Off The Cuff With Adam Rozencwajg - Peak Oil Is Closer Than You Think

Originally published at:

If you’ve been following me for any length of time you know that I am a strict observationalist. If I can see that something is happening, I don’t struggle with wondering if it’s happening.

Peak Oil is not a theory, it is an observation that individual wells produce up to a peak, and then the output declines as the well’s initial bounty is depleted.

What’s true for every single individual well is equally true when averaged across an entire set of wells placed within any given oil basin.

And what’s true for any given basin is true for all the basins in the entire world. Eventually, they will collectively peak out and that will be that for the part of our economic story that is based on oil-fueled economic growth. Which is kind of a doozy because what we’ve really done is built an entire system of debt-based money the smooth operation of which is entirely based on one idea; that oil-based economic growth will never end.

What happens when that’s revealed to be a rather ill-formed and rather silly idea? I don’t know for sure, but I bet it involves massive financial losses spread across everyone, but more upon those who simply didn’t see this coming. Rather like what happened to those who trusted the various spokesmodels for the Magic Holy Shot. It didn’t go so well for far too many of them. So, Caveat Emptor!

You may recall that I got into a bit of a back-and-forth with Doomberg over Peak Oil and you may have noted that he later went back and forth with one of my very favorite oil and resource analysts Adam Rozencwajg of Geohring and Rozencwajg.

Today I interviewed Adam Rozencwajg and asked him to expound on the models and analyses that his firm has conducted that project that the one final and last mega oil basin in the US – the Permian – is set to hit peak output in 2025.

If it does, I predict this will set off alarm bells within the US and across the world, and result in vastly higher oil prices. But will it? And why do they think it is close to peak? What about the Marcellus – the monster US natural gas shale field?

Tune in to find out!


Enjoyed the interview. Adam is much more optimistic than I am, but he’s younger too. I was disappointed when he brushed off energy conservation when discussing housing. We can really build residences that stay the same temperature year round, no matter where you live, without the use of fossil fuels.

Personally I would rather be independent of fossil fuels rather than dependent on fossil fuels when it comes to my residence.


Great interview!

I’d like to understand more about the EROI and especially the levelized cost of electricity (LCOE). I hadn’t heard the latter term before.

Specifically I’d like to learn the comparison between different means of generating electricity to really see how each is likely to behave going forward.

Any pointers or recommendations?

That was a really good interview, hats off to both of you for putting the numbers out there. I’ll have to give it an audio re-listen on a long drive I have tomorrow.

I’m going to throw in some data and fits that I’ve been holding back for a while. It more or less jibes with Adam’s group’s analysis. Since the EIA went bonkers last year and started including natural gas liquids in their total petroleum numbers, there’s no more unpolluted data easily available and I’ve dropped out of the production prediction game. But here’s as far as I got.

edit: Note, this is all for domestic US production. May not have made that clear in the rest of the text.

What you see here is a fit of four logistic distributions to EIA US oil production data, going back to 1920. The fitting engine is a genetic algorithm, using statistical error weighting on the data. NB, these are not the same as normal (i.e.Gaussian) distributions. Though they are qualitatively similar, they have thicker tails. Here’s a link to the wiki on these: Logistic distribution - Wikipedia They’re commonly used to describe saturation and depletion phenomena, and BTW they do a decent job of modeling uncontrolled disease spread numbers.

The width parameter (s in the linked article’s nomenclature) was allowed to have different values on the two sides of each peak. This allows for “Seneca cliff” behavior in the fitted curves. Four peaks (conventional CONUS, Alaska, and two for fracked oil), and four parameters each. There were a handful of other standard numerical techniques used that I won’t further bore the audience with.

The down-side width for the fourth peak could not be determined, simply because it hasn’t happened yet so there is no data. The up-side width was used to make the plot. Alternately, if the total recoverable oil numbers were available, we could integrate under the curves to come up with the downside-s. However, the total recoverable reserve numbers are (a) not easily available, and (b) not all that accurate.

FWIW, the down-s for the first tight oil peak is about 1/3rd the value for the upside-s — one hell of a Seneca cliff! Also, these widths were about 1/20th the values for the CONUS conventional and Alaska peaks. Be afraid.

Also, the fits are only to data thru early 2020. The production numbers went crazy after that. We might have recovered from that glitch, but now the data’s been muddied since last year with the inclusion of the natural gas liquids into the petroleum production numbers. Not worth the bother of fitting: garbage in, garbage out.

The uncertainty bounds are one standard deviation of the results from the GA’s population ensemble results, for the last peak only. It’s as good a method as any, but that’s another discussion.

Logistic distros are a stone cold bitch to fit. A semi-log plot (not shown) reveals why. During the main growth and decline phases they are nearly linear (i.e., exponential on a linear plot), and have little curvature to give a hint as to when the peak production year will occur. Even though we’re fitting linear data, this underlying behavior persists. In contrast, normal distros are inverted parabolas on a semi-log plot, have plenty of curvature from which to extract some future peak date, and are real sweethearts for numerical fitting. That’s why they’re used so often!

BTW, Hubbert used a data linearization process, and then did a linear fit to that. In the mid-50’s he predicted a peak around 1967. Using the method described above (with just one peak) on the data available to Hubbert at the time, 1970 was predicted, smack on what it turned out to be. For the algorithms and computing power available at the time, Hubbert did a remarkable job.

Normal distros have their uses in fitting oil peaks too. I’ve had fair results using these on world oil production figures, better than with logistic distros. With all the production interruptions from wars, regime changes, and bad data, the central limit theorem kicks in and the individual logistic distros blur into normals. But the data’s all crap, and I can’t really draw much from it. For domestic production though, things are orderly enough that logistic distros do better.

OK, so all that said, here are my conclusions:
(1) We’re screwed.
(2) The numbers since about 2021 are being juiced, probably to make the powers that be look good.
(3) Adding in the natural gas liquids is just dirty pool, and makes further predictions from the EIA gross data nearly impossible…
(4) But they can’t keep the number manipulation going forever.
(5) I would NOT want to be the occupant of White House circa 2026, when the decline really gets rolling and is no longer concealable.
(6) When the fracked oil is gone, things kind of level out circa 2030 on conventional oil’s longer tail at about 20% of peak production. Maybe Pareto’s principle will help out as the pain sets in, and we won’t be quite as screwed as this seems at first look. More of “muddling through,” like the 70’s malaise on steroids.
(7) Over the following decade up to 2040, that 20% will drop to maybe 12% of the peak at a comparatively gentle rate. That’ll give us time to get serious about either nuclear power or breeding more draft animals. Because it’s going to be one or the other, choose wisely.

Now that I’ve gotten that off my chest, off to bed. Really good interview, can’t wait to give it a thorough second go-through tomorrow.


So glad to hear Peak Oil & Limits-to-Growth being discussed. Climate-Change not to be ignored seems to be all that’s talked about the past few years.

I recall the late Jerry Mander refer to the world facing a global triple crisis, the first of which is climate-change, the second less well known the imminent end of the era of cheap energy, generally called peak-oil (by-products included) and thirdly, the expected extinction of up to fifty-percent of all planetary species over the next few decades.

So with regard to this discussion on energy I ask have any of you given thought to peak-by-products and ask what by-products we depend on will come with wind, solar, nuclear just-to-mention. Can we find alternatives or can we live without these fossil-fuel by-products. We could begin with fertiliser.

With kind regards to all.

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I completely agree with your entire analysis - dirty pool indeed!

As to the above, the question becomes, what’s the price of oil going to be? The US economy cannot tolerate being weaned from oil at this time.

This is a horrifying way to approach the era of ‘less-and-less:’


Well, for one it’s a math problem. It simply does not pencil out. And, oh by the way, that blue GDP line probably kinks downward upon the arrival of Peak Oil, so it’s even worse than it appears at first glance.

But the real issue is that the current trajectory is one of approaching this brick wall at max speed. Any reasonably intelligent society would be tapping the brakes.

But ours? Nope!

All we’ve got in our back pocket are a set of rules designed to steal everyone’s wealth in some poorly thought-out derivatives-inspired hot mess. Spoiler alert: This is the modern equivalent of killing the golden goose.

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Just adding my “unsolicited testimonial” too. A great interview and a fantastic guest! Thank you. Thoroughly enjoyed the content and discussion.

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I liked his neural net models. I’ve written a large number of models to answer questions, mostly about markets, but I totally get what he did. Just get a GPU and a linux box - you could do it too.

The plan appears to be, “By 2030, You’ll Own Nothing”, locked down in your 15-minute city. Safe & Effective - at helping de population.

If only we could figure out how those tictacs fly around. Then we wouldn’t have to worry about “fossil fuel” any longer. Its almost as if they know energy = civilization, and if they control the energy, they therefore control civilization too.

Rev 19:17-18 “Then I saw an angel standing in the sun, and with a loud voice he called to all the birds that fly directly overhead, Come, gather for the great supper of God, to eat the flesh of kings, the flesh of captains, the flesh of mighty men, the flesh of horses and their riders, and the flesh of all men, both free and slave, both small and great.”

I always considered that this description was literary, not literal. In the past few years I have had to reconsider my view on this Bible passage. Perhaps, in the next 20 years the dominant mode of transportation will once again be the horse.

I think “they” knew this from Day 1 of the first recovered UFO. More than just the flying technology, I think they realized this power source would allow humanity to have freedom and agency and not have to depend on TPTB. It was always about controlling humanity.

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Maybe they gave us the reason why in this movie:

Kay: A person is smart. People are dumb, panicky dangerous animals and you know it.
Fifteen hundred years ago everybody knew the Earth was the center of the universe. Five hundred years ago, everybody knew the Earth was flat, and fifteen minutes ago, you knew that humans were alone on this planet.”