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Page added on May 12, 2014

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Peak Oil: A Dilemma Or Two

Consumption

In order to break the addiction to oil, economies dependent on oil will need to invest huge amounts of money and energy in building new social and economic infrastructures that are not so heavily dependent on oil (e.g. efficient public transport systems to incentivise people to drive less, organic food systems, renewable energy systems, etc.). But since this transition has not yet seriously begun, the necessary investment of money and energy is going to be required at a time when money and energy are scarcer than they have been in recent decades. This places us in the ‘energy trap’. Politicians are going to have a short-term incentive not to invest extra money and energy in new infrastructure, since people will already be feeling the pinch of high oil prices. This means that there will be very little or no surplus money and energy to direct towards the necessary infrastructure projects. [1]

I’m seeing a dilemma or two….

Add in the reality that in order to effect such a wide-scale transition, fossil fuels will be needed in abundance from conception to final construction/implementation of the infrastructure, systems, and services supplanting fossil-fuel dependent infrastructure, systems, and services currently in place, and the dilemma increases exponentially.

This would not be a good set of circumstances in which to find ourselves. While there’s little doubt that our fossil fuel supplies will last a good long while as it is, how quickly might we expect a full-scale reorganization of almost every facet of commercial and societal systems we’ve long-depended upon?

And how much more difficult will these already-difficult-by-several magnitudes efforts be to put into place if the public isn’t being told the truth right now? This society-wide readjustment and adaptation to a non-fossil fuel dependent existence is not a weekend undertaking!

Several years ago, in a seminal, well-regarded, and oft-cited project (“The Peaking of World Oil Production: Impacts, Mitigation & Risk Management”—commonly cited as the Hirsch Report) sponsored by the National Energy Technology Laboratory of the Department of Energy (see this; PDF here), energy advisor Robert L. Hirsch and his colleagues issued a challenge of sorts, after setting forth a fundamental but daunting truth at the outset:

The peaking of world oil production presents the U.S. and the world with an unprecedented risk management problem. As peaking is approached, liquid fuel prices and price volatility will increase dramatically, and, without timely mitigation, the economic, social, and political costs will be unprecedented. Viable mitigation options exist on both the supply and demand sides, but to have substantial impact, they must be initiated more than a decade in advance of peaking.
Mitigation will require an intense effort over decades. This inescapable conclusion is based on the time required to replace vast numbers of liquid fuel consuming vehicles and the time required to build a substantial number of substitute fuel production facilities. Our scenarios analysis shows:
• Waiting until world oil production peaks before taking crash program action would leave the world with a significant liquid fuel deficit for more than two decades.
• Initiating a mitigation crash program 10 years before world oil peaking helps considerably but still leaves a liquid fuels shortfall roughly a decade after the time that oil would have peaked.
• Initiating a mitigation crash program 20 years before peaking appears to offer the possibility of avoiding a world liquid fuels shortfall for the forecast period.
The obvious conclusion from this analysis is that with adequate, timely mitigation, the economic costs to the world can be minimized. If mitigation were to be too little, too late, world supply/demand balance will be achieved through massive demand destruction (shortages), which would translate to significant economic hardship.
There will be no quick fixes. Even crash programs will require more than a decade to yield substantial relief.

We’ve got our work cut out for us. At what point do self-serving and short-term interests step aside in favor of benefiting (and assisting) us all?

Peak Oil Matters



29 Comments on "Peak Oil: A Dilemma Or Two"

  1. Pops on Mon, 12th May 2014 8:48 am 

    ” At what point do self-serving and short-term interests step aside in favor of benefiting (and assisting) us all?’

    They never will.

    As the man said, the “baker doesn’t bake to feed you, he bakes to feed himself.”

    The “system” is self-organizing, as much as some would like there to be a grand wizard or cabal or God behind the curtain pulling the strings, there is no such person or thing, at least I’ve never seen the proof.

    If you want the system to become more resilient and less dependent on fossil fuels, then YOU need to become less dependent on fossil fuels.

    That’s about the long and short off it.

  2. rockman on Mon, 12th May 2014 8:57 am 

    The Hirsch Report certainly does the job of highlighting the problem. As does countless others over the decades. Of course few would be referring to the report had not oil prices boomed. All the reports often list what should be done but typically don’t detail the process. More importantly they also don’t explain how to get the political system to respond. A butt simple example: US motor fuel taxes. What an obvious yet totally ignored method to encourage conservation. So how did the politicians respond? Increased the fuel efficiency of new vehicles…which has resulted in whopping total of 1 mpg average increase over the last several years of the EXISTING FLEET of vehicles on the road.

    About 4 decades ago my first mentor at Mobil Oil explained PO to me…he called it the “reserve replacement problem”. He specifically pointed to the problem coming to a head about the time I reached retirement age…which is about now. Obviously if anyone tried to motivate a change to the dynamics at play they would have been laughed at…just as President Carter was oft made to look while wearing his sweater in the Oval Office. Obviously we should have started responding at least 40 years ago. But we didn’t then and still aren’t making a significant effort today IMHO.

    Maybe we need another report explaining the problem. Yeah, that’s the ticket. LOL.

  3. GregT on Mon, 12th May 2014 9:42 am 

    “All the reports often list what should be done but typically don’t detail the process.”

    Only because there isn’t a viable process. At least not one that includes the continuation of BAU.

    Modern industrial society was grown from an ever increasing supply of cheap abundant fossil fuel energy. The system currently in place requires infinite exponential growth, or the system crashes.

    Even if we had of listened, and focused a great amount of time and ‘energy’ over the last few decades building out new infrastructure, many of our biggest lobbyists’ organizations would have ceased to exist. An even greater percentage of people would find themselves jobless, and debt loads would be much larger than they are today.

    It all boils down to the choice between a planned depression, or simply waiting for the depression to occur on it’s own. In the interim, those that understand our predicament have been making plans for a reduced energy future. That future will not include all of us.

  4. Northwest Resident on Mon, 12th May 2014 9:59 am 

    They CANNOT talk about peak oil, much less implement plans to mitigate the problems of peak oil — not publicly, anyway. The reality of peak oil MUST be kept quiet.

    Why?

    Because the moment that government recognition of peak oil is made public, the stock market will crash, banks and businesses worldwide will flip onto their backs and wiggle their little legs for a while and then die — in other words, global economic crash and subsequent collapse.

    The only thing keeping the global economy and the stock market sleezing along is the confidence of millions of investors living in a state of denial and the multiple trillion$ of freshly printed money being pumped into the system.

    But don’t take my word for it. Read this:

    Stock Market will Crash when Investors realize Peak Oil is Real

    “David Fridley, an expert on oil economics, worked under Chu. In an interview given in 2009, Fridley claims, “[Chu] was my boss…He knows all about peak oil, but he can’t talk about it. If the government announced that peak oil was threatening our economy, Wall Street would crash. He just can’t say anything about it.” (Morrigan)

    A whistleblower at the IEA alleged that oil reserves had been overstated, and that the IEA had downplayed the lowering rates of production because it feared panic could spread on the financial markets if the figures were brought down further. ‘Politicians are terrified of mentioning peak oil,’ says Chris Skrebowski, director of Peak Oil Consulting and former editor of respected industry magazine Petroleum Review. ‘They are frightened of the social and financial reactions. Peak oil has been placed on the pile marked “too difficult” (Rowe).”

    energyskeptic dot com/2012/stock-market-will-crash-when-investors-realize-peak-oil-is-real/

  5. Davy, Hermann, MO on Mon, 12th May 2014 9:59 am 

    Rock, speaking of the Hirsh report, Hirsh had a good book also worth reading. It is called “The Impending World Energy Mess”. Chapter 10 and 11 are of particular interest to me especially chapter 10. Hirsh looks at administrative mitigation like rationing options dealing with price and allocation controls, tax and rebates, general rebates with unregulated gas prices, and gas coupons. Every one of these mitigation efforts had difficult issues for implementation. I am really impressed that there is not more writing anywhere including here on PO about these mitigation efforts. I would also include the study of the effects of liquid fuel shortages on the economy. I am still looking for an Australian study I have somewhere that looked at what a 10% reduction on liquid fuel supplies did to discretionary driving and by extension economic activity. Basically there is a 50% reduction in discretionary driving to cover essential driving which cannot be cut back significantly without risking grave problems for society. Society does not even have an effective control plan or policies for liquid fuel disruptions. This should be done even if one is from the “Lobby of Plenty”. There are still issues from War to terrorism that these folks can understand that could disrupt liquid fuel supply. Noticed how Hirsh has dropped off the radar screen. I imagine because he sees how futile it is to even bring up these subjects to a society that is buried in the belief that all will be well with energy. Hell, people think the US is the next Saudi Arabia and energy independence is in a few short years away. How can someone preach gas austerity in that climate of optimism!

  6. rockman on Mon, 12th May 2014 10:01 am 

    Greg – Exactly. As Pogo said long ago: “We have met the enemy…and he is us.”. Again jut consider the motor fuel tax. If we had built in a 1 cent increase per year 40 years ago think how driving would be different today. And who could have argued that tiny increase (a fraction of 1% of total fuel cost per year) would drive own the economy? OTOH it old have had such a mall short term impact the politicians didn’t see any incentive for them personally to push for it. Even 40 years later they would till rather put the burden on the auto builders than the fuel consumers.

  7. Davy, Hermann, MO on Mon, 12th May 2014 10:04 am 

    N/R, you are so right about the worry TPTB have about our energy predicament. Maybe that is why we are getting all the unrealistic hype out of Wall Street and the DC mafia. I remember the Chu and IEA references. They are very profound in their implications of cover ups and manipulations of public opinion.

  8. Boat on Mon, 12th May 2014 10:09 am 

    Just think of the lost jobs if we couldn’t drive to football games, nascar events, amusement parks and shooting ranges. Goodness, that is where quality of life ends.

  9. Northwest Resident on Mon, 12th May 2014 10:14 am 

    You are right, Davy. We see a constant stream of articles from Bloomberg, Forbes, Motley Fool and other places just on this site. ALL of those articles are intended to keep the general population numb and clueless to the realities of peak oil and the rapidly approaching consequences.

    They KNOW about this problem at the highest levels of government and they have known about it for a long time.

    They have chosen to NOTHING about it, other than to make their own secretive preparations while at the same time generating a barrage of “feel good” propaganda to keep the masses in line and marching steadily toward that cliff.

    They obviously decided long ago that there is nothing that can be done. Therefore, the only alternative is to build concrete bunkers and bullet-proof escape plans, to wait for the inevitable collapse (or pull the trigger themselves at a time of their choosing) and let Darwin’s Law sort things out, then re-emerge with the resources and command structure needed to rebuild from the ground up.

    I’ve been saying that for a long time. The closer we get to that coming collapse, the more it appears that my initial speculation was correct.

  10. Northwest Resident on Mon, 12th May 2014 10:16 am 

    Boat — I disagree. MY quality of life is totally disconnected and independent of football games, nascar events, amusement parks and shooting ranges. But I understand your point of view. The mindless clueless masses must have their distractions and entertainment, that is a fact.

  11. Boat on Mon, 12th May 2014 10:28 am 

    NR,
    You can add the hotel industry, gambling, tourism and my love, golf . None of these industries have anything to do with survival but exist.

  12. Plantagenet on Mon, 12th May 2014 10:31 am 

    As long as we elect leaders like Obama who are more interested in golf then in doing the hard work of leading, nothing substantive will get done.

  13. GregT on Mon, 12th May 2014 10:54 am 

    Plant,

    There are other places on the planet Earth, outside of the USA. The US population is a mere 4% of total world population. Obama has little, to no bearing on 96% of us, and Obama has little to no bearing on even US policy. He is doing what he has been told to do.

  14. GregT on Mon, 12th May 2014 10:55 am 

    Boat,

    “Just think of the lost jobs if we couldn’t drive to football games, nascar events, amusement parks and shooting ranges.”

    Yes Boat, just think about that for a moment, and make plans accordingly.

  15. Northwest Resident on Mon, 12th May 2014 10:59 am 

    Plantagenet, always looking to blame Obama. A day is not complete without finding something to blame on Obama, right Plant? Every time you blame Obama, you expose how clueless and small-minded you are, and since almost all you do on this site is blame Obama for whatever is going wrong, you end up painting a very vivid picture of yourself that is not complimentary. You’re a cheap-shot artist, Plant. Despite having it explained to you in detail numerous times, you just don’t get it and continue to think that Obama is even capable of being responsible for all the many things you blame him for. Pathetic.

  16. rockman on Mon, 12th May 2014 11:26 am 

    Boat/Greg – And IMHO that’s the saddest aspect of how we need to respond to PO: simply reduce ff consumption. We all know of countless unnecessary energy uses we could eliminate overnight. But just unnecessary to many on this site. But very necessary to folks making a living of those activities. The service industry for sure. No one has to buy $4.50 cup at Starbucks. We do it because we want it and can afford it.

    We’ll probably know when we start getting hit with worst of the Peak Oil Dynamic: we’ll begin to see a significant and consistent decline in service industry employment. There’s a lot in that area folks will give up before they start taking mass transit everywhere.

    So just when daily life starts getting really expensive we’ll also see a big increase in social services for those at the bottom of the pyramid.

  17. tahoe1780 on Mon, 12th May 2014 11:57 am 

    IMHO, the GW conversation is the closest we’re going to get to a dialog on dialing back on FF use. “A crisis is a terrible thing to waste.”

  18. GregT on Mon, 12th May 2014 12:06 pm 

    “the GW conversation is the closest we’re going to get to a dialog on dialing back on FF use”

    Dialing back on fossil fuel use is happening, whether we have a dialog about it, or not……..

    GW is yet another facet to our growing predicament.

  19. Boat on Mon, 12th May 2014 12:17 pm 

    On the idea of any president or party being at blame. Could any of you even imaging of a candidate running for office on shutting down all these industries? They would bring the white truck and take him away.

  20. GregT on Mon, 12th May 2014 12:34 pm 

    Boat,

    Exactly, but only if that candidate managed to lie his way into office. ( like that would ever happen) Anyone promoting the de-growth of our economies, would never get elected in the first place. Oh, and somehow I doubt the truck would be white, it would more than likely be black.

  21. bobinget on Mon, 12th May 2014 1:21 pm 

    The trick it seems is to simply act and not talk about why. For instance, climate change skeptics have made subtile changes in their rhetoric. Marco Rubio (R)
    from Florida keeps doubling down: “Man’ has nothing to do with Climate Change” Note, #1 he admits the climate has changed. Sen Rubio even goes so far as to call for mitigation efforts but stops short of exactly what sort. The guy is representing a state that in one human’s short lifetime will be underwater. He knows this in his heart but sees where funding comes from.
    Marco will be long out of office when manta rays swim down Flagler Street and up Biscayne Blvd. Republicans will simply say ‘it was God’s will’.

    The ‘trick’ I’ve been pushing for fifteen years on line is
    not to argue with PO or AGW deniers but suggest alternative cheaper solutions won’t conflict with
    previously held convictions. For instance, for a dozen years I kept pushing simply hanging out one’s laundry to sun-dry. I pointed out each dryer load could cost half a buck. Mentioning lower rolling resistance tires
    might save gasoline as would driving slower hardly offend NASCAR fans.

    Solar panels and hot water made a person more independent of rate changes, off grid made government interference less likely.
    These guys eat this shit up. Did I mention CO/2 load would be reduced? Not.

    My best moment was coining or adopting the phrase
    “bridge fuel” I tried to use “BF” pushing natural gas
    powered trucks and one particular US manufacturer of
    natural gas truck engines. Not one single right wing nutter objected, and why would they?

    Plant is a perfect example of the type who understands
    oil is finite. This is a start, like Sen. Rubio he is already half way home. Instead of teasing Plant, I would try to soft sell a few ideas that could in time, change his world view slightly. When a genuine left of center Democratic President gets elected, Plant will look back on Obama’s record and regret (ever so slightly) he sassed him 945 times, when 457 times might have sufficed.

    Peak oil has been a reality in America for forty years and we are still one of the world’s top producers.
    We simply either need to reprice EVERYTHING or
    rephrase to: “Peaked Cheap Oil”, for that is the reality.

  22. rockman on Mon, 12th May 2014 3:17 pm 

    Bob – All good points. But in the end any big changes will only be accomplished with huge public support. So short of being taken over by a well armed dictator politicians aren’t going to make any meaningful changes unless the general public agrees.

    And the public is all for sacrifices being made for the good of the body collective. As long as they aren’t the ones sacrificing. This is a society where the majority wants someone hang by their nuts if they lose Internet service for 48 hours. And cell phones off for 48 hours? Someone will have to be executed. LOL.

  23. energy investor on Mon, 12th May 2014 6:52 pm 

    There may be public support if the public doesn’t keep buying ICE cars…

    http://www.vincelewis.net/unsoldcars.html

  24. MKohnen on Mon, 12th May 2014 11:37 pm 

    I can think of another catalyst of global energy use change that could be quick, decisive and not require huge public support. A nice big war. Don’t think I’m an advocate, but it’s true. And if you look at the issues swarming around the Ukraine and the South Sea of China, I kinda think that is the conclusion a lot of governments (or, more properly, the power behind the governments) has come to, too. I’ve never hoped to be wrong so much, but it really explains why so many of the players in this potentially global tragedy seem so willing to shoot themselves in the foot. It also explains the sense of hysteria that supposed “diplomats” are displaying lately.

    Plant,

    I agree with you that nothing substantive will be done under Obama. Add to that list every world “leader” since the beginning of the FF era. The possible exception is Jimmy Carter; he may have done something if given the chance.

  25. MKohnen on Tue, 13th May 2014 1:50 pm 

    Energy Investor,

    That link is un-believable. No, really, it’s un-believable. My mind just won’t allow itself to wrap around the … what word would you use for this? Insanity just doesn’t seem to cut it! Just when I think I have some kind of grasp of just how stupid things are, I’m made aware of something like this, and I’m left with a brain that can no longer comprehend anything.

    Good (bad) link, though, and thanks (even though it destroyed the last two brain cells I had left!)

  26. Northwest Resident on Tue, 13th May 2014 2:06 pm 

    energy investor — That is quite a link, and provides direct visual evidence of just how screwed BAU is.

    The text in that article says it all. The day that they stop producing cars (to allow current inventory to be sold first) is the day that thousands of employees worldwide get laid off, thousands of factories producing accessories close down, thousands of truck drivers and warehouse workers and trains stop — and on down the chain.

    But it isn’t just cars that are being over stockpiled — I have read that retail outlets are having the same issue, where they just keep buying and stockpiling filling their warehouses with stuff that won’t ever get sold at a profit.

    It is all just short term strategy — to keep BAU going for a little while longer. How long can the game be stretched out until it ends, that is the only question.

  27. Davy, Hermann, MO on Tue, 13th May 2014 2:12 pm 

    I am with you MK and NR what about some amazing wasted embedded energy. A total example of the maximum of entropic decay of a dying system. The evil car will be our end. I so respect the Amish for rejecting the car!

  28. energyskeptic on Tue, 13th May 2014 5:12 pm 

    I have a summary of the 2005 Hirsch report here: http://energyskeptic.com/2012/summary-of-hirsch-bezdek-2005-doe-peak-oil-study/

    The thing is, even if we’d prepared 20 years ahead of time (and at the 2006 ASPO Italy conference Hirsh told me really you’d need 30 years), none of his solutions would work: Heavy Oil, GTL (Gas-to-Liquid from NG), Enhanced Oil Recovery, Efficient Vehicles, Coal Liquids

    Because the “liquid fuel” substitutes are all peaking as well, and it takes too long to replace our existing fleet of vehicles with more efficient ones, especially now that half of Americans would have a hard time getting their hands on $2,000 if given a month (Time magazine).

    containerization is what allowed globalization to happen (90% of cargo moves on ships), and I can’t decide if rising sea levels in 2050-2100 or the 20-30 year lifespan of container ships before they rust apart will be the death knell of shipping.

  29. Davy, Hermann, MO on Tue, 13th May 2014 6:33 pm 

    Skeptic, the Hirsh report was great for its time but in reality status quo BAU cannot run on the energy sources he highlighted with or without the time facto of 20 or 30 years for adaptation. We know this all too well from discussions here. If we could have redesigned lifestyles, attitudes, and population growth 30 years ago or more then we may have been able to lengthen a modern lifestyle. I imagine this would have involved dramatic efficiency efforts, significantly less energy intensity, Local food, minimal transport, redesigned living spaces, and simple local leisure. Hirsh at that time did not connect the dots of modern Bau systematic requirements of cheap energy to support a growth based system required energy intensity. This high level of energy intensity can only be satisfied with the traditional cheap high quality energy found in the 1st half of the oil age. We know the alternative lifestyles mentioned above would never have made it off the ground. Jimmy carter mentioned a few minor changes and he was booted out of office in favor of Reagan. Reagan was a “balls to the walls” type of guy for the traditional American dream of anything and everything with few limits. A serious crisis may change our attitudes but I doubt it. The only serious BAU changes will come with a systematic collapse.

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