to make it into actual oil. And so he said, 'OK let's take this number that people seem to accept and then let's look over the long term to say what are the implications really. And he found with the production that had already occurred, and that you know had been still rising at that point so soon it's not going to just drop off a cliff suddenly it's probably going to keep rising for at least a few more years. And you have some kind of smooth curve like this bell shaped curve. It's pretty hard to escape the conclusion that the peak was going to come in the not too distant future and where he pinned it with that estimate for the total recovery of 150 billion barrels was it looked like it would come in about 10 years around 1965 and then he said...

Chris Nelder: Because he was making this model in 1956.

Mason Inman: In 1956, yes.

Chris Nelder: So he was saying based on generally accepted estimates of ultimately recoverable resource in 1956. Probably hit the peak around 1965.

Mason Inman: OK, but then he said OK you know these things aren't totally nailed down. So what if there's more oil. Let's add another 50 billion barrels on to get a total of 200 billion barrels.

Chris Nelder: Just for a fudge factor.

Mason Inman: And then he showed that's a lot more oil.

Chris Nelder: 25 percent more, well actually a third more.

Mason Inman: Yeah a third more oil. But the effect that it has on when the peak would come, as long as you assume that you have this smooth kind of roughly bell shaped curve. The effect is not actually that much it would only delay the peak about five years. And so then if there is that larger amount of oil available maybe the peak would come around 1970. So this is this range that he became known for saying the peak is going to come around 1965 to 1970.

Chris Nelder: And then in reality the peak happened in 1970.

Mason Inman: Exactly.

Chris Nelder: And so Hubbert had been very much reviled, criticized, ridiculed by people within and without his profession who just didn't like this message. And then in 1970 he was vindicated. Now how long did it take for that recognition to happen. How long did it take for the world to go, oh you know what he was right about that 1970 thing?

Mason Inman: It took until after 1970, until the 1973 OPEC embargo before he...

Chris Nelder: So that's when people in the oil industry finally was like' Oh you know what, it happened in 1970, and Hubbert was probably right.' So then that was a U.S. model, OK so what was his model for the world?

Mason Inman: Before we get into that I thought, he didn't just say let's take a total amount of oil for the ultimate production from the U.S. and then fit a bell curve to it and that's it. He developed a number of other methods in the years after that that he used to try to forecast production in the U.S. and that did not rely on assuming ultimate production at the beginning.

Chris Nelder: So how did they work?

Mason Inman: So one was he tried looking at the number of large fields or giant fields that had been discovered over time. So these are fields that have at least 100 million barrels of oil in them. And it looked like the rate of discovery of those big fields was dropping off over time. And so he thought it's getting harder to find them. We can use this to put some boundaries on how much oil it is that we're going to be able to get. It turned out to be more complicated to do that kind of analysis than we thought at first because not all big fields are recognized as being big. Initially. You might drill into them and think they are a certain size and then as you drill more, you realize actually it's a much bigger field than we had thought at first. So this was an issue that people call reserve growth but there wasn't really any analysis of this kind of thing at that point. Not any analysis of to try to say what's the reserve growth of all the fields in the U.S. over time or anything like that. So that was something that he had to tackle in order to try to build a better forecast. Another method that he used was to look at how many barrels of oil are being discovered for every foot of exploratory drilling that you do. And so he could take these estimates of how much exploratory drilling there had been. And look at the amount of oil that was discovered each year. But again, this wasn't a case where when it's not always obvious in a particular year how much oil you've discovered in that year, you discover some oil fields but you don't know exactly how much is in them. And how much is in them only becomes apparent over time. So for both of these analyses he had to try to understand how reserve growth works, how these fields seem...

Chris Nelder: So there was always an idea in his modeling that there would be reserve growth. That was always baked into the idea.

Mason Inman: Not the very initial versions, but after he came out with this initial version and said if we base it on an assumption of a certain amount of ultimate oil people don't really like his conclusions. So then they just started magically coming up with much bigger numbers. Within a year of him giving this 1956 speech that got a lot of attention the estimates that were generally accepted went from...

Chris Nelder: Estimates coming from where?

Mason Inman: These were from a number of sources like the Department of Interior in the US government. They were industry estimates like Oil and Gas Journal at that time would do surveys of some companies and then report these things anonymously.

Chris Nelder: And the U.S. Geological Survey?

Mason Inman: They were not at that point really making any resource estimates for the U.S. They were not very much involved.

Chris Nelder: That came later.

Mason Inman: Yeah, that came later.

Chris Nelder: OK, so let's talk about how Hubbert got to his global model of production. How did he do it? Was it again this concept of estimating the total production for the world, and then drawing a bell curve around it and estimating from there?

Mason Inman: It was that kind of thing. But he also argued that that was not really a sufficient method and that he was always trying to find ways of getting the data in order to do a better analysis like what he had done for the U.S. where you look at barrels per exploratory foot of drilling or you know measures of how many large fields have been discovered and other things like that that can give you some idea without an assumption at the beginning about how much oil will be extracted.

Chris Nelder: A more empirical method and he was still in search of a better method.

Mason Inman: Yeah.

OK, so when when did he come up with his global model?

Mason Inman: So he was making forecasts for world oil production for many years starting in 1949 with that U.N. meeting that I talked about where he was taking this assumption of around 2,000 billion barrels and saying if we burn it fast maybe we'll have a peak in the early 21st century, if we burn it slow maybe it will be in the middle of the 21st century like 2050 or something.

Chris Nelder: So real rough ballpark estimates at first. And then eventually it came down to where he actually had a pretty discrete model for the world.

Mason Inman: Yes and no, I mean he had his own intuitive idea but he would present these kind of bell shaped curves for the world up until the 1973 oil embargo which was the first time when anybody had really tried to affect the production of oil for...

Chris Nelder: It was the first time that OPEC really asserted its power.

Mason Inman: It tried before and did not succeed, and it was not a coincidence that the first time that they succeeded was after U.S. oil production peaked.

Chris Nelder: Because the US had been the biggest producer.

Mason Inman: The U.S. has been the biggest producer and the biggest consumer. And it had been able to supply most of what it needed from its own production but not all. And suddenly when the peak came it was needing more and more imports every year.

Chris Nelder: OK so when was Hubberts canonical or most recent most discrete model for world production. When did he make it?

Mason Inman: Well, after the 1973 oil embargo then he was saying, look there are different paths that this could follow. We could, if we follow the path that was like what we had been on before where production would just keep going up and up as long as it could, then production might peak very soon like in 1980 or something. But we could also have a situation where for political reasons the production for the whole world winds up being roughly flat from the early 70s onward. And then he looked at how long that kind of plateau might last, if you were to drag it out, then it would be until maybe the 2030s. And he said these are two extreme scenarios. And the actual production will probably be somewhere in between these two.

Chris Nelder: And somewhere in between these two was when?

Mason Inman: So I mean it could be anywhere between 1980 and 2030s. And so his favored idea was around the year 2000 roughly.

Chris Nelder: OK. But he wouldn't have been super militant about saying it's going to be 2000. Like it wouldn't have surprised him if it was 1995 or 2005 or whatever.

Mason Inman: Yeah, he wasn't trying to nail down an exact year. What was more important to him was trying to get people to think about the long-term of course.

Chris Nelder: That there could be a peak, first of all.

Mason Inman: Yeah that there could be a peak that could come surprisingly soon, that you have to look at the long term course of things in order to try to get an idea roughly of when it was going to come. So in this kind of two scenario case that he would show, he was trying to emphasize that there's a role for geopolitics and so on that can influence when the peak would come exactly.

Chris Nelder: So he certainly anticipated there being exogemous factors that would change things politics, new technologies, new discoveries, fuel substitution. All that stuff.

Mason Inman: Yeah, I mean the fuel substitution and so on is a somewhat different issue. But he was definitely aware that there were alternatives to oil and was urging the world to switch off of them because that's the whole issue about peak oil is right. How are we going to transition off of oil.

Chris Nelder: So was 1973 basically the last major iteration of Hubbert's model for the world?

Mason Inman: In the 70s and later in the 70s he published a couple of papers that had a bit about world oil production in them, where he would present these two scenarios showing how geopolitics could have an effect.

Chris Nelder: So there's been 30 almost almost 40 years transpired. Really between when Hubbert was actively doing modeling and today. So obviously a lot has changed. Obviously world oil production did continue to increase and it increased to a higher level than Hubbert anticipated. But within the plus or minus sort of five year bracket that he expected. Which would have been kind of the nominal or notional middle of this range of forecast that he was actually working with.

Mason Inman: Yeah exactly.

Chris Nelder: OK. All right. Now let's talk about what other people thought of Hubbert's models, like when he was making his forecasts for U.S. production to peak in 1970 in 1956, what were people saying?

Mason Inman: So people generally disregarded this, people in industry but also people in government. The arguments were that he had you know left out some crucial factor or many crucial factors from his analysis. So they said, technology can develop, and prices can increase. These things can make it so that we will ultimately extract a lot more oil than Hubbert had thought. And that the mainstream ideas thought at any given time. But the problem with this is that it doesn't really have any limits to it. The idea that prices and technology would just keep increasing how much we could extract forever apparently.

Chris Nelder: So that was the view at the time of his opponents was: there's really no limit, we can we can keep increasing, prices will cooperate. We don't see any real indication that there's going to be a limit to production at all in 1956.

Mason Inman: Yeah, so like some of his main opponents were from this oil company called Humble Oil. That was the largest producer of oil in the U.S. at that time and they were owned about half or a bit more by Standard Oil of New Jersey. And they wound up merging and became ExxonMobil later. So these are big players in the oil industry who were criticizing Hubbert and their main concern at that time was whether the U.S. would consume enough oil and also whether too much oil would come in from the Middle East and undermine their ability to sell oil at prices that they can actually turn a profit off of. In the U.S. you know barrels extracted and selling for profit. So because of their concerns about Middle East oil and about consumption they were really not thinking about any kind of limits to how much oil might get extracted.

Chris Nelder: Humble Oil wasn't thinking about them.

Mason Inman: No, and so they were trying to shoot down Hubberts ideas. They wanted protection from the Middle East oil and they wanted the US to extract as much as possible to maximize their profits.

Chris Nelder: So did Hubbert have any allies with his kind of peak forecast at the time?

Mason Inman: Basically no. I mean even at Shell they gave him permission to give this talk in 1956.

Chris Nelder: Grudging permission.

Mason Inman: Well it wasn't grudging so much at the time, but a couple of people got wind of it. And right as he was about to give the speech he got called off the stage to field a call from somebody at the headquarters in New York saying please tone it down like this stuff about the peak of oil coming in the not too distant future. That's just ridiculous. And he said this is just a pretty straightforward analysis based on well accepted ideas and he disregarded them and gave his speech.

Chris Nelder: So he didn't have any allies for his theory in 1956.

Mason Inman: Yeah.

Chris Nelder: OK. So after the 1970 peak, like in the 80s and the 90s what was the state of thinking about peak oil then? Or was anybody doing more modeling?

Mason Inman: Well, there's the early 80s right after the second oil shock and then later in the 80s that are a lot different times. But if we take from 1986 when there was a crash in the price of oil through the 90s when oil prices remained low there was relatively little attention to these issues. There weren't very many forecasts issued for when oil production might peak in the world, and there wasn't much attention to estimates of what the ultimate amount that might be extracted would be. And some organizations like the U.S. Energy Information Administration and also the International Energy Agency in the late 70s they had both issued forecasts that were showing world oil production peaking around the year 2000. But then when oil prices dropped even those organizations stopped issuing any kind of forecasts like that and generally said there wasn't anything to worry about with world oil production peak.

Chris Nelder: So when did that happen. Like when did they stop forecasting a global peak around 2000 and just not talk about it anymore?

Mason Inman: It was after this 1986 oil price crash.

Chris Nelder: Right. So price got low and scared everybody away from the peak oil thesis. And just for the sake of our listeners let's refresh very briefly why that happened. Why did oil prices crash?

Mason Inman: So when there was this 1973 OPEC's embargo they wanted to get a lot more dollars per barrel for the world that they were selling so they raised their prices. So that was the first oil shock. Then there was a second oil shock with the Iranian Revolution in 1979 which drove the prices even higher. Both of those meant that there were a lot of places around the world where it became profitable to extract oil that wouldn't have been profitable before. So there was a big boom in drilling in the North Sea. So England, Norway and Denmark started producing oil where they had basically produced nothing before. There was a big offshore field found in Mexico that started producing a lot of oil. This big field in Alaska. Prudhoe Bay that was the biggest field ever found in the United States. And it still is the biggest that's ever been found in the United States. That one finally came online as well. And so these higher oil prices did bring forth a bunch of additional production.

Chris Nelder: And all of a sudden people didn't believe in peak oil anymore. Because prices crashed.

Mason Inman: Yeah. Well another side of it though was about the consumption of oil. So people were burning a lot of oil in power plants and they cut that back because it didn't make sense anymore when oil is expensive to burn it in power supply.

Chris Nelder: So back to just kind of the quick review of modeling here. So after Hubbert's latest model circa 1973, nobody was really doing any real peak oil modeling. There was no real attention to the matter given there was new production happening there was new discoveries happening the prices were low. Nobody believed, nobody cared anymore.

Mason Inman: Generally, yeah, that's true.

Chris Nelder: OK. Until 1998 when Colin Campbell and John Lahrerre published an article about peak oil in Scientific American.

Mason Inman: So before they had their article in Scientific American there was a whole bunch about peak oil in the 1998 International Energy Agency's World Energy Outlook and a lot of it was actually inspired by their work but it was before they had published the Scientific American article. So Colin Campbell was a geologist who worked at BP for many years. John Ritter was a geophysicist who had worked at the French oil giant Total for many years, and they had been analyzing the world oil situation using this database that was the best thing around at that point from this organization called Petro Consultants in Switzerland and they thought that there was signs from the data in this database that something around the like the estimates that Hubbert had been working with around 2 trillion barrels of conventional oil, that that was likely to be roughly the limit of how much would be extracted over the long term. So they were using a lot more data than what Hubbert had available to him and they were coming up with an answer that was roughly similar to what he had. And they used a method that was somewhat similar to what he had used in his early studies like in 1956 where he had said let's start with an estimate for the total amount of oil that we think would be ultimately extracted and fit a bell curve to this and try to get a rough idea of when the peak might come. And so they did this in 1998 and they came up with a number if I remember right that it would peak in the early 2000s and after that they couldn't say exactly how things would proceed because it depends on how people react to it. But they talked about that there could be an undulating plateau where instead of just production going up and then sharply dropping off after that because of feedbacks between oil production, the price of oil and the state of the economy, that production might go up. Then the economies might falter, production would fall a bit. The price would fall, then it could pick up again with economic growth picking up. But there's this kind of feedback between all these forces that would mean it's kind of messy for a while and you are roughly on a plateau. But eventually it's going to start declining again. And this is this long term problem that we have to start planning for well in advance if we're going to make any kind of smooth transition away from oil.

Chris Nelder: Right. OK. So 1998 Campbell and Lahrerre had refreshed the Hubbert hypothesis essentially and updated the data and come up with substantially similar numbers for the URR, and for the timing of the peak. Okay, 2005 is when I think a lot of people, including us, had really tuned in to the peak oil dialogue and we started finding each other on places like Yahoo message boards and then the Oil Drum was established and so there was a whole rich dialogue that happened at the Oil Drum for quite a few years of people who have started this data and are interested in these modeling techniques. And so there was a real debate, a rich debate that went on at the Oil Drum for years, and at the same time Campbell and Lahrerre and some other folks had founded the Association for the Study of Peak Oil international organization and then later there was the U.S. chapter of that ASPO USA which had its first conference in 2005. I was actually at that conference. And so there was a bunch of folks like I remember Henry Groppe, Richard Heinberg, Albert Bartlett, Roscoe Bartlett. In fact I remember somebody in the audience yelling out a joke about Bartlett pear. Anyway. So that was around 2005. Was like that whole dialogue started amongst people you know sort of in the modern era about peak oil. And so we had all these conferences. TOD was publishing stuff every single day.

Mason Inman: Yeah that's the Oil Drum right?

Chris Nelder: The Oil Drum. To talk about. You know, what does the latest model say. When are we actually going to hit the peak, that was 2005. When did we actually hit the peak of conventional oil production?

Mason Inman: 2006.

Chris Nelder: 2006 - right after all this dialogue really happened, right after The Oil Drum was launched.

Mason Inman: But it wasn't clear at the time.

Chris Nelder: We didn't know then. So then we had the worldwide commodity explosion, the financial meltdown of the global economy 2008. Then we had the depression, or great recession whatever, QE all over the world, all sorts of attempts made to restore growth. Since that point. 2014, summer of 2014 prices started to fall for oil. It's been 20 months since then. Because prices started to crash, all of a sudden I see all these people who always hated the peak oil story suddenly running out with the courage to shoot the wounded and say, 'Oh we always knew that peak oil was dumb and prices are so low now that it proves that peak oil was dumb and everybody was afraid of it in 2007, 2008 nobody talked about it for years but it has turned out that was all wrong and it was dumb.' First of all 2007, 2008 I was there, people were not talking about it. They were not taking it seriously. This was not something that was being seriously entertained in the pages of the major publications out there.

Mason Inman: Yeah this is this really weird revisionist history thing that's going on right now. And it's not even just from like weird fringe people. It's even coming from the International Energy Agency. I was reading their Medium Term Oil Market Report.

Chris Nelder: Who us? We said? No.

Yeah I know. I'm reading their report. Their latest one that came out in February the Medium Term Oil Market Report. And it says you know something along the lines of everyone used to be worried about peak oil and now they're not anymore. And I'm like everyone?

Chris Nelder: I was there I don't remember that. I don't remember people saying peak oil seriously back then.

Mason Inman: Yeah, so I don't really know what the deal is with that but it's definitely true that everyone is lining up right now to say that the low oil prices you know undermine any kind of peak oil concerns.

Chris Nelder: Right. And along with it I think we're hearing a lot of other not only revisionist history but just straight up myths about whatever peak oil meant. So let's take a minute because I know that you've actually collected some of these. So let's take a minute and talk about the sort of mistaken ideas about peak oil that have been promulgated in the press or other myths about what major progenitors in the peak oil thought movement thought.

Mason Inman: So yeah, I mean one of the big ones was about price. And people would say that Hubbert and other peak oil people thought rising prices wouldn't make any difference. So to take one example we have Daniel Yergin who is now treated as one of the nation's and the world's greatest energy experts.

Mason Inman: So you know he wrote this Pulitzer Prize winning book called The Prize. It's a history of the oil industry and everyone cites him every time he appears anywhere as this Pulitzer Prize winning author.

Chris Nelder: If you ever need to cite an oil expert in any mainstream publication you're always going to want to cite Daniel Yergin.

Mason Inman: And so when he wanted to make a strong argument against peak oil in 2011 when his latest book The Quest was coming out he wrote Hubbert insisted that price didn't matter. So that's pretty straightforward, except it's not true. So what Hubbert actually said was rising prices will make some fields more attractive economically. So you'll get more production than you would have at low prices. But he said this isn't some kind of panacea. It's not something that can just happen forever indefinitely. If you have a rise in oil prices sure you can get some more oil production for a bit with some limits but the price can't just go up and up and up from $10 a barrel to a million dollars a barrel and bring forth thousands of times more oil than what you would get at $10 a barrel. But that was the way that people generally talked about it in Hubbert's time and then people are still talking about it the same way. Now where that discussion is not that sophisticated they just say you've ignored price, or price will bring forth more production, and people aren't very good about putting data on it.

Chris Nelder: Yeah, I think we all we all realize that. So what other myths have been said?

Mason Inman: Yeah there's another one that technology would bring forth more resources and allow production to keep increasing and people would say that Hubbert ignored technological development or that he assumed that technology would be static.

Chris Nelder: Or that the peak model of production would be sort of exclusively driven by geology, that there was nothing that economics could do to overcome those limits.

Mason Inman: Yeah. And so supposedly it was some kind of thing where if there was no technological development and no change in the prices then you would get a certain kind of path for the production over time that would be something like these bell shaped curves that the peak is known for. But then with the magic of technology and prices then you know anything's possible. So Yergin was another one who was saying this kind of thing you know when in 2011 he said Hubbert had a view that technology was just going to be static. And Yergin's firm called CERA, Cambridge Energy Research Associates.

Chris Nelder: Which is now part of IHS.

Mason Inman: Yeah. They had had a report years earlier in 2006 called 'Why the peak oil theory falls down. And they you know made the same kind of arguments then where they said Hubbert's methodology falls down because it does not consider likely resource growth, application of new technology, basic commercial factors or the impact of geopolitics on production. And so as we already talked about he actually considered all of these things, he was actually the first one to give any kind of quantitative estimate for reserve growth for fields in the U.S. for the whole set of fields in the US.

Chris Nelder: So not only did he anticipate it, he was the first one to quantify it.

Mason Inman: Yeah right. But then people didn't really like the answer they came up with.

Chris Nelder: And so what did Hubbert know about like the future of technology, like what do he know about fracking?

Mason Inman: So he was the one who first explained how fracking works physically. So he didn't like invent fracking, and the oil company during World War II called Stanalend or Standard Oil of Indiana. They were the ones that first developed hydraulic fracturing as a method to try to get more oil out of the ground.

Chris Nelder: After many years of other people doing all kinds of crazy things like dropping dynamite down holes and stuff yeah. And nitro glycerin.

Mason Inman: Yeah. So people had tried everything they could to try to tweak oil fields and see if more oil would come out and this was just another one of those kind of things that wasn't obvious whether it actually work. But it did actually start working. So it became really popular. People started doing it a whole bunch in the 50s especially in West Texas.

Chris Nelder: So Hubbert was the first one to explain how this worked sort of formally.

Mason Inman: Yes there was this argument going on within the oil industry about how it worked where the company that first developed this technique, they thought that the fractures would open up in a particular direction they thought it would be horizontal in the ground and some others said we think they'll actually be vertical. And Hubbert heard these debates at a conference but he thought actually both sides are not really making sense. Their analysis of what's going on with the physics doesn't make sense. And he was really good at physics. He was a geologist some say or a geophysicist but he was good at physics. So he did an analysis at Shell because they gave him this task when there is this debate going on: figure out what is going on fracking. And so he came up with a theoretical explanation of how the fracturing works and that is now regarded as a classic paper that people still cite today. And so basically he explained how fracking works when nobody was really sure at the time.

Chris Nelder: So clearly the allegations that Hubbert was somehow unaware of the miracle of fracking that would come decades later. Totally wrong.

Mason Inman: Yeah, so he did not foresee the huge production of shale gas and tight oil that would come from fracking. That's fair to say. But nobody else did really either. Even the people who were big optimists about technology and price and so on they weren't saying, oh if only the price gets up to $100 a barrel then we're going to start fracking these tight oil formations.

Chris Nelder: 30 years before it actually happened. Nobody was saying that, no.

Mason Inman: And so it wasn't like that he was just super grumpy pessimists who. And that was the reason why he came up with these lower estimates so he was aware of these technological developments. He tried to incorporate them in his studies of oil production. So for example when he was looking at the discoveries per foot of exploratory drilling that was done, he said this record that we can look at where we look at this statistic over time it incorporates a lot of development of tools for finding oil like seismographs and for drilling and getting it out of the ground. And so we can look at this long term record that actually reflects the technological development that has occurred at the same time and there could be a break from this trend if there was some huge technological development that nobody could have foreseen and that was a complete break from the historical record. But if you assume that technological development will more or less proceed the way that it had been for decades before then you would probably follow something like that trend that had been going on there which was that they were finding less and less barrels for each foot of exploratory drilling.

Chris Nelder: So he clearly clearly understood what the future of technology might be and how it might affect future production. So that myth is busted, that he didn't understand tha future prices or future technology could change things. All right. What else what else you got.

Mason Inman: I mean I think those are the big ones. Price, technology, the reserve growth idea. I mean the other big one that we haven't talked about explicitly was about unconventional oil. So people say, oh but there's there's not just the field that you drill into the oil comes out there's tar sands, there's oil shale like in Colorado.

Chris Nelder: Right. There's biofuels.

Mason Inman: There's biofuels there's these different things.

Chris Nelder: We can turn coal into liquid fuels. We can turn gas into liquid fuels.

Mason Inman: Yeah. So people say well Hubbert just didn't know about these things. He wasn't aware of tar sans and so on, but that is just a complete myth because all you have to do is read his papers and you see he made estimates for how much he thought tar sands might yield over the long term. How much oil shale might yield, and so on.

Chris Nelder: So that was in his original modeling?

Mason Inman: So in his 1956 paper he put in estimates for those things but it wasn't part of the bell curve that he drew because that was just for the conventional oil. So he was saying you know we can add on a bit more from tar sands and oil shale and so on. But it's not going to totally replace the conventional oil that we've been using. So we need to work on other things. And he had some ideas about what that might be and his ideas about how to transition off oil changed over time. But the general point is he was aware of that there were other ways of turning things into some kind of liquid that you could put in your car's gas tank.

Chris Nelder: OK. Now I thought you had like a whole list of myths, we've been through two and your done.

Mason Inman: That was four.

Chris Nelder: Oh that was four, ok.

Mason Inman: Reserve growth, technology, price and tar sands and other unconventionals. I can do a whole show on myths about Hubbert.

Chris Nelder: Pick a couple good ones and let's let's run through them here.

Mason Inman: So I said one other big one is that people say Hubbert assumed that oil production must follow a bell curve or that he got this bell curve by looking at what individual fields do and then saying the whole U.S. or the whole world will be like one giant oil field and will exhibit this same kind of behavior where the production goes up gradually, just plateaus and then drops off. And he didn't say that. Nothing that he wrote was looking at individual oil fields and how their production is.

Chris Nelder: So just to recap. Hubbert was never saying that economics doesn't matter and it was purely a geological phenomenon. He never said that there would not be reserve growth or that there would not be growth in production as new technology made new resources available. And he did not say that production would follow a rigorous bell curve and that it would look exactly like that. And he would not say that oil would peak in a specific year and it had to be that year and that there wasn't going to be a plateau or some other different shape around that year.

Mason Inman: Right.

Chris Nelder: Okay, now that we've got that out of the way. Let's talk about how you plan for energy transition. I mean back then especially in 1973, so we've got the Carter Administration, we've got the Arab oil embargo. I remember sitting in line in those years waiting to buy a couple gallons of gasoline in the hot Tucson sun for like a year and a half. That sucked. That sucked.

Mason Inman: I'm glad I was young enough to not remember. I was probably sitting in the car at that time but in a car seat.

Chris Nelder: Just sitting there in line like a 105˚F waiting for an hour and a half to to buy a couple of gallons of gasoline on your odd-even day depending on your license plate. Back then, they were trying to do planning for energy transmission and that was some of the work that Hubbert was involved in was trying to help the U.S. government figure out what the future production of resources could look like and how to plan their own energy consumption ... on Energy policy.

Mason Inman: There was basically no planning. And he was trying to get them to take seriously that there were limits to resources and that they would need to start planning. And so after this 1973 oil embargo then he began to be recognized as an expert who had foreseen this and people started saying oh you like this prophet or this or coal who had foretold what is now occurring. And he said you know of course I'm not an oracle I'm not communicating with the gods. I'm a scientist. I was trying to tell you guys based on evidence why we were headed towards this kind of thing. But you guys weren't listening. Anyway, you're listening now so I'll tell you more about where things are going. That was basically him in the 1970s and he did get some interest from the Carter Administration when they first started trying to have some kind of energy policy for the U.S. So Carter created the Department of Energy and had a Secretary of Energy in his cabinet which was something that had never existed in the U.S. before that. People essentially took energy for granted. So that first Energy Secretary James Schlesinger and he gave warnings about approaching peak of world oil production, without putting an exact date on it, but you know it was something that we needed to worry about. He knew about Hubbert's forecasts. And when I interviewed him for my book he actually told me that he had wanted to give Hubbert a National Medal for his work to recognize that how Hubbert had highlighted these important long term issues that the U.S. and the whole world were facing. But then Schlesinger was really arrogant. He was very abrasive and hard driving. So he had a lot of good qualities that he was trying to warn people about these things. But the way he went about it was not the best. He wound up getting fired by Carter because he rubbed too many people the wrong way. And so he got fired before he was able to actually give Hubbert this national medal unfortunately.

Chris Nelder: Wow. OK. So Hubbert was trying to help encourage formal planning around resources. That was one of his objectives and he became, actually well before the 1970s involved in a movement called technocracy. So tell us briefly what technocracy was about, when it started.

Mason Inman: So technocracy started in the depths of the Great Depression in the early 1930s. That was a group that Hubbert an engineer named Howard Scott and a few other people who pulled together who thought that some kind of rational planning could help pull the country out of the Depression, and their particular view on this was that scientists and engineers could help direct the economy or plan the economy. And the reason was because they thought that the people who were in charge of running things like setting policies in the government or setting monetary policies and the Federal Reserve and so on. These were not people who understood the industrial civilization that that existed at that time. Their ideas were based on older ideas and that we needed people who understood how machines powered by fossil fuels had completely changed the possibilities for how you run an economy and how you live your life. Even at that time, there was a lot of mechanization and automation that was meaning that people did not have to labor as much and you could produce a huge amount of goods without so much time from people. And so working hours had been getting cut back and back from 80 hours a week to 40 hours a week, which is a huge difference. And they thought that this was a trend that would continue into the future.

Chris Nelder: They were worried about a future in which we're being dominated by a robot overlords. And we wouldn't have any work to do.

Mason Inman: Sort of. I mean what they were hoping was that everybody would come together to share the bounty from these machines so everyone could have plenty, have a decent life and you wouldn't even have to work very much. The number they came up with 16 hours a week.

Chris Nelder: OK. So technocracy briefly was interested in taking an empirical top down planning approach to the economy. And they were not particularly focused on limits to growth per se or on resource limitations, generally. They were more looking for an optimization really.

Mason Inman: Yeah, they wanted to run the factories efficiently and so on. Like one fascinating thing that they had was they said everybody should share cars instead of owning their own car. And you go to this garage and you check out a car and then.

Chris Nelder: The sharing economy for vehicles.

Mason Inman: It was Zipcar like a hundred years before. So yeah they had a bunch of things like this that they thought would help allow the economy to run more efficiently instead of the bounty of the machines just going to the owners and a few people becoming rich, they thought it could build a totally different kind of society where everyone could have a lot of leisure and study and so on.

Chris Nelder: OK. So that started in the 30s. And then here we are, fast forward 40 years and Hubbert, his views have gotten the attention of the Carter Administration, gotten the views of James Schlesinger, and by that point Rachel Carson's Silent Spring had come out. Right, so the whole environmental movement was now in motion, and the Club of Rome had published the Limits to Growth. And so there was at least in intellectual circles, there was certainly a consciousness that there might be this whole Limits to Growth problem. And Hubbert, how did he view that that school of thought?

Mason Inman: So he was a big proponent of the work that was being done at MIT that was the Limits to Growth report and other things on this matter I was not told to.

Mason Inman: Yeah. Dennis Meadows actually got a hold of Hubbertt right before they published this Limits to Growth report in early 1972. Before that Dennis Meadows got a hold of Hubbert and said a lot of our work was inspired by you, I wanted to see if you'd be interested in collaborating. And Hubbert said no, and I think the main reason was he was never very good at collaborating with anybody.

Chris Nelder: He didn't get along well with others.

Mason Inman: He did not get along with others well, no. But then over the years he said many nice things about the Limits to Growth work, like he wrote a long memo about it for the Secretary of Interior at that time to say these are important issues that we need to be looking at. And you know he had been saying similar things about, that there are various kinds of resource limitations that would limit growth, and that we should be trying to adjust our society to run things sustainably which means that it could keep going that way for hundreds or thousands of years. He had been saying these kind of things for a couple of decades before the Limits to Growth report came out. But he wasn't better when it came out. He just said this is great. People are paying more attention to this kind of thing.

Chris Nelder: Well what was Hubbert's view of what a sustainable energy consumption looks like. What did he think, like he obviously recognized that oil would have limits. So what did he think was going to come after that?

Mason Inman: Well he recognized limits for oil but also for coal and natural gas. And so when he first started thinking about this kind of thing seriously in the 1940s he was looking for you know what is going to replace these, what's something that can actually last for a long time and to that point he thought it would be hydro electric power because that was the big renewable energy source at that time.

Chris Nelder: Yeah. In the 40s for sure.

Mason Inman: Yeah. And then several years later after World War II nuclear power came to the fore and the first commercial nuclear power plant started up right before this famous 1956 talk that he gave and he got pulled in by the National Academy of Sciences to be an adviser on nuclear waste disposal to help the Atomic Energy Commission which was at that point in charge of promoting nuclear power in the US and also regulating nuclear power in the US. So he and a small team of other scientists were supposed to advise them so he learned a lot about nuclear power at that point and he got very excited about it and said essentially this is the answer we need to switch as much as we can over to nuclear power. But he said we need to do it in this way where you use breeder reactors, so you use these reactors that turn uranium into plutonium and it greatly increases the amount of energy that you can get out of a certain amount of uranium that you mine out of the ground. But that was not the way that the reactors were working at the time and there's very little work done on trying to develop these breeder reactors.

Chris Nelder: And then as it turned out Hubbert had been involved in doing official U.S. government estimates of how much uranium could be produced at an acceptable price to run a nuclear based electricity system.

Mason Inman: Well, he didn't make his own estimates for uranium.

Chris Nelder: No, but he worked with a team that was working on that. That had been hired to figure out for the U.S. government what the future of these resources looked like.

Mason Inman: Yes. So he was part of this National Academy of Sciences panel that was put together. It was at the request of John F. Kennedy when he was President and to assess the Nation's resources. And this was all kinds of resources but they chose Hubbert to be in charge of energy resources. And then he tapped all the top experts that he could find on particular things, like he took oil himself. But then he had an expert for solar, and an expert for coal, and an expert for uranium who was this U.S. Geological Survey expert who wound up becoming his nemesis in later years. But that's another story.

Chris Nelder: So Hubbert was exposed at that point to some of the best information that you could get your hands on that anybody could get their hands on about the state of all these technologies and he became aware of the nuclear waste handling problem. And it started to sour him on the prospect of nuclear power.

Mason Inman: Yeah. So essentially he thought nuclear is a great technology but people can't be trusted with it. You know, some people might handle it well, but as a whole the way that it developed it was difficult to do it well, and he really did not like the Atomic Energy Commission. But that was a weird organization that was built to promote and regulate the nuclear industry.

Chris Nelder: A fox guarding the henhouse classic situation.

Mason Inman: Yeah. It's like I don't know who thought of that but it's not a good idea. But you know they persisted with that for years. They were started up right after World War II and it only got kind of dismantled and changed into something else in the mid 70s if I remember righ. So he and the others on this National Academy of Sciences panel on nuclear waste were trying to bring attention to these, the way that nuclear waste was getting handled. I mean people were doing crazy things like just putting waste in cardboard boxes that were sitting out like in this kind of desert-y area and Hanford, Washington. And then when questioned about this the people in charge said well it doesn't get much rainfall so we there's not much water so it won't carry the radioactive stuff very far. It might get into the ground somewhat but it'll probably stick to the dirt and it won't get into the groundwater so there's nothing to worry about.

Chris Nelder: So massive irresponsibility in the handling of the nuclear waste at the Hanford site.

Mason Inman: Yeah, and not just Hanford.

Chris Nelder: So Hubbert saw this and was aware of it.

Mason Inman: Yeah. So then at the same time he had been following solar power you know going into different conferences and talking with experts in that area and he saw that there were big leaps being made in solar power and this was solar concentrating power where you have a bunch of mirrors that reflect light to generate heat and drive a turbine but also photovoltaic power to regenerate electricity directly. And so at the same time he was souring on nuclear power he was getting more excited about solar. And so right at the time of the OPEC embargo in 1973 then he had this lecture tour that he was put on by the American Association of Petroleum Geologists. So this is like essentially the oil industry sending him out on a lecture tour and he said we need to. Switch over to solar power as much as we can. This was in 1973 and early 1974, so he was very forthright in saying I used to think nuclear was the answer. But he said, now I've become really afraid of it. You know there's these issues with nuclear waste. There are issues about nuclear proliferation where people might get bombs. There are issues where people might run in and hijack a nuclear plant and then like make it melt down or you know there's a variety of issues. And he was worried about the environmental impact from these. And he just thought it's not a good technology.

Chris Nelder: It's just too dangerous for humans. And solar power is safe and we should go solar. So that was circa 1973. OK. So this raises a really interesting point. It sounds like in a lot of ways Hubbert was was basically taking the point of view that we should be practical and pragmatic, we should be driven by data. We should try to design our economy around the best information that we have around data and so on and that in reality he was opposed by people who either stood to benefit from the industry in one fashion or another and had to put down this sort of story of limitations that he had, or who really just sort of fundamentally didn't like the idea of there being any sort of top down planning that we should just take a lasseiz faire approach to everything. And now in modern times I think that same debate has actually morphed into this, it's almost a kabuki theater about are you a cornucopia or are you a Malthusian. Like it's the same debate that we're having today that we had back then. Only now it's about do you believe in an endless future of abundance in resources or do you believe that there are limits.

Mason Inman: Right. So people you know envoke these words like 'technology' and 'price' and then either you believe that those are going to enable growth forever, or you question that and that's seems to be about the extent of it.

Chris Nelder: But if you're data driven, if you're taking the side of the debate as it was in Hubbert's time, then you have to be persuaded by the data, you have to be persuaded by what do we know, what are the facts. Which automatically means that you're part of the questioning tribe like you don't just sort of believe a priori that there will always be more resources at an acceptable price. That automatically puts you in the skeptic tribe which automatically makes you a Malthusian which automatically means that we shouldn't listen to anything that you have to say because you don't believe, you don't you don't believe as we do. You don't believe that humanity will always find a more abundant or cheaper or fungible substitution.

Mason Inman: So yeah. It's really this kind of mythology or worldview that has built up. And if you question that at all then you wind up being pushed to the fringe. So...

Chris Nelder: Right so if I believe that it would be best to run an economy based on whatever we know, the best information about what what the extent of our resources is, what it will take to produce them how we can run an economy on them etc. and that automatically makes me a Malthusian...

Mason Inman: Yeah in a lot of people views.

Chris Nelder: People on the other side of it would characterize me that way just as a strawman to just say oh well you know this guy Nelder he just doesn't believe, or worse he wants to see the U.S. fail, or he wants to see humanity collapse. Right. Well of course I don't want to see that. I'm just saying there's a very real possibility that there might be a limit to what we know are actually in truth finite resources, and that we should try to think about how we want to deal with that reality.

Mason Inman: Yeah I mean there's a lot of things that we could do like put a lot more effort into research and development so that it will lead to things that could be useful in 10 years or 20 years. But there's a long lead time on those.

Chris Nelder: Well and besides that I think as far as the argument goes that Hubbert was engaged in: can you plan an the economy top down or do you have to just take a laissez faire approach to things and whatever whatever let markets decide right. I think we've taken the latter point. You know we've taken the latter path like we're letting the markets decide. We're not even trying. We haven't had a coherent energy policy in this country since the 70s. We're clearly not trying to plan anything.

Mason Inman: Yeah. Or not in any coherent way. You know there's little things that we do where it's not completely free market you know like there have been tariffs on imported oil. There's the research that the government funds in order to try to shape what will come next. There's help for the nuclear industry that they gave it when it getting going. There's the help now for solar and wind industries with feed-in-tarrifs and other kinds