The piece is excerpted from the new book Snake Oil: How Fracking’s False Promise of Plenty Imperils Our Future.

We're running low on cheap oil.

ShutterstockWe’re running low on cheap oil.

For the past decade I’ve been a participant in a high-stakes energy policy debate — writing books, giving lectures, and appearing on radio and television to point out how downright dumb it is for America to continue relying on fossil fuels. Oil, coal, and natural gas are finite and depleting, and burning them changes Earth’s climate and compromises our future.

In the past two or three years this debate has reached a significant turning point. Evidence that climate change is real and caused by human activity has become irrefutable, and serious climate impacts (such as the melting of the Arctic ice cap) have begun appearing sooner, and with greater severity, than had been forecast. Yet at the same time, the notion that fossil fuels are supply-constrained has gone from being generally dismissed, to being partially accepted, to being vociferously dismissed. The increasingly dire climate story has achieved widespread (though still insufficient) coverage, but the puzzling reversals of public perception regarding fossil fuel scarcity or abundance have received little analysis outside the specialist literature. Yet claims of abundance are being used by the fossil fuel industry to change the public conversation about energy and climate, especially in the United States, from one of “How shall we reduce our carbon emissions?” to “How shall we spend our new-found energy wealth?”

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This is an insidious and misleading tactic. The abundance argument is based not so much on solid data (though oil and gas production figures have indeed surged in the United States) as on exaggerations about future production potential, and on a pattern of denial regarding steep costs to the environment and human health.

Permit me to use a metaphor to frame this discussion about fossil fuel abundance or scarcity. Since all debates are contests, at least superficially, it’s possible to summarize this one as if it were a game — like a soccer match or a bowling tournament. Of course, it is far more than just a game; the stakes, after all, may amount to the survival or failure of industrial civilization. But games are fun, and it’s easy to keep track of the score. So … let the metaphor begin!

First, who are the teams? On one side we have the oil and gas industry, its public relations minions and its bankers, as well as a few official agencies — including the U.S. Energy Information Administration and the International Energy Agency — that tend to parrot industry statistics and forecasts. This team is respected and well funded. We’ll call this team “the Cornucopians,” after the mythical horn of plenty, an endless source of good things.

snake-oil-front-cover-268The other team consists of an informal association of retired and independent petroleum geologists and energy analysts. This team has little funding, is poorly organized, and hardly even existed as a recognizable entity a decade ago. This is my team; let’s call us “the Peakists,” in reference to the observation that rates of extraction of nonrenewable resources tend to peak and then decline.

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These two teams have very different views of the energy world. Back in 2003, the Cornucopians were saying that global oil production would continue to increase in the years and decades ahead to meet rising demand, which would in turn grow at historic rates of about 3 percent per year (about the same rate at which the economy was expanding). Meanwhile oil prices would stay at approximately their then-current level of $20 to $25 per barrel. The Cornucopians’ message could be summarized as: “There’s nothing to worry about, folks. Just keep driving.”

This view was in stark contrast to that of us Peakists, who, based on geological evidence from around the world (depleting older super-giant oilfields, declining rates of discovery of new fields, and increasing costs to develop them), were saying that rates of global oil production would soon reach a maximum and start to diminish, while petroleum prices would soar. The Peakists’ argument wasn’t that the world would suddenly run out of oil anytime soon, but that the end of cheap oil and expanding rates of production was approaching. Since oil price spikes have had severe economic impacts in recent decades, the implication was clearly that societies would be better off weaning themselves from oil as quickly as possible.

Well, what has actually happened? How has the game progressed so far?

In 2005, world crude oil extraction rates effectively stopped growing. In that year the average global production rate was 73.8 million barrels per day (mb/d); in 2012, that rate had only increased to 75.0 mb/d — a relatively insignificant bump of less than 1.5 mb/d in seven years (a 0.3 percent average annual rate of growth). This was completely counter to the forecasts of the Cornucopians, but it fit the views of the supply pessimists well. Point for the Peakists.

With oil supply rates stagnant, prices went up — soaring from a yearly (inflation-adjusted) average of $35 per barrel in 2003 to a yearly average of $110 in 2012. Again, this development was completely unforeseen by Cornucopians, but had been clearly and repeatedly forecast by Peakists. Point for my side.

When the world oil price briefly shot up to nearly $150 per barrel in the summer of 2008, the global economy shuddered and swooned. Thus began the worst recession since the 1930s. Of course, other factors contributed to the crash — most notably, a bursting housing bubble in the United States and an unsustainable buildup of debt in nearly all the world’s industrial economies. But it’s clear that high oil prices added to financial fragility and the oil price spike of 2008 provided a sudden gust that helped bring down the house of cards. Peakists had been warning of the economy’s vulnerability to high oil prices for years; here was dramatic confirmation. Another point for my team.

Now we’ve arrived at the period 2008–2009; at that stage of the game, the score was Peakists 3, Cornucopians zip. Despite the fact that we Peakists had virtually no funding and limited media access, we were seriously in danger of winning the debate. The term peak oil went from being unknown, to being associated with conspiracy theorists, to being broadly familiar to those who followed energy issues.

The Cornucopians, however, were not about to throw in the towel. In fact, they were just shaking off the complacency that accompanied their status as reigning champs. And they were about to deploy a significant new game strategy.

The “peak” issue was not limited to oil. U.S. conventional natural gas production had been declining for years, and prices were soaring. Peakists said this was evidence of an approaching natural gas supply crisis. Instead, high prices provided an incentive for drillers to refine and deploy costly hydraulic fracturing technology (commonly referred to as “fracking”) to extract gas trapped in otherwise forbidding shale reservoirs.

Small- to medium-sized companies crowded into shale gas plays in Texas, Louisiana, Arkansas, and Pennsylvania, borrowed money, bought leases, and drilled tens of thousands of wells in short order. The result was an enormous plume of new natural gas production. As U.S. gas supplies ballooned, TV talking heads (reading scripts provided by the industry) and politicians all began crowing over America’s “game-changing” new prospect of “a hundred years of natural gas.” We Peakists hadn’t foreseen any of this. Point to the Cornucopians.

Not only did supplies of natural gas grow, but prices plummeted. In the pre-fracking years of 2001 to 2006, gas prices had shot up from their 1990s level of $2 per million Btu to over $12. But after 2007, as the hydrofracturing boom saturated gas markets, prices plummeted back to a low of $1.82 in April 2012. Gas was suddenly so cheap that utilities found it economic to use in place of coal for generating base-load electricity. The natural gas industry began to promote the ideas of exporting gas (even though the United States remained a net natural gas importer), and of using natural gas to power cars and trucks. Again, Peakists had completely failed to forecast these developments. Point Cornucopians.

Then, using the same hydrofracturing technology, the industry began to go after deposits of oil in tight (low-porosity) rocks. In Texas and North Dakota, U.S. oil production began growing. It was an astonishing achievement, especially since the nation’s oil production had generally been declining since 1970. Suddenly there was serious discussion in energy policy circles of America soon producing more oil than Saudi Arabia. None of us Peakists had predicted this. Point Cornucopians.

That brings us to the present. As of 2013, the game is tied and headed into overtime. Cornucopians have the momentum and the historic advantage, so they’ve been quick to proclaim victory. Meanwhile, at least one prominent Peakist has publicly conceded defeat: in a widely circulated essay, British environmental writer George Monbiot recently proclaimed that “We were wrong on peak oil.”

It doesn’t look good for my team. It appears to most people that the “Shale Revolution” (the tapping of shale gas and tight oil, thanks to advanced drilling techniques) has changed the game for good. Is it time for us to exit the playing field, heads bowed, shoulders slumped?

No. The game is about to turn again.

Almost no one who seriously thinks about the issue doubts that the Peakists will win in the end, no matter how pathetic my team’s prospects may look for the moment. After all, fossil fuels are finite, so depletion and declining production are inevitable. The debate has always been about timing: Is depletion something we should worry about now?

Readers who’ve seen articles and TV ads proclaiming America’s newfound oil and gas abundance may find it strange and surprising to learn that the official forecast from the U.S. Energy Information Administration is for America’s historic oil production decline to resume within this decade.

But the EIA may actually be overly optimistic. Once the peak is passed, the agency foresees a long, slow slide in production from tight oil deposits (likewise from shale gas wells). However, analysis that takes into account the remaining number of possible drilling sites, as well as the high production decline rates in typical tight oil and shale gas wells, yields a different forecast: Production will indeed peak before 2020, but then it will likely fall much more rapidly than either the industry or the official agencies forecast.

And there’s much more to the story: shale gas wells that cost more to drill than their gas is worth at current prices; Wall Street investment banks that drive independent oil and gas companies to produce uneconomic resources just so brokers can collect fees; official agencies that have overestimated oil production and under-estimated prices consistently for the past decade.

The data I’ve surveyed suggest that, through the technology of hydrofracturing, the oil and gas industry will generate 10 or fewer years of growing fuel supplies. (In the case of shale gas, the clock started ticking roughly five years ago; for tight oil, about three years ago).

Let me be clear: I am not saying that the United States will run out of shale gas or tight oil sometime in the next five to seven years, but that the current spate of oil and gas supply growth will probably be over, finished, done and dusted before the end of this decade. Production will start to decline, perhaps sharply.

The temporary surge of production may yield a very few years of lower natural gas prices and may temporarily improve the U.S. balance of trade by reducing oil imports. What will we do with those years of reprieve? In the best instance, the fracking that has already been accomplished could provide us a bonus inning in which to prepare for life without cheap fossil energy. But to make use of this borrowed time we must build an energy infrastructure of wind turbines and solar panels rather than drilling rigs and pipelines. This will constitute the biggest investment, and the most ambitious project, of our lifetimes. Currently, instead, many renewable energy efforts are being hampered by the false perception of vast, long-term supplies of cheap natural gas.

We are starting the energy transition project of the 21st century far too late to altogether avert either devastating climate impacts or serious energy supply problems, but the alternative — continued reliance on fossil fuels — will ensure a future far worse, one in which even the bare survival of civilization may be in question. As we build our needed renewable energy system, we will also need to build a new kind of economy, and we must make our communities far more resilient, so as to withstand environmental and economic shocks that are inevitably on their way.

Meanwhile the fossil fuel industry is doing everything it can to convince us we don’t have to do anything at all — other than simply keep on driving. The purveyors of oil and natural gas are selling products that we all currently use and that we still depend upon for our modern way of life. But they’re also selling a vision of the future — a vision as phony as the snake oil hawked by carnival hucksters a century ago.