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By Robert Rapier on Jun 7, 2007 with no responses

Why I Sat Out the Feeding Frenzy

I have gotten several e-mails about Cyclone Gonu in which I was asked to comment. Some asked why I haven’t written about it, or why I haven’t participated in the discussions about it. I was content to let this episode fade into history, because addressing it will offend some people who are friends of mine. But I have gotten enough e-mails about it that I will address the issue. The fact is, I feel that there is a lesson to be learned here.

I have been criticized by some for my cautious approach toward Saudi Arabian and world oil production. For the record, I don’t believe that their oil production has peaked. (However, I want to emphasize that I don’t think U.S. energy policy should be based on trusting the Saudis to always supply the oil that we need.) I believe they are managing their production to meet demand. When I look at the moves they have made, I believe they are consistent with what the market dictated. And the bottom line is that despite their cuts over the past year, oil prices are right where they were a year ago. That screams to me that they are making the cuts to maintain prices, because some demand destruction has occurred at current oil prices. But there are many who have gone out on a limb and stated emphatically that Saudi Arabian oil production has peaked.

Which brings us back to Cyclone Gonu. To me, this was Peak Oil forecasting with immediate feedback. The approach was the same that many take toward Peak Oil. Some are careless or selective with data interpretation, and they make conclusions based on that (not to say that everyone is careless). It has been a waiting game to actually validate or negate their predictions on Saudi, for instance. But we didn’t have to wait so long with Cyclone Gonu.

I agree that a cyclone threatening that part of the world is an incredible story. The mainstream media was very slow to respond to the story. The potential for devastating consequences was there. The potential for some consequences to oil and gas supplies was fairly high. But, there was also data suggesting that the storm could peter out. Some were warning that the dry air the storm would encounter as it moved north could weaken it. So, I saw a serious danger of wiping out my credibility by joining the feeding frenzy. It was a high risk, high rewards issue. If the cyclone had dropped a Katrina-like surprise on the region, those who were beating the drum that the consequences would be devastating would have been “rewarded” by calling this event correctly. Suddenly, their forecasts of other devastating events are taken more seriously. Credibility increases.

Yet the risks are high. For anonymous posters, the concern about credibility is probably not great – but even they can marginalize an argument by being wrong en masse. And if you are out there posting under your real name, forecasting horrifying consequences, only to see the consequences turn out to be much less than anticipated, you are going to take a credibility hit in the eyes of many people. Your position on other issues will come into immediate question by some, and others will use the event to discredit you. In this case, the risk did not pay off. The consequences were less than advertised (although it is still too early to say that the impact on oil deliveries will be negligible). I would have advised caution. In fact, I did advise caution to some via e-mail. But I ultimately just backed away from it. I considered stepping into the fray and saying “let’s slow down here”, but I didn’t feel like dealing with some responses that would have certainly been hostile. In fact, some who did suggest a cautious approach were shouted down.

If you look at how I have approached gasoline inventory numbers, I have been cautious. I have not suggested that we will run out of gas. I have pointed out facts: Gasoline inventories are low – even at record lows – but the consequences are not clear. Absolutely, the risks go up as the inventory levels go down. And we could see a hurricane this summer that disrupts production and literally causes the tanks to run dry. It could happen. But it is important to point out the things that might prevent it from happening (like strong imports). If I had said that we were going to run out of gas on Memorial Day, and Memorial Day came and went without incident (except for high gas prices), then critics could use that to discredit every forecast I make. Forever. And that’s why I approach things in the way I do: Here are the facts, here is my interpretation of those facts, and here is what I think will happen. But also, here is what could change that, and nothing is certain. Some call that being wishy-washy. I call it being practical, and making sure that all of the relevant information is being presented – even information that is contradictory to the point I am making.

If You Like Credibility So Much, Why Don’t You Marry It?

Some have said that my burden of proof is so high that we will only know long after the fact that oil production has peaked. My response to this is that we need to be prepared – today – and that we need to warn people right now that resource depletion has the potential to be an incredibly disruptive event.

Some will say “This is too important to worry about your stupid credibility. People are going to die because they took a cautious approach like you do.” And there is the lesson from Cyclone Gonu. Look at what’s happening. Those who went over the top on the issue are now having fingers pointed in their direction. Some subtle, some not so subtle (and some over the top as well). So the issue here is not maintaining my credibility for the sake of my ego, or because I don’t like to be wrong (even though I don’t like to be wrong), it is maintaining credibility so that I don’t marginalize my arguments.

If I had started sounding the “Peak is Now and the End is Nigh” alarm in 2005 – as some did – and over time it became clear that oil production had not gone into free fall and we were not yet living in caves, how likely are people to listen to me the next time I sound the alarm? This is exactly why I am cautious on the data and the news coming out of Saudi. If history shows that Saudi is still capable of ramping up production, you are out of the prognostication business if you have declared that they have peaked. Your credibility is shot, even as we need you talking to people about the consequences of resource depletion.

In conclusion, even if you think you are absolutely certain that we are facing utter devastation, you should take a fact-based approach, and make it clear exactly where the data are subject to interpretation or speculation. Caution was thrown to the wind by too many in this case, and I fear that the damage will linger for a long time. The boy cried wolf – not because he was making things up, but because he was careless in identifying the wolf. Next time, not as many people will believe him. Even if the wolf is real.

And that’s why I sat out Cyclone Gonu.