Peak Oil Matters

This is the fourth in a series of posts [* links below] examining the latest entry straight from the playbook on peak oil denial—that seemingly never-ending attempt to ignore facts, mis-/under-inform readers, or create ever-rising levels of non-credible optimism.

[NOTE: Any quotes in this series are taken from the above-referenced Manhattan Institute paper unless otherwise noted. Links to sources/citations/footnotes within those quotes are located in the original report.]

This post examines the issue of forecasting.

~ ~ ~

Just wondering: the Manhattan Institute author devoted several paragraphs to what he labeled “doomsday energy predictions,” including the by-now almost obligatory smack down of 1972’s The Limits to Growth with their allegation that the book “predicted that the world would be out of oil by 1992 and out of natural gas by 1993”. Unfortunately, there’s the truth about this allegation conveniently overlooked, as Ugo Bardi points out here and here.

These assertions are another in the line of arguments deniers make all the time as evidence that those of us urging greater awareness and understanding of peak oil are constantly wrong. There’s wisdom in the financial world’s cautionary adage that “Past performance is no guarantee….” Extrapolating statements of some along the way as blanket projections by all is convenient, but accurate? Not so much.

By the way, what makes the deniers’ forecasts any more certain?

It’s more than a bit curious that they consistently and conveniently overlook their at-least-equally sorry-ass track record of predictions (see this, also), which shows a healthy and regular deviation from the ultimate outcomes. But then again, evidence does muck-up a good ideological narrative.

I mentioned at the beginning of this series (and in most of my discussions about peak oil denial)  that the absence of context and a fuller recitation of facts are certainly helpful, but only if not explaining all the essential details is the motivation. For instance, the Manhattan Institute paper offered this statement:

… (C)onsider what has actually happened. Between 1980 and 2011, global natural gas production increased by 129 percent, and oil production jumped by 33 percent. What happened? Why were so many forecasters—including the chairman of Exxon, one of the world’s biggest and most technically savvy companies—so wrong? The answer: all of them underestimated innovation in the Oil Patch.”

Although it’s not uncommon to find variations of these statistics from different sources, let’s agree that the numbers above are correct. There’s no question that production in certain areas at various times in those past thirty years has increased. What’s not mentioned: increases here in the U.S. are still well-below the 1970-1971 peak as predicted (correctly) by the often-maligned M. King Hubbert; and crude oil production has been on a plateau for almost a decade. Among many analyses detailing that fact is this [links in original quote]:

US Energy Information Administration (EIA) data confirms that despite the US producing a ‘total oil supply’ of 10 million barrels per day, up by 2.1 mbd since January 2005, world crude oil production and lease condensate – conventional production – remains on the largely flat, undulating plateau it has been on since it stopped rising that very year at 74 million barrels per day (mbd).
The IEA’s  ‘World Energy Outlook’ actually corroborates this picture – but the devil is in the largely overlooked details….
[T]he report’s projected increase in ‘oil production’ from 84 mbd in 2011 to 97 mbd in 2035 comes not from conventional oil, but ‘entirely from natural gas liquids and unconventional sources’ (and half of this from unconventional gas including shale) – with conventional crude oil output (excluding light tight oil) fluctuating between 65 mbd and 69 mbd, never quite reaching the historic peak of 70 mbd in 2008 and falling by 3 mbd sometime after 2012. [1]

And Robert Rapier offered this:

Because U.S. production has fallen over the years (even though production has been rising, 2011 production was still 31% below the peak level of 1970) and because global production has risen, the U.S. percentage of global crude production has declined from 24% in 1970 to 9% in 2011….
One final note about oil production that gets very little attention is the fact that the 83.6 million barrels produced in 2011 is of a lower quality than the 32 million barrels produced in 1965.

Saudi Arabia’s production is in decline [see this discussion of mine with its additional references]; conventional crude oil fields continue their inexorable depletions ** [a critical fact never mentioned by peak oil deniers—all the more critical since current rates of production from shale aren’t exceeding those rates of decline and depletion, leaving us essentially on a treadmill—as China/India demands screw up the math even more); current oil exporting nations are keeping more of their production to meet domestic needs, as Jeffrey Brown takes great pains to explains via his Export Land Model (see this, along with other links and Jeffrey’s clarification in the Comments), and so the challenging future we urge officials and the public to consider more carefully rounds into shape because of reality. An amazing concept!

Amazing too is how a fuller offering and explanation of facts provides a different perspective on energy supply reality.

More to come….

** [Kurt Cobb has a nice summary here]

~ My Photo: Key West, FL – 02.24.06

* links to prior posts in this series:

http://peakoilmatters.com/2013/04/09/peak-oil-denial-sticking-to-the-script-pt-1/
http://peakoilmatters.com/2013/04/11/peak-oil-denial-sticking-to-the-script-pt-2/
http://peakoilmatters.com/2013/04/16/peak-oil-denial-sticking-to-the-script-pt-3/

Sources:

[1] http://truth-out.org/opinion/item/13629-age-of-cheap-oil-abundance-a-myth; Rosy Forecast of Cheap Oil Abundance, Economic Boom a Myth by Dr. Nafeez Mosaddeq Ahmed – 12.31.12

As anyone with even marginal interest in the future of fossil fuel production knows, the International Energy Agency’s [IEA] recently-released World Energy Outlook 2012 offered some exuberant assessments about American production in the years to come. The prediction is that in a handful of years, the United States will become Numero Uno once again in oil production.

A small sampling of recent headlines shows no small measure of delight in some quarters at the news:

US oil production hits 15-year high
Remembering “Peak Oil” Madness
A Cause for Thanksgiving, Part I
A Cause for Thanksgiving, Part II
World’s oil industry won’t be the same in the wake of shale
Bakken revolution is only half-complete
The story of plenty is yet to be realised

Sounds so wonderful, doesn’t it? Almost all of our problems have been solved! Any day now, we can only hope that the tens of thousands of climate scientists and related peers will fess up and tell us that they had indeed engineered an elaborate plot to try and convince the world that our planet was warming for reasons they’ll soon divulge. Can’t wait! All that’s left is for reputable economists and leaders on the Democratic side of the aisle to admit that they’ve been making up charts and evidence for close to three decades, and that yes indeed, tax cuts for the 2%-ers [a/k/a “job creators”] does indeed trickle down to the rest of us, and thus the illusion of the Great Recession and unemployment/inequality woes have just been figments of our imagination.

President Obama will thus have no choice but to finally admit that he and three close friends from his days as a gay Kenyan Muslim community organizer engineered an elaborate scheme of their own to steal the last two elections (mind-control was involved, for those who must know); that in fact he has no real birth certificate because he was not born on this planet (he and his mother conspired to make him a “terror baby” just weeks before his pod-hatching), and that he indeed will convert us all to Communist Islam Socialist Liberalism as soon as he personally removes all guns from the possession of every gun owner in America. (It’s expected that he will wait until the first week of January to do this, after changing the laws so that everyone is taxed at a rate of 83%.)

Back to the main topic….

As for the so-good news about our energy future, I prefer the more accurate assessment offered in this headline:

Peak oil, peak bullshit

Recent posts of mine—among others—have been pointing out some of the other commentary and information contained in that IEA Outlook (that annoying fact stuff) which gives us pause before jumping on the bandwagon of good news. Not that we don’t want to believe it, despite what some will surely argue. As I’ve stated on numerous occasions, I would really like to be wrong about my take on Peak Oil. I enjoy a very nice lifestyle which Peak Oil is sure to screw up royally, so there’s no incentive on my part to be a “doomer.” I’d prefer we just take a more careful look at the facts and perhaps make a plan or two….

To that end, ASPO (Association for the Study of Peak Oil) President Kjell Aleklett recently examined the IEA report and offered up some commentary of his own. Of course, his current role as ASPO President and “Professor in Physics at the Department of Physics and Astronomy, Global Energy Systems Group (former Uppsala Hydrocarbon Depletion Study Group) at Uppsala University” should not be taken to mean he knows much about the subject. I’m sure former insurance executive and now U.S. Senator James Inhofe could teach Dr. Aleklett a bit about energy production and climate change in one sitting, just to set him straight.

For purposes of this article, however, I’m going to give Dr. Aleklett the benefit of the doubt, and let you ponder a few of his observations about the information and statements contained in the  IEA Outlook which serve in part as the basis for its optimistic assessments of future oil production:

Around 50% of the USA’s crude oil production in 2035 is to come from fields yet-to-be found. New regions must be opened up for exploration.

In common with all attempts to describe future market trends, the projections in WEO-2012 are subject to a wide range of uncertainties. Indeed, it is unlikely that the future will follow any of the precise paths described in our scenarios. But that is not the aim of the WEO: none of the scenarios is a forecast. Each is intended to demonstrate how markets could evolve under certain conditions. How close those scenarios are to reality not only hinges on how well the model represents the way energy markets work and the validity of the assumptions that underpin that model, but also on the occurrence of ‘game changer’ events in the economy at large….
When reading articles about the findings in WEO-2012, these scenarios, although not forecasts, are treated as being the truth….

The majority of the oil we consume is crude oil and this statement from WEO-2012 should be noted by all: ‘Crude oil output from those fields that were in production in 2011 falls by close to two-thirds, to only 26 mb/d by 2035 (Figure 3.15). Thus, the projected production of 65 mb/d in 2035 requires almost 40 mb/d of new capacity to be added over the projection period. Of this capacity, 26 mb/d, or 66%, comes from discovered fields yet to be developed, most of which are in OPEC countries, and the remaining 13 mb/d from fields that have yet to be found, mainly in non-OPEC countries.’

Is there any possibility at all—any—that Dr. Aleklett (among others critical of the Outlook) might possess at least some vague working knowledge of the information reported and might thus be at least marginally correct in his assessments? If we’re willing to grant him that at the very least, wouldn’t it make sense to start some conversations at a broader level to determine if we might/should consider a plan or two … just in case he’s right?

Granted, it’s only our, and our children’s, future well-being that we’re talking about, so it’s not as though it’s anything of importance. But just to give us all something to do on the weekends, perhaps some plans might be kicked around?

* My Photo: Good Harbor Beach, MA – 09.04.05

There’s been a fair amount of rejoicing in some circles of the energy world in recent weeks on the heels of the wildly optimistic forecasts for future oil production as contained in the recently-released 2012 World Energy Outlook by the International Energy Agency (IEA). As if the generous expectations weren’t enough, miracles of miracles the good ‘ol U S of A is predicted to once again be Number One in world oil production in less than a decade.

Peak Oil is history! Hooray for us. The Magic Technology Fairy has come through just in the nick of time. What a holiday gift for everyone; those gas-guzzling SUVs should start flying out of showrooms any day now.

But every now and then, a little rain must fall on parades. Facts and reality have made their way into the dialogue about our future “energy independence.” A slightly different story results when those in the know take a look behind the International Energy Agency’s curtain.

Yes, United States’ oil production has risen in recent years. No one disputes that. However, few in the media and fewer still who should know better (and most likely do), decide against telling the whole story. Why bother to let the rest of the world know that the rise in oil production still leaves us many millions of barrels per day short of our 1970 production peak? [It goes without saying that those who deny the facts never get around to pointing out pesky little factoids such as the IEA’s own caveats, or that it is once again asserting a portion of the increase in U.S. oil production will come from fields “yet-to-be found.” Good to be optimistic!]

Adding liquids to the production totals which should not be factored in adds another feel-good element to the story of oil abundance, but that’s not exactly the truth, either.

[N]atural gas liquids are not equivalent to oil. They contain only about two-thirds of the energy content of oil; they are far less versatile in their applications; and only about 19 percent of a barrel of natural gas liquids is actually usable as vehicular fuel. If the implication is that the U.S. is going to be able to drive around on its own domestically-produced fuel, then that implication is simply wrong. [1] [See this also].

So while gushing over our marvelous ingenuity and technological prowess in having revolutionized oil production by utilization of “fracking” to blast open shale formations and release oil trapped in the layers [a very simplistic explanation of what is actually a complex process], those who deny the reality about our fossil fuel resources never get around to sharing important details which most of us should be aware of. Who benefits when the details are omitted, shaded, or hidden? Fairly certain it’s not you or me….

Even just a few more of those damned annoying facts dull the luster of the feel-good news. And I won’t begin to discuss the environmental issues associated with fracking, our ongoing failure to invest more aggressively in alternative energy options, or the effects on climate change—but thank goodness that’s a “hoax” perpetrated by tens of thousands of scientists who are scheming to … ah, do things in … um, certain ways to … ah, get some … uh, benefits of some kind.

[I’d highly recommend reading the articles cited in the “Sources” section below to get the full picture….]

Recent US news reports have highlighted the fact that US oil production has been rising and is now higher than it has been in years. Reports that highlight the recent US oil production increase don’t mention that oil production outside of Texas and North Dakota has actually declined in the last few years….
It appears to me that in the near future, the prime producing area within the four [North Dakota] counties is going to be saturated with oil wells considering that the fracking wells being used can extend up to approximately 2 miles. Assuming that the industry continues to add new wells rapidly, they will have to go to less fruitful areas outside of the prime producing area.
Oil wells in the Bakken region decline rapidly. From data I’ve seen, the average decline in the first year is ~60%. The only way to maintain or increase Bakken oil production is to rapidly increase the number of wells.
As the industry has to drill in less fruitful areas, being able to maintain production will become an increasing challenge. [2]

[P]resently the commercial profitability for new wells is barely positive.
The ‘average’ well now yields around 85 000 Bbls during the first 12 months of production and then experiences a year over year decline of 40% (+/-) 2%
The recent trend for newer ‘average’ wells is one of a perceptible decline in well productivity (lower yields)
As of 2007 and also as of recent months, the total production of shale oil from Bakken, has shown exceptional growth and the (relatively high) specific average productivity (expressed as Bbls/day/well) has been sustained by starting up flow from an accelerating number of new wells
Now and based upon present observed trends for principally well productivity and crude oil futures (WTI), it is challenging to find support for the idea that total production of shale oil from the Bakken formation will move much above present levels of 0.6 – 0.7 Mb/d on an annual basis.
Authoritative research companies (like Bernstein Research) and widely acknowledged specialists/institutions like USGS and SPE have recently and in general arrived at identical conclusions by applying different sets of methodologies and from studying other areas….
The wells normally have a high production at start up that rapidly enters into steep declines.
To facilitate growth in total production an accelerating number of wells needs to be brought into production.
To sustain a plateau requires a continual addition of a high number of producing wells. [3]

One reason the WEO 2012 estimates are unreasonable is because the oil prices shown are unrealistically low relative to the production amounts forecast in the report. This seems to occur because the IEA misses the problem of diminishing returns. As the easy-to-produce oil becomes more depleted, and we need to move to more difficult reservoirs, the cost of extraction increases.
In fact, there is evidence that the ‘tight’ oil referenced in Exhibit 1 is already starting to reach production limits, at current prices. The only way these production limits might be reasonably overcome is with higher oil prices–much higher than the IEA is assuming in any of its forecasts.
Higher oil prices cause a huge problem because of their impact on the world economy. The IEA in fact mentions that current high oil prices are already acting as a brake on the global economy in its first slide for the press. Higher oil prices also mean that investment costs required to reach target production levels will be even higher than forecast by the IEA, adding another impediment to reaching its forecast production levels.
If higher prices put the economies of oil importing nations into recession, then oil prices will drop lower, reducing the incentive to invest in new oil production infrastructure….
There are other issues as well. If there is a need to drill an increasing number of wells just to stay even, or an even larger number, to increase the amount of oil produced,  we start to reach limits on many kinds: number of rigs available, number of workers available, miles driven for water to be used for fracking. Perhaps the issue that will limit production first, though, is limits on debt available to producers. Rune Likvern has also shown that cash flows from tight oil extraction tend to run ‘in the red,’ so an increasing amount of  debt financing is needed as operations ramp up. At some point, companies hit their credit limit and have to stop adding new wells until cash flow catches up. [4]

But wait, suggests the IEA, there’s still one wild card hope out there: Iraq. Yes, Iraq. In the belief that the Iraqis will somehow overcome their sectarian differences, attain a high level of internal stability, establish a legal framework for oil production, and secure the necessary investment and technical support, the IEA predicts that its output will jump from 3.4 million barrels per day this year to 8 million barrels in 2035, adding an extra 4.6 million barrels to the global supply. In fact, claims the IEA, this gain would represent half the total increase in world oil production over the next 25 years. Certainly, stranger things have happened, but for the obvious reasons, it remains an implausible scenario. [5]

I’ll ask the same question I and others have asked on countless occasions: Wouldn’t it be a good idea to do a bit of planning for something other than fossil fuels as our energy supplier?

* My Photo: low tide at Good Harbor Beach, MA – 11.13.12

Sources:

[1] http://www.smartplanet.com/blog/take/us-will-not-surpass-saudi-arabias-oil-production-by-2020/268; U.S. will not surpass Saudi Arabia’s oil production by 2020 by Chris Nelder – 11.28.12
[2] http://peakoil.com/geology/a-closer-look-at-bakken-and-u-s-oil-production/; A Closer Look at Bakken and U.S. Oil Production by Roger Blanchard – 11.21.12
[3] http://www.theoildrum.com/node/9506; Is Shale Oil Production from Bakken Headed for a Run with “The Red Queen”? by Rune Likvern – 09.25.12
[4] http://ourfiniteworld.com/2012/11/13/iea-oil-forecast-unrealistically-high-misses-diminishing-returns/; IEA Oil Forecast Unrealistically High; Misses Diminishing Returns by Gail Tverberg – 11.13.12
[5] http://truth-out.org/news/item/12988-world-energy-report-2012-the-good-the-bad-and-the-really-truly-ugly; World Energy Report 2012: The Good, the Bad, and the Really, Truly Ugly by Michael T. Klare – 11.27.12

(A continuation of my two posts from last week)

In this third and final part of my look at The Hirsch Report, a series of “Wildcards” (all from p. 63) were offered which the authors believed might have the effect of either minimizing the adverse consequences of Peak Oil (“Upsides,” which were covered in my last post), or making it much worse (“Downsides”). I’ll offer a comment or two on the “Downsides” today, as they apply to current conditions.

“World oil production peaking is occurring now or will happen soon.”

Two words: Already there.

“Middle East reserves are much less than stated.”

As I wrote in Part 2 of this series on The Hirsch Report: “After decades of already-questionable representations and a complete inability for outside sources to verify those stated reserves, we shouldn’t be counting on more magical discoveries or even a half-rational explanation as to how Middle East reserves magically increased by substantial amounts when OPEC production quotas were changed in the 1980s to tie in with stated reserves: higher reserves = more oil allowed to be sold = more revenue.” What’s the more likely and logical answer? Seems pretty obvious to me….

“Terrorism stays at current levels or increases and concentrates on damaging oil production, transportation, refining and distribution.”

Terrorism is of course always an issue, sad to say. Given the current political turmoil throughout the Middle East, it may be a more pronounced consideration than it has been in recent years. More likely, however, the general discord in that region is cause enough for concerns about oil production and related issues. Recent price spikes are but one indication of how fragile our supply sources have become.

“Political instability in major oil producing countries results in unexpected, sustained world-scale oil shortages.”

Hello! As of this writing, significant sustained shortages are not an immediate concern, but there’s no doubt that if the upheavals in the Middle East spread into Saudi Arabia in particular, we may very well be dealing with that kind of a crisis very quickly.

“Market signals and terrorism delay the realization of peaking, delaying the initiation of mitigation.”

The same considerations stated above would apply here as well, although evidence that we’ve reached peak seems clear enough. Whether our leaders and the majority of citizens realize (or at least acknowledge) it is a different issue. Initiating mitigation is not a concern because we haven’t even gotten there, yet, and that is a problem having nothing to do with market signals or terrorists.

“Large-scale, sustained Middle East political instability hinders oil production.”

I’m thinking there isn’t a need for me to say much about this….

“Consumers demand even larger, less fuel-efficient cars and SUVs.”

There are indications that this is exactly what is happening now. I don’t think we’re prepared yet to underestimate the sense of entitlement which governs much of our behavior—notwithstanding a solid body of evidence about climate change and the ongoing challenges we face in providing adequate energy resources for increasing demand.

“Expansion of energy production is hindered by increasing environmental challenges, creating shortages beyond just liquid fuels.”

This is certainly within the realm of possibility. Increases in oil shale production here in the U.S., along with increased production from the tar sands of Canada notwithstanding, the amounts available now and for a number of years to come is not going to meet demand. Oil depletion from existing fields marches on, and just maintaining current levels of supply is challenging enough.

I won’t bother reiterating too many of the points I and others have raised in recent months about current oil supplies and future prospects. Suffice it to say, demand has exceeded discovery for several decades now; “giant” oil fields discovered in recent years aren’t even close to matching the giant oil finds of forty, fifty, and even seventy years ago. The fact that we continue to rely on those giants many, many decades after their discovery ought to raise at least one obvious question: How much longer can they produce at current/past rates? (See this good summary.)

I wrote this more than a year ago, and it’s safe to assume the situation is not any better today: “Cantarell in Mexico has long been considered of the supergiant oil fields on the planet. As recently as 2004 it was producing about 2.5 million barrels a day of oil, and about half of that was shipped here. Production has fallen off a cliff since then, and in 2 – 3 years, it’s expected that production will have declined by close to 80%. Aside from the enormous financial, political, and social problems that will create for our neighbor south of the border (Cantarell was the major source of income to the Mexican government), this also poses a dilemma for us. Where and how do we make up that shortfall?”

“According to the report [the International Energy Agency’s World Outlook 2010], by 2035 three quarters of currently operating oil fields won’t be producing anymore. In fact, current fields are only expected to account for less than one fifth of that year’s production.
“That leaves over 80 per cent of the IEA’s 2035 production projection coming from new oil fields, ones that either haven’t yet been developed or haven’t even been discovered. And the contribution from that undiscovered category alone is still far greater than the one from currently producing fields. That’s a tall order for new field discovery.
“Undeveloped or undiscovered oil fields, growth in tar sands production and increased reliance on natural gas liquids account for all the expected growth in world oil production over the next two and a half decades.” [1]

‘Nuff said.

Spin is good only for so much and for so long. The sooner we recognize the challenges we’ll be dealing with in the not-too-distant future, the sooner we can start having an intelligent, meaningful, and productive national dialogue about what we need to do. Now is as good a time as any, because later won’t be a better alternative.

Sources:

[1] http://www.huffingtonpost.com/jeffrey-rubin/even-the-international-en_b_787450.html; Even the International Energy Agency Forecasts Peak Oil by Jeffrey Rubin – November 23, 2010

(A continuation of Monday’s post.)

In this second part of my look at The Hirsch Report, I’d like to focus on the advice and conclusions Dr. Hirsch and his colleagues offered, as they now apply to current conditions.

“It is possible that peaking may not occur for several decades, but it is also possible that peaking may occur in the near future. “We are thus faced with a daunting risk management problem:
• On the one hand, mitigation initiated soon would be premature if peaking is still several decades away.
• On the other hand, if peaking is imminent, failure to initiate mitigation quickly will have significant economic and social costs to the U.S. and the world.
“The two risks are asymmetric:
• Mitigation actions initiated prematurely will be costly and could result in a poor use of resources.
• Late initiation of mitigation may result in severe consequences.” [p. 59-60]

Given the magnitude of the transition away from a fossil fuel-based economy to one in all likelihood requiring combinations of alternative sources of energy—depending on the region and industry—it’s fair to wonder whether any mitigation efforts can be considered “premature” at this point. With 70% of our transportation needs currently being met by fossil fuels, the effort to convert and/or implement alternative plans to satisfy that personal and commercial demand alone will require years of effort … more than a decade in all probability. At this point, absent some magical intervention by energy angels, we are simply too late into the game to prepare ourselves for an effortless shift away from fossil fuels.

That being the case, the sooner we begin the process of planning and implementing (with due regard for the testing and ramping up of new sources of energy), the fewer problems we will nonetheless have to contend with, and the lesser their severity … I hope. It makes no sense to delay for any reason at this point, as we can be certain that there will be some disruptions to our economy, industrial production, and lifestyles as the full brunt of declining oil production seeps inexorably into almost every facet of our ways of life.

There are almost no legitimate assessments which suggest we’re still decades away from Peak Oil. Any time frame shorter than that will be a problem. Let’s not add more problems on purpose because of ignorance or delusion that a rescue is just around the corner, or that we can afford to wait. We can’t.

While we still have at least a sufficient supply of fossil fuel resources, let’s begin the process of re-designing/re-creating our transportation and industrial infrastructures to accommodate alternative energies. Diverting existing resources to those efforts will cause enough hardship as it is. Let’s not make it any worse for ourselves by waiting for the resource pie to get even smaller.

The Hirsch Report offered up a series of “Wildcards” (all from p. 63) which might have the effect of either minimizing the adverse consequences of Peak Oil (“Upsides”), or making it much worse (“Downsides”). I’ll offer a comment or two on each, starting with his “Upsides” in this post. I’ll cover the “Downsides” in my next post.

“The pessimists are wrong again and peaking does not occur for many decades.”

The simple answer is that this wish and hope is extremely unlikely at this point. I’ve yet to come across a single credible report from any authoritative source suggesting anything of the kind. Given that the International Energy Agency ‘s World Energy Outlook 2010 report concluded that Peak Oil occurred five years ago, this is probably not a good bet. (See this and this.)

“Middle East oil reserves are much higher than publicly stated.”

After decades of already-questionable representations and a complete inability for outside sources to verify those stated reserves, we shouldn’t be counting on more magical discoveries or even a half-rational explanation as to how Middle East reserves magically increased by substantial amounts when OPEC production quotas were changed in the 1980s to tie in with stated reserves: higher reserves = more oil allowed to be sold = more revenue. Funny how that all worked out….

“A number of new super-giant oil fields are found and brought into production, well before oil peaking might otherwise have occurred.”

After decades of exploration with all the advanced technology available (and several decades of demand exceeding discoveries—see this), it would be borderline delusional to think that there might still be any such fields remaining. Most recent discoveries of “giant” oil fields turn out to be not nearly as impressive when those annoying facts are added to the discussion.

“High world oil prices over a sustained period (a decade or more) induce a higher level of structural conservation and energy efficiency.”

While energy efficiency (including higher mileage standards) are more frequently discussed, there are indications that the auto industry is already balking at raising mileage standards, and that consumers are not exactly racing to purchase the most fuel-efficient automobiles. With one of our major political parties having already taken the oh-so-mature and visionary step of returning Styrofoam packaging to the House of Representatives’ cafeteria rather than continuing to use recyclable materials (they sure showed us, right?), the education process is a long way from being complete.

“The U.S. and other nations decide to institute significantly more stringent fuel efficiency standards well before world oil peaking.”

A legitimate question to ask is: What’s the likelihood of getting any such agreement at this point? We can’t get everyone (meaning the fact-free GOP) to get on board with greenhouse gas emission standards … we can’t even get them to accept climate facts! “Drill, baby, drill” sums up their energy policy … facts about its at-best questionable value as a solution notwithstanding, of course.

“World economic and population growth slows and future demand is much less than anticipated.”

A possibility, of course. One has to wonder if slowing economic growth is what any of us should be actively rooting for, however. The truth is that it’s likely going to happen in any event. I’m advocating that we ought to actually plan ahead for that eventuality rather than just “count” on it as a possible solution to Peak Oil. I won’t go down the road of population growth except to state that it might be wise for at least some of our leaders here—and across the planet, for that matter—to at least wonder once in a while just how many resources they think this planet has left to provide for an approaching nine billion citizens.

“China and India decide to institute vehicle efficiency standards and other energy efficiency requirements, reducing the rate of growth of their oil requirements.”

Clearly this is not beyond the realm of possibility (and certainly China has taken many steps already in that direction as it is, exhibiting an understanding about the need for energy efficiency and the future which seems notably lacking here in the States—highlighted by a recent Pew Research Center report indicating that China now accounts for almost half of the world’s solar modules and wind turbines). That option alone won’t do the trick, however. But any contributions from major population and energy-consumption regions are a step in the right direction.

“Oil prices stay at a high enough level on a sustained basis so that industry begins construction of substitute fuels plants well before oil peaking.”

Two words: too late. Besides, sustained high fuel prices will curtail demand, which curtails profits, which curtails incentives for investments, which….

“Huge new reserves of natural gas are discovered, a portion of which is converted to liquid fuels.” See this recent post.

“Some kind of scientific breakthrough comes into commercial use, mitigating oil demand well before oil production peaks.”

Two words: too late. For all the astonishing technological breakthroughs mankind has introduced into the marketplace, hoping for that breakthrough here and now which will quickly replace a substantial majority of the 80+ million barrels of oil we use each and every day borders on the insane. Hoping for it to even slowly replace that oil is not much better. Certainly there is a great deal of research and innovation taking place as I write this (not nearly enough in the United States, unfortunately … tough to do when funding is reduced because the Magic Economic Fairy has decided that doing less for our future prospects is the best way to ensure more for our future), but we are many, many years away from successful invention, production, testing, implementation, and full commercialization of anything that could do the trick. Miracles do happen now and then, but if that’s our primary strategy, we are in some deep sh_t.

Crisis, or opportunity?

To be continued….

~~~

As I have been consistently urging in most of my posts in recent months, planning for what happens in the wake of Peak Oil’s arrival must become a national priority—and not just one for Congress. This is an all-hands-on-deck necessity, and every day we choose not to begin the complex, lengthy process of figuring out how to adjust to a world where the basic energy source for almost everything that we’ve produced in the last 100+ years will no longer be available as we’ve come to expect and demand is another day of almost certain difficulty for all of us. That’s not a good formula for growth and prosperity in the years to come.

Given what is at stake, I thought it might help readers new to the Peak Oil discussion to review the observations and suggestions of one of the seminal works of the past decade (see a prior discussion here). Back in 2005, energy advisor Robert L. Hirsch and his colleagues, on behalf of the federal government, issued a report entitled “The Peaking of World Oil Production: Impacts, Mitigation & Risk Management”—commonly cited as the Hirsch Report—sponsored by the National Energy Technology Laboratory of the Department of Energy (PDF here). The Hirsch Report offered an informative assessment of the then-current state of oil/fossil fuel production in the early part of the 21st Century. Of greater importance, it presented a clear warning about the potential consequences if we all fail to plan for the day when oil production has begun its inevitable slide down the slope from its peak.

According to the International Energy Agency (IEA), peak oil production occurred about a year after the Hirsch Report was released. Not good.

The Hirsch Report begins with a stark advisory:

“The peaking of world oil production presents the U.S. and the world with an unprecedented risk management problem. As peaking is approached, liquid fuel prices and price volatility will increase dramatically, and, without timely mitigation, the economic, social, and political costs will be unprecedented. Viable mitigation options exist on both the supply and demand sides, but to have substantial impact, they must be initiated more than a decade in advance of peaking.
“Dealing with world oil production peaking will be extremely complex, involve literally trillions of dollars and require many years of intense effort.” [p. 4]

Among its key recommendations, the Report suggested that a “crash-course” of mitigation efforts would need to be undertaken at least a full decade before Peak Oil’s arrival in order to avoid many if not all of the drastic challenges and consequences brought about by declining oil production and the availability of fossil fuels to meet our (increasing) needs. If the IEA assessment is correct—and there’s no reason to believe it is not substantially accurate as is—then we are already five years behind in preparing ourselves. Not good.

“Intervention by governments will be required, because the economic and social implications of oil peaking would otherwise be chaotic.” [p. 5]

“Prudent risk management requires the planning and implementation of mitigation well before peaking. Early mitigation will almost certainly be less expensive than delayed mitigation.” [p. 6]

That’s just for starters. “Less expensive” seems to be out as an option for us now. What kind of “intervention” by governments might be needed has by all indications not yet been considered—at least publicly, as I discussed in my last post. That should be cause for concern.

A quick acknowledgement about how much of our nation’s transportation depends on a ready supply of inexpensive gas and oil suggests even to the entirely uninformed that adapting to the post-Peak Oil world is at a minimum going to be a monumental undertaking of almost-indescribable complexity … in other words, a big challenge! The transportation aspect is not just about dependence on our personal vehicles, either. A significant percentage of our produced goods are transported via trucked freight, and there’s a fair amount of air travel to keep in mind as well. This sobering observation offers plenty of motivation:

“We cannot conceive of any affordable government-sponsored “crash program” to accelerate normal replacement schedules so as to incorporate higher energy efficiency technologies into the privately-owned transportation sector; significant improvements in energy efficiency will thus be inherently time-consuming (of the order of a decade or more).” [p. 24]

So what’s the Plan? Business as usual and a whole lotta hope ought to be off the table already. Denial and ignoring it in the hopes it will just go away aren’t of much help, either. Three questions posed to readers [p. 10] when the report was issued have even greater relevance today. Do we have answers yet?

“What are the risks of heavy reliance on optimistic world oil production peaking projections?
“Must we wait for the onset of oil shortages before actions are taken?
“What can be done to ensure that prudent mitigation is initiated on a timely basis?”

Optimism is fine and well … up to a point. Believing that we’re doomed is not the best starting point, so a recognition that with great, concerted effort we may still be able to count on our nation’s great intellectual and cultural resources to lead the way is certainly advisable. But that notion alone, without planning and then implementation, is not much more than an empty platitude. Obviously waiting until we’re up to our eyeballs in Peak Oil’s impact and consequences is not the preferred approach, but time’s a-wastin’. We’re damn close to that point now.

“[D]oing the research required to bring new technologies to commercial readiness takes time under the best of
circumstances. Thereafter, more than a decade of intense implementation will be required for world scale impact, because of the inherently large scale of world oil consumption.” [p. 7]

Ensuring prudent mitigation is one of the key topics I’ll be devoting scores of posts to in the coming weeks and months. Suffice it to say, leaving it all up to our nearly-useless Congress without a great deal more involvement on our parts is a sure strategy for not-so-pleasant consequences which I don’t want to give even a first thought to. We need to start having difficult, painful, but honest public conversations about what happens in the years to come when the oil and gas we rely on every day is simply no longer as available as it has been for decades. There’s no getting around that fact.

“Waiting until world oil production peaks before taking crash program action leaves the world with a significant liquid fuel deficit for more than two decades.” [p. 59]

That outcome ought to be scaring the bejesus out of us right about now—to least enough for us and our leadership to get off our asses and start having those conversations and putting plans into place starting today. That phase alone is going to take many months of thoughtful consideration and an examination and understanding of what makes our industries productive and successful, and in turn affords us the myriad options and opportunities we’ve enjoyed for decades. Plan B for all of that is not going to be the end result of a couple of chats at someone’s weekend retreat.

The concluding advisory is not comforting given how inadequate our preparation has been to date:

“In summary, the problem of the peaking of world conventional oil production is unlike any yet faced by modern industrial society. The challenges and uncertainties need to be much better understood. Technologies exist to mitigate the problem. Timely, aggressive risk management will be essential.” [p. 7]

We’ve past the point where “aggressive” is called for. Whatever comes after aggressive is where we need to be, and soon.

I don’t like the thought of crash-program anything, but with oil production having at a minimum plateaued half a decade ago, the signs are not good for a return to business as usual. A minor bump-up in production from oil shale is not a reason for concluding that the Peak Oil problem can again be put to bed. We need to have the courage and wisdom to recognize that, and then begin the process of putting our magnificent talents and the ethics and creativity of our peers to work as we lead the way into the post-Peak Oil world.

Crisis, or opportunity?

To be continued….

[NOTE: This is the latest installment in a new PeakOilMatters series (which started here). It’s about finding a new and better vision to get to, through, and beyond Peak Oil and its widespread impact on what we produce, how we produce, and how we live. We won’t be falling off a cliff tomorrow, and the full brunt of Peak Oil’s effects won’t be experienced all at once, either. Gas and oil do not have to disappear entirely, nor do gas prices have to rise into the stratosphere before Peak Oil’s impact is felt.
Gradually, but inexorably, changes will be in the offing, however. We need to come to a better understanding of this, and start preparing ourselves now for the lengthy transition and just as lengthy ongoing impact of Peak Oil on all of us. Many issues must of necessity be considered, and I hope to make a contribution to the public dialogue we need to have. I hope you’ll find these objectives enjoyable as well as beneficial. We have more of a voice than we think we do. Finding that voice just might be our best hope.]

~~~

Before I dive into a series of posts discussing general objectives as the next step in this ongoing “New Direction” series (and other issues of note), I thought it might make sense to give us all just a few simple reminders about where we stand with Peak Oil. About a year ago, I posted the first of several pieces discussing some basic facts in support of my position that we’re now in the early stages of irreversible declining oil production. It’s a good starting point, if I do say so myself.

More recently, Sharon Astyk posted a genuinely terrific article (which I blogged about at the time) which offered a refreshing take on the peak-oil-is-here-no-it’s-not debate. If you haven’t read it, I wholeheartedly encourage you to do so in conjunction with this. It is really good and stands up just as well as it did when she wrote it several months ago.

“A major reason for the rising prices and flatlining production is that for ‘the currently producing fields of crude oil, the production will decline,’ [International Energy Agency Chief Economist Fatih} Birol said.
“Today's active oil fields produce about 70 million barrels per day, but by 2035, he said, ‘they will produce less than 20 million barrels per day of oil.’
“Just to keep crude oil production flat would require much more production from new oil fields—including those discovered but not yet developed, and others still to be discovered.” [1]

This quote follows release of the IEA’s World Energy Outlook 2010, in which the Agency admitted for the first that Peak Oil is in fact here, and has been since 2006. Oops! That report also predicts that almost half of the oil we’ll need by 2030 will have to come from oil fields not yet developed or found! Hello!

And as Jeff Rubin noted in his own review of that IEA report,

“According to the report, by 2035 three quarters of currently operating oil fields won’t be producing anymore. In fact, current fields are only expected to account for less than one fifth of that year’s production.
“That leaves over 80 per cent of the IEA’s 2035 production projection coming from new oil fields, ones that either haven’t yet been developed or haven’t even been discovered. And the contribution from that undiscovered category alone is still far greater than the one from currently producing fields. That’s a tall order for new field discovery.
“Undeveloped or undiscovered oil fields, growth in tar sands production and increased reliance on natural gas liquids account for all the expected growth in world oil production over the next two and a half decades. Curiously absent from this list is any contribution from conventional oil production–you know, the type you can afford to burn in your car, the type the global economy can afford to use to power transoceanic trade?”

None of this is good news, and the contortions one has to perform so as to convince others that there are no oil supply issues on the horizon would seem to be at best pointless. Reliance on unconventional resources such as oil shale, the Canadian tar sands, deep-water wells (anyone remember that little oil spill in the Gulf of Mexico last year?), and other reserves carries its own set of risks and challenges.

None of those alternatives are guaranteed to even replace what’s being lost each year just from normal depletion in existing fields, much less provide more; they are more expensive to locate and produce; the efforts needed to extract and then refine them are significantly greater than traditional oil production; it’s taking longer to bring the final product to market because of the inherent challenges in extracting those unconventional reserves (see this and this, for example); the net energy from those efforts (simplified: what’s left from the energy expended to extract vs. the energy potential gained) is much less; it’s costing so much more to obtain the same quantity and quality of energy efficiency as conventional oil, and there’s that little problem of environmental damage….That’s just for starters.

Let’s not forget that the world-wide recession of recent years has sharply curtailed investment in oil exploration—conventional or otherwise. Oil exploration and production is not a two week start-up to final production undertaking. Delaying needed investments by several years sets the entire industry back by at least that much … and while all of that is happening, demand continues to increase for a supply that simply is not expanding any longer. No matter how one does the math, the results are not good.

It’s become a common refrain that “the days of cheap oil are now behind us.” That does not bode well for countries hoping to regain their economic footing while their citizens clamor for more energy to meet their increasing demands for all kinds of products and services they’ve watched U.S. citizens enjoy for decades. Who wants to tell those several billion people “No”?

It’s also worth noting that recent turmoil in the Middle East has made it quite clear that we are in many respects largely dependent on suppliers who are less than stable or reliable. [Michael Klare recently offered a very informative piece on this topic.] The political calculations and consequences of continuing instability (and hostility to America) are not insignificant. A related consideration which gets too little attention is that oil-exporting nations also have their own citizens’ demands to provide for. Those exporters are not immune to the desires of their own people to improve their living conditions and prospects for prosperity. Who wants to tell those nations “We insist you supply the United States with what we need before you satisfy the requirements or demands of your own people?” Good luck with that!

As the domestic needs of exporting nations increase, the simple math result is that they will this have less oil to export. (A nice summary of the key points is here.) That’s not terribly shocking or difficult to appreciate, but what it means to nations like ours (as it relates to the by-now familiar statistic is that we consume approximately one-fourth of oil supplied each year) is that we’ll be getting less. Our demand for increases matched against less being supplied to us does not lead to good outcomes.

Finally, before this concise summary turns into an epic novel, I’ll direct you to one final article which provides readers with a generous amount of information about oil production and existing oil reserves. Jim Puplava, the author, provides a concise perspective on some key, fundamental aspects about the oil fields we continue to rely on after decades of production. As I touched on in my own above-referenced post, and as Mr. Puplava highlights, we are relying on fewer and fewer giant oil fields whose replacements simply cannot match the quantity and quality of those ever-depleting giants.

It is not a formula that gives optimists much to hang their hats on.

Sources:

[1] http://news.nationalgeographic.com/news/energy/2010/11/101109-peak-oil-iea-world-energy-outlook/; Has The World Already Passed Peak Oil? by Mason Inman – November 9, 2010

“We are on the brink of a new energy order. Over the next few decades, our reserves of oil will start to run out and it is imperative that governments in both producing and consuming nations prepare now for that time. We should not cling to crude down to the last drop – we should leave oil before it leaves us. That means new approaches must be found soon….The really important thing is that even though we are not yet running out of oil, we are running out of time.”
– Fatih Birol, Economist – International Energy Agency, 2008

With the IEA having now admitted Peak Oil occurred several years ago, the urgency of addressing the myriad impacts of having reached the summit of oil production is all the more pronounced. As I and others have discussed, it’s going to take many years for us to fully move away from our longstanding reliance on fossil fuels to power our economy and support our lifestyles. Unfortunately, we’re already years behind in preparing and doing.

In recent posts I have raised the issue that in order for us to have some hope of successfully transitioning away from fossil fuels (and despite continuing opposition in some quarters about the need of an active and involved federal government), it is only from strategies as created, directed, supported, and financed by our federal government that this hope can find fulfillment. To be sure, much of what needs to be done will be provided by the private sector—as shaped and guided more specifically by local or regional entities. One or two approaches aren’t the answer! But without a national strategy and framework for deciding on priorities, we’ll be confronted with a hopeless mix of ad hoc attempted solutions from literally thousands of directions. Chaos, anyone?

No less an authority than the esteemed Tom Whipple echoed that theme in a recent post of his [1].

“In short, 200 years of abundant energy have allowed us to build an extremely complex civilization based on dozens of interrelated systems without which we can no longer live – at least not in the style to which we have become accustomed. Food production and distribution, water, sewage, solid waste removal, communications, healthcare, transportation, public safety, education — the list of systems vital-to-life and general wellbeing goes on and on.

“Those who believe that ten years from now we will be able to get along with much reduced government have little appreciation of how modern civilization works or how bad things are going to get as fossil fuel energy fades from our lives….

“Whether one likes it or not, the size and complexity of the coming transition will be so great and unprecedented and there will be so much at stake that only governments will have the authority and power to cope with the multitude of problems that are about to emerge. Be it heresy in some as yet unknowing circles; all this is going to require a massive transfer of resources from private hands to public ones.”

That’s the reality. We can continue to debate it ad nauseum, but in the end, we will have no choice. How quickly can we muster the intelligence and courage and wisdom to understand what is at stake—and how widespread will be the changes—so that we take advantage of the resources we’ll need right now, rather than coming to the same conclusion only after needless ideological battles?

Take a glance at the following list [2]:

Solvents       Diesel fuel       Motor Oil       Bearing Grease       Ink       Floor Wax       Ballpoint Pens        Football Cleats       Upholstery Sweaters       Boats       Insecticides       Bicycle Tires       Sports Car Bodies       Nail Polish       Fishing lures       Dresses       Tires       Golf Bags       Perfumes       Cassettes       Dishwasher parts       Tool Boxes       Shoe Polish       Motorcycle Helmet       Caulking       Petroleum Jelly       Transparent       Tape       CD Player       Faucet Washers       Antiseptics        Clothesline       Curtains       Food Preservatives Basketballs       Soap       Vitamin Capsules       Antihistamines        Purses       Shoes       Dashboards       Cortisone       Deodorant       Footballs       Putty       Dyes       Panty Hose       Refrigerant       Percolators       Life Jackets       Rubbing Alcohol       Linings       Skis       TV Cabinets       Shag Rugs       Electrician’s Tape       Tool Racks       Car Battery Cases       Epoxy       Paint       Mops       Slacks       Insect Repellent       Oil Filters       Umbrellas       Yarn       Fertilizers       Hair Coloring       Roofing       Toilet Seats       Fishing Rods       Lipstick      Denture       Adhesive       Linoleum       Ice Cube Trays       Synthetic Rubber       Speakers      Electric Blankets       Glycerin      Tennis Rackets       Rubber Cement       Fishing Boots       Dice       Nylon Rope       Candles       Trash Bags       House Paint       Water Pipes       Hand Lotion       Roller Skates       Surf Boards       Shampoo       Wheels       Paint Rollers       Shower Curtains       Guitar Strings       Luggage       Aspirin       Safety Glasses       Antifreeze       Football Helmets       Awnings       Eyeglasses       Clothes       Toothbrushes       Ice Chests       Footballs       Combs       CD’s & DVD’s       Paint Brushes       Detergents       Vaporizers       Balloons       Sun Glasses       Tents       Heart Valves       Crayons       Parachutes       Telephones       Enamel       Pillows       Dishes       Cameras       Anesthetics   Artificial Turf       Artificial limbs       Bandages       Dentures       Model Cars       Folding Doors       Hair Curlers       Cold cream       Movie film       Soft Contact lenses       Drinking Cups       Fan Belts       Car Enamel       Shaving Cream       Ammonia       Refrigerators       Golf Balls       Toothpaste       Gasoline

This is just a very small sampling of the thousands and thousands of items made from and/or dependent on oil for their existence. When the true decline of oil sets in (many suggest we’re on a several years long “plateau” of production as the precursor to experiencing actual limitations in availability), which one of these items should first be eliminated?

How do we make the assessment as to which if these products should no longer be produced? Who delivers that message to the designers and producers and shippers and end users? What’s their Plan B?

Or if doing away with product lines entirely is not the strategy, then what percentage of production should be curtailed? What criteria will be employed in making determinations that other products or services or consumers will have priority? Who among us will volunteer to make do without some of these items so as to permit others with the same needs to enjoy them instead? How well is that going to work if we’re all instead flying by the seat of our pants with no guidance whatsoever?

Picking just one item from that list: Who determines which patients will get access to artificial limbs that can no longer be produced in the same quantities and with the same availability nation-wide? Is that product more important than a heart valve? Or might we decide that more people need anthistamines instead, so we’ll curtail production on those medical items even more so as to satisfy that need instead?

Examining what is arguably a less important need (as I had mentioned in the first of a series of posts several months ago), which teams will make do with fewer basketballs or footballs?

When we no longer have nearly enough gas to fuel all of our automobiles (forget for the moment all of those other oil-dependent products we use), who takes the hit? Where do we point fingers for the terrible short-sightededness in failing to invest in public transportation and infrastructure now and how much will that help? All those billions that are being committed to building new roads … how do we get that money back when a much smaller percentage of us are driving? What kind of costs will we all have to absorb and endure in years to come when the existing transportation infrastructure is completely inefficient and useless given that there will be no fossil fuels to speak of, and when even more will have to be done in a much shorter period of time to address even bigger problems in a society where mobility is key?

“Some have suggested that this is acceptable policy, that the Obama Administration was failing to address the needs and desires of the U.S. population in its focus on developing new and better modes of transportation.” [3]

With all due respect, our population at large has demonstrated a less than admirable understanding of some basic political and economic issues in recent months. Everyone’s plate is full now, and there is no shame and no blame for the majority who simply cannot invest the time needed to understand the important issues of the day, burdened as they are just trying to survive each day. But do we really want to rely on the opinions of a populace that at the moment does not have at hand the information it needs to make knowledgeable assessments?

Part of the challenge we now face, as I’ve suggested, is that each of us is going to have to take some time to better understand what’s at stake. Let’s not make the adaptations even more burdensome by imposing them on the unsuspecting and unknowing. We owe it to ourselves to commit to becoming better informed, because we are most definitely all in this together. My liberal philosophy will no more stave off the adverse impact of declining oil production and fossil fuel availability than will one’s Tea Party inclinations. We all need to move beyond that. Idealistic? Certainly! Necessary? Absolutely!

Of course everyone wants more of the same! Who in their right mind would voluntarily undertake or accept the massive changes Peak Oil suggests we’ll have to endure? But those changes are coming … perhaps not in the usual near future that most of us are limited to considering, but the changes will begin long, long before we’re ready for them. We have a choice to begin the occasionally painful process of adaptation and transition now when we can do so with far less pain than will surely be the case in the years to come, or we can sit tight and hope for the best.

That is a choice. It’s not a good one, but it is a choice.

It is not my intent to frighten or disconcert. But this is the reality we now must contend with, and it is a reality that is not going to improve. Demand is increasing, supplies are harder to come by and no longer available at the same quantities in any event, and changes are in the offing. The more we understand exactly how potentially drastic Peak Oil’s impact will be (or at the very least appreciate how widespread will be its effect) the more involved and aware we all become. It is the future. More information and more input is always a good thing.

So are we going to be content to let the marketplace sort all of this out? Do we think that unregulated industries will immediately step to the plate and direct all of this fairly and efficiently on their own? Can we expect that industry leaders will just band together across the nation and put together a coherent plan? Think there might be some enforcement or distribution challenges, for starters? Piecemeal approaches that address some small aspect of need for some short period of time in some limited geographical area for just a few consumers is in the end a monumental waste of limited resources, time, and effort. We’re going to have to be much better, much wiser, and much more focused.

For all the bluster and nonsense about getting the federal government off our backs and out of our tea bags or whatever that nonsense might be, what happens when oil availability declines and these types of decisions have to be made? Are we willing to allow a thousand different voices to make decisions based on their own understandably narrower concerns and hope that everyone is coming to the same conclusions so as to maximize the efficacy of these choices, or can we recognize that a nation speaking with one voice in the face of these daunting challenges is indeed our best hope?

As I’ve repeatedly stated: there are no easy, quick, simple, or inexpensive solutions. So too are there no easy, quick, or simple approaches that lead us to the strategies and solutions we’ll have to rely upon. “Business as usual” or notions that what’s worked before will work now are not options for us. Quite frankly, there is nothing simple or obvious about any of this!

We’re going to have to attempt a lot of different solutions from many sources, but we will ultimately be best served if the efforts and strategies and inputs derive from a vision and from plans and determinations that have as their source an informed national agenda. We need to speak up, and we’ll need our national leaders in and out of government to listen and utilize their skills in ways they all too infrequently demonstrate. They too, must expand their vision and express far more courage and wisdom than they typically show us. The process will take enough time as it is. Let’s not add problems to the mix.

“If we’re to meet the crises ahead with even the smallest hope of something other than total failure, the options that need to be explored cannot be limited to those that the current political and business elites – the people whose decisions by and large got us into this mess, remember – happen to find acceptable. The resources that those elites can bring to bear are important, and need to be directed into anything that can be made acceptable to them – the rebuilding of the US rail system comes to mind as a very good start – but the options that can be made acceptable to today’s elites will only contain a small fraction of the options that need to be put to work.” [4]

All hands on deck.

Sources:

[1] http://www.fcnp.com/commentary/national/7980-the-peak-oil-crisis-the-future-of-government.html; The Peak Oil Crisis: The Future of Government – December 8, 2010
[2]http://peakoil.com/consumption/things-you-didnt-know-were-made-of-oil/; Things You Didn’t Know Were Made of Oil – May 30, 2010
[3] http://www.thetransportpolitic.com/2010/12/01/growing-conservative-strength-puts-transit-improvements-in-doubt/; Growing Conservative Strength Puts Transit Improvements in Doubt by Yonah Freemark
[4] http://www.energybulletin.net/stories/2010-12-08/futures-further-shores; The future’s further shores by John Michael Greer

{A reminder to my readers: I was down South recently to set up my daughter for her senior year of college, and next week we travel to New York for several days to set up our other daughter for her sophomore year. We’ll return at the end of next week just long enough to get ready for a ten day vacation, so it’s entirely possible that this will be my last post until after Labor Day. Thanks for your patience and continuing interest!}

I’ve written on several occasions (see this recent post, for example) about the difficulties we’ll face in transitioning from our fossil fuel-based way of life to “something else” … that something else not yet certain. To that end, some recent articles (links provided at the end of this post) address this same issue by pointing out some of the more precise difficulties we’ll be encountering as we attempt to transition away from our fossil fuel-dependent economic and personal lifestyles. As it stands now, there is no effective and clear-cut choice for Plan B, and thus the problem.

“The time for smooth, convenient solutions was decades ago, when scientists first began to raise the alarm about the greenhouse effect and peak oil, and the twin approaching disasters of a changing climate and an energy crunch. By now, the most we can do, and the least we have to, is to scramble however we can. Yes, even during a global recession, and even during the next ones. If you think upgrading the energy foundations of a planetary civilization is hard during an economic recession, imagine how hard it’ll be with a fraction of the energy available, and climate-related disruptions erupting everywhere.

“We need to make extraordinary advances in energy sources, and we have to do if fast, or, to put it simply, the 22nd century will look like the 17th. We need to constrain our use of fossil fuels as much as possible….We are in this fix because a few short decades ago we did nothing. If we do nothing, or even if we just don’t do enough, the fix we’re going to be a few short decades from now will be much, much worse.” [1]

Despite the occasional nincompoop who insists that our supply of oil is infinite, the truth is that oil is a geologically finite resource (as are the other fossil fuels), and increasingly harder to come by. I and many others have posted frequently explaining this basic fact which some still seem incapable of accepting.

(It doesn’t help when others offer truly fanciful assessments about the remaining reserves of oil and gas. Saudi Aramco President and CEO Khalid A. Al-Falih was recently quoted as having said that we can still expect to have available between 6 and 8 trillion barrels of conventional oil and natural gas liquids and about 7 trillion barrels of unconventional oil. [2] Not exactly the most objective source of information….I’m guessing that pixie dust is also in ample supply for those making such assessments.)

Just last week, Fatih Birol, the International Energy Agency’s chief economist, once again expressed his concerns about the future availability of oil:

“The era of cheap oil is over. Each barrel oil that will come to market in the future will be much more difficult to produce and therefore more expensive. We all – governments, industry and consumers – should carefully choose the type of car we want to buy in the future and should be prepared for oil prices being much higher than several years ago.” [3]

In its simplest terms, this acknowledgement is a clear recognition that at some point in the not-too-distant future (and we’re past the point where it matters that that date may be next week, three years, or fifteen years from now; we’re too late to effect a painless transition away from oil), we are going to have to endure the disruptions, changes, and yes, the hardships of not having enough fossil fuels at the ready to meet our demands and expectations. We can hope that the changes in business practices, industrial production, and personal lifestyles will be effortless, but that will likely remain just that: a hope.

As the authors of the articles mentioned above explained, history is such that the transition from one dominant source/supply of energy to another is not a simple or easy process. It is a multi-decades long effort, as not only must the supporting infrastructure (transport modes, utilities, public services, etc.) be changed or adapted to new energy sources, so too must industry revise what goods and services it produces—and how. And then, the end users must be willing to accept what is then offered in the market place, necessitating that they in turn then adapt their own lifestyles to these “new” products and services. That’s going to take a good long while.

So too must we recognize the fact that effecting the transition from fossil fuels to whatever alternatives ultimately prove to be the most efficient and cost effective (we’re still waiting on that) will itself require massive amounts of fossil fuels in order to create, build, produce, and then supply into the marketplace the new infrastructure and products fashioned from some other energy source.

Perhaps the key stumbling block remains as yet unresolved: no alternative source of energy has yet proven to be as efficient, effective, readily available, or commercially viable as oil. Anything else will thus be … less, and more expensive.

So what’s the solution?

“Now, all sides are counting on a Green Economy: it seems that we all just have to firmly believe that researchers and engineers worldwide will develop alternative energies into marketable products that are similarly fungible as crude oil at precisely the right time; in this way people in the old industrialized countries would not have to abandon their lifestyles, and the middle classes in the newly industrializing countries would not have to give up their hope of comparable prosperity.” [4]

Good luck to all of us!

We may very well (and I hope we do) develop alternative sources of energy that prove to be perfectly capable of meeting our future demands, but those who are counting on that as a given are taking enormous chances.

Hoping is not the strategy we should be relying on.

Sources:

[1] http://ieet.org/index.php/IEET/more/rinesi2010725 – Peak Oil and Climate Change: Between Too Soon and Not Soon Enough by Marcelo Rinesi
[2] http://www.ibtimes.com/articles/42230/20100810/petroleum-oil-energy-reserves-peak-oil-aramco-reserves-oil-futures.htm
[3] http://www.energybulletin.net/53805 – IEA: ‘Cheap oil is over’ as demand approaches new record by Matthew Wild
[4] http://peakoil.com/generalideas/peak-oil-yet-another-inconvenient-truth-2/ – Peak Oil – yet another Inconvenient Truth by Dr. Jürgen Wiemann

Links on energy transition referenced above:

http://www.energytribune.com/articles.cfm/4964/Wood-to-Coal-to-Oil-to-Natural-Gas-and-Nuclear–The-Slow-Pace-of-Energy-Transitions – Wood to Coal to Oil to Natural Gas and Nuclear : The Slow Pace of Energy Transitions By Robert Bryce

http://www.sciencemag.org/cgi/content/full/329/5993/780 – Do We Have the Energy for the Next Transition? Richard A. Kerr

http://www.theoildrum.com/node/6743#more – Lloyd’s ‘Sustainable Energy Security’ White Paper – Some hits; some misses by Gail the Actuary

I’ve been very clear in stating that while I do believe Peak Oil is imminent (which doesn’t necessarily mean next week!), there’s no doubt that we still have billions of barrels available to us in the years to come. Our energy base is not falling off a cliff tomorrow.

Having said that, we must nonetheless start planning now for what happens when fossil fuel availability is significantly diminished and prohibitively expensive. While we still have a ready and adequate supply of oil and gas, we need to utilize those still-abundant levels of energy to begin the transition away from fossil fuel dependency. The reality is beyond dispute: our entire infrastructure developed, was built, and has since been maintained with coal, oil, and gas in mind. Until very recently, there had never been any considerations or concerns that we might actually have to completely re-vamp the transportation, power grid, communications, utility, food production, and/or other systems that comprise our basic infrastructure. We’re going to need lots of energy to make that happen.

When you stop for a moment and consider all the highways, the aqueducts, the power and electric grid systems (poles, wires, etc.), the schools, the hospitals, the bridges, the sewers, the farms, the waste treatment facilities and all the other components of our infrastructure, the amount of fossil fuels needed to design, build, repair, maintain, and renovate all of those elements are beyond staggering! Dealing with the impending reality that the fossil fuels which served at the heart of our infrastructure will no longer be available—thus requiring that the repairs, maintenance, renovations, re-design, delivery, and functioning of these complex components will necessitate something other than fossil fuels—means that the transition over to alternative energy sources or brand new design features will take years (read: decades.) We can’t wait until we’re up to our eyeballs in Peak Oil’s impact to start figuring out what to do. We’re too close as it is.

Our great dilemma then rears its head: We do not yet have the alternatives energies in place to effect an orderly and efficient transition. It’s going to take many, many years, much trial and error, and incredible amounts of research, design, production, and delivery implementation in order to achieve seamless transitions away from fossil fuels—assuming those efforts to identify efficient alternative energies prove successful! What are we supposed to do once the existing fossil fuel resources are not so plentiful ever again?

Disasters … or Opportunities?

In my last post, I cited the American Society for Civil Engineers’ 2009 report on the disastrous condition of 15 different infrastructure systems, and the assessment that we need several trillion dollars to bring them into some semblance of acceptable condition. Those systems do not exist in their only little cost-free vacuums, either. For example, when roadways or bridges become impassable for lack of timely funding to repair them, then the products and supplies needed for other elements of the infrastructure are undeliverable as planned, and those delays lead to other problems which create other issues that then lead to….

According to the International Energy Agency, if we continue to rely on fossil fuels, then some $26 trillion dollars in new investments are needed from now through 2030 to continue exploration for new resource fields and to utilize whatever new extraction technologies might be required to meet production and demand expectations. Does anyone doubt that a comparable amount will be needed to re-design, re-build, and/or re-configure our infrastructure so that its development, construction, repair, and maintenance are properly achieved without fossil fuels at the ready?

If we haven’t figured it out yet, then we need to recognize and appreciate the direct connection between a properly functioning infrastructure and the overall health of our industry and economy—and by extension the well-being of the citizens of this nation. A few tweaks and some tinkering here and there isn’t going to get it done. That’s a waste of time and resources, and we don’t have a lot to spare as it is.

The wonderful New York Times columnist Bob Herbert has stated that “We’ve become stupid about this.” Stupid can’t be a strategy any more than denial or delusion, and we’ve already got way too many people adopting those approaches.

I don’t pretend than any of this is pleasant to consider, but we are indeed presented with incredible opportunities to design an almost entirely new way of living, producing, and prospering. There are no elements of our cultural or industrial society that cannot (and will not) be impacted, and so the challenge is rife with the potential for great harm, or great opportunities. But success won’t happen if only some of us are on board.

So what choices do we make? What choices do our business and political leaders make on our behalf? Do we attempt to preserve a way of life that is inevitably subject to the reality of natural resource depletion; or we do we begin the lengthy, uncertain, and challenging path of finally moving away from fossil fuel dependence? There are no guarantees that we escape harm regardless of the choice made. We’re going to be affected and impacted regardless. And neither choice is free. But one is surely and at best only a short-term solution (and yes, decades are short-term in this regard).

Despite the amazing depths of foolishness (the kindest word I could manage) exhibited by those who have decided that ALL scientific assessments are completely wrong (a hoaxy-socalisty-changey thing, I guess), climate change is also going to impact us. Peak Oil is not going to help. We’re going to have to make fundamental, extensive changes in what we do to try and ward off the harm and destruction global warming will dump at our feet (even if that might be decades away as well). We need to start implementing those changes now, while fossil fuels remain plentiful.

These are not separate crises. We’ll need an extraordinary amount of wisdom and insight to make certain that fixing one problem doesn’t make the other worse … and we’ll need a fair amount of luck to try and make that work. We’re not going to come up with perfect solutions in the next couple of weeks, but we’re guaranteed to come up with none if we don’t recognize what we’re facing.

Despite the somber portrayal, I remain convinced that this is all about opportunity. The challenge of Peak Oil affords us a chance to determine and define growth and progress in new ways—and for many decades more than what continued reliance on fossil fuels will get us. Change is always difficult, more so now in the midst of great economic and financial uncertainty. Expectations about growth and prosperity along a comfortable and familiar path are understandably preferred. But they are now growing increasingly unrealistic, and the sooner we all understand this, the better off we’ll all be and the sooner we can begin to move in a necessarily different direction.

We have before us a great challenge, to be sure. Just contemplating the magnitude of what we have to undertake is overwhelming.  Designing and then undertaking all that is then required to actually implement this new vision is a feat well beyond our capacity to fully envision at this moment. But that does not make it impossible.

There’s no getting around it: we need to build a twenty-first century infrastructure. The one we have will not endure if it remains reliant on fossil fuels. We’re well past the stage where crossing fingers and toes is the answer. Our communication systems; food production; industrial development, production, and delivery; power grids; all that we consider transportation; water and sewer services, and all the other components that make up the infrastructure foundation that has brought us to this moment will have to be re-fashioned. All the pretending otherwise, denying, or ignoring isn’t going to change that. Those who’ve chosen some combination of these strategies must find the courage to look again.

A world of 6, 7, 8, 10 billion people simply cannot survive or hope to maintain (let alone enhance) economic growth and prosperity unless it embraces the changes contemplated here.

We have a choice, of course. But really, we have no choice. It’s up to us to recognize this and act, or fail. The opportunities are there.

Next: Part III