Peak Oil Matters

In this post, I’m going to continue with the theme of my most recent entry and provide you with some additional considerations about oil consumption here in the United States. While few of the facts to be cited will surprise anyone very much, I doubt many are considered very often, if at all.  I believe this overview is critical to our understanding of Peak Oil’s importance. We obviously can’t and won’t address fundamental issues of which we remain contentedly unaware.

It is when we become more fully cognizant of just how vital the use of oil is to just about every single one of our economic activities that it also becomes obvious what a powerful and pervasive impact Peak Oil will have on just about everything we do and everything we plan to continue doing. (I’ll be exploring these specific issues in much greater detail in the weeks to come.)

Changes are inevitable … big changes. With no plans in place, those changes are going to be incredibly disruptive. But as I take pains to suggest, so too will these looming changes present us with incredible opportunities….

But as of now, the United States has no plans to deal with Peak Oil.

Understanding where we are is a key step in making plans for where we want to be. Doing what we’ve always done is not going to be a viable option for much longer. We’re bumping up against an immoveable barrier to our continued prosperity unless we summon the individual and collective wisdom, courage, and ingenuity to chart a different course. It is fraught with both uncertainty and unparalleled opportunity.

We may not be prepared to hear this, but there’s no getting around it: it is all up to us. Relying on Someone/Anyone Else is not going to work this time around.

Oil provides energy in ways unlike any other source we have. It is an incredibly powerful and efficient resource. Without it, economic development here and across the planet would have never attained its current levels and scope. According to the U.S. Department of Energy, the United States gets 40 percent of its total energy from oil and another 25% or so from coal and natural gas. Those are much higher percentages than any other nation. We’re wedded to oil like no one else, and the separation will not be easy. But we’re not going to have much of a choice in the not-too-distant future.

This quote (by Michael Brownlee of  Denver’s Boulder County Transition Team), premised on an estimate that our nation uses one cubic mile of oil per year, provides us with a stunning portrayal of just how efficient oil is as compared to other energy sources:

[One cubic mile of oil] “equals the same amount of energy provided by 52 nuclear power plants generating energy being built every year for 50 years or 104 operating coal-fired electrical plants built every year for 50 years or 32,000 wind turbines built every year for 50 years and in continuous operation or 91,250,000 solar panels built every year for 50 years.” [1]

Think about that for a moment. How on earth (literally) do we produce energy sources of those magnitudes to replace this finite resource that has served as the lifeblood of world-wide economic and industrial development for these past 150 years?

There’s no doubt that we must continue development of alternative energy sources such as solar and wind, but the plain truth is that as presently developed they cannot possible duplicate or even remotely approximate the energy derived from oil.

Currently, the oil and gas industry produces between 80 and 90 million barrels of oil per day for worldwide consumption. But every year, anywhere from 4% to 7% of that oil (depending on the source cited) is lost to a simple and undeniable truth about any finite resource: depletion. Simple path math will tell you that if a supply of something is declining naturally and inexorably, then in order to maintain at least the same level of supply, you have to produce more just to stay even.

So far we’ve done a good job of maintaining that steady state, but it’s just not going to last. The many little fields of oil we continue to find, and those not-so-easy, not-so-cheap to find and produce oil sources we discover in the remote corners of the world will not keep pace with increasing demand. The math does not work, and when you consider the ever-increasing world population, the numbers are not comforting to those who continue to hope for business and development and prosperity as usual.

We’re certainly free to remain blissfully unaware or unconcerned, but that’s only going to make the inevitable that much more painful.

A greater truth, and one I don’t believe gets nearly the attention it deserves, is that for all the energy that we could potentially derive from those alternative sources, our entire infrastructure and way of life has been built around the availability of, access to, and use of abundant amounts of relatively inexpensive and just as relatively available oil. That option is running out, as prior posts have tried to make clear.

We have designed our lifestyles, our economic and industrial development, and our communities around cheap, easily-produced oil. Our everyday world is premised on that continuing supply (together with natural gas) to produce and transport food, to fuel our transportation, build and heat or cool our buildings, purify our water, treat our waste, and build, well, just about everything we use. (And a related issue I’m not even touching right now: we have an old infrastructure, one that will not repair or update itself for free.)

No amount of alternative energy sources as presently developed can provide us the same quality and quantity of those basic needs. We may fervently want or hope that the square pegs of alternative energy sources fit neatly into the round holes of continuing-on-with-life-as-we-know-it, but magical thinking inevitably runs into reality.

And the reality is that the foundations of all we do and have and use are built with oil, and when declining supply begins to travel the same road as increasing demand, we’re going to have a monumental problem on our hands, and one that will not be solved in just a few months or a few years. All the legislation and hand-wringing in the world won’t create an entirely new infrastructure reliant on energy sources not named oil in any period of time one would consider “short.”

A more unfortunate truth is that our political and economic system—indeed, our entire societal attitudes about growth, prosperity, and entitlement—are simply not fashioned to deal with what must be done … yet.

Any false hopes that we can instantly create new technologies to effect seamless transition are at their very best hopelessly naïve. Foolish is a better description. So we do have to begin thinking differently, and planning, and then doing.

“[T]he cold, hard, inconvenient truth is that trillions of dollars have been invested in the existing energy infrastructure, which provides consumers with electricity, gasoline, jet fuel, and myriad other commodities. Changing that infrastructure—nearly all of which has been built upon fossil fuels—to a system based on renewable and alternative energy will take decades.” [2]

An inconvenient truth indeed….

Next: The World Of Transportation

Sources

[1]: America’s Perfect Storm: Transition to Survival After Peak Oil Hits – Frosty Wooldridge http://neighbors.denverpost.com/blog.php/2008/11/25/america%E2%80%99s-perfect-storm-transition-to-survival-after-peak-oil-hits/

[2]: From the book Gusher of Lies: The Dangerous Delusions of Energy Independence by Robert Bryce (p.44); publisher: PublicAffairs (Perseus Books Group)

In order for us to begin thinking differently about Peak Oil and its implications, and to begin envisioning what kinds of changes we can make (and will likely have no choice about), we should first understand our oil situation and consumption. This post is an introduction.

If the Peak Oil proponents are correct, we are in for a rude awakening in the near or immediate future (as measured against our ability to transition effortlessly to new energy sources).  Many of us won’t understand why. I’d like to help.

At first glance, addressing the potential fuel/oil replacement problems will appear to be quite daunting. A second glance will suggest that we have incredible opportunities to effect changes that could carry us for decades to come into a safer, cleaner, prosperous future.

At the risk of excess hyperbole, we may very well be at the dawn of a potentially new industrial and economic revolution, if we all understand what’s involved and what’s at stake….I won’t even pretend that this will be easy. It won’t be. But we own the choices. We can prepare, or we can ignore and keep our fingers and toes crossed that some way and some how, we’re going to find the tens of millions of barrels of oil everyone is going to need each and every day, and that we will continue to find those same/increasing amounts … well, forever. I’m an optimist, but not that much.

For those of us more familiar with peak oil statistics, this is a popular one: The United States represents approximately 4% of the world’s population, yet it consumes more than a quarter of the world’s oil each year. (By way of comparison, Europe’s population is nearly 50% greater than ours, yet it uses less than half of the oil we do.)

We own more than a quarter of a billion 2-axle vehicles, and have approximately 200 million drivers. For those of us near large cities, most days it seems as though all 200 million drivers are parked on the same highways as we are.

Two-thirds of the nearly seven billion barrels of oil we use each year is used by those same quarter of a billion cars, trucks, and vans. That’s more than any other nation’s total usage! Almost 90% of America’s workforce uses those cars and trucks to get to work. Our gas mileage standards are remarkably poor for a nation such as ours, and so we waste a tremendous amount of oil and gas. (One estimate suggests that lost productivity and wasted fuel caused by traffic congestion in the U.S. costs us more than $80 billion per year. And German auto mileage standards, for example, are nearly twice as high as ours.) This is not good math.

Another estimate suggests that the 20 million or so barrels of oil we use each day translates into 10,000 barrels of oil per second!  (I won’t do the math to verify it, but feel free to do so on your own.)

About 60% of our oil is now imported, to the tune of hundreds of billions of dollars each year. Those numbers will only increase as time passes. Fifteen years from now, it’s expected that we’ll be importing close to 75% of the oil we need. Some suggest the amount will be much higher. Other nations (notably China and India) are increasing their oil consumption exponentially. At some point limited supply will crash headfirst into increasing worldwide demand as more and more nations seek to improve their standards and emulate our way of life. What happens then?

Our military alone uses close to half a million barrels of oil each and every day. Its entire infrastructure has been built on the foundation of readily-available oil. Limit oil’s availability or supply and what happens to our military operations, our national and international commitments, and the protection of oil transport from the Middle East?

Fortunately, we’re already seeing signs that the military leadership understands this. The rest of us ought to start doing so as well. As I try to emphasize, this is either a disaster in the making or an incredible opportunity. I am an optimist on that score.

We’re sending hundreds of billions of our dollars to Saudi Arabia, Russia, Venezuela, and many other nations each year—dollars we no doubt could find good use for here in the United States. We do so in part because our oil peaked in production about 40 years ago. (Even Prudhoe Bay in Alaska, our largest oil field, is now at about one-fifth of its peak production.) We are still finding oil, as the there’s-more-than-enough-oil optimists like to point out in their snarky criticisms of peak oil proponents. We’re just not finding enough, and that hasn’t changed for decades. We’re using more and finding less, and third-grade arithmetic will tell you that that is not a good outcome.

For all the talk of  the “massive” amounts of oil offshore and in Alaska and the “obvious” need for us to just “drill, baby, drill”, we’re several decades away from full production in those regions, and the amounts anticipated will wind up meeting far less than even 5% of our needs. None of it will come cheaply. Drilling in the Arctic is a wee bit more challenging than punching a hole in the ground in Texas, and one does not require an engineering degree to understand that. The “drill, baby, drill” crowd never gets around to spelling any of that out for us. Magical thinking is nice, as is a denial of pesky truths, but on the planet we occupy, it’s a fairly useless exercise.

Data from the Energy Information Agency as of 2007 indicates that our “proven” reserves of conventional oil are about 21 billion barrels. That’s about a 3 year supply for us. More bad math.

One-third of those reserves are “light sweet crude,” which is considered the easy, good stuff. The rest is the not-so-easy and not-so-good stuff … the kind of oil that isn’t produced or refined very efficiently, or inexpensively. Few of our refineries can convert that heavy crude oil into gasoline. None of this is good news.

Opportunity….

There just aren’t any more places on this planet where we can find bottomless pools of oil flowing freely, easily, and inexpensively. That’s certainly true here in the U.S. We’re tapped out. It’s starting to take a lot more effort, many more years, and a lot more money to find and produce what was once so readily available. We’re paying for that, too. Even more bad math.

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?

None of these statistics are especially pleasant to consider. Potential bad news rarely is. But if we understand our situation, if we understand our needs, if we understand that we must individually and collectively begin making better choices and devoting our incredible talents to creating and implementing new means of energy production while revising and improving how we use energy, the bumps in the road we’re destined to confront might be a bit smoother. And in these times, that may not be such a bad option.

Next: More Considerations About American Oil Consumption

There is no question that peak oil is a contentious issue among those familiar with the discussions and considerations. Some adamantly deny that we are even close to producing the maximum rates of oil, while others ardently insist we are—or that we have already passed that point.

Let me start with just a few basics, to give you an idea as to why proponents like me think that we’re already at the point (or soon will be) when we have maxed out the rate of oil that is produced on this planet, and are just looking at declining amounts of oil production from here on in.

My next post will weigh in with an initial discussion of the opposing viewpoint.

Keep in mind that this is just a small sampling of facts supporting the imminent challenges of peak oil. Future posts will discuss the evidence in greater detail (but without getting bogged down in the heavy technical aspects. The Oil Drum and Energy Bulletin do a significantly better job at that than I could hope to, and they have access to better sources of expert opinion. See the links for each in my Blogroll.)

What the following facts each and collectively suggest seems fairly evident without the requisite professional expertise, but I’ll leave that to you to decide.

• Just 20 years ago, 15 oilfields were able to supply at least one million barrels of oil per day (the world now uses approximately 85 mbpd). Now there are only 4 such fields. [1]
• The world began using more oil than it was finding nearly thirty years ago. Nothing has changed since. This year we are on pace to discover nearly 20 billion barrels of oil. Sounds great up until the moment you learn that the world uses approximately 30 billion barrels per year, and that roughly 80% of the Earth’s population is just starting to use energy as we do. [2] Make no mistake: they will be looking to use more.  (Think China and India, for starters.)
• A substantial majority of petroleum geologists agree that about 90% of all the conventional, recoverable oil on the planet has now been located. [3] Most of the Earth’s favorable geological formations conducive to oil formation have been identified.
• Here in the United States, we reached peak oil production almost forty years ago, at about 9.5 million barrels per day. We’re down to about 5 million now. We’re not alone.
• One third of global oil supply comes from 20 large fields—all discovered more than thirty years ago. Production rates for each of those 20 fields have now peaked. [4]
• The International Energy Agency [IEA] is an organization which serves as an energy policy advisor to its 28 member countries, including the U.S. Its recent studies prove that the oil produced from 580 of the largest 800 fields is declining [5]
• The largest oil field in the world is Ghawar in Saudi Arabia. It was discovered in 1948 and reached its peak production rate of 5.6 million barrels per day in 1980. It now produces 5 million barrels per day [6], and when oil prices shot through the roof last year, at a price nearing $150 per barrel, Saudi production levels did not increase.  (What greater incentive to get more oil out of the ground than such sky-high prices, especially when you can produce it as  inexpensively as the Saudis? That didn’t happen because it couldn’t.)
• Back in the 1960s, more than 25 giant and super-giant fields were discovered. Super-giants are identified as those with “5 billion barrels of initial proven and probable reserves.” (The number is 500 million for “giant” fields). [7] By contrast, super-giant Ghawar had tens of billions of barrels of proven and probable reserves. Impressive, certainly, but the number of such finds has declined steadily over these past 40-plus years.
• We’re at a grand total of two such discoveries so far this decade (although none come close to matching Ghawar).

It’s probably safe to assume that the intensive and technologically-advanced explorations in these last few decades have not been designed to hunt for tiny fields. The giant/super-giant fields aren’t being found because there aren’t any. 8-10 billion barrel fields are now being touted as the “huge” finds of our time, and we’re not discovering nearly enough of them.

This does not mean we’re running out of oil next Tuesday, or next month, next year, or maybe even five years from now. “Running out” is not what Peak Oil is all about. Peak oil is about the rates of oil production, and declining rates mean declining supplies at a time when demand is and will be increasing significantly in certain parts of the world.

If the facts stated above are true, then waiting until it’s too late to do anything probably isn’t the best strategy.

Many developing nations feel entitled to seek levels of prosperity once enjoyed almost exclusively by Americans. By what right can we deny them? “We’re Americans so we get to do anything we want first” isn’t likely to get us very far in this day and age, much as some wish it were otherwise.

China, India, and other rapidly-developing economies are not going to sit on their collective hands while the United States and others make certain they are taken care of first.

What this does mean is that we are now on a slippery slope. Competition for diminishing supplies in the next few decades will become our reality as the demand for oil in the developing nations increases.

It’s important that we understand what this means, and how it will affect each and every one of us in our daily lives. Changes are in the offing.

I’ve designed this blog to help readers understand what those changes will be, what they mean, and how we turn a potential catastrophe into opportunities to revitalize our economies, our industries, and our way of life.

It will be a crisis only if we let it be, and that will happen because we all decide to … wait until some undefined “later” to start doing something/anything.

We’ll never be able to restructure our petroleum-based economies overnight, and without some planning now, attempting that is precisely what we’ll be faced with.

That approach won’t work, so let’s find better ways.
 
Next: What the opponents of peak oil have to say

Sources

[1]: http://www.canada.com/story+glimpse+future+chapters/1333692/story.html; The oil story and a glimpse at future chapters -  By Ray Grigg, Courier-Islander February 27, 2009
[2] http://www.oildecline.com/
[3] ibid
[4] Earth Policy Institute: Is World Oil Production Peaking? Lester R. Brown www.earthpolicy.org/Updates/2007/Update67_data2.htm
[5] http://www.energybulletin.net/node/48582; The IEA warns of shortages – “The next oil crisis is coming” by Michael Kläsgen
[6] http://seekingalpha.com/article/130145-200-oil-is-coming-while-we-waste-a-perfectly-good-crisis-part-2
[7] Running Faster To Stand Still – By: John Kemp http://blogs.reuters.com/great-debate/2008/11/24/running-faster-to-stand-still/