My Thoughts on Surviving Peak Oil
As I write these words in the early spring of 2007, I believe that peak
oil has already occurred. Prior to peak there was an excess
pumping capacity (globally) of around 1 million barrels per day
(mbpd). With the total daily consumption at around 85 mbpd this
is slightly over 1%. Thus when oil demand rises by 1%, or oil
production declines by 1%, the demand line (which has been increasing
at about 1.5% a year) will cross the supply line (max of 86 mbpd?) we
will be in for an oil shock. If the economy falters oil consumption
will decline, allowing extended time before the shock hits.
Increased oil prices could have the same effect, by reducing
demand. Both these cases will only put off the inevitable for a
year or three at most.
At first this oil shock will feel like the two previous ones we have
experienced. But as we get farther from the peak, oil depletion
will accelerate, pumping capacity will decline and oil shock may turn
into oil crisis. Whether this crisis develops or not will depend
on many variables. For example, demand will decline as price
skyrockets, alternatives will be developed at an increasing rate and
production declines may be slow initially.
A crisis will develop if society fails to voluntarily reduce oil
consumption (however painfully) faster than supply drops. If
society can reduce oil consumption faster than supply drops, then the
price will stay low. If the two are nearly at par, then the
prices will likely rise fairly high ($10/gallon for gas--about what is
currently (3/07) paid in Europe. If there is a slight under
supply
prices will go high enough so people just can't afford it, and if there
is a large under supply prices will go so high that critical services
may be shut off (eg power plants using oil; most gas stations will run
out; etc). If the under supply is extreme, then creating
alternatives, such as the tar sands or biodiesel (which use a fair
amount of energy), may not happen--which
will doom society.
Oil fields tend to peak and fall at a wide range of rates. The
largest and best example we have of a country peaking is the United
States, which peaked in 1970, and has been declining at about the same
rate at which production accelerated prior to 1970. If this is an
example for the globe, then supply will decline at a slow enough rate
that we can adapt to it. If it follows a decline rate similar to
the North Sea, society will be in big trouble. I suspect reality
will be between these two rates; there is a lot of untapped little oil
patches that are currently un-economical, which will cushion the
decline rate.
What can we do to reduce consumption, extend the lifespan of our
remaining oil and keep supply above consumption? The first and
most important is reducing personal use. Since I got serious
about it, I have reduced my use of petroleum produces by around
40%. I have also reduced my business use of oil by around
15%--and hope to reduce it a lot further! Some things I have tried, or intend to
try.
When the Soviet Union broke up, Cuba lost it's primary source of
oil. It survived a 50% drop in oil supply. This Peak Moment
interview talks
about it. If Cuba can survive, I think the United States can do
so too! But it sounds like it was tough...very, very tough.
Mid-summer 2007
I have been regularly reading The
Oil Drum, and one of their articles talked about what happens when
a country that has been exporting oil reaches peak production and then
begins declining. The article discusses
the UK, whose energy production peaked in 1999, and in 6 years they
went from a net energy producer to an energy importer. The reason
for the speed the UK went from an exporter to an importer is because
their energy needs rose nearly as rapidly as production, so it didn't
take long for declining production the intersect rising consumption.
The implications of this are pretty staggering. If all energy
exporting countries are like this, then each one in turn will only have
a brief (say 5-10 years) period between the time their oil peaks and
they need to begin importing energy. As the largest energy
importer, the US is the most vulnerable to this. If the remaining
countries of the world peak over the next 10 years (ie midpoint = 5
years), and 6 years from then no country (with probably a few
exceptions) will be an oil exporter, that means the 60% of oil we
import today could decline at over 10% a year. Add that to the
current 2% the US oil production is currently declining and you have an
immense problem.
With this in mind, I think we need to look at how to decrease our
imports by more than 12% a year if we want to avoid an energy
crisis. This is a staggering amount of energy, especially after
the first couple of years. Can we do it? I think so,
especially if we tackle it with forethought. My own inclinations are:
- Tax imported oil at a very high rate. This will help reduce
consumption (if it doesn't, increase taxes more). Yes, it will
hurt (a lot), thus making this policy very hard to implement. But
if we don't hurt some now we may hurt a LOT more later.
- Set a goal of reducing use of petroleum and natural gas for
electric generation to less than 10% by 2015. Do this by both
allowing huge tax credits for installing coal, wind, solar, geothermal,
tidal and other sources plus taxing use of petroleum and natural gas
for electrical generation (make the taxes high enough so the target of
10% is met--and if it is not met by 2015 then double it every year
after 2015 until it is met).
- Have a national sales tax on vehicles that get less than the
target mpg. Make this tax high enough to drastically reduce sales
of these vehicles, with large tax credits for those who get vehicles
with much better than the target mpg . Yes, yes, very painful
(especially for the auto makers) but if we don't we won't be able to
drive those gas guzzlers anyhow--a little pain now is better than a LOT
of pain later. If we want to halve our fuel consumption by 2015
then we need to double our average mileage, say from 30 to 60.
Since there are prototype cars out there that get over 100 mpg (the VW
1 litre gets over 235!!), this should be possible without too much
pain. I would suggest a 20-25% tax on vehicles getting less than
30 mpg in 2008, increase the mileage (and tax if necessary) until the
goal of 60 mpg average by 2015 is met.
- Most homes in the US can be heated and cooled with natural
systems and extra insulation. Implement government programs that
will promote rapid shift from using fossil fuels to using natural
systems.
- Forget ethanol from corn. The numbers don't justify it (why
spend 8 barrels of oil to get the equivalent of 10 barrels in
ethanol? All the while sacrificing valuable crop land.)
Cellulose ethanol, yes! Sugar cane, sure. Speaking of
ethanol, let's do away with those steep taxes on imported ethanol from
Brazil (good if the tax is supposed to limit drinking, bad if it limits
fuel). Why tax a resource to death, when it can help our energy
crisis?
- Develop a crash program to internalize 90% of energy production
by 2015 (keeping in mind if we don't do it voluntarily, it may be
imposed on us as other countries cease exporting oil). If you
planned on conservation reducing consumption by 30%, this will
considerably reduce the needs for alternative energies.
- Rather than an economic crisis and possible severe depression,
tackle the problem by putting people to work on alternative
energies. ie pour money into the problem: try all solutions, not
just a few. This will require reducing or eliminating most, if
not all, other programs. It will hurt (immensely). Do it
anyhow.
- For a specified period of time, suspend EPA regulations and
impediments (the goal is to get past the crisis, so probably 10
years). I realize this will cause pollution to soar, but better a
dirty environment than one completely trashed, which is what will occur
if we can't develope alternative fuels fast enough. For example,
if we fail to provide the energy resources people need, they will just
take it--I could foresee deforestation of the entire US if energy
policies fail.
- Society (and government) needs to understand that the looming
energy crisis is far far
greater than the (possible) threat of climate change. Indeed the
climate changes most people talk about will actually help the energy
problem by reducing heating needs. Therefore all policies aimed
at limiting CO2 production should be suspended until the
crisis is over (but see below).
- The eventual goal should be to gain all of our energy from
renewable resources. Over the short term coal will probably
become our primary energy source (and coal use should be strongly
encouraged, as it is the only remaining energy source which can be
rapidly and economically expanded), it should be phased out entirely as
soon as feasible (say over the next 40-80 years).
- We had a strong warning in the 1970's that oil was going to peak,
when the US oil production peaked. (I am totally confused by the
people who say oil globally won't peak, or will continue production for
years to come--we know peak oil does occur, for it DID...how can anyone
deny it? The US production is now down so far we aren't even
producing as much oil as we did in the 1950's.) The oil
conservation policies begun (and the lessons learned) in the 1970's and
1980's didn't sink in. We could have completely been free of all
imports today if we had continued to concentrate on energy
independence. Instead we allowed the import of cheap oil to drug
us into complaciancy. We need to assume the worst, for if we
assume it will be a mild crisis (or no crisis) and it turns out to be
very bad, the damage done to the economy (and society in general) will
be very, very bad--perhaps to the point of collapse. If we plan
to loose 100% of imports by 2015 and we are completely wrong, we will
have done some damage to the economy but in the long run we'll be
better off. Indeed the US has sufficient energy supplies that we
could become an energy exporter if we tackle the problem head-on.
The main problem is converting those energy resources into a form we
can utilze.
- Converting energy from one form to another requires
infrastructure that doesn't currently exist. For example gas can
be made from coal. To build the required infrastructure takes
time. Currently the process takes 10-15 years to do a major
project. Much of this time is taking up with siting and
environmental permitting. This is far too long if we are in
crisis. Therefor all permitting and obstructions to doing major
projects need to be removed, during the crisis period.
Of course I realize most of this won't happen until after the fact, so
policies like these are unlikely to be implimented soon enough to
prevent the oil shock from entering oil crisis, which will may cascade
into a complete energy crisis, with the lack of oil and natural gas
impacting every part of the energy picture. This will require
policies that are more draconian if we are to recover. The key is
to recognize the draconian measures are needed soon enough to avoid
being engulfed by the crisis.
I continue to be convinced that oil has peaked. The US Energy
Information Agency published data showing that oil production is now
down nearly 1% from 2005 (Note: 2007 data includes only up through
April):
The real question that remains is this a limitation on pumping, or is
it a decline in consumption due to high prices? Both other peaks
(1998 and 2000) precede declines that are clearly consumption driven;
this leads to skepticism about oil peaking. With the majority of
the oil producing countries in decline I don't think the remaining
countries can increase their production enough to make oil production
rise. I think it will fall from now on, probably at an
accelerating rate over the next 2-5 years until the global decline rate
is 3-8% annually.
The current copyright laws protect
this page, even though not specifically copyrighted.
However if you want to use portions of
it feel free to do so, though I would appreciate it if you would
acknowledge my authorship.
Last messed with spring 1999.
ß
Ray's Home