Peak Oil – are we heading for collapse?

Most of you are probably familiar with the concept of peak oil. For those who are not – peak oil is defined as the point at which the maximum rate of oil extraction is reached, after which it goes into terminal decline.

Based on the observational data of individual oil wells, and the historical production rates of entire countries, it can be shown that oil production always follows a bell-shaped curve. It won’t suddenly “run out” – but instead declines gradually. Oil is cheap and abundant on the upslope of the curve; increasingly expensive and harder to extract on the down slope.

This is also true for the planet as a whole. Oil is a finite, non-renewable resource – there is a point at which it will peak globally, and no amount of money or technology will ever increase that rate of production again.

Oil is vital to industrial society and forms the bedrock of the global economy. It was central to the last 150 years of human progress, allowing the Earth’s population to swell from 1.2 billion in 1850, to almost 7 billion today. If you draw a graph of oil production and the human population, there is a strong correlation. Cars, trucks, aeroplanes, ships, heating, lighting, electrical equipment, manufacturing, materials production, medicine, food and clean water … all of these things have relied on a cheap, abundant and ever-increasing flow of oil.

Most people take this for granted, and rarely pause to appreciate the precariousness of our situation. We’ve become so accustomed to the world around us – with all of its modern comforts – that it’s easy to forget just how reliant we are on this black gold. If oil were to peak, it could potentially threaten civilisation itself.

In its 2007 report, the International Energy Agency (IEA) appeared to support the view of most governments at the time, declaring that “world oil resources are judged to be sufficient to meet the projected growth in demand to 2030.”

The agency mocked people who said that oil supplies might peak. In the foreword to a book it published in 2005, its executive director, Claude Mandil, dismissed those who warned of such an event as “doomsayers”. “The IEA has long maintained that none of this is a cause for concern,” he wrote. “Hydrocarbon resources around the world are abundant and will easily fuel the world through its transition to a sustainable energy future.”

This outlook would change dramatically, however, as the agency scaled back its forecast, based on new data from the world’s 800 largest oil fields. In November 2010, it confirmed what observers from outside the organisation had long suspected and feared. In its latest report, the IEA admitted that conventional crude oil production has already peaked – in 2006.

“Crude oil output”, it states, “reaches an undulating plateau of around 68-69 million barrels per day, by 2020, but never regains its all-time peak of 70 million barrels per day reached in 2006.”

To even maintain this plateau (shown by the yellow line), the report assumes that massive new reserves will be found and developed in time to keep up with demand. As industry insiders have admitted, this so called “unidentified” oil is nothing more than a euphemism for shortfall.

Since we’ve already plundered the biggest oil fields, any major new finds are surely impossible. Make no mistake about it – the world has been thoroughly explored over the last 150 years. Even the whole of the Arctic, for example, is estimated to contain just 90bn barrels (about three years’ worth of global oil demand), while Canada’s tar sands can provide only a fraction of what is needed (and are hideously destructive to the environment). Deepwater drilling is expensive, difficult and extremely risky, as shown by the recent Gulf disaster.

The signs of peak oil are obvious. Three of the world’s four largest oil fields have already gone into decline. The giant Bergan field in Kuwait and the Cantarell field in Mexico both peaked earlier than had been expected. Also going into decline have been Alaska, the North Sea, and Western Siberia. Even the super-giant Ghawar field in Saudi Arabia, according to some reports, is now teetering on the brink of a crash (the country has already begun offshore drilling).

The IEA – an intergovernmental organisation – had been unashamedly optimistic in the past. It now acknowledges peak oil. Though careful to avoid mention of a crisis, its outlook has moved closer to that of the Energy Watch Group (EWG) – an independent, non-partisan association of researchers and scientists, which has been warning for years of an impending “energy crunch”.

The EWG’s latest report includes a graph – shown below – offering what is perhaps a more honest and accurate picture of global oil production. This ignores the unfounded assumptions made by the IEA, and takes into account other factors such as net energy, quality of energy, etc. You can see from this graph that the world is about to enter a steep decline in oil production, with no chance of an upswing.

As became evident in the 1970s, it only takes a small decline to have massive, immediate impacts on the global economy and society; yet here we are looking at the permanent decline of oil.

Global demand is now rising by roughly 2% a year, boosted by the massive industrialisation of China and India. Given the projected decline rates (estimated at 4% to 6%) and the projected increase in demand, the world requires the new capacity equivalents of five Saudi Arabias by 2030. Clearly, it will take nothing short of a miracle to achieve this.

Despite its implications, this stunning revelation has received little attention in the mainstream media. Climate change dominates the headlines, but in the medium term, it is peak oil that poses the greatest threat to our way of life. This will become painfully obvious in the coming years – as food and energy prices soar, economies collapse, civil unrest begins to spread, and nations fight for control of the last big oil reserves.

The Iraq War, clearly motivated by oil, was merely a precursor to what potentially lies ahead. What will happen when the major oil producing nations begin to withhold their own supplies?

Most of the alternative energy sources we need to meet demand either aren’t ready for the mass market, or simply haven’t been invented yet. And to develop/deploy any new technologies will likely require vast amounts of oil.

There is talk of biofuels, ethanol, hydrogen/electric vehicles, oilsands, etc. But these are unlikely to save us.

Ethanol, for example, takes almost as much energy to make as it eventually produces, and in any case, would require a vast amount of the world’s farmland – at a time when arable land is already declining and populations are rising. Electric cars take huge amounts of petroleum to manufacture, before they can be used, and their maintenance also requires oil. Tar sands, as mentioned earlier, are highly expensive and difficult to extract from, can only provide a fraction of what is needed to satisfy demand, and cause untold damage to the environment.

Put simply, no other resource comes near to matching the convenience and quality of energy that conventional crude oil provides. We have become horribly complacent about this. Oil is now inextricably entwined with modern society, with every aspect of our lives dependent on it. This will need to change – and fast.

Whatever the solution is, it won’t come easily, and there won’t be a smooth transition. Wars will no doubt be fought, and many people will die before nations begin to seriously address this issue. It may already be too late. I dearly hope I’m proved wrong.

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A documentary I recommend is Collapse, starring Michael Ruppert (trailer shown below). Also included are links to various sites.

Links

International Energy Agency – World Energy Outlook 2010

The Energy Watch Group – Crude Oil Supply Outlook (PDF)

Life After The Oil Crash

Peak Oil, Carrying Capacity and Overshoot: Population, the Elephant in the Room