Recently, the always-wonderful New York Times columnist Bob Herbert raised some interesting questions about America’s future:

What will the United States be like in 20 years when today’s toddlers are in college or trying to land that first job or maybe  thinking about starting a family?

The answer will depend to a great extent on decisions we make now about the American infrastructure….

In 20 years, will today’s toddlers be traveling on bridges and roads that are in even worse shape than today’s? Will they endure  mammoth traffic jams that start earlier and end later? Will their water supplies be clean and safe? Will the promise of clean  energy visionaries be realized, or will we still be fouling the environment with carbon filth to the benefit of traditional energy  conglomerates and foreign regimes that in many cases wish us anything but good?

The answers to these and many other related questions will depend to a great extent on decisions we make now (even in the  midst of very tough economic times) about the American infrastructure. We’re trundling along in the infrastructure equivalent  of a jalopy, with bridges rotting and falling down, while other nations, our competitors in the global economy, are building  efficient, high-speed, high-performance infrastructure platforms to power their 21st-century economies. [1]

As uncomfortable as these questions may be; as difficult to ask as they appear to be; as unpleasant as they may be to consider, we are going to have to do the dirty work of asking and answering these and many related questions. Peak Oil’s challenges and the opportunities they will afford us to create a new framework for our future are not limited to ensuring we can fill the gas tanks of our Land Rovers and BMWs, or putting food on the table, or conducting “business as usual” (which is not to minimize the significance of those needs).

As I’ve discussed briefly in my prior posts and as will be detailed in a lengthy series of upcoming posts, there is very little in our everyday lives that does not originate from oil-based products. We are facing monumental changes when oil supplies begin their inexorable decline, and fascinating opportunities to address ways of meeting those changes!

What we give precious little consideration to, however, is that not just our lifestyles, our industries, our transportation, our health care, our businesses, and our entertainment rest on the fundamental availability of cheap oil. Our access to the basic utility services that sustain us likewise depends on that same cheap oil. How many sewer systems, power lines, natural gas and oil pipelines, water pipes, bridges, culverts, or roadways have been designed, built, maintained, repaired, or replaced without some necessary component of oil and the energy it provides?

We’ve spent decades creating an infrastructure in support of our phenomenal growth and successes because we’ve had access to inexpensive and plentiful oil that provided the energy and means to build it all. Does anyone really think that we’re not going to have to start addressing major repairs to our infrastructure soon? It’s no secret that we’ve neglected it far too long.

We have tens if not hundreds of thousands of miles (or more) of those very old pipes and power lines that need to be maintained and in many instances repaired and replaced. Reports and comments raised in just the past year alone suggest that we’ll need several trillion dollars here in the U.S. to bring our infrastructure back to some semblance of acceptable condition.

When the oil faucet starts flowing more slowly, what happens? Where do we prioritize, and at what cost?

We’re creating a dangerous precedent in thinking that this will all be fixed or replaced or reinvented any time soon. There are countless opportunities awaiting us, and countless problems looming if we don’t start thinking about how to deal with less oil.

The International Energy Agency (IEA) is on record estimating that more than $26 trillion will be needed worldwide in the next twenty-odd years to continue fossil fuel exploration (gas, coal, and oil) and to develop and utilize production technologies to meet increasing energy demands. But those resources aren’t replenishing themselves! So after we spend all that money (which will come from … where?), we’re still going to have diminishing resources.

There’s a choice to be made, and it is not an easy one: Do we summon the financial means to try and meet increasing energy needs with coal, gas, and oil (along with unconventional resources such as oil shale and oil sands), or do we begin the long and costly process of converting and redesigning our existing infrastructure into one capable of supporting continued growth by means of alternative energy sources? (And this is all predicated on a fervent hope that we will in fact develop alternative energies of sufficient capability, quantity and economic feasibility to fully replace what oil does for us—not an inconsiderable task! Trillions of dollars are going to be needed in this regard as well. Our level of research and development expenditures this past decade is abysmally low. We’re already way behind.)

Alternative energy success is by no means a guarantee, but I daresay we don’t have much choice. The issue is how to go about doing all of this….Opportunities.

There are other problems to be addressed if we decide that we must continue a steady march toward development of all available oil—both conventional and unconventional. These tend to get glossed over in the more popular discussions about oil finds and oil usage, but they are no less important to consider.

And in the face of Peak Oil’s challenges, we are going to have to fashion solutions without the same ready supply of cheap and easily-available crude oil as we have for these past few decades. With another billion and half or so people added to world population in the next fifteen years, which is predicted to nearly triple energy demand, we’ve got our work cut out for ourselves. (Throwing up our hands and crying “Uncle!” seems an appropriate response right about now.)

I have alluded to the fact that the existing oil fields now in production face an inevitable consequence: the amount of oil pumped from the ground today means less oil available for tomorrow’s production quota, and then less the day after that…. In 2008, the IEA projected that the natural decline from existing oil field production would exceed 10 percent per year by 2030.

I’ve previously noted that we’re finding smaller and smaller fields to replace what’s now declining, so that’s not helping. Offshore finds, apart from their costs and the monumental efforts needed to bring them online, also decline faster than land-based fields owing to their unique characteristics.

We’re going to have to throw a lot more money at harder-to-find and harder-to-produce oil fields, and we’ll have to do so in the face of yet another challenge: this worldwide recession has significantly curtailed investment and production in the past two years. In just a handful of years, we’re going to start feeling the pinch of lower supplies because investments haven’t kept pace with demand. Billions of dollars worth of oil projects have been scrapped or postponed in these last few years, and they won’t run back at full throttle overnight. It’s going to take years to recover.

IEA Director Nobuo Tanaka warned back in November that global investment-related spending dropped nearly $90 billion, or 19%, during 2009 vs. 2008. That all adds up to less oil during this next decade [2].

In its most recent world energy outlook, the IEA is also predicting that almost half of the oil we’ll need by 2030 (an extra 45 million barrels per day, or about 50% more than what we now consume!) will have to come from oil fields not yet developed or found! [3], [4] In energy terms, twenty years is not a long time.

Is anyone planning to retire on funds yet to be found? That’s what we’re being asked to hope for when it comes to oil supply.

We must also not forget political considerations. We’ve haven’t exactly bathed ourselves in international glory this past decade. There are not an inconsiderable number of countries (think Venezuela and Iran, among others) which aren’t inclined to do us any extra oil favors.

Back in the 1970s, the Mobils and Exxons of the world controlled more than three-fourths of the planet’s oil reserves. Today, 90% of that is controlled directly by the oil-producing countries. Big Oil is getting shut out, and we’re all being left at the mercy of geopolitical interests and oil-production capabilities by many countries that are neither favorably disposed toward us nor necessarily as technologically advanced as the oil corporation giants. And let’s not forget that as their populations grow and their productivity increases, the need for these countries to keep oil “at home” increases.

Those who deny the implications of Peak Oil tend to overlook these facts. We cannot afford to do so.

Furthermore, various reports in the last couple of years suggest that over the past two decades, more than half a million skilled oil and gas workers have lost their jobs. It’s going to take years to replace them. Oil engineering and related studies are not drawing the same numbers of students as in the past, so as older professionals retire, there’s a growing shortage of experts.

We scoff at these factors at our peril, for they are real-world considerations directly affecting oil supplies and production. That’s not a good thing for those hoping for “business as usual” once we all get back on our feet.

Next: More Considerations – Part II


[1]: – What the Future May Hold By BOB HERBERT, November 17, 2009

[2]: – Top Ten Peak Oil Stories of 2009
By Tom Whipple, January 4, 2010

[3]: – Peak Oil Demand by: Hard Assets Investor December 03, 2009