I have a hunch that shale oil will do to oil price and supply what shale gas did to natural gas price and supply.

Price is very muchj linked to the key issue of energy return over energy invested (EROEI).

In 1930 humanity was drawing from the ground about 2 billion barrels of oil per year. That oil was then essentially coming from easily accessed wells with an average EROEI of about 100 to 1. Hence the amount of net energy available to humanity from oil was then of about 1.98 billion barrels energy units (The US Internal Revenue Service indicates that one barrel of oil generates about 5.8 million BTUs).In 1970 humanity was drawing from the ground about 17 billion barrels of oil per year. That oil was however coming from older or more difficult wells to access with an average EROEI of about 30 to 1. Hence the amount of net energy available to humanity was then of about 16.32 billion barrels energy units.
In 2005 humanity was drawing from the ground about 30 billion barrels of oil per year. That oil was however coming from much older or more difficult wells to access with an average EROEI of about 15 to 1. Hence the amount of net energy available to humanity was then of about 27.9 billion barrels energy units.
Looking forward in time at the future oil supplies of humanity, it is now becoming quite clear that their EROEI will be even much lower. Alberta tar sand oil has an EROEI of a mere 1.5 to 1. Ultra deep water oil may not be much better, if it is even positive (The BP Macondo well has shown how much technology was stretched and the newly found ultra deep water oil reservoirs off Brazil are much deeper and will be much more difficult to put into production, Arctic oil is at the moment only a dream because there is still a moving ice cap during the winter in that region). As for shale oil, like for shale gas, one will be lucky if its EROEI is even positive, in particular if you take into account the environmental damage done. As for the oil volume that humanity will be able to extract, numerous oil experts – including the Chairman of TOTAL – have publicly said that humanity will be lucky if it can reach a volume of 100 million barrels per day i.e. 36.5 billion barrels of oil per year.Hence at some point in a not too distant future, humanity’s oil production will reach 36.5 billion barrels per year with an average EROEI of about 1.5 to 1. When that happens, the amount of net energy available to humanity from oil will only be of about 12.1 billion barrels energy units…Humanity is at the moment right at the beginning of a slide down the oil net energy cliff… and the above mentioned rough estimates do not even take into account the rapidly diminishing quality of oil. Humanity’s transportation sector, it should be recalled, is today almost totally dependent on oil. And one cannot realistically expect to replace the current generation of oil powered transportation vehicles and infrastructure with something else powered by another energy source within less than 15 years.A similar declining EROEI phenomena is occurring with the rest of humanity’s fossil fuel production i.e. coal and natural gas. Fossil fuels currently provide about 80% of humanity’s energy…As for nuclear fission energy, solar and biofuels, they all have an EROEI of less than 20 to 1. Only wind has an EROEI of slightly above 20 to 1 but it only delivers intermittent energy (as for solar energy) that has to be somehow stored or backed-up by another energy source to be practically usable. The amounts invested in the existing fossil fuel energy production infrastructure are huge and something much bigger would need to be invested in the above mentioned alternative energy sources… Yet the global financial system is on the brink of insolvency and the global economy is hitting the no growth wall. The existence of that “no growth wall” is very likley related to energy availability and in particular to affordable energy availability…

JB    

Any extraction peak such as peak oil should refer to the direct extraction of a single primary resource. I think you should stick with peak *conventional* oil, and not try to shoehorn sources of unconventional oil into the term. We’re almost certainly at or past conventional peak crude now, or else we would not be maintaining the prince levels needed to sustain unconventional production.

There are many sources of synthetic crude, including oil sands, oil shale, synthetic crude from coal or biomass from the Fischer-Tropsch process, or even if you can imagine it, if we could somehow economically and sustainably grow oil-rich algae in brine, the triglycerides could be refined into virtually any hydrocarbon and there would be no peak, it would behave like the classic laws of supply and demand, where demand conjures supply into existence and the price is found at the intersection of the supply and demand curves.

Anyway, I agree with Lee Borden – I think you should keep the concept of peak oil focused on conventional crude. The implication of peak oil, then, is the price needed to sustain unconventional production and the long term impact on our economy and environment.

Why isn’t it doing it then? They’ve been tapping it North Dakota pretty hard. Where’s my $2/gallon gasoline?

You’ re only going to get the goods if you are willing to pay a fair price. New tech costs a bit more but gives infinite supply.

In general, yes, but credible EROEI estimates can vary broadly. Tar sand EROEI is sometimes stated around 5:1-10:1, and shale estimates vary between 2:1 and 20:1, depending on field access and new extraction technology forecasts. But the trend you highlight is real and irreversible. And Rubin’s analysis is spot on – affordable energy was the key to strong growth. The era of cheap, concentrated energy is over. It is only uphill from here.

Peak Oil is like Ohm’s Law. It’s not simply an economic term or a geologic term. It is many dynamics working in tandem. “Oil production” is inexorably related to both price and demand, so calling “peak oil” strictly a geologic issue is an oversimplification. The geological reality is that there will always be enormous stores of fossil energy in the ground. But the cost to extract that energy is now increasing far faster than inflation – this is primarily an economic issue (supply-demand-cost-means to produce).

I have this vision from science fiction that one day our major cities will have massive city-sized factories nearby to produce energy from increasingly EROEI marginal sources and processes.