Is the energy world really flat?

The Energy World is FlatThe Peak Oil theory, which reached its own zenith around 2010 with the publication of Matt Simmons’ book “Twilight in the Desert”, is, for many commentators, now consigned to the dustbin of history, along with many previous predictions that the world is running out of oil. For some this is not, in fact, good news. Environmentalist George Monbiot’s take on it is “we were wrong on peak oil. There’s enough to fry us all.” But others see opportunity, and this is the central theme of economist Daniel Lacalle’s new book “The Energy World is Flat: Opportunities from the end of Peak Oil

”In fact the scope of Lacalle’s book is much broader than just oil. He sees ten separate forces at work, including not only horizontal drilling and hydraulic fracturing but also the increasing competitiveness of renewables and shifts in demand away from oil, which will lead to a “flattening” of the energy world in the sense of greater availability of energy on a global basis.Myths of the Oil BoomBut others have different views. Steve A. Yetiv, an academic who has published extensively on the relationship between oil and geopolitics, has recently come up with his own view in “Myths of the Oil Boom”. Essentially Yetiv’s book – written from an American perspective but with global lessons – cautions against getting too carried away with the idea that shale oil means cheap oil now and forever more.  He points out that shale oil is itself a finite resource and – at least on current estimates – less widely distributed than conventional oil. He quotes the US Energy Information Administration as forecasting peak shale oil production in the US in the 2020s. And another factor he highlights is that an increasing proportion of world oil production is in the hands of state-owned national oil companies, who have proven themselves less efficient than the big international companies in bringing new supply to market.

Two very different views – best read them both…