In-Depth: Peak Oil

It is no secret that our world is built on the shoulders of oil.  However, like Atlas, those shoulders have grown tired of their burden.  The supply of oil and its fossil fuel friends has a history of volatility, however in the near future that volatility may shift to a steep and permanent decline.  This decline has been prophesied for decades and is better known by the dramatic title of Peak Oil Theory.

Peak oil theory was first introduced in the 1950s, when industry was really picking up after the destruction of World War II.  Needless to say, a theory about the eventual collapse of the oil supply was not popular in the post-war boom.  However, since the oil crises of the 1970s, the theory has gained more and more traction.

Peak oil theory predicts that oil production will soon start a terminal decline.  Most authors imply, further, that no adequate alternative resource and technology will be able to replace oil as the backbone resource of industrial society.

Jörg Friedrichs, University of Oxford

Peak oil refers to the point where production and consumption of oil reaches its maximum.  After that, production, and therefore consumption, will decline.  It makes a lot of sense when you remember that oil — and all other fossil fuels — are a finite resource.  They are a large finite resource, as evidenced by the two trillion barrels of oil that are estimated to have existed in Earth’s history, but still definitively finite.  At some point, we will run out of oil either because we can’t access what is left or because there is simply none to be accessed.

Peak oil: “near-term peak and subsequent terminal decline in the global production of conventional oil”

Richard G. Miller & Steven R. Sorrell, University of Sussex

Much of the remaining oil is currently inaccessible.  For example, our current oil wells can only retrieve around 35% of the total oil in the well before the pressure falls too much and the well is contaminated with water.  Other oil is inaccessible due to it being under very deep water or ice.  While the ice may no longer be an issue after a few decades of warming, the water is only going to get deeper.  Offshore drilling is incredibly expensive and often a guaranteed money loss, setting aside the issues of how dangerous it is for the workers and surrounding wildlife.

If all this weren’t enough, oil is also in trouble financially.  It is a seldom discussed fact that fracking and tar sands are only profitable at oil prices of over $100/barrel, something we haven’t seen in several years.  New projects have been losing money since their inception and do not have the money to pay off the twenty or thirty year loans form their investors.  In part because of the huge upfront costs for building these projects but mostly because of the impotent returns, investors are loathe to finance new drilling.  Therefore, there is significantly less money to subsidize new projects and fewer being built.

Despite oil’s fraught and tenuous future, we are still very much dependent on its power.  In 2016, oil and other fossil fuels accounted for 80% of our primary energy usage.  The average American uses 25 barrels a year and the average person in the rest of the Global North uses 14 barrels a year.  Oil supports 95% of our transport needs.  While there has been a lot of talk about electric cars, electric trucks, and magnet trains there are still ships and airplanes.  These are less easily moved over to renewable energy, especially if we want to retain the fast, global market to which we have been accustomed.

In conclusion, the current oil dependence is economically, ethically, and practically unsustainable.  Questions, therefore, about the validity of its demise are both ill-timed and unimportant.  The important questions are when it will come and what we will do next.

Peak oil has been expected many times since the theory was introduced in the fifties.  Recently, however, evidence has been growing that the time is close at hand.  The International Energy Agency predicts that oil demand will reach its maximum in the 2040s.  That may seem futuristic, but it’s only 21 years away.  Someone born in 2000 would only be 40 years old.  Dutch Shell and many other analysts suspect that oil is more likely to peak within the next decade.  As yet, it is difficult to say how steep the decline in oil production will be.  If there is a gradual decline, it is more likely that renewable resources and technologies will step into the gap left by fossil fuels.  However, if there is a steep decline we could be left with no alternatives and the transition period necessary could lead to chaos.

There is precedent for situations where oil and fossil fuels are scare.  Jörg Friedrich, a researcher at the University of Oxford, has analyzed the responses in three historical countries which faced a shortage of oil.  In the 1930s, Japan resented having to import its oil from the United States (not helped by the atmosphere of war).  Their solution was to go to conquer oil producing regions in the Pacific.  In the 1990s, both North Korea and Cuba were left without oil after the collapse of the Soviet Union.  The two countries pursued very different options.  The North Korean government chose to preserve the comfort and status of their elite by denying resources to the general population.  This led to mass starvation and the death of between 240,000 to 3.5 million people.  Cuba, on the other hand, leaned into the social networks present in the country and promoted organic, urban agriculture without the use of fossil fuels for tractors and tools.  The economy also was transitioned away from fossil fuels to more pre-industrial methods.

Countries prone to military solutions may follow a Japanese-style strategy of predatory militarism. Countries with a strong authoritarian tradition may follow a North Korean path of totalitarian retrenchment. Countries with a strong community ethos may embark on Cuban-style socioeconomic adaptation, relying on their people to mitigate the effects of peak oil.

Jörg Friedrichs, University of Oxford

It is also possible that governments will turn to other fossil fuels as a substitute for oil.  Environmentally, this would be a disaster.  Coal and other fossil fuels are more polluting that oil (which, as you may recall, is already very polluting) and would exacerbate the planet’s warming.  In time, these resources would also dwindle.  We would be left with a resource shortage with no other fossil fuels on which to fall back.  Resource shortages are the perfect breeding ground for war, extreme inequality, exploitation, and starvation.  Throughout history, oil has been a vector of suffering and it seems that it might not be done its dirty work.

There is, however, a vision of hope.  In Cuba, fuel shortages led to an outbreak of organic and non-industrial agriculture on abandoned, urban plots.  If we begin now, we can wean ourselves off of fossil fuels and onto renewable sources of energy before disaster strikes.  As any doctor will tell you, prevention is easier and better than curing the disease.  We have a choice between a green, healthy, and safe future or one that is dark, dangerous, and uncomfortably hot.  If we care about ourselves and our children, it’s not actually a choice.  The only thing left is to act.

What can you do?

  • Use less fossil fuels!  Drive less if you can & conserve electricity.
  • Support local agriculture!
  • Look into the energy available in your area.  Where does it come from? Speak to your government representatives about making renewable energy a priority.

Sources:

  1. Friedrichs, J. (2010) “Global energy crunch: How different parts of the world would react to a peak oil scenario”. Energy Policy, 38, 4562-4569.
  2. Miller, R.G. & Sorrell, S.R. (2014) “The future of oil supply”. Philosophical Transactions of the Royal Society A, 372, 1-27.
  3. Pargman et al. (2017) “What if there had only been half the oil? Rewriting history to envision the consequences of peak oil”. Energy Research & Social Science, 31, 170-178.
  4. “With oil peak now in view, question is the steepness of the descent” (2017). The Electricity Journal, 30, 65-68.
  5. Keiser, M. (2019, July 13) “And Forgive Them Their Debts”. Keiser Report, RT, KR1409.

3 thoughts on “In-Depth: Peak Oil”

  1. […] It’s hard to believe —  now that gas prices have retreated from the highs of a few years ago — that we are actually living in a time of increasing oil and gas scarcity.  The true price of oil and gas has been covered up by another recent invention —  savings accounts that don’t pay anything to savers.  Back when banks had to pay us for the use of our money, investors couldn’t afford to put money into gas exploration that spills more money than carbon!   To read more on the topic, please read this excellent summary.  […]

    Like

  2. […] It’s hard to believe —  now that gas prices have retreated from the highs of a few years ago — that we are actually living in a time of increasing oil and gas scarcity.  The true price of oil and gas has been covered up by another recent invention —  savings accounts that don’t pay anything to savers.  Back when banks had to pay us for the use of our money, investors couldn’t afford to put money into gas exploration that spills more money than carbon!   To read more on the topic, please read this excellent summary.  […]

    Like

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