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Peak Oil and the Future – Grim Reality or Conspiracy Myth?



"The era of cheap oil is over and will never come back… Conventional oil peaked in 2006," - Fatih Birol, International Energy Agency Chief Economist, 25 May 2011

There is perhaps no more divisive issue in the world energy markets than the concept of "peak oil," which has ignited vociferous debate on both sides of the issue.

Shorn of its complexities, peak oil boils down to a half-empty/half-full glass debate. The peak oil theory, first enunciated by Marion King Hubbert, a geologist working at Shell’s research lab in Houston, stated that any finite resource (including oil), will have a beginning, middle, and an end of production, and at some point it will reach a level of maximum output, to be followed by a decline, which cannot be effectively arrested. Elaborating upon his theory, Hubbert presented a paper to the 1956 meeting of the American Petroleum Institute in San Antonio, which predicted that U.S. overall petroleum production would peak between the late 1960s and the early 1970s, igniting fierce controversy, but Hubbert became famous when this prediction proved correct in 1970 when U.S. oil production did in fact decline.

Oil Production vs. oil consumption

In 1973 oil accounted for 46 percent of the world's total energy consumption; by 2005, its share had declined to 35 percent. But oil remains well ahead of other energy sources: coal meets 25 percent of the world's energy needs, natural gas is next with a market share of 20 percent and nuclear power provides 6 percent of the world's energy needs.

While there are more than 40,000 oil and natural gas fields worldwide, 94 percent of known oil is concentrated in fewer than 1,500 giant and major fields. Of these, 100 super-giant fields contain approximately 65 percent of cumulative production plus remaining reserves. Current world production and consumption remain heavily dependent on super-giant and giant oilfields discovered in the 1950s and 1960s, and only rarely in recent decades have discoveries equaled production. Instead, it’s usually been one barrel discovered for every three barrels produced.

Old super-giant fields are aging and their production is declining. Kuwait’s Burgan field, which has proven reserves of 70 billion barrels and has a daily output of 1.6 million barrels a day, the world's second-biggest field after Saudi Arabia's Ghawar field, was discovered in 1938 and peaked in 2005. Ghawar, containing 75 -83 billion barrels, was discovered in 1948 and production also reportedly peaked in 2005. Pemex’s Cantarell, discovered in 1976 in the Gulf of Mexico, peaked in 2004, earlier than anticipated. Alaska’s Prudhoe Bay, containing 13 billion barrels, was discovered in 1969 but production there began to decline in 1998, again, earlier than expected.

North Sea production, where reserves are estimated at 17 billion barrels, is also in decline. While primary oil demand in European Union countries is projected to increase by 0.4 percent per year from now to 2030, North Sea output peaked in 1999 and has been declining ever since. More than half of the North Sea oil reserves have been extracted, according to official sources in both Norway and the UK. British sources give a range of estimates of reserves, but even using the "maximum" estimate of ultimate recovery, 70 percent had been recovered at the end of 2006.

Western Siberia, which began production in 1959, contains 70 percent of Russia's oil and produces seven million barrels a day. Last year, the Russian Ministry of Energy reported that the recoverable oil reserves for Russia in general had a depletion rate of more than 50 percent; in the European part of Russia –65 percent.

In the United States production has been falling since 1970 despite the country having the best equipment, the largest infrastructure, the most money and the greatest financial incentives to produce.

New oil discoveries to the rescue?

Since 1996, 11 new super-giant oil and natural gas fields have been discovered, containing 5 billion or more recoverable barrels apiece. Skeptics of peak oil point to such discoveries as proof that the world faces no imminent production shortfalls, but a few caveats are in order.

These new finds are 1996 Bach Ho (White Tiger), Vietnamese field in South China Sea (5 billion barrels): 1999 Kra al-Marow, Kuwait, (up to 70 billion barrels): 2000 Kashagan, in Kazakhstan’s Caspian sector, (13 billion barrels): 2001 Azadegan, Iran, (26 billion barrels est.): 2003 Ferdows, Iran, (8 billion barrels est.): 2006 Gulf of Mexico, Noxal Field, off Veracruz, (20 billion barrels est.): 2006 Gulf of Mexico, off coast of Louisiana, (3-15 billion barrels est.): 2007 Bohai Bay, off the northeast coast of China, (7.5 billion barrels est.): 2008 Tupi, off the coast of Brazil, (5-8 billion barrels est.): 2008 Santos Basin, off the coast of Brazil, (40 billion barrels est.) and 2008 Carioca, off the coast of Brazil, containing an estimated 10-33 billion barrels.

First, eight of these new super-giant fields are in offshore waters, a situation greatly increasing lifting costs and in the case of Brazil, in water several miles deep. The three super-giant onshore fields are all located in the Middle East, and Iran’s petrochemical industry is severely constricted by U.S. economic sanctions threatening firms investing in the country’s hydrocarbon industries. Given the long development times and expense involved in developing the offshore fields, they will not come online for years and when they do, their production costs will be high.

New oil cannot be instantaneously brought onstream and there will come a year when the production rate can rise no longer even though there is a lot more oil left to be produced, which will represent peak production. There is little argument now about whether this will happen, only when.

Accordingly, there is overwhelming evidence that the world will shortly reach a plateau where supply cannot continue to keep up with demand increase. Accordingly, hundreds of billions of dollars will need to be found if the world is to continue its oil addiction, and these massive investments will eventually be factored into increased oil costs.

Possible solutions

The interim solution now being belatedly being adopted in the U.S. is to increase conservation and thereby reduce oil usage. A major milestone was reached last month when automakers agreed to double the fuel economy of the vehicles they sell in the U.S. to a fleet wide average of 54.5 miles per gallon by 2025. The White House negotiated the proposal, which will take effect in 2017, with automakers including General Motors, Ford and Toyota.

Secondly, the U.S. military, the world’s single largest industrial consumer of oil is also moving both towards conservation and the development of renewable biofuels to lessen its dependence on traditional hydrocarbons. As a result of the global recession, which began in 2008 and the recent wrangling in Washington over budget cuts the U.S. Defense Department is beginning to look at the bottom line for its fuel costs, as every $10 increase in the price per barrel of oil costs the Pentagon an additional $1.3 billion.

These initiatives, while both laudatory and long overdue, are running up against a number of hard truths about global oil production, including the simple fact that if something cannot be sustained indefinitely, it will eventually be incapable of being sustained, but instead, ultimately it will shrink, as a resource that is finite cannot continually have its production increased. Furthermore, you cannot produce oil unless you first discover it and the majority of the world’s new oil finds are offshore, requiring massive investments before a single barrel of oil is produced, years in the future.

Hubbert himself saw a partial solution to the depletion of global oil reserves lay in diversification of energy resources, favoring the development of both solar power and nuclear energy. Given the dominance of the global energy markets by the oil industry for the last five decades however, alternative energy development funding has been starved of capital and except for nuclear power, other sources such as wind, tidal, solar and biofuels remain in their infancy.

Our future in a peak oil world

Overall the long-term prognosis is grim for the future of "cheap" oil, and the world must expect to get along without what has been our critical energy source in expanding the world’s economy for more than half a century. The sooner the world’s governments prepare for that eventuality and a transition to alternative energy sources the better, but the signs have hardly been encouraging up to now, with both the oil industry and its client nation-states keeping their fingers crossed and continuing "business as usual."

By John C.K. Daly for Dry Dipstick

Commentary/Book & Movie Reviews


Peak Oil and the Fate of Humanity

Excellent article by Hans Zandvliet on Peak Oil explaining the problems and limitations of making a global energy transition, the perils of exponential growth, and the consequences of a fossil energy crunch with respect to the economy, transportation, agriculture and the human population.

Prelude

A Dry Dipstick Book Review

Author: Kurt Cobb
260 pages
ISBN 0983108900
2010, Public Interest Communications

Buy It Now!

Kurt Cobb has created a novel that is first and foremost entertaining. His story of an oil industry analyst and her discovery of, and immersion into, the machinations of Big Oil kept me unable to put the book down till finished. The field of action ranges from the Gulf of Mexico to the Alberta Tar Sands (only please call them "oil" sands, says the industry) and, most importantly, the oily movers and shakers in Washington DC.

Hollywood studio giant Samuel Goldwyn famously said "If I wanted to send a message, I'd use Western Union." Fortunately Cobb used neither Western Union nor email. Instead he wrote an gripping book that also gently and clearly gets across the Peak Oil message. Read Prelude because it's a Good Read. The message is a bonus for your not-quite-yet-aware friends.

Emergency

A Dry Dipstick Book Review

Author: Neil Strauss
418 pages
ISBN 0060898771
2009, Harper Collins


The cover text says: "This book will save your life". I don't believe it. But it will make you aware of a lot of possibilities, both good and bad. And that awareness, and the resulting actions you might take, could save your life.

Scenarios imagined by various Peak Oil observers range from an apocalyptical Mad Max, dog-eat-dog world to one of communal and blissful togetherness on a green, healthy and sustainable planet. Neil Strauss saw Peak Oil as just one of many looming disasters, all designed to bring down the Empire with him in it.

He started his journey in this book with the decision to prepare a safe retreat for life after the Collapse of the Empire. He chose an island in the Caribbean along with a second passport and a Swiss bank account. He also decided that he needed to learn the skills that would help him fight, connive, sneak and otherwise escape from the United States and reach the safety of his island sanctuary.

Read full book review

Blind Spot

A Dry Dipstick Movie Review

88 minute DVD
Filmmaker:Adolfo Doring

Blind Spot is a powerful presentation of the state of the planet, with a primary focus on Peak Oil, but including overpopulation, global warming, and the worldwide economic infrastructure. The film is well-made, with excellent photography, editing and narration, and the choice of talking heads much more interesting than the average Peak Oil film.

I was especially pleased to see perceptive observations and commentary from Joseph Tainter, the historian author of The Collapse of Complex Societies, and from sociologist William Catton, author of Overshoot: The Ecological Basis for Revolutionary Change. Both placed the planet's current situation in its proper historical and evolutionary content—which is basically more of the same except much, much worse, since we now have a global society rather than a local or regional one.

One of the more memorable quotes in the movie was from author Derrick Jensen:

"The world is saying, 'Look you have a choice. You can either fix it or I can fix it, and if I fix it you are not going to like it because I'm going to throw everything away.' And everything means most of us."

But I'll have to admit my favorite quote was from economist Max Fraad Wolff:

"Wal-Mart is basically the distribution arm of the Peoples Republic of China."

Blind Spot is the creation of Adolfo Doring, and was funded by the Wallace Global Fund, one of the more farsighted foundations that supports worthwhile groups concerned about the planet and the human family. The film would be an excellent introduction to friends who aren't yet familiar with Peak Oil which, if our experience is typical, still includes almost everyone in the United States.

Collapse +11 Years
The Napa Valley Today

Journal of Mick Winter—December 15, 2020

As I sip my morning espresso, I have a brief moment of longing for an earlier time when I could make my stovetop coffee quickly on a gas burner. It takes a lot longer using this electric one. Little did we know that gas was right behind oil in peaking. Fortunately we finally have plenty of solar-produced electricity and, once again, access to coffee. So it's a minor inconvenience, but just another reminder of things we used to take for granted.

Today's one of the two days a week when I work at the office instead of home. It's a little late to go by bike so I check my cell phone. The streetcar is due in 10 minutes. If I lived much further from the trolley stop, I'd probably flag a jitney or autorickshaw and take it all the way to work. Although they cost a little more, they get you exactly where you want to go. But I've got time to walk to the trolley, so I'll ride the rails this morning.

I'm happy to see my streetcar is one of the old-fashioned designs. I prefer them over the new, ultramodern style. They're just as comfortable but in a more homey kind of way. Aboard the trolley, I see many of my usual fellow riders. There are also a few people with suitcases. They're probably connecting with the train to the Vallejo Ferry. Streetcars are a great way to travel in town. Every town in the valley has them. Except Yountville, which is very walkable and compact.

Read full article

Reinventing Collapse
The Soviet Example and American Prospects

A Dry Dipstick Book Review

Author: Dmitry Orlov
176 pages
ISBN 0865716064
2008, New Society Publishers




Well, first of all, it's funny. Really. I don't mean it's filled with jokes, but Dmitry Orlov has a very humorous and biting style. This humorous approach serves two important purposes:

  1. It makes the book enjoyable to read.
  2. It helps the reader develop a certain healthy detachment from the subject matter. If you can see the humor in the situation, it can lessen the melodrama of the Cold War in the past, and the collapse of both the Soviet Union (past) and its mirror twin the United States (very current).

Orlov observes that the citizens of both the U.S. and the S.U. were targets of marketing campaigns that successfully developed intense brand loyalty. In each country, it was forbidden (either legally or through intense peer pressure) to advocate for the other brand. The U.S. was for capitalists (Yes, we're #1), and the S.U. for communists (Da, we're #1), and never the twain shall meet.

Read the full book review

Post Carbon Cities:
Planning for Energy and Climate Uncertainty

A Guidebook on Peak Oil and Global Warming for Local Governments

A Dry Dipstick Book Review

Author: Daniel Lerch
100 pages
ISBN 0-9767510-5-4
2008, Post Carbon Press



When I read this book, I was impressed with the attractive layout, the clarity of writing, and the quality of the information it contained. However, I felt it was a bit too basic, too simplistic. While it was a good introduction to the problems of Peak Oil and climate change that are facing communities, I felt it didn't provide the depth of detail necessary for towns to deal with the multitude of effects we can likely expect. In short, I felt it wasn't enough for what is needed.

Then reality straightened me out.

Read the full book review


World Made by Hand - a Novel

A Dry Dipstick Book Review

Author: James Howard Kunstler
336 pages
ISBN: 0-87113-978-2
2008, Atlantic Monthly Press


This book could more precisely, but less poetically, be named "World Made by Kunstler". Author and Peak Oil commentator James Howard Kunstler has written a novel that brings to life a community and world that Kunstler himself has created. It's not just any creation, however, because what he has created is informed by his many years of study of our society, its built environment, and the Peak Oil threat.

As a novel it's entertaining and interesting. As a demonstration of Kunstler's vision for the post-Peak Oil future, it's vivid and compelling. Kunstler imagines a world where all systems have broken down because of Peak Oil, climate change, economic collapse, apparent nuclear war—a number of U.S. cities are gone—and, of course, famine and pestilence. In short, it's a world ravaged by the Four Horsemen and a bunch of their close friends.

Read the full book review


After the Peak - The End of Cheap Oil

A Dry Dipstick Movie Review
by Mick Winter

27 minute DVD
Filmmaker: Jim McQuaid

After the Peak is a mock-TV news program. It's presented as if live from a local television station in North Carolina, with anchors in the studio reporting and talking to reporters in the field. And, yes, there's even the obligatory sports guy.

The time is "one year from today". Worldwide oil production has peaked and is declining. It's still early in the Peak Oil saga with gasoline usually available, but prices are going up. Oil is now $195 a barrel and prices at the pump average $10.29 a gallon, seriously affecting people's lives, their businesses and their commutes.

Read the full movie review


The Circle is Closed - The End of Suburbia's Beginner

In a little noticed news item, it was reported on November 11th ("Levitt and Sons files Chapter 11") that Levitt and Sons, a builder in Fort Lauderdale, Florida, had filed for bankruptcy under Chapter 11 on November 9th.

Read the full commentary


There's a Choo-Choo Train A-Comin'

There's a train speeding toward me. Toward all of us, actually. I'm aware of the train. A number of people are. Far more people aren't. But it is coming, regardless of awareness or non-awareness.

I can see it coming. So how do I deal with this approaching train? I have a comfortable chair and a computer and I sit in the middle of the tracks with a cup of coffee and I read about the speeding train.

Read the full commentary


What a Way to Go -
Life at the End of Empire

A DryDipstick Movie Review

Documentary - 123-minute DVD

five oil well review

A two-hour poem of great power and beauty. The story of a personal journey; yet a journey that is also deeply universal. As humanity rushes towards a nexus of catastrophe, is there a world beyond denial and despair? The film suggests the possibility.

Read the full movie review


Energy Crossroads

A DryDipstick Movie Review

Energy Crossroads
54 minute DVD

In a society where most people take energy for granted and assume life will go on just as it is, this film is a cold shower of fact.

Read the full movie review


WAG YOUR BELL for GWOPO*

People love acronyms, particularly in the United States where acronyms like GWOT (Global War on Terror) are household words—at least if your house is a big white one.

Other popular acronyms are YMMV (Your Mileage May Vary), WAG (Wild Ass Guess), RTFM (Read the F--- Manual), BYOB (Bring Your Own Beer) and my personal favorite TEOTWAWKI (The End Of The World As We Know It). Acronyms are good for time-saving shorthand and as memory devices. They also often help avoid the need for real thought and communication.

Read the full article


Book Review

The Last Oil Shock

A DryDipstick Book Review


Author: David Strahan
ISBN: 978-0-7195-6423-9
2007, John Murray - U.K.

The last thing I needed to do was read yet another book about Peak Oil. I've been reading extensively about it since 2003. But I promised the publisher I would read it. So I finally did.

I'm glad I carried out my promise.

Read the full book review






Oil Depletion Protocol, The
A Plan to Avert Oil Wars, Terrorism and Economic Collapse, by Richard Heinberg



End of Suburbia
The movie you, your family and your friends have to see Buy the DVD now



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