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Page added on October 27, 2016

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Revisiting Peak Oil

Consumption

When I started writing this column years ago, it was intended to be a voice for the Transition Vashon group.  We were espousing the need to plan for decreasing energy use due to the dangers of CO2 concentration and consequent global warming, and the arrival of peak oil.  Peak oil is the point at which a finite geographical area has pumped out half of its total supply of known oil reserves after which production will decrease year after year.  The idea was put forward by M. King Hubbert in the 1950s.  He predicted that the US would hit peak oil around 1970.  His theory gained credibility when the US peak appeared to have occurred around 1973.  He predicted that global peak oil would occur around 2000.  Credible estimates now put the date somewhere between 2000 and 2040, with most estimates ranging from 2005 and 2020.

The problem with experiencing peak oil is the economic stagnation that occurs if alternative energy supplies are not available.  Our entire civilization runs on oil.  All manufacture, transportation, food production, and technology depend on it.  At peak oil, we are only at the theoretical halfway point in the depletion of our supply, but decreasing supply, the theory said, would raise the price of oil and, therefore, the price of practically everything else.  The need to move away from petroleum to avoid severe climate change is obvious.  The changes required will entail a huge investment in research, redevelopment, and new infrastructure.  Peak oil was seen as an increasing impediment to making those changes by raising costs and generally destabilizing our economic and political bases.

As little as five years ago, the prospect of steadily increasing oil prices appeared to be working in our favor by encouraging us to conserve energy, develop renewables, reinvent local economies that would starkly lower transportation needs, thus making us all more resourceful and resilient to shocks in the wider world.
What has happened since has surprised all of us.  We knew that the higher extraction cost reserves, such as tar sands, oil shale, and such would come into production when the price of oil was high enough.  The price rose and domestic production of hard to get fossil fuels began.  On the good side (from a transition perspective), prices at the pump were above $4/gal, and we were buying more efficient vehicles and driving less.  On the bad side, the extraction of these dirty and energy intensive tar sands and oil shale was causing a good deal of environmental damage.  What we didn’t foresee was the fracking boom.  Nobody in their wildest imagination expected that the US would become a fossil fuel net exporter once again.  In just the last three years, US oil production, which was not expected to increase much, if any, ever again, has gone from under 2 million barrels per day to almost 3½ million barrels per day, only a bit less than the all-time highs achieved at the so-called peak in the early 1970s!  The massive proliferation of fracking, along with the aforementioned more challenging reserves, with its known pollution impacts and yet unknown health and geological destabilization questions, has turned into a new fossil fuel boom that is nearly impossible to stop.  All of a sudden, we have pipelines and rail lines being co-opted to get these new resources out to our coasts so we can put them on ships and sell to the highest bidder.  You would think that we might want to hold our resources so as to remain energy independent, but cash flow is the name of the game.

It gets even more convoluted.  Seeing a big drop off in their market share, the OPEC countries (primarily the Saudis) started over-producing their conventional reserves to drive the price down and make it uneconomical for us North Americans to work our tar sands and oil shale deposits.  In addition to that, the decrease in demand as a result of the cooled down economy and the threat of climate change, have all resulted in oil prices  dropping precipitously and the high extraction cost operations shutting way down. Maybe the low price environment will last long enough for us to see the wisdom of leaving the dirty and difficult to extract fuels in the ground.  Maybe we will continue to heed the warnings of climate change and cut back on fossil fuel use and build renewable energy infrastructure.   The fact that the low prices have tempted us to buy gas guzzlers again is not a promising sign.  If the peak oil scenario had gone the way the transition movement originally expected, it would be easier for us to leave fossil fuels behind.  As it is now, we’ve created a temporary oil glut that encourages us to use more now at the expense of our future.  If we continue to react like lab rats, we will burn ourselves into a climate nightmare.  Our well-considered personal choices need to drive the economy, not the price of oil and the pursuit of dollars.

Between ever changing knowledge, technology, and human behavior, it is nearly impossible to predict what will happen next.  We do know, though, that conserving energy, keeping as local and as self sufficient as possible (the original strategy of the transition movement) is still the best approach.

vashloop



5 Comments on "Revisiting Peak Oil"

  1. Davy on Thu, 27th Oct 2016 7:47 am 

    What is occurring is more than peak oil. If you are obsesses with one factor good or bad then your outlook is flawed. Most outlooks today are flawed one way or the other. It is the multidimensional outlooks that are relevant. These multidimensional views point to uncertainty because they are too difficult to model beyond the short term. Divergences become very great longer term with so many variables in relationship. One thing is certain the trajectory appears negative in regards to growth. Yet this is likewise flawed because there is likely at least short term the possibility of regions achieving transition and creating a status quo extension of pseudo growth. This would be through renewables and adaptive economics. This would also be through continued economic repression and quantitative easing extending the decaying status quo.

    There is no turning back economically. We closed the door on traditional 20th century economics. Something new has developed and it will continue to develop. Few want to address economic conditions in their outlook. This is a major part of any of the outlooks whether they are technoptimist or neocollapse. This is a huge world connected with globalism. We must generalize because of this globalism but we must also acknowledge the power of various regions to adapt. We cannot know how globalism will suffer limits and systematic decay because the data set is too large. If we generalize we can say that traditional economics will not work much longer. This breakdown can then be generalized. Where will regionalism adapt and how much technology and innovation will be involved. How much socio-political decay will occur? World War may bring the whole system to its knees without time to adapt to a process of change both destructive and constructive.

    Peak oil is firmly part of this process because oil is foundational but there is more to oil’s contribution to this process. The advent of alternatives and the whole process of demand destruction change peak oil and peak fossil fuels dynamics. If we go into a shallow curve of economic decline there may be enough energy in all its forms to allow this decline. Locations will be disenfranchised from this status quo in a status quo decline that is fed by the fat of an earlier time. How failed states and failure within states combine and react is beyond modeling. We can see where the status quo has adapted since 08 and we can see a trajectory. The 08 crisis was a watershed economically and with energy. Post 08 we saw bubbles and new oil sources. We are now seeing the effects of the two combining in dangerous debt dynamics and oil industry decay.

    Going forward we also have climate change. We still are not sure how bad this will be to economies. Increasingly it appears there is little hope of overcoming abrupt climate change but we still cannot tell how economies will react at least shorter term. We can take comfort in the longer time periods of climate but comfort is misplaced because science tells us changes can come swiftly and destructively. The problem is our human minds discount this.

    This then becomes a threefold future of negative economic, energy, and climate issues with an underlying undulating status quo in decline with a basis of momentum from technical progress. Increased efficiency is possible but also socio-political decay. The only positive would be techno-efficiency but that is deceptive because some of these strategies are making this process worse. This techno efficiency is hitting limits and diminishing returns surely preventing a breakout to a new shiny world the progressive constantly paint.

    The underlying issue is time and scale. How much transition and adaptation time do we have? It appears eventually time may run out but I admit this is a neocollapse view. It may run out for some but not others. It may slowly play out over decades. It may end all at once for too many reasons. It is the latter of sudden collapse we should be focusing on with mitigation and adaptation strategies. Instead we are moving forward across the board with progressive strategies of the status quo with eyes on a shiny future.

    Time is running out and options are compressing. A good start would be geopolitical cooperation at least on the level of defusing tensions that could lead to major power conflicts. Another start would be acknowledge economic status quo is wandering into a swamp of moral hazard that will lead to sociopolitical breakdown. Finally we need to accept climate change cannot be changed and we need to adapt and mitigate our relationship to the ocean and food production. Instead it is likely diverging views of narrow-minded outlooks will clash and continue to be wiped clean by the reality of a collapse process beyond modeling.

  2. rockman on Thu, 27th Oct 2016 8:14 am 

    First, he doesn’t even understand that PO has nothing to do with how much reserves are left to produce: “Peak oil is the point at which a finite geographical area has pumped out half of its total supply of known oil reserves…”. Essentially one more unsophisticated observer appointing significance to the relatively unimportant date of PO.

    Second, completely clueless as to how much oil the US imports: “Nobody in their wildest imagination expected that the US would become a fossil fuel net exporter once again.”

    Third, apparently unable to do a simple web search to learn the US is currently producing 8.5 mm bopd: “US oil production…has gone from under 2 million barrels per day to almost 3½ million barrels per day”

    Forth, beyond clueless to incredibly ignorant: “…so as to remain energy independent…”

    Fifth, current demand is near an all time record high: “…the decrease in demand…”

    Sixth, focuses on the sale of low mpg vehicles and ignores the fact that since the oil price collapse more than 100 MILLION ICE’s, including high mpg models, have been sold :”…low prices have tempted us to buy gas guzzlers again…”.

    Again it would seem such reports are posted here to show what’s being put out that will continue to confuse the public.

  3. paulo1 on Thu, 27th Oct 2016 9:21 am 

    US is definitely NOT a net oil exporter. This writer has been watching too many political debates.

    Good points above, guys. To add to what Rockman concludes about a confused public, Society is confused because to be aware is unimaginable for most people. Much like we wish to believe the bedrock our houses are built upon is stable, only a small minority buy earthquake insurance or have emergency supplies on hand. To even question the nature of energy supply we take for granted can easily label you as a crackpot doom and gloomer.

    I was in town yesterday and stopped in for lunch at my favourite restaurant. I snooped a listen between the waitress and customers about our recent power outages. (We had a big fall storm). Many said they had no preps at all, and their solution to the power disruption was to simply go to bed. Some were planning to flash up the barbecue. I compared that to our home where we have lights, power, heat, entertainment; all ready within a few minutes. We also have earthquake insurance. 🙂

  4. Jerry McManus on Thu, 27th Oct 2016 12:48 pm 

    What Rockman said.

  5. Hawkcreek on Thu, 27th Oct 2016 12:53 pm 

    “When I started writing this column years ago, it was intended to be a voice for the Transition Vashon group. We were espousing the need to plan for decreasing energy use due to the dangers of CO2 concentration and consequent global warming, and the arrival of peak oil.”
    They shoulda picked a better voice. He obviously doesn’t have a clue about PO.

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