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Page added on January 26, 2012

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Nature: Has Peak Oil Already Happened?

Geology

A new analysis concludes that easily extracted oil peaked in 2005, suggesting that dirtier fossil fuels will be burned and energy prices will rise

Despite major oil finds off Brazil’s coast, new fields in North Dakota and ongoing increases in the conversion of tar sands to oil in Canada, fresh supplies of petroleum are only just enough to offset the production decline from older fields. At best, the world is now living off an oil plateau—roughly 75 million barrels of oil produced each and every day—since at least 2005, according to a new comment published in Nature on January 26. (Scientific American is part of Nature Publishing Group.) That is a year earlier than estimated by the International Energy Agency—an energy cartel for oil consuming nations.

To support our modern lifestyles—from cars to plastics—the world has used more than one trillion barrels of oil to date. Another trillion lie underground, waiting to be tapped. But given the locations of the remaining oil, getting the next trillion is likely to cost a lot more than the previous trillion. The “supply of cheap oil has plateaued,” argues chemist David King, director of the Smith School of Enterprise and the Environment at the University of Oxford and former chief scientific adviser to the U.K. government. “The global economy is severely knocked by oil prices of $100 per barrel or more, creating economic downturn and preventing economic recovery.”

Nor do King and his co-author, oceanographer James Murray of the University of Washington in Seattle, hold out much hope for future discoveries. “The geologists know where the source rocks are and where the trap structures are,” Murray notes. “If there was a prospect for a new giant oil field, I think it would have been found.”

King and Murray based their conclusion on an analysis of oil data from the U.S. Energy Information Administration. Looking at use and production trends, the two note that since 2005 production has remained essentially unchanged whereas prices (a surrogate for demand) have fluctuated wildly. This suggests to the authors that there is no longer any spare capacity to respond to increases in demand, whether it results from political unrest that cuts supply, as in the case of Libya’s political upheaval last year, or economic boom times in growing countries like China. “We are not running out of oil, but we are running out of oil that can be produced easily and cheaply,” King and Murray wrote.

Other statistics, however, argue against a plateau. Oil company BP found in its most recent analysis that oil production was actually more than 82 million barrels per day in 2010, higher than the proposed plateau of 75 million. That difference may be the result of the increasing use of “unconventionals”—Canadian tar sands or the natural gas liquids co-produced with oil extraction. Rising production in the China, Nigeria, Russia and the U.S. also hints that technological improvements may allow greater production from existing fields than the new research suggests.

Plus, the price of oil may argue against any such plateau. Adjusted for inflation, today’s $100 per barrel is roughly equivalent to prices in 1981, according to environmental scientist Vaclav Smil of the University of Manitoba. Smil also notes that in the last 20 years enough oil has been found to satisfy the demands of two new consumers—China and India—nations that now import more oil than is consumed by Germany and Japan.

Some of that price stability is the result of increased efficiencythe potentially vast reserve of unused oil. The U.S. and other developed countries have maintained economic growth while reducing the amount of oil (and other energy) required for that growth, although some of this apparent efficiency has come from outsourcing energy-intensive economic activity, such as steel production. “We have about halved oil intensity since 1981,” Smil argues. “We could halve it again, so we could do with so much less oil—why should we panic about producing less, even if that were the case?”

If King and Murray are correct about 2005 marking the end of easily extracted oil, however, then Smil’s additional halving of demand, plus conservation and a rapid deployment of alternative energy, would be required to avoid even more economically painful oil price shocks in the future. As it is, the U.S. spent more than $490 billion on gasoline in 2011—$100 billion more than in 2010, even though the number of miles driven was similar, according to data from the New America Foundation.

An easy-oil plateau is not good news for the climate, either. Harder to extract oil means increased burning of dirtier oil like that from the tar sands—or even dirtier coal. In fact, there are trillions more barrels of carbon-intensive fuel out there in the form of huge coal fields, such as the one currently being brought into production in Mongolia. “There will still be enough CO2 produced to result in significant climate warming,” Murray notes.

Even with large supplies of coal and natural gas, the world faces a potential energy shortfall, one reason that the U.S. Department of Energy suggested in a 2005 report (pdf) that a “crash program” to cope with any decline in oil supplies be instituted. The report argued this program should start 20 years before peak global production to avoid “extreme economic hardship.” That’s because it will take decades for any kind of energy transition to occur, as evidenced by past shifts such as from wood to coal or coal to oil.

In fact, King and Murray argue that global economic growth itself may be impossible without a concurrent growth in energy supply (that is, more abundant fossil fuels, to date). “We need to decouple economic growth from fossil-fuel dependence,” King adds. “This is not happening due to industrial, infrastructural, political and human behavioral inertia. We are stuck in our ways.”

Scientific American



4 Comments on "Nature: Has Peak Oil Already Happened?"

  1. BillT on Thu, 26th Jan 2012 4:03 pm 

    Yes, we have passed the peak of oil production…and only the supposed liquid fuel growth is preventing that from being noticed at this point.

    As for economic growth being chained to cheap plentiful oil production, yes, it is. And there can be no real ‘growth’ without a corresponding growth in cheap oil. End of the game is drawing near.

  2. steven jones on Thu, 26th Jan 2012 5:50 pm 

    I think this is a pretty optimistic analysis. Energy production, and the economic growth coupled to cheap energy is set to go off a cliff. We are at the end of carbon economy paradigm and the insane persuit of ‘growth’ at all costs. As the piece says, our response to this is smothered by inertia.. people need to pay much more attention to the implications of what is happening.

  3. Kenz300 on Fri, 27th Jan 2012 3:58 am 

    People tend not to react until they are forced to. That is too bad. We all need to begin making changes in our personal and business lives to prepare for a world of limited resources and higher energy prices.

  4. BillT on Fri, 27th Jan 2012 10:11 am 

    Kenz, is that your stock reply? It sounds like a bot, not a person. Canned answer to the situation.

    This is a capitalistic for profit world now and it will not change until there is a catastrophe in the form of financial collapse, systems collapse, or a world war. If people accepted or even knew about the state of the world today, the real world, they would stop buying, and the economy would collapse. The corporate elite know that that would mark their end as sure as the French Guillotine ended the elite in the French Revolution. Heads rolled in the streets.

    Nothing will get done because the powers/masters/lords don’t care what happens to the world (the rest of us). Most of the really wealthy are in their 70s or 80s and will be dead before they would have to worry.

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