Tuesday, October 23, 2007

New Study: Peak Oil is Here, Experts Predict "extreme shortages, wars, and social breakdown"

The peak of world oil production, long predicted by Houston geo-physicist M. King Hubbert, is here. A recent study for the German-based Energy Watch Group states that oil production has peaked and predicts production continuing to fall by 50% by the year 2030. It's a graphic picture of 'extreme shortages" leading to wars and social breakdown.
The difficulties of expanding oil production can also be demonstrated by looking at the performance of the big international oil companies. In aggregate, they were not able to increase their production in the last ten years, despite an unprecedented rise in oil prices.

--Crude Oil: The Supply Outlock, Report to the Energy Watch Group, October 2007

In 1956, geophysicist, M. King Hubbert, working at the Shell research lab in Houston, TX predicted a peak in US oil production which he thought might happen in the 1970's. He might have been correct had not "secondary recovery" breathed new but temporary life in the old, often abandoned oil fields that I grew up with in West Texas.
The use of technology, as discussed, will not change the overall picture. The decline of the oil production in the USA since 1970 could not be avoided. And, just to give a recent example, also not the production decline in the North Sea since 2000. The use of “aggressive” production methods aimed at producing fields at a maximum rate possibly poses a problem regarding the future global oil supply. Once the inevitable decline sets in, decline rates probably will be much higher than without the prior use of these methods. The decline rates in offshore regions past peak set an ominous example.

--Crude Oil: The Supply Outlock, Report to the Energy Watch Group, October 2007

New discoveries are another matter. The age of discovery peaked some time ago --in the sixties. For his efforts, Hubbert was pilloried by oil experts and economists. Nevertheless, the 70's are remembered for an Arab Oil Embargo that, while it might not have been the end, made the point that the US had become an oil junkie nation. The US partnership with Arab oil producers was always a strange marriage of fundamentalist Christians from Texas and equally fundamentalist Muslims from the far flung deserts of the Middle East, primarily Saudi Arabia. It was and remains a recipe for terrorism.

Only oil already found is produced. It is just a matter of time that production from existing fields will peak and decline. That time has come. The global availability of oil will decline hereafter, year after year, accompanied by declines in economic growth in every oil-based economy.

Since oil replaced whale blubber, "coal oil", camphene and other lubricants and fuels, economic growth has been accompanied, made possible in fact, by growing oil consumption. In recent years, the growth of oil supplies has slowed and, thus, production has now plateaued. It is no surprise that oil prices have reached historic highs. It's a matter of supply balanced against industrial demands for oil, consumer demands for transportation.

The German-based Energy Watch Group puts a date on global oil production peak: the year 2006, earlier than most experts had expected, perhaps, as well, the oil barons propping up the Bush administration. Based on the report, you can now expect oil production to fall at a rate of 7% a year. Concurrently, oil prices will set new records. Just recently, oil hit more than $90 a barrel.

What this means for individuals all over the world is a matter of bleak conjecture amid the need for "radically different" approaches. The report quotes British energy economist David Fleming:
Anticipated supply shortages could lead easily to disturbing scenes of mass unrest as witnessed in Burma this month. For government, industry and the wider public, just muddling through is not an option any more as this situation could spin out of control and turn into a complete meltdown of society.

--British Economist David Fleming in Crude Oil: The Supply Outlook, Report to the Energy Watch Group, October 2007

Americans are just barely aware that for a long time they paid about one-third the price Europeans paid for gasoline! But you have to credit the GOP with resourcefulness. The Bush administration delivered a message to the faithful: the war in Iraq would result in lower prices at the pump even as Bush cited every other reason for waging war on Iraq. To assert that oil was behind Bush's war of aggression was tantamount to treason. It was unpatriotic. It was enough to get you pilloried and ostracized.

For a while, America bought Bush's line. Dixie Chick CD's were banned, there was a flag on every SUV, the nation was out to kick Iraqi ass. Americans felt macho. It is not a period of time which Americans can look back on with pride. I am sure millions would prefer to forget having bought that SUV. Millions may have forgiven the Dixie Chicks for daring to speak the truth. I am surprised that Bill Maher didn't promise to kick their asses! Millions must admit now that they were dead wrong and will pay the price for greed and imperialist ambitions. After peak oil, there is no place to run. No place to hide. See also: Life After the Oil Crash

There is a bright side to oil's demise. Oil wars will have outlived their utility. Those wars that are waged may not be motorized, certainly not powered by fossil fuels. The long bow may make its biggest come back since Agincourt.

The "oil industry" may no longer dictate to governments. The industry may no longer demand and get an "oil depletion allowance", the sacred cow that most surely cost JFK his life and Jimmy Carter his legacy. It's easy to find in the 1970's the growing antipathy between big oil and the Democratic party. Carter had been advised to lift price caps but others in his administration nixed the idea. Clearly, American consumers were fed up with higher prices but absurdly long lines were the only alternative. In the wake of this report, consumers will never, ever again have it both ways!


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