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.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.--Crude Oil: The Supply Outlock, Report to the Energy Watch Group, October 2007
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.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.--Crude Oil: The Supply Outlock, Report to the Energy Watch Group, October 2007
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.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.--British Economist David Fleming in Crude Oil: The Supply Outlook, Report to the Energy Watch Group, October 2007
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!
The Richard Heinberg Interview Part - 1
Classic Pop Selections
The Existentialist Cowboy
Economic Collapse
Peak Oil
Global Shortages
GOP Crime Syndicate
Iraq
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16 comments:
"Oil wars will have outlived their utility. Those wars that are waged may not be motorized, certainly not powered by fossil fuels."
One can easily imagine Bu$hCo continuing to wage bloody war if they have to do it with black powder and lead ball. Just so long as they can get someone else to pay for it, and to do the dying.
In reality, there is no upside - the world's agricultural industry is of all economic sectors, one of the most dependent on oil - from the tractor pulling the plough to the petroleum-derived fertilizers used.
This would be a damn good time to invest in a horse ranch, and breed those babies just as fast as you can. If they aren't expropriated by the military for cavalry, they can be used to till what's left of the soil.
sadbuttrue said..
This would be a damn good time to invest in a horse ranch, and breed those babies just as fast as you can.
Good idea. Just surviving will be tough unless you own land and have some means of defending it. I have been interested in "Earthships", energy sufficient dwellings made of recycled materials. But, at this point, just getting to the point of self-sufficiency is a monumental challenge and more so because of the world created over several centuries by the capitalist robber baron mentality. It was premised upon Earth having inexhaustible resources and that just is NOT the case.
The US government knows about Peak Oil. At the request of the US Department of Energy, Robert Hirsch produced a report in Feb 2005. His conclusions:
1. World oil peaking is going to happen, and will likely be abrupt.
2. Oil peaking will adversely affect global economies, particularly those most dependent on oil.
3. Oil peaking presents a unique challenge (“it will be abrupt and revolutionary”).
4. The problem is liquid fuels (growth in demand mainly from transportation sector).
5. Mitigation efforts will require substantial time:
* 20 years is required to transition without substantial impacts
* A 10 year rush transition with moderate impacts is possible with extraordinary efforts from governments, industry, and consumers
* Late initiation of mitigation may result in severe consequences.
When he talks about substantial impacts that's a short hand way of saying the almost total breakdown of the global economy, rationed fuel, severe civil unrest in many countries.
JIm Kunstler has more.
Nafeez Ahmed has a great account of how oil is driving US policy on terrorism and Iran.
So why Iran and why now?
Nothing to do with oil, of course. It is merely a coincidence that in late June, a former White House energy consultant and NATO energy delegate Dr. Roger Bezdek, annoyed the Bush administration by demanding that it “must immediately and rigorously assess the looming impact of peak oil.” He said: “... it may already be too late to avoid serious problems.”
Dr. Bezdek’s warning came shortly after the publication of British Petroleum’s influential Statistical Review of World Energy which claimed optimistically that sufficient oil reserves remain to meet current demand for the next 40 years.
BP’s report, which echoes that of other American and British giant oil corporations, was refuted by leading independent oil industry experts including Dr Colin Campbell, a former chief geologist and vice-chairman at several major oil companies, who noted that on the contrary, the latest data shows oil is set to peak within the next four years.
Indeed, Chris Skrebowski, a former chief planner for BP and now editor of Petroleum Review, observes: “I was extremely sceptical to start with. We have enough capacity coming online for the next two-and-a-half years. After that the situation deteriorates.”
Bush administration officials have long been aware of the impending oil crisis. Indeed, it was a key factor in Vice-President Dick Cheney’s formulation of the strategy in Iraq only five months prior to 9/11. Reports like that of BP are designed to misinform, steering public attention away from the real cause of the problem.
Great links, damien. I hope interested folk have been saving all your links.
I might as well tip my hand. I am drafting an outline of yet another history of Rome. Well, not really a "history" --just an accurate economic analysis of the economic "forces" driving Roman conquest.
Like Rome, the US is "hooked" on conquest. It is no coincidence that US imperialism began to rise as America's last big domestic oil resource --West Texas --began to slide into decline. Big oil was into secondary recover methods ever as I was growing up. "Peak oil" is nothing new to me. But wars of naked aggression cannot be excused.
You're just escaping from reality, Len -- and you know it. If you were a real activist you would be writing "The Evolution of Political Thought in West Texas, 1952- 2007. Nothing fancy mind you, just your regular 4 volume juggernaut with a two volume supplement entitled "Varieties of Messianic Determinism" (apologies to William James). LOL. With WW3 on the horizon and society stuck in a full psychiatric and cultural meltdown you may as well do something useful with your time. No-one else is.
And as for people "saving my links" I suspect some of them have been exercising their better judgment and posting me on the No Fly List with Homeland Security ("under no circumstances let this guy fly").
Anyway, cheers.
damien said...
If you were a real activist you would be writing "The Evolution of Political Thought in West Texas, 1952- 2007. Nothing fancy mind you, just your regular 4 volume juggernaut with a two volume supplement entitled "Varieties of Messianic Determinism" (apologies to William James)
LOL LOL Hey...Bro William "don't" mind. He's cool.
As for writing "The Evolution of Political Thought in West Texas, 1952- 2007", that's a challenge! Political thought surely devolved over those years characterized by Ed Foreman's "Americanism", the "Impeach Earl Warren" movement, the brief appearance of the Orwellian named "Constitutional Party", and the daily "two minute hate" of anyone daring to challenge the oil depletion allowance.
Sigh! Thomas Wolfe warned "You Can't Go Home Again".
But I have other things in common with Wolfe. Try his Story of a Novel. It can be found in The Creative Process, a collection of essays edited by Brewster Ghiselin.
You know, American women have tried thru the years to sensibly control the population and have helped extend their lives by limiting birth rates; and as we get closer to disaster people rant and rave and say HAVE MORE BABIES! And they keep importing more competition for the resources that are continually declining by insisting on bringing in more people from all over the world. It's no different than a nuclear holocaust but in that case people want guns and stock-pile their necessities to fend off those who would take their means of survival away. I don't see their methods today as any different. Let the end come if it will, at least the people who are left will once again be their own masters and not have to bow down and kiss anyone's ring. Have a great day.
Zena said...
And they keep importing more competition for the resources that are continually declining by insisting on bringing in more people from all over the world.
Neocons and various cultists --especially that crowd known to make "pilgrimages" to Bohemian Grove where they sacrifice to Owl God --are looking out for themselves. At best, it's passive genocide. At worst, they will deliberately foment the wars that will wipe the rest of us off the earth.
Perhaps, Man and women will finally get going, and start creating alternatives to oil. yes, I'm fully aware that we already have fuel made from corn.
I'm thinking about all these new fangled inventions which man could created to ease us thru our need for oil. These inventions should have been created by now. Time is running out, and our inventors and scientist need to move quickly.
A special thank you, to Len, for a great article and video.
Hey Len,
I've heard about Peak Oil, but also about the potential it's a fraud of sorts. There are two facts which may support the latter idea. First, oil output was already supposed to have peaked, but new oil discoveries have met increasing demand. Second, the idea of scarcity is beneficial to oil interests, because it artificially props up the price of oil, which of course, leads to more profits.
More tangentially, one could argue that the other vested interest in spreading the notion of scarcity of oil is that it would motivate self-interested Americans to support foreign invasions. The logic would go, if our most important resource is threatened, we have to go to war to protect against our own financial calamity.
I don't know one way or the other, but that seems to be an interesting alternative explanation.
liberal journal man said...
There are two facts which may support the latter idea. First, oil output was already supposed to have peaked, but new oil discoveries have met increasing demand.
Your point is well-taken. However, "peak oil" is defined as that point at which the cost of producing outstrips demands. Not only "new discoveries" but secondary and tertiary recovery forestalled "peak oil". Hubbert himself thought oil production would peak in the 70's.
I grew up in oil country, West Texas --a case in point. In boom days, oil was plentiful, easy to find, cheap to produce. Gasoline sold for about 23 cents a gallon as recently as the sixties. There were "oil wars" sparked, presumably, by excess production.
Odessa/Midland boomed when only someone like George Bush could FAIL to make money in the oil "bidness". I've seen what happens to abandoned oil fields that might still have produced --but at great cost. Much of the "cost" is the damage done to the environment --oil seeping into water tables, oozing up onto ranch lands, etc.
Certainly, West Texas oil fields ceased to compete with Saudi Arabia.
In a microcosm, peak oil has already occurred at several times: Pennsylvania, Spindletop, West Texas ...and now globally.
I don't think "peak oil" is a fraud. At worst, it's a tautology --simply peak oil is that point on a bell curve after which production declines. Typically, production will decline whenever it costs more to produce new product than consumers can or will pay. And that point is usually plotted on supply/demand curves.
It's a natural cycle that many industries experience. As a resource grows scarce, the costs of producing increase. Peak "anything" will coincide with that point when the production costs outstrip supply.
The idea that new discoveries are meeting demand is disproved with a simple fact: oil prices have risen consistently for quite some time now. Had new discoveries kept up with demand, prices would have remained constant.
More tangentially, one could argue that the other vested interest in spreading the notion of scarcity of oil is that it would motivate self-interested Americans to support foreign invasions.
The oil industry is driven by the quest for profits in any case. Richer fields are cheaper to pump --reason enough to explore abroad. Arab oil was already undercutting West Texas crude by the '50s. The "Oil Depletion Allowance" became a sacred cow even as domestic oil fields dried up.
JFK managed to piss off two groups who were already allied very closely: the Texas oil barons AND the CIA. No wonder he got shot!
"The idea that new discoveries are meeting demand is disproved with a simple fact: oil prices have risen consistently for quite some time now. Had new discoveries kept up with demand, prices would have remained constant."
You sure, Len? I pulled up one chart on oil prices adjusted for inflation (
http://zfacts.com/p/35.htmlli), and the price of gas at the start of the Iraq war 2003 was at the same level it was in 1986. Prices have gone up and down, but the latest increase coincides with the Iraq war.
LJ, are you talking about crude prices or finished product?
The IMF is warning of a “permanent oil shock” and high energy prices for 20 years to come affecting both crude oil and gasoline prices.
Meanwhile, M.J. Ervin Associates says that world oil price hikes are driving increases in gasoline prices. At the time Ervin made the statement, crude per barrel was $65. When levels reached $92 before backing off there was talk of $100.00 per barrel oil.
Going back twenty years or more probably won't prove anything, as increased production is expected to meet demand. And, that, of course, is what "Hubbert's Peak" is all about --a point at which neither new discoveries or increased production will offset demand.
I'm still sticking with Hubbert, having witnessed a "micro" version of a predicted world wide peak. Oil is obviously finite and, as I saw growing up, big oil just walks away from a field when it stops producing.
There is oil in Iraq and there must be oil in Iran. God help those people. Big oil in partnership with Bush will murder anyone who tries to keep them from getting it. A Middle Eastern diplomat recently told me in Houston: "Oil is a curse".
Well, EC, the graph for the price of crude (http://zfacts.com/p/196.html)correlates almost exactly to the gas one.
I don't want to belabor the point, nor am I denying a peak exists. It's just that saying the peak is right around the corner helps oil companies because when people think it's more scarce than it actually is, it drives up the price.
LJ, your points are well-taken and obviously the price of gasoline at the pump is so heavily influenced by inflation, supplies, demand etc, that it is probably not a good predictor. In Houston, however, there was a measurable decrease in SUV sales which many economists chaulked up in part to increasing gasoline prices. A better indicator is probably not retail prices even indexed for inflation --but rather gasoline prices as a percentage of total household income. At some point, a "real" increase will be seen, if only shortly before the bubble bursts. That makes its prediction all that much more difficult.
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