Peak Oil: We absolutely MUST talk about the elephant in the room

November 23, 2007 | By | 6 Replies More

It’s time to discuss what we’re going to do about our depleting supply of oil. 

Here in the U.S., we’re doing nothing, though we call this technique “letting the free market solve the problem.”  The are many good reasons to question the “wisdom” of the free market in this context.  The consequences of doing nothing will be horrifying, however.  The first step to doing something will be to convince economists to wake up from their dangerous fantasies. 

This letter by Michael Lardelli, published by Energy Bulletin points out that those who are sounding the alarm about peak oil are primarily scientists — whereas the opposition consists largely of economists.  The scientists aren’t seeing eye-to-eye with the economists [Note:  Lardelli is a professor with the School of Molecular and Biomedical Science  at The University of Adelaide, in AUSTRALIA].

[The economists] seem to believe that the geological reality of finite conventional oil resources and the thermodynamic constraints on energy production from alternative hydrocarbon sources can be overcome by a sufficiently high price signal.

[However], there are many statistical and energy-production data supporting predictions of imminent energy decline. For example, a chart of annual discoveries of oil during the twentieth century shows that, despite tremendous advancement in discovery and extraction technology during this period, oil discoveries have been on a downwards trend for nearly 50 years (see ASPO Newsletter 73; January 2007).

Although huge, non-conventional oil resources exist — for example: tar sands, shale oil and even biofuels — harvesting these resources is likely to produce little or no energy profit.

Third, scientists warning of energy decline are seriously disturbed by this issue, for many reasons. One is the annual increase in the world’s human population. Until recently this has been sustained by increasing grain production, made possible by the oil-driven ‘green revolution’. However, grain consumption now exceeds production and reserves are dwindling rapidly. The availability of food will be further eroded by the diversion of grain to production of biofuel.

Most people lack sufficient scientific training to appreciate the strong evidence for, and dire consequences of, an imminent decline in oil production. They are easily lulled into complacency by those with a vested interest in delaying any mitigating responses. The scientific community must unite behind the issue of energy decline.

It is shocking that no politician is addressing the possibility that the scientists (rather than the pie-in-the-sky economists) are correct.  What is the contingency plan for our country if oil rockets upward in price over the next decade yet no magic cheap substitute appears?  Conservatives, especially, brush off the issue by assuring us that the “free market” will take care of things.  This is utter nonsense.  No substitute (or combination of substitutes) is waiting in the wings, such that it/they could provide the amount of energy  currently provided by cheap oil (Americans use 5,000 gallons of oil per second). At least some media outlets are starting to take this issue seriously. But not all media outlets are brave enough to mention the issue, perhaps because peak oil is such abysmally unhappy news.  For instance, notice the refusal of the BBC to mention the elephant in the room. 

In its oil prices item on the 10 o’clock News tonight, the BBC mentioned rising demand in China, the falling value of the US dollar and investors/speculation, but nothing about falling oil stocks / demand outstripping supply. What’s going on at the BBC? 

And check out this gloomy note by Llewellyn King:

In 37 years of writing about energy, in boom and bust, I have never found the kind of fatalism that now grips the oil patch.

The cause of the furrowed brows is simple: The global production and supply of oil, at between 85 and 86 million barrels a day, is straining the system.

…The most gloomy predictions come from a loose agglomeration of economists and geologists who believe in the theory of “peak” oil.

… If you think the negatives are coming only from oil patch radicals, try Rex Tillerson, chairman of ExxonMobil.

At my request, Lardelli kindly sent me additional materials regarding the issue of impending oil depletion., For example, here is an excerpt of an article he wrote for Australian National Radio. 

In the energy-poor landscape spread out before us are a number of alternative destinations. The easiest one to get to is the bleakest. If we continue straight ahead and try to maintain “business-as-usual” for as long as possible then societal chaos is the only possible outcome. An ever decreasing group of the once wealthy and powerful members of our society will grab an ever larger share of the declining resources while skyrocketing transport, food and other costs mean unemployment, bankruptcy and deprivation for the rest. Ultimately, all will lose but, on the way there, the very first to suffer will be young families with large mortgages on the outer edges of our sprawling cities – some of John Howard’s most nervous supporters.

The business-as-usual crowd, the economic rationalists, will say that the most economically efficient policy is for fuel to go to those with the greatest ability to pay. So, the rich will continue to live comfortably for a time while the rest – well, its their own fault for being poor. That is the path to disaster.

How bad are things getting? 

The prominent oil and energy website recently published an article describing how Saudi oil production has declined by 8% in the past year. Oil extraction is also falling rapidly in other major areas such as the North Sea and the Cantarell field in Mexico. Even Australia is experiencing its own production crash. Our oil extraction peaked in 2000 and has since declined by over 50%!

Here is what Lardelli himself recommends:

So what have I been doing? First, I have made the mental adjustment to the fact that the future will not be a rosy picture of ever-rising stockmarkets, increasing consumption and happy motoring. My attitude is now one of reducing consumption, conserving energy and preparing for an uncertain and unstable future. I am taking action to get to know my neighbours and to inform my local community about the threat posed by energy decline so we can face the future together in a cooperative spirit. I am reducing my debt levels as fast as possible to help me cope with rapidly rising living costs and the interest rate rises that the Reserve Bank will probably impose in a futile attempt to curb inflation caused by rising oil prices. I have bought a trailer for my bicycle so that I can do unavoidable shopping without a car. I am really concerned about the central role cheap oil plays in modern industrial agriculture so I am enhancing my food security by learning the lessons our grandparents knew about growing food in their own backyards. I recently attended a 10-day Permaculture Design Certificate course and I will use the knowledge gained to re-engineer my suburban garden for food production.

And check out this article, entitled “Economic growth to end soon – forever”:

The weeks before Easter 2007 were a truly momentous period for the peak oil debate. Highly respected figures in the oil industry, such a energy investment banker Matt Simmons and legendary Texas oilman T.Boone Pickens, abandoned their usually restrained commentary to declare that world oil production was now at its peak and would henceforth fail to meet future demand increases.

Ali Samsam Bakhtiari, a retired vice president of the National Iranian Oil Company, reported that two differently formulated computer simulations of world oil production had given very similar predictions – peak oil production in 2007 followed by a decrease of 33 per cent by 2020.

Some might argue that the oil energy gap will be filled by the use of alternatives such as natural gas or coal. While some such substitution will undoubtedly occur, the steeply rising costs of such infrastructure projects will probably limit their implementation [examples cited]. We will simply have to learn to live with less energy.

So, in 2007 with energy still cheap, we should seize the opportunity to prepare for an eventful ride on the slippery slope of energy decline. Buying a bicycle and growing some vegetables in the backyard would be a good start.

Sorry to be the bearer of such heavy doom and gloom.  It’s impossible to deny the facts and the dangers any more, however.  For those of us with children who will need to survive in this post-cheap-energy future, it’s hard to find a more dangerous threat on the horizon, given the massive social unrest that will accelerate with the decline of cheap energy.  This threat is impossible to deny except, perhaps, for those who are consciously trying to avoid learning the facts.


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About the Author ()

Erich Vieth is an attorney focusing on consumer law litigation and appellate practice. He is also a working musician and a writer, having founded Dangerous Intersection in 2006. Erich lives in the Shaw Neighborhood of St. Louis, Missouri, where he lives half-time with his two extraordinary daughters.

Comments (6)

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  1. Ebonmuse says:

    Unfortunately, it seems like one of the most common reactions to the steadily rising price of oil is to turn to dirtier fuels (especially coal) that can still be obtained cheaply. What we're currently practicing is the growth strategy of a virus: multiply, consume all the natural resources in an area, and then move on. It's unsustainable by definition, and I find it deeply disturbing that so many people don't seem to recognize this.

    There are plenty of sustainable power sources out there. They may not be as cheap as oil and coal, but that's only because the true costs of fossil fuels aren't reflected in the price we pay for them at the pump or on the utility bill. We've already made a lot of progress in making the switchover, but we have a long way left to go before we can decarbonize our economy, and time isn't on our side.

  2. Erich Vieth says:

    Ebonmuse: Your comment "time isn't on our side" is the key. We are currently producing automobiles that will be uneconomical (perhaps illegal) to run during the expected lifetime. This is sheer stupidity.

    We are also still building houses that the intended occupants will be unable to maintain, in a short number of years, due to their size and location away from the city centers.

    The silence if deafening, except for that ignorant and broken record response that "the market" will magically cushion our fall and make sure that everything will be fine. As though ANYTHING out there is positioned to replace the energy equivalent of the 5,000 gallons of oil per second that Americans currently use.

  3. Niklaus Pfirsig says:

    I think I have pointed this out before. Cheap, abundant enegery is mankind's limiting factor. As the oil runs out, more and more people will die. Currently we have no practical alternative, and as the population increases, so does our thirst for oil.

    This is a problem that could lead the human race to a sudden end. We have to reduce the population, and at the same time apply some of the gene splicing technology to develop a plant that can produce oil, from the CO2 and water in the air.

  4. Dan Klarmann says:

    Nik: Human population was growing nicely for a few centuries before the dawn of the industrial revolution that spawned (not rose from) the consumption of fossil fuels. Factories ran fine on water-turbine or wood-steam power.

    Running out of cheap oil will be disruptive to society, especially to the distributed, urban, automotive crowd. It could conceivably lead to the next crash of civilization, but that is a low probability scenario.

    It won't be the end of our species. Just consider the millions of people who are now living fossil fuel free existences. We may call it squalor in some cases, but it is survival. Except from having to fight off refugees, they may not otherwise notice the change.

  5. Erich Vieth says:

    The fastest-growing bet in the oil market these days is that the price of crude will double to $200 a barrel by the end of the year.

  6. Dan Klarmann says:

    Given the collapsing dollar, and the forecast Democrat victories coupled with the convenient way the oil prices varied just as the Republicans have needed for the last 8 years, the $200.00 2008 oil barrel may not be that far fetched.

    But I'd expect the price to come back into line with extraction costs after the U.S. elections.

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