# Transcript

Dieter Helm
My name is Dieter Helm. I am Professor of Energy Policy at the University of Oxford, and I'm also a Fellow in Economics at New College.
Peak oil's become one of those slogans covering a multitude of sins, and there are a variety of different hypotheses competing for space around this term. First of all there are people who believe that the Earth's resources are in some physical sense limited. Then there are those people who think that whether they're limited or not, the resources that we need now, particularly oil, and to a lesser extent gas, are controlled by a small number of countries who can exert political pressure and will indeed throttle the consuming countries. Then there are people who believe that it's inevitable that the demand for these fuels will carry on going up, so whatever the supply, demand will outstrip supply and therefore the price will go up, and these are the price peak oilers.
If we unpack the various components of peak oil claims, the starting point is that there's somehow some sort of physical limitation. Now in some pure theoretical sense it's got to be roughly right that there is some physical limit, but that's not really an interesting question from an energy perspective, unless that physical limit is somehow imminent, and about to bear down upon us, and mean that supply can't keep up with demand.
Now a moments reflection of the nature of the Earth's crust will tell you that it's absolutely riddled with carbon. Past photosynthesis in geological history has taken a great deal of carbon out of the atmosphere and deposited it in our rock structures. A little bit of it has percolated up from those deposits laid down in estuaries and ancient seas, and so on, has percolated up to find holes, gaps in the rocks, and that's what we call oil and natural gas, in a conventional sense. And so far all our technologies have enabled us to do is drill holes into those reservoirs and take out, in the case of oil, less than 50% before we have abandoned deposits; that's all we've achieved
The unconventional resources, the stuff that's riddled throughout those rocks which haven't found those nice, neat reservoir deposits, we've hardly scratched the surface of that. So it's not right to say, from a physical point of view, within any reasonable and relevant time period, that we have limited resources. What we have is limited technologies to get those resources, and then the question is are we on the brink of, and will we in the future, get the technology to access more of those resources? And the answer to that question is yes, and particularly if the price is high enough. So as the price of oil goes up people explore all sorts of other alternatives and they push the technological boundaries.
So, first of all, can we get more out existing wells? Yes, that's about pressure, and one of the ironies of climate change is that if we were to use sequestrated carbon, and inject it into some of those holes, we might get even more carbon fuels out as a result. So, there's an enormous amount that we could get out of existing resources, which just isn't economic at the moment.
But then there are the shales. And the shale gas revolution, shale oil following on, has been one of the great events in the last several decades in the fossil fuel industries. This is big stuff, and it's big stuff not because of some scientific change, not because the resources have changed, they're physically just what they were, but simply because higher oil prices have pushed through these new technologies.
If for a moment you were to suspend belief in peak oil, and take seriously the claim that the Earth's crust is riddled with fossil fuels, and that technological breakthroughs are making those fossil fuels more and more accessible. You would then have to entertain the possibility that the price of oil and gas is not going to go north, but could possibly go south. In other words, contrary to many of the wilder claims, we're not on the verge of a doubling of the oil price. Alright it might happen temporarily if we have an explosion in Iran or whatever, but a fundamental shift upwards in the oil price, and the gas price. We may be in a world in which they're going to be low, and even possibly very low. Now, from a climate change point of view, this is potentially very bad news.