The Fate Of The Human Species Depends On How We Approach Peak Oil, Part One

[Musicat]

I thought we were supposed to run out of oil in the '70s, copper in the '80s and most everything else in the 90’s. What happened?

Could Vance Packard have been wrong???!?

[Sam_Stone]

@spark240

Famines do occur regularly. The “Green Revolution” destroyed a lot of traditional subsistence knowledge and replaced it with manufactured fertilizers and pesticides, that could only be purchased from foreign corporations. Soil became depleted, and only increasing new chemical “inputs” could wring out more food. More food was wrung out, allowing populations to increase… bringing us to the present, when global grain consumption exceeds production (only briefly possible, of course), new famines of unprecedented scale loom for some parts of the world, and some people are calling for a “Second Green Revolution”…

Famines today are entirely a problem of local resource distribution. We have the capacity to easily make ten times as much food as we do now, if the demand was there.

How could it not be certain? You acknowledge that there’s no new oil growing in the depths of the earth, right? There’s a fixed, finite supply. There has to be a high point in the production graph somewhere, after which global production may fluctuate some, but the overall trend will be inexorably downward.

It’s not entirely certain because another energy source could be developed which is cheaper than oil, and demand could start to fall before we start seriously running out of supply. There was no ‘peak whale oil’, because we stopped using whale oil before the supply of whales was gone.

The production graph for the last few years has been relatively flat, despite increasing expenditures on extraction techniques. I think it’s a reasonable guess that the peak moment, in terms of production, is here, or past.

There are two reasons why production could peak - one is because the supply is dwindling, which would be your ‘peak oil’ scenario. Demand is high, not enough supply, so you get price spikes and shortages and such. The other reason would be because demand falls while there is still plenty of supply, but there’s no profit in continuing to extract new sources.

The reality will probably be somewhere in the middle. We’re not at peak oil, we’re at peak $20/bbl oil. Those sources are depleted. So the price rises, which brings a new source - $40/bbl oil, extracted from deeper wells or using more expensive extraction methods. If that runs out, we’ll have $60/bbl oil, extracted from shale and oil sands. At some point, oil starts to run into serious competition from other energy sources, and demand slacks off while there is still supply of oil at that price level.

Okay… but,

1. Can we really come up with (even over the course of “decades”) enough new energy sources to cover all the things we’ve been using oil for, and at a similar end-user cost?

Perhaps not at a similar end-user cost, but at a higher cost which is still affordable. The only scenario in which this wouldn’t be the case is if there was some sudden shock where it became apparent quickly that we were going to be very short of oil - say if it turned out that the Saudis were lying about their reserves.

But it’s not clear at all how much oil is still left - the U.S stopped exploring off its coasts some time ago. There may be major reserves in the arctic in areas that haven’t been explored yet. There are still major new fields being discovered - just two years ago, the third-largest known field of oil was discovered off Brazil. The field is estimated to hold 33 billion barrels of oil. That one discovery can provide all the world’s oil for a year. Saudi Arabia claims to have 267 billion barrels of oil in reserve. Canada has 179 billion. At current consumption rates, those two countries alone could provide oil to the world for 15 years. The top 17 oil producing countries have together 1,243 billion barrels of oil in reserve - that’s over 30 years’ worth of consumption. And that number for reserves means only reserves of oil that are feasibly extractable at today’s energy prices. If the price of oil doubles, the unconventional sources come online, and they could be at least as large.

2. What is life going to be like during this transitional phase, after the price of oil has started to “rise dramatically,” and before all those various new technologies are developed and integrated?

Why would you think these two thinks wouldn’t happen simultaneously? Canada is already heavily developing its oil sands, for example. If we hit the production peak and the energy markets come to believe that oil will become increasingly scarce, the futures price of oil will rise. That will stimulate production of new sources. It will also moderate the price rise, because the futures price also affects the current price, which stimulates alternatives and conservation as well as new production.

So… after peak oil, the price will rise, but not as fast as you’d think. In the meantime, demand will be controlled by the price rise, and supply will be stimulated. Research into alternatives will also increase. At some point, the price curve of oil will cross the price curve of the alternatives, and you’ll see a relatively rapid shift away from oil.

Will this cause some hardship? Sure. But it also has benefits. For example, if you believe in the more dire scenarios for peak oil, you also have to downgrade the potential damage from global warming, because that implies a lot less carbon going into the atmosphere.

Also, if you support legislation like Cap and Trade, which is intended to do the equivalent of raising the price of oil by probably $50/bbl, and you believe that this will not seriously hurt the economy, then you’re undermining your own negative claims for peak oil, because cap and trade is nothing but an artificial cap on supply.