High oil prices may make it profitable to recover more oil from unconventional deposits, but ultimately physics rules. In his talk at the AGU session, Charles A.S. Hall pointed out that the energy return on investment—the amount of energy you get out of a well vs. the energy needed to produce the oil—has been getting steadily worse over time. As long as there is some net energy gain and some profit to be made, drilling may go ahead, but the benefits to the energy supply deteriorate at the same time as the collateral damage to climate (in the form of increased carbon dioxide emissions per barrel of oil produced) goes up.
The market is not laying the foundations for an era of unending oil-based prosperity. The market is pushing inexorably toward investment in expensive technologies to extract the last drop of profit through faster depletion of a resource that's guaranteed to run out. If we're going to invest in expensive energy technologies, it would be better to pick long-term winners rather than guaranteed losers.
The flaws in the abundance narrative for fracked natural gas are much the same as for tight oil, so I won't belabor the point. Certainly, the current natural gas glut has played a welcome role in the reduced growth rate of U.S. carbon dioxide emissions, and the climate benefits of switching from coal to natural gas are abundantly clear. But gas, too, is in a Red Queen's race, and it can't be counted on to last out the next few decades, let alone the century of abundance predicted by some boosters. Temporarily cheap and abundant gas buys us some respite—which we should be using to put decarbonized energy systems in place. It will only do us good if we use this transitional period wisely. We won't be much better off in the long run if cheap gas only succeeds in killing off the nascent renewables industry and the development of next-generation nuclear power.
Does all the new American oil give us yet another way to fry ourselves? At 0.1159 metric tons of carbon per barrel of oil, the oil in Bakken and Eagle Ford amounts to a carbon pool of 81 gigatons, and the Green River shale adds up to 232 gigatons. Given that burning an additional 500 gigatons of fossil fuel carbon is sufficient to commit the Earth to a practically irreversible warming of 2 degrees Celsius, these are scary numbers. However, if oil analysts such as those speaking at the American Geophysical Union are right, almost all of this oil will remain inaccessible. In that case, coal—which certainly contains enough carbon to bring us to the danger level and probably much beyond—remains the clear and present threat to the climate, and the fight to leave as much coal as possible in the ground remains the front line in the battle to protect the climate. This does not mean the threat posed by the carbon pool in unconventional oil can be completely ignored. The case against oil abundance seems persuasive, but I'd hate to bet the planet against the ingenuity of future oil engineers, which is why I feel that some rearguard actions that inhibit development of unconventional oil are warranted, notably in the case of the Keystone XL pipeline, which taps into Canada's Athabasca oil sands.
False hopes for an unending age of oil abundance provide an excuse to put off the hard decisions we need to make in order to smooth the road to a sustainable energy future. If oil cornucopians like Leonardo Maugeri are wrong, then the end of oil and gas is not many decades off (a few would say this is true for coal as well), and so even without bringing climate change into the picture, it is necessary to begin planning for new energy sources. Economists offer up a rosy picture in which gradually rising prices call into being some combination of increased production and resource substitution, but the resource depletion endgame does not always work this way. The story of Wisconsin white pine timber depletion, recounted in William Cronan's book Nature's Metropolis, should give us pause:
The manufacturer's acute seasonal need for short-term credit drove them to the one market where they knew they could get quick cash, even if it meant that they were forever selling lumber at lower prices than they liked. Under such circumstances, the only way they could keep up with costs was to cut more trees, contributing still further to the overproduction and saturated markets that had created low prices in the first place. Chicago thus became the focal point of a vicious circle: Undercapitalization caused overproduction, which in turn kept prices low and accelerated the destruction of the northern forest. The Lumberman summed up the problem by attributing it to “so many men … striving to carry on a larger business than their capital will warrant” and, as a result, having to turn natural capital into liquid capital merely to survive. “The only reasonable explanation of this paradoxical state of affairs,” the Lumberman's editors wrote, “is that the mill men … are using up their capital, as it exists in the form of stumpage, for no other end than simply keep themselves in business.”
This description is eerily similar to the last-gasp scenario described in Chris Nelder's article on the oil endgame, “The Last Sip.” Whales were driven to the brink of extinction before petroleum replaced whale oil, and we may well fry our planet—and bankrupt ourselves while doing so—before we're finally forced to kick the fossil fuel habit. It will be hard to muster the resources to develop replacements for fossil fuel energy if we wait until both the economy and climate are in ruins. We are in for a hard landing if we don't use our current prosperity to pave the way for a secure energy and climate future.