How will the specter of a shrinking oil supply affect each of us? How will we adapt as a community?
Some who have thought more about this claim that when this occurs, we will see life as we know it grow much more LOCAL and a lot less global. It will be a condition of economic and market forces - the interplay of supply and demand, where the SUPPLY of oil will be shrinking at exactly the same time the world's fast track growth nations (i.e., China, India) will be driving up the price of a barrel of oil due to their unquenchable DEMAND for it.
That's why this topic is so important.
More important than, say, where someone has his lawn-mower parked in his yard??
I would think so. And I think you think so, too, given the turnout of citizenry at the last village council meeting.
But not all of our council people think so. In fact, I would speculate most are not even AWARE of the greater problems that loom for us as a community.
Come 2008, you have the chance to change the mix and the focus. Don't miss the opportunity. Much is riding on it.
The articles below are a somewhat technical summary of the issues related to Peak Oil theory. If the subject interests you, read in more detail below. If, like me, your interest lies in what the COMMUNITY should be doing about it, then follow the link sent by my geologist friend, Chuck Grapes:
This is a organization located in Yellow Springs, Ohio that is linking Peak Oil Theory with the importance of local community. I attended their second conference in 2005, I think they are "way ahead of the curve" on this issue. I think the site will interest you.
Chuck
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For a quick schooling on the subject, go to the Q&A section of the above mentioned website.
Here you will also want to pay attention to this question:
Plan C ? Our strategy of culture change, conservation and curtailment. These are far greater threats to the village than someone's lawn-mower location in his yard or the paint chipping off his house! This despite the council's obsession with the code enforcement officer and politics thereof, unfortunately to the detriment to our community. Get educated on the issues, then let's wake them up!
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Consumption
Not only should we be thinking about these issues as a community - we should at least be having a dialog about them, too. But we are not. You can change that.
This brief is a response by Lt. Col. (Ret.) Raul Diaz to Chuck Grapes information below. Some people are ahead of the curve in thinking about what could challenge us as a small community.
You may write to Raul at Horseppl@aol.com if you'd like to hear more from him.
Well.....Lets look at the other side of the picture: Consumption.
I divide consumption into two fields: Mass energy and individuals.
The mass energy field is basically the purview of companies providing electricity and gas. Gas LP and natural are going to hit their peak much later than crude oil and by that time functional alternatives would have, in all likelihood, been developed. Electrical power, in the US today, is not dependant wholly on fossil fuels, nuclear, or any other non renewable energy, not so elsewhere, particularly in many third world nations, where power plants were built and owned by US or European concerns and run on coal or oil. In these nations, many of which nationalized those plants and now they belong to governments which are caught between a rock and a hard place, since they find it hard to afford the cost of fueling them, impossible to afford replacing them or finding a foreign fool to invest in them, based on their volatility and experience with nationalization.
Back to the US, here we are finding very large and powerful companies, like GE, which is heavy into wind power, and even oil companies, such as Chevron who already profits from geothermal power, which are leading the way by investing in replenishable forms of energy, specifically directed at the mass energy field, which provides a consolidated form of revenue through electrical billing or equipment and technology purchases. Others look at optimizing existing hydroelectric facilities and constructing new ones, while still others search for answers in currents, tides, hydrogen, solar, etc. However, the attraction provided by the huge market of combustion engines has moved others to the field of replacement combustion fuels.
Replacement combustion fuels are currently being lead by alcohol based fuels and, since alcohol can be derived from just about all organic material, the race, which in the US started with corn based ethanol, is now heading to looking for better, more economical, less conflicting and non confrontational organic base, these fuels, however, require some alterations made to current combustion engines in order that they can be effectively used.
On the other side, others have a very large infrastructure and marketing investment in continuing to procure fossil oil and have turned to oil sands, shale oil and coal extraction as their future source, but the possibility of really be able to produce oil in sufficient quantities to provide even only to satisfy US needs is years and billions of dollars away, even under mandated efficiency increases for combustion engines.
One of the big problems with many alternative energy sources are delivery and marketing. We know how to charge people at the pump and how to get the product there. Try hydrogen and electricity and a myriad of problems come to mind. These are things that have to be resolved economically before such known sources can become widespread realities.
Now, at the home energy level, solar is king and becoming more widespread easy to install and cheaper. Europeans are leading the way, driven by exorbitant electric costs. Germans are currently leasing the world in solar conversions, but the US is quickly moving in this direction, assisted by support legislation and even commands at all governmental levels, federal and even municipal.
Besides peak oil and global warming concerns with CO2 emissions from fossil fuels used in combustion engines, there are other concerns which motivate the race to alternative fuels and energy sources in the US, the most important being national security.
Not only our planes, most of our navy and all our land vehicles run on very powerful fuel consuming engines, but also that is the case for most of nation's economy and citizens. This means that, since a substantial portion of our foreign oil imports come from Islamic nations embarked in, or subject to, terrorist activities which jeopardize or requirements for oil supplies, or makes the US susceptible to economic blackmail, it is imperative that we part company with such suppliers. This, not to mention that, our oil purchases are a substantial source of funding for terrorist activities largely directed against the US.
Today, the Wall Street Journal (WSJ) had a Page 1 article about limits to world oil production. The article begins:
A growing number of oil-industry chieftains are endorsing an idea long deemed fringe: The world is approaching a practical limit to the number of barrels of crude oil that can be pumped every day. Some predict that, despite the world's fast-growing thirst for oil, producers could hit that ceiling as soon as 2012. This rough limit -- which two senior industry officials recently pegged at about 100 million barrels a day -- is well short of global demand projections over the next few decades. Current production is about 85 million barrels a day.
The WSJ sees a number of above-ground issues as being the reason for this looming plateau (below the fold...)
1. Lack of investment during the time was oil priced low, leading to less exploration and less production now.
2. Resource nationalism curbing investment too.
3. Untapped resources in all the wrong places (conflict zone, inhospitable climate, environmental concerns)
4. Talented workers are retiring; not enough trained workers to replace them.
All of these issues are important, but they do not address the underlying issue -- we start with a finite amount of oil, and this is gradually being depleted. As it gets depleted, it becomes more and more difficult to extract economically, so production
tends to decline. For example, this is a graph of US oil production.
US oil production reached its high point in 1970, and has fallen since then, despite the discovery of additional oil in Alaska and the Gulf of Mexico, and many technological advances. This decline was forecast in 1956 by M. King Hubbert.
We are also seeing declines in other fields that have been produced for extended periods, such as the North Sea.
The Wall Street Journal article says:
Traditional peak-oil theorists, many of whom are industry outsiders or retired geologists, have argued that global oil production will soon peak and enter an irreversible decline because nearly half the available oil in the world has been pumped. They've been proved wrong so often that their theory has become debased.
This is nonsense. One by one, each field that has been pumped extensively has gone into irreversible decline. The production of the majority of countries of the world is now in irreversible decline. It is becoming increasingly clear that in the not-too-distant future, world production will begin to decline. The coming decline of oil production has been predicted by many. The estimated date has varied, but the general time frame has been around 2000 to 2020.
One aspect of peak oil theory that is being refined is the method of prediction. One of the earliest techniques predicted that oil production would begin to decline when half of the available oil had been extracted. Methodology has been expanded, so other forecasting techniques are now also used. (It is doubtful that this was ever the only technique used.) Some reasons for not relying on this technique:
• There are many types of oil resources, including free flowing traditional oil and the very difficult to develop oil sands and oil shale. If a 50% factor is applied, it must be applied to each type separately. Thus, adding oil sands reserves which are very slow to be developed does virtually nothing to push forward the peak oil date.
• New technology can change the pattern of production. Sometimes, new extraction techniques can "hold up" production until perhaps 60% of the ultimate resource extracted has been removed, so that the decline begins later, and is steeper.
• Many of the frequently quoted reserve amounts appear to be seriously overstated. OPEC numbers appear to be too high, as indicated by this analysis. Even US Geological Study reserves have been questioned as being too high, in analyses such as this one. Reserve estimates are not audited, and different organizations have different standards for setting their reserves.
Because of the these issues, those involved with the study of the peak oil use a variety of techniques to project the peak in future production, rather than simply applying a 50% factor to estimated ultimate production. For example, many analysts are now looking at planned new production, together with expected decline rates on existing fields, to make their forecasts. For an example, see this recent presentation by Chris Skrebowski.
All of the techniques seem to be converging to show a likely decline in production in the next few years, or even starting about 2005. Oil production data suggests that world oil production has been flat to slightly declining for the last two years, so it is possible the decline has already begun.
Figure 3. Average daily total liquid production, by month, from EIA (green) and IEA (plum), together with 13 month centered moving averages of each line, recursed once (LHS). WTI spot price (blue - RHS).
Click to enlarge.
Graphs are not zero-scaled. Source: IEA Oil Market Reports, and EIA International Petroleum Monthly Table 1.4. The IEA line is taken from Table 3 of the tables section at the back of the OMR in the last issue for which the number for that month is given. WTI spot price is from the EIA with November estimated from average of daily figures available so far. Graph by Stuart Staniford.
The oil production forecasts that have been truly erroneous are those of the US Energy Information Administration (EIA), the International Energy Agency (IEA), and Cambridge Energy Research Associates (CERA). All of these organizations prepare estimates that are consistently biased high, as indicated by the analysis EIA forecasts by researchers at Penn State University, and by this analysis of CERA forecasts by Dr. Euan Mearns. One starts to wonder whether the forecasts of these organizations are based primarily on forecasts of future demand, together with a large measure of wishful thinking.
The WSJ article quotes Randy Udall:
Randy Udall, co-founder of the U.S. chapter of the Association for the Study of Peak Oil and Gas, has written that these unconventional oil supplies are like having $100 million in the bank, but "being forbidden to withdraw more than $100,000 per year. You are rich, sort of."
This is a good way of understanding our current problem. There is a lot of oil in the ground, but it is complex oil to get out. It is expensive, and requires a lot of trained workers. We are rapidly reaching the point where we cannot pull as much oil out of the ground, because the "easy oil" is gone, and the remaining oil is in difficult locations and is hard to extract.
One of the issues with respect to extraction of oil is that we must use scarce resources in the extraction process - oil and other energy resources, water, and trained workers. Once we reach the limits on these, we cannot extract more oil. If we start spending more than one barrel of oil to obtain a barrel of oil, we have a clear problem. If we expect to use huge amounts of fresh water in areas that are subject to drought, water may also be a limiting factor. Additional manpower can be trained, but this takes time, and resources of other types. We are rapidly reaching the point where obtaining adequate resources for oil production is a limiting factor, so production must fall.
The impact of declining oil production in future years is likely to be very significant. Rear Admiral Hyman Rickover predicted many of the issues we are facing today in his speech from over 50 years ago. Mr. Rickover talks about the close tie of fossil fuel use with our standard of living. This is likely to be one of the big challenges in the years ahead.
For those who wish to learn more about energy and our future, The Oil Drum has many articles of interest. Some links to individual articles are shown at the top of the TOD page. Euan Mearns put together a compilation of worthwhile articles by various Oil Drum authors. This is a link to a PDF compilation of some introductory articles I have written. In the comments, some may want to share links to their favorite articles.
According to The Kiplinger Letter, Washington, Nov. 16, 2007, Vol. 84, No. 46, Venezuelan President Hugo Chavez's upcoming power grab will cause U.S. oil production interests to lose billions of dollars [ExxonMobile & ConocoPhillips.]
One of the riskiest aspects of conducting international business is that the leadership in a country can at any time declare the foreign assets of a global business to be commandeered for their own country's use. This is what is happening in Venezuela.
Chavez's actions are sure to keep the oil prices high for the long term, and discourage future American businesses from locating in Venezuela. Protections on private property are non-existent in a dictator state. -srb
The Peak Oil Crisis: Wall Street Comes To Reality Written by Tom Whipple Thursday, 22 November 2007
The day was a long time in coming. For many months now, world oil production has remained essentially flat and world oil exports have fallen while world oil prices just climbed and climbed.
Poor country after poor country was priced out of the market and world oil stockpiles started to melt. Yet as the world lurched towards the mother of all economic crises, the major media of the country led by Wall Street’s own Journal remained strangely silent.
From time to time they would report some good news such as “billions of barrels found 25,000 ft under the Gulf” or “steaming out sticky oil will save us.” However, they never got around to asking what is involved in extracting oil from deepwater wells or just where all that tar-melting steam was coming from. Anyone who questioned that oil production could keep on growing for the foreseeable future was castigated as lunatic fringe.
This make-believe world finally came crashing down on Monday when the Wall Street Journal published a front-page story admitting there was a big, big problem with oil production just ahead. Now the flagship of economic journalism does not come to such a decision lightly. To admit that you have been dead wrong in ignoring the most important economic issue the world is likely to face in the next century certainly strains your journalistic credibility.
There must have been hours of agonized meetings in the offices of senior Journal editors as they hashed out just how to break the news that world oil production was about to peak without admitting that the world is arriving at peak oil.
The solution turned out to be rather ingenious. Write a story about a new kind of “plateauing oil” that has just been recognized while continuing to bash the old “peak oil.” Sophistry? Of course, but it enables the Journal to maintain that all-important face.
The title of the Journal’s story sets the stage “OIL OFFICIALS SEE LIMIT LOOMING ON PRODUCTION.” The first sentence carries the message “A growing number of oil-industry chieftains are endorsing an idea long deemed fringe: The world is approaching a practical limit to the number of barrels of crude oil that can be pumped every day.”
There you have it. The story is not portrayed as “evidence is growing that world oil production will soon go into decline.” It turns out that the real news is that an increasing number of oil-industry leaders are afraid that the world is approaching “a practical limit” on oil production. “Practical limit”is a nice touch which sweeps a number of issues under the rug.
To give the Journal its due, right up front they lay out the magnitude of the problem - “The world certainly won't run out of oil any time soon. And plenty of energy experts expect sky-high prices to hasten the development of alternative fuels and improve energy efficiency. But evidence is mounting that crude-oil production may plateau before those innovations arrive on a large scale. That could set the stage for a period marked by energy shortages, high prices and bare-knuckled competition for fuel.”
After so much honesty the Journal, unfortunately, falls back into its old ways by attempting to make a distinction between what it is telling us as news and the old “peak oil theory.” The following paragraph from the Journal’s story is a gem.
“The current debate represents a significant twist on an older, often-derided notion known as the peak-oil theory. Traditional peak-oil theorists, many of whom are industry outsiders or retired geologists, have argued that global oil production will soon peak and enter an irreversible decline because nearly half the available oil in the world has been pumped. They've been proved wrong so often that their theory has become debased.”
“Proved wrong so often?” “Debased”? As could be expected, peak oil adherents were apoplectic at these words. The web was instantly populated with reasoned refutations and charts which ask, “What on earth are they talking about?”
The answer probably is in the way large institutions such as the Journal pass important stories through layers of editors – not just to get the commas right but to insure political correctness from the paper’s perspective. The “debased” paragraph plays such a discordant note, it can only be a political afterthought from management.
The story then goes on to explain “plateauing” oil. “The new adherents...don't believe the global oil tank is at the half-empty point. But they share the belief that a global production ceiling is coming for other reasons: restricted access to oil fields, spiraling costs and increasingly complex oil-field geology. This will create a global production plateau, not a peak, they contend, with oil output remaining relatively constant rather than rising or falling.”
Once the story gets beyond the “face saving” it does a credible job in explaining why the world will soon be facing a major shortfall in oil production -- “The emergence of a production ceiling would mark a monumental shift in the energy world.” The “expanding pool of oil, most of it priced cheaply by today's standards, fueled the post-World War II global economic expansion.” “Since 1990, despite billions in new spending, the industry has found only one field with the potential to top 500,000 barrels a day.” “Some of the most promising geological formations are in locations that are inhospitable, for reasons of geography or, especially, politics and strife.” “Labor and construction bottlenecks also are making it difficult to develop proven fields.”
The Journal’s story marks an important turning point in the public’s understanding of peak oil. Now that the ice has been broken by the flagship of the financial press, it will not be long before others muster the courage to explore and discuss the ramifications of “plateauing” oil. This cannot be a bad thing for as the notion that we are entering the greatest paradigm shift of the last 100 years sinks in, people can start preparing for it.
I have listened to Dr. Chuck Allen's video (dr.chuck@comcast.net) linked in his earlier email to us. I must say it touches on very many of the arguments and discussions had here in this group, but with a very different emphasis on cause and effect. I would be interested in hearing from you who have the time to listen and comment. Cliff Notes version follows below. I appreciate all your views. -Sharon
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CLIFF NOTES VS:
Lindsay Williams is a Baptist minister and aviation missionary and was a former chaplain and executive board representative for three years at British Petroleum, Atlantic Richfield, and other companies on the north slopes of Alaska's oil fields.
After "rubbing shoulders with some of the most powerful men on the face of the earth," Williams wrote down his experiences in this book: The Energy NON-Crisis.
The video clip here relates the information in Lindsay's own words, and introduces Williams' assertion that Alaska's Gull Island pool is larger than all the wells in Saudia Arabia combined -- the largest pool of oil in North America and possibly on the face of the earth.
Ken Frohm, past president of ARCO, edited the book to make it "letter perfect" after he was fired from ARCO. He then was rehired by ARCO and was told he could no longer give information to Williams, who asserts that "if American policy makers do not tell the American people 'the rest of the story,' America will be a 'has been."
In the 60's, oil was chosen to be the tool to "control the world" since every person on the planet every day uses products made from oil or oil derivatives. "What we pay for a gallon of gasoline at the pump is a taxation by the few people who control the world," per Williams, "and the people in Washington are scared to death - scared to tell you the truth. Why don't they tell you the truth? Because they know what happened to John F. Kennedy and many others who have told the truth."
Who are these "few people"? While Henry Kissinger was Secretary of State, he went to every oil-producing country of the world and made them a proposition. "I want to cut you a deal that will make you rich. We'll buy oil from you; we'll make you wealthy; but you must denominate the oil sales in dollars. For this, we will give you a percentage of the money to build your country, but you must buy a small portion of our national debt." Two countries would not sign: IRAQ and IRAN.
Williams says that if something isn't done now, we will be slaves in the future. Saddam would not sign the Kissinger proposition, and so he had to be destroyed. Abner Dethrey worked for the State Dept. in Feb.-May of 1990 and was dispatched at that time to tell Saddam Hussein the US would not intervene if Iraq would invade Kuwait. It was a set up by George Bush Sr. Our State Dept. wanted an excuse to topple Saddam and invade Iraq. George Bush Jr. had to finish the job after Clinton had served as president for eight years.
Oil is the established world currency and is controlled by big oil men. If America does not succeed in Iraq, the American dollar could collapse and be worth nothing. These same big oil men talked of a 30 year plan for Arabia. Gold was trumped as the investment commodity to buy, and it went to $800/ounce. When oil went over $10/barrel, gold fell to $300/ounce, and those who had purchased high had to sell low. Oil, not gold, then became the commodity traded that could make a man rich. And it was all done intentionally by leaders in our own nation. That is the reason for the drive up in gasoline prices.
"The gasoline purchased at the gas pump is a tax imposed by them." Who is them, you say? Williams called "them" out. Manufacturer sells oil to a wholesaler who sells it to a retailer who sells it to you - there are "in between" men. It costs $3 to bring oil out of the ground in Alaska and $5 in Saudia Arabia. The rest is "tax." The world's people cannot afford to put food on the table when gasoline is $5+/gallon.
"Oil producing countries and companies are making profits greater than at any time in history, but not nearly as much as the "in between" middlemen and the big oil executives and their representatives, the traders who sit behind computers in New York and London every day, and tell the world what price oil will be for the day, and they are making exorbitant profits - $60 BILLION per year. But there's a group who is making even more." - Lindsay Williams
The International Monetary Fund (IMF) & the World Bank is the "them," making the exorbitant profits through taxation. From world citizen pocket books buying gasoline, the World Bank offered to forgive Third World countries their debts. The World Bank now owns the Amazon River Basin as collateral for their loans in Brazil.
IRAN
By a certain date, Iran said it will flood the world with cheap oil and denominate all oil sales in Euros. They've built their flow-line pipes, they have the third largest oil reserve in the world. The American administration is shaking in their boots - if this occurs, it will collapse the American dollar and ruin the economy and life as we know it.
War is a racket conducted at the expense of the very many for the benefit of a very few. Read "The Confessions of an Economic Hit Man," by John Perkins, who was an insider, who worked for huge corporations owned by families of those who controlled the resources of the entire world, and would stop at nothing to direct profits out of the countries and flow them into the coffers of these families. NO OIL PRODUCTION PLANTS AND REFINERIES HAVE BEEN BUILT OR MODERNIZED IN AMERICA IN 20 YEARS - BY DESIGN.
President Bush cannot allow oil from the north slopes of Alaska to come to the USA, because if he did, the oil countries' Kissinger proposition would be dishonored, resulting in agreements to be broken, and collapsing the American dollar. So we go to the gas pumps and pay over $4/gallon to pay the Third World debt of oil producing countries while making a small group of elite families rich beyond our wildest imaginings. ===============================
It is my good fortune to have as a long time friend Chuck Grapes, Petroleum Geologist, living and retired today at his beloved High Point Farm in Ohio.
It is because of him that I have learned about Peak Oil Theory. If you should like to dialog with him about this, please write to him at: HighPtFarm@aol.com
He is a scientist and advocate of getting people to think about what will happen to society as oil is depleted. Thank you, Chuck, for the learning. It is an honor and a pleasure to know you and to call you my friend. -Sharon
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From: HighPtFarm@aol.com [mailto:HighPtFarm@aol.com] Sent: Tuesday, November 20, 2007 2:26 PM To: sballer@lobatek.com Subject: Re: Hello Sharon
It sounds a lot like geology. It's as much an art as it is a science. Mitchell's HR claimed it took eight years of professional experience for a geologist to begin returning a profit to the company. Mitchell hired very few geologists without several years of professional experience. They hired me right out of my graduate school program, but I had four years professional experience before I went to graduate school.
Petroleum geology is an art because of the interpretive nature of the data used to reach "high dollar" conclusions. Think of it like this: You are looking at a subsurface landscape through a scattering of soda straws (the wells drilled) in the area. From these drill holes we get pieces of the landscape via well cores and drill cuttings. We can characterize the sedimentary environment in which the rock formed at that specific place by looking at the size and shape of the grains, its internal structure (beddiing) and its fossil content.
Geologists then attempt to connect all these individual wells into a coherent subsurface landscape or depositional model. Geologists then tie these wells into various modes of remote sensing studies such as seismic and soil-gas geochemical surveys so that they can extrapolate that depositional model into new areas in hopes of discovering new oil or natural gas fields. By the time, a geologist is actually picking a place to drill an exploration well (the high dollar conclusion), he is usually making a critical decision based on two sets of highly interpretive data. It takes years of mentoring and oversight before a young geologist becomes skilled enough to avoid all the pitfalls inherent to this "fuzzy science" and has the solid judgment to become profitable to a company.
In short a new geologist can not replace an older geologist because it's the knowledge acquired from years of experience that makes the older geologist valuable to a company.
From: HighPtFarm@aol.com [mailto:HighPtFarm@aol.com] Sent: Wednesday, November 21, 2007 11:56 AM Subject: More Spin on the WSJ Peak Oil Piece This Week
A growing number of oil-industry chieftains are endorsing an idea long deemed fringe:
The world is approaching a practical limit to the number of barrels of crude oil that can be pumped every day. Some predict that, despite the world's fast-growing thirst for oil, producers could hit that ceiling as soon as 2012. This rough limit -- which two senior industry officials recently pegged at about 100 million barrels a day -- is well short of global demand projections over the next few decades. Current production is about 85 million barrels a day.
The WSJ writers refer to peak oil theorists as "debased" and try to put distance between the supposedly more legitimate statements now coming from the titans of the oil industry and the predictions of supposed peak oil nuts. I think these writers are unfair in their treatment of the lower status and, in their eyes, less legitimate theorizing of petroleum geologists and physicists. How dare anyone but owners and top managers of capital get taken seriously? But the titans of industry were not long ago painting a far rosier energy picture (as were inept national and international energy information agencies) and I'm finding it hard to see them as the more legitimate experts on this topic. The sharpest peak oil theorists are looking a lot more accurate in their assessments than the CEOs of big oil companies.
It is becoming harder to label someone as a fringe kook for saying that Peak Oil is coming Real Soon Now. You can still tell us we are wrong. But I'm no longer fringe on this topic and that of course makes all the difference in the world. It creates a problem for me personally. How can I be cutting edge? Now I've got to find more topics to be fringe on since some of my major themes are heading into mainstream legitimacy and acceptance. Who are these non-fringe people who say we are nearing the peak?
"I don't think we're going to see the supply go over 100- million barrels a day. Where is it all going to come from?" Conoco CEO Jim Mulva said at an investor conference in New York.
I've got readers complaining to me that I need to take global warming seriously and get out of the denial mode. Well, Peak Oil is going to do far more to cut CO2 emissions than the Kyoto Accords would have done had they actually been adhered to. All those models that projected future CO2 emissions based on the world using 130+ million barrels of oil a day are based on unrealistic assumptions. I doubt we'll even reach 95 million barrels per day. Then comes the downhill slope. Or are we already on it?
Kenneth Deffeyes predicted that world oil production (note that he used crude + condensate, not total liquids) would peak between 2004 and 2008, most likely in 2005. He observed that world crude oil production probably peaked in 2000, but he never backed off what his mathematical model showed.
The cumulative shortfall between what the world would have produced at the May, 2005 rate and what it has actually produced is over 700 mb (EIA, crude + condensate). So, the crude oil data suggest that we probably did peak in 2005. However, the real problem is net export capacity. We are working on our final written report on the top five net oil exporters (about half of current world net oil exporters), but note that their total liquids net exports fell by -3.3%/year from 2005 to 2006, and the decline in net exports is almost certainly going to accelerate from 2006 to 2007. This is the fundamental reason for high oil prices-- we are bidding against other importers for declining net oil exports.
Brown and his often co-writer khebab (Samuel Foucher) argue that oil exported from current net oil exporters (countries that make more oil than they use internally) will decline more rapidly than oil production in those exporters. They call this the Export Land Model as they group all the oil exporters into "Export Land" and the rest of us in "Import Land". They expect more rapid growth in demand in oil exporters will cause their exports to drop even before their production does. This is an extremely important observation. The amount of oil available to buy will go down even faster than the decline rate of oil production. Worse yet, the number of people bidding on that oil is going up due to population growth and economic growth. Asian economic growth - especially in China - is going to bid oil prices up so much that oil imports into the United States, Europe, and Japan will decline more rapidly than oil exports from producers.
Think about that.
There's a wild card that could make the short to medium term picture even worse: Countries with large oil reserves could decide to lower production even more rapidly in order to conserve oil to sell later. With prices in the stratosphere why sell as much as you can sell now if the high prices at a lower production rate will give you plenty of cash to run your government and placate your population?
The present climb in the oil price has coincided with rising demand from China. Put it this way: China used about three-quarters of the additional supply of oil in the world last year. The economic team at ING Bank notes that China may account for all the additional production this year. If China is to go on using all the additional oil that is available, or more, the rest of the world will have to get by with less. This makes the present surge in the oil price different from all previous oil shocks: it is caused by rising demand rather than restricted supply.
Recently I've gone through a shift in my thinking about Peak Oil. I'm no longer worried about trying to figure out when it will come. The analytical curiosity about future events has been replaced with something that is beginning to feel more like fear. Peak Oil looks to be coming soon enough that I'm thinking more along the line of how to earn a decent living while economies around the world go through one year after another of wrenching recession.
Got any constructive thoughts about adaptation? I'm keen to hear them.
“History does not entrust the care of freedom to the weak or timid.”~Dwight D. Eisenhower Copyright 2007-2010TALK CITIZEN ™ is a trademark of LobaTek Incorporated
