Peak Oil

Yesterday I helped two other grown men push a small van up a slight hill. Together, the three of us moved it maybe 30cm before giving up. Have you ever considered how much energy is contained in a single drop of oil?

For the past few months I have been reading all I can about Peak Oil. The basic idea is that the global oil supply will soon (around 2010) be less than oil demand. As oil is so fundamental to our lives (all transport, manufacturing, fertilisers for agriculture) this will cause big problems. Some people think modern society will end (literally), others predict a global depression, and some the death of the suburbs as the world reconfigures itself for a low energy lifestyle.

Here are some common predictions that I rate as plausible:

  • Oil prices will sky rocket, like over $150/barrel, causing the price of everything to increase, i.e. high inflation.
  • Stock markets tumble as every stock is based on the assumption of continuing economic growth sustained by cheap energy.
  • Widespread unemployment as whole industries collapse, i.e. “demand destruction”. Starvation in less developed countries (no fertilisers)
  • People with very high debt levels (the norm in Australia) will be in deep trouble. Overpriced housing markets collapse. The “perfect storm” for a modern economy.
  • As the taxation base decreases the government will be less help. For example they won’t be able to fund a switch to renewables, pay unemployment benefits, fix blackouts.

After a few months of research I am convinced Peak Oil is for real. While I am not in the survivalist camp (I think modern society will pull through) my best guess is that there will be very tough times for the world economy.

A powerful DVD on the subject which I recommend is A Crude Awakening. A really good book is Half Gone by Jeremy Legget, which nicely explains both Peak Oil and Global Warming. Or just Google on Peak Oil.

Governments (except Sweden) are ignoring the problem. This means that if Peak Oil hits, we will be largely unprepared, as we will have squandered the time required to prepare for transitioning from fossil fuels. So it’s probably up to individuals and communities to do what they can to cushion the blow.

You know what scares me about the Peak Oil problem? As an engineer I am used to solving problems. Software doesn’t work, you fix it. Hardware bug? Start debugging. You know that there is always a fix, somewhere. Peak Oil scares me because I just can’t see the fix. Anywhere.

So I am thinking about what I can do to “kick the carbon habit” and prepare for Peak Oil. Tactics like reducing debt, an electric vehicle (EV) conversion, improving my household energy budget, re-arranging my stock portfolio, and getting a grid-connect Photovoltaic (PV) array for my household electricity. All good stuff, even if Peak Oil isn’t for real. More on this later.

I am also interested in the possibilities of using Free Telephony to help a post Peak Oil world. I figure if people are moving around less and have less money, then low cost, low power telephony based on open hardware and software may be very useful for connecting the world.
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17 thoughts on “Peak Oil”

  1. The Peak Oil concept, is a lot like religion. There are people who don’t believe, there are people who are fanatical believers and there are even different belief systems analogous to the different systems like Buddhism, Hinduism, Muslim and Christian.

    I firmly believe that we are heading for some very very rocky times as a result of PO. This is mainly because we have powerful organisations who have a vested interest in promoting the Status Quo and a large enough group of people who don’t want to change their consumption driven lifestyles. The problem these 2 groups pose for us is that they will promote skepticism and denial until it is untenable to ignore the problem, and with a problem of this magnitude we cant wait that long to find a solution. We need the oil reserves we have currently available to help establish the replacement infrastructure.

    Oh, and for those proponents of nuclear energy, yes we have hundreds of years of nuclear fuel available to us at the moment, but only at current consumption rates, if we use the nuke energy at the rate we do fossil, we have about 30 years worth. Then there is the 900 to 90000 years of waste maintenance that need to be paid for after that, all for about 30 years of gluttony. Does this still sound like a sound option?

  2. Thanks Ian for your thoughtful reply.

    I agree that a very large part of the problem is the vested interests of entrenched companies and their influence on governments in the US and Australia. For example our Prime Minister has stated Australia is an “energy superpower” despite being a net importer of energy and being past our peak in domestic oil production. We are racing ahead with dirty and inefficient coal technologies as fast as we can dig the stuff out of the ground.

    For that reason I am very nervous that in Australia the knee jerk response will be to shift to a coal or uranium based energy economy, rather than persue renewables.

    Other problems with nuclear include lead time and capital expense. I have seen estimates of up to 15 years before a single nuclear electron can reach the grid here in Australia. Money for capital intensive projects like nuclear power stations will be very scarce in a post Peak Oil world.

  3. The lead time issues associated with nuclear are really a problem with 90% of the alternatives and not just a nuclear thing. Lead time is the reason we need to start transition yesterday and not tommorrow. We cant even begin to start this until we can get agreement on wht the transition is to be to, let alone the debate as to is it necessary.

  4. The problem is not that there is no engineering solution. The problem is its far too late to seriously attack the problem before collapse. Fusion might have worked out with more intense research. Tapping 0.1% of the Atlantic Gulf Stream would provide more than the whole human race needs. The snag is that before serious work really gets going on any of these things, the wealth needed to fund them will be evaporating. The time before northern europe returns to huddling around fires in winter, as we did when I was a child, won’t be enough for such large scale developments to complete.

    Maybe we would have been doomed anyway. The problem is so big, it might be insurmountable. Dragging feet has, however, made a bad future inevitable.

  5. Here is a post from Rich Bodo (who had trouble posting his comment to this blog):

    Just an idea, here: perhaps international competition to develop
    alternative energy sources will help alleviate oil dependency.
    Something akin to the “space race” in the 60s. What pressure can we
    exert on our governments to make this happen? Public opinion does
    matter to these people.

    Perhaps popularizing the meme “The Alternative Energy Race between the
    US and China” might help. Know any journalists? Maybe you can get
    them to ask political leaders how they weigh in on that.

    It would be cool to hear journalists say:

    “Minister Jiabao, how do you react to president Bush’s assertion that
    the first country to develop cheap power will be the only superpower?”

    “President Bush, will you comment on Minister Jiabao’s assertion that
    China is winning the alternative energy race and will have no
    significant dependence on coal or foreign oil by 2020?”

    Might not do anything, but governments do react to the media,
    especially in the light of campaign issues and civil unrest. It looks
    to me that Bush didn’t even feel the need to defend his environmental
    record until Rupert Murdoch suggested that his media properties would
    be asking about it:

    http://www.usatoday.com/news/washington/environment/2007-09-28-bush-climate_N.htm

    http://money.cnn.com/2007/08/14/news/companies/pluggedin_gunther_murdoch.fortune/index.htm

    Anyway, just an idea. I might work on it a bit.

  6. The search for an oil replacement is our generation’s moonshot. Nothing else matters – not terrorism, healthcare, anything. Everything else pales by comparison. A Crude Awakening is a good movie to watch. People don’t realize how soon you get to the end of an exponential use curve…

  7. 7 years ago oil has reached it’s lowest price where in some countries, oil production cost was higher than it’s price.
    Also, back in 1979, oil price along with gold, has reached a record high.
    This is an economy game by the superpower. They control the world by changing the it’s parameters. They just create different reasons every time.

  8. Considering the recent war in Iraq, one can believe the United States of America have achieved a great step in securing oil ressources. The US government has sure taken into account some Peak Oil… Bush is the best 😉
    More seriously, Peak Oil and oil war was one of the motives for Second Iraq War, according to Alan Greenspan’s recent book. But i think that peak oil, if it was to occur, would produce several conflict with same scheme : seizure of oil producing nations or territory by armed forces. You can think for example of algerian oil seizure by European Nations, or Russia outtake on north pole submarine positions…. not counting on Iran’s control by US…

  9. Oil will never go below $85 again. In 2010 oil will be over $250 a barrel and gas will be $10 a gallon. Even though reserves are rising which should make oil prices drop the fact they don’t drop in price is because the political tensions are rising. With that you will either buy a hybrid which will still be expensive to operate or ride your bike or take the public transit. There are ways to reduce your fuel cost.

  10. Well it is Oct. 24, 2008 and oil is $63 a barrel. We don’t really
    know when peak oil is going to happen. As prices go up oil that wasn’t feasible to produce because of the price becomes feasible. Also as the price of oil goes up as we have seen in the last year consumption goes down and people turn to other forms of energy.

  11. Yes what an amazing range of oil prices we have seen this year. Probably an average of $100 a barrel I guess for 2008. Some people have suggested oil production has now peaked, as there will be little investment in new production given the lack of credit and unstable oil prices.

    It also takes the public eye away from oil and renewable energy, not a good thing.

    Personally I think the short term oil price is only weakly correlated with Peak Oil, what is more likely is wide swings like we are seeing. Unfortunately today low spot price doesn’t change the amount of physical oil in the ground, or steadily growing long-term consumption.

  12. I was a bit intrigued by the first comment by Ian who wrote
    “The Peak Oil concept, is a lot like religion. There are people who don’t believe, there are people who are fanatical believers” uuhh? If you understand the normal distribution bell curve then peak oil is an obvious concept and why would that make you a fanatical believer?

    It will be interesting to see how 2008 is regarded in fifty years time. Will it be the equivalent of the Wall Street Crash? I am trying to work out why oil prices have suddenly dropped in the last few days. Probably it’s just a quirk of the market – hey prices are really good just now, let’s release more, the market gets flooded and prices come down.

    As David has said many times oil is so energy dense that if we use it frugally we could make the transition to other energy sources less painful. I can’t believe people are claiming that the new hybrids are so efficient. The VW we had in the fifties used to get similar good consumption levels.

    I think it is time for universal government action on oil and the best mechanism is to introduce fuel rationing.

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  14. @Denise

    What I meant by fanatical believers should be pretty obvious if you have spent enough time discussing this concept with a broad enough range of people. I have discussed this with people who deny it is anything but a conspiracy to rip peple off. I have discussed this with people who are almost suicidal and are actually in the pocess of preparing to leave society and go off the grid completely. I myself sit somewhere in the middle ground, I would like to think at the centre of the Bell curve.

  15. Well Gas Prices have steadily been getting higher and higher, $2.63 in Goose Creek, South Carolina, USA. I do believe in PO, I am sure of it. I believe their is a certain amount of oil and we are using it faster and faster every day. I own a Prius and I have had it since 03′ and I have got over 40mpg over the 175k miles I have used the car so far. With that I have already made back the higher price I have paid for the car vs some other small model car that I could have paid $10k less for. Gosha anyways it is say their have not been more posts about this, because it is not going away it is coming, within our lifetimes. It took the earth millions of years to create this oil and we burn it billions of times faster than it took to make. I want to mention a radio program I listen to a night. The host speaks with guest that believe in ghosts, alians and 2012. But he does not believe in PO, he believes the earth creates oil at the rate we use it and oil will never run out. To me that is harder to believe than all the other crazy things. Cheers.

  16. Here is a little thought experiment

    In a nutshell its like this…
    Our global economy depends on growth to maintain a standard of living for about 20 percent of the world population that we in the western developed world call normal..

    WRONG WRONG WRONG

    Take a finite resource say 100 liters of water. It is kept in a open container and there are 10 people that rely on it for drinking water for lets say a period of 5 days, no other supply is avalible!
    They all agree initially that if each of them uses only 2 liters or less a day then all will be well.
    Now it gets interesting.
    As humans are able to extrapolate future events from often conflicting data the following should be of no surprise.
    On day 2 one of the group spills there daily quota and asks if the others will share some of theirs.
    Sounds reasonable?
    8 agree to give some of there share but 2 don’t want to share as they contend that the person should be responsible for there actions.
    Now we have 8 cooperating for the good of the group and 2 taking a different fundamental viewpoint.
    On day 4 one of the 2 who decided not to share there resources comes down with a fever.
    He is dehydrating rapidly and the other person who didn’t help the water spiller on day 1 once again wont help his fellow man arguing that he didn’t cause the person to get sick.
    of the 8 who were willing on day 1 to share only 5 offer some of there ration to help save the sick persons life.
    The other 3 say that the five who do help will be enough to save the sick person from dehydration.
    Enter the ugly head of rationalization.
    You will note in this quite realistic scenario that after just a few days there are potentially at least 3 groups with different ideology regarding just this one issue!
    We all need a good kick in the backside, we say we are civilized, rational and most of all capable of learning from our experiences and we have the power to share and pass this experience to others.
    But as in my example that is just not the case.
    It is a so far from being the case its a joke!

    I am not at all optimistic on our survival as a species, even in the short term and I personally think our only hope for a future, and a slim one it is at that is to do what we do best.
    There are to many of us we don’t share our resources or our knowledge.
    This will inevitably lead to conflict and that is the one think our species excels at.

    So as I see it its total war, it has to be total, enough to throw us back to the stone age.
    If we are lucky this Human race mark2 might just remember enough, find necessity enough, might just make the leap that eludes us so called sentient beings, to share resources, help each other when ever needed not just when asked, and most importantly learn from past mistakes as these are so costly to learn the first time.

    But who knows maybe just maybe our incredible ingenuity and limitless imagination might pull a fast one on my prediction.

    I challenge homosapien sapien MK1, save our future, It may cost our present way of life but is the alternative appealing?

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