PEAK OIL
What is ‘Peak Oil’?
The term Peak Oil refers to the point in time at which global production of oil will reach a peak or plateau. After this, production will decline as extraction becomes more difficult and expensive (for more detail see http://en.wikipedia.org/wiki/Peak_oil).
Does this mean that we are running out of oil?
There is still a very large supply of oil (probably 1-2 trillion barrels) in the ground. However, the oil that was easier and less expensive to extract has already been extensively depleted. Much of the remaining oil is either offshore, at greater depth, of lesser quality or in smaller fields and takes more money, time and energy to extract
(see http://news.bbc.co.uk/2/hi/business/5305950.stm).
Why is Peak Oil a problem?
Modern economies developed in the era of cheap oil during much of the 20th century. Peak Oil is likely to seriously affect the functioning of these economies if the peaking of global oil production coincides with increasing global demand for oil (as is currently the case).
The oil supply shocks of the 1970s and early 1980s, which caused high inflation, recession and high unemployment, give an indication of how damaging Peak Oil could be (see pages 26-32 in The Hirsch report at http://www.netl.doe.gov/publications/others/pdf/Oil_Peaking_NETL.pdf).
If the supply of oil is not able to keep up with expanding demand, some of that demand will be ‘destroyed’, that is economies around the world are likely to go into recession, with a real risk of a worldwide depression (see executive summary of The Hirsch report at http://www.netl.doe.gov/publications/others/pdf/Oil_Peaking_NETL.pdf).
Because food production is heavily dependent on cheap fuel, food prices are also likely to rise steeply at the same time as economies are going into recession and people are losing their jobs.
Won’t higher oil prices stimulate more oil production?
Oil is found in reservoirs in particular geological formations. Higher prices will not overcome the fundamental geological constraints on more oil production.
The situation in the US illustrates this point. Oil production in the ‘lower 48’ US states (excluding Alaska and Hawaii) peaked about 1970 and has declined ever since despite sustained higher oil prices (especially between the late 1970s and mid 1980s) and greatly improved oilfield technology (see pages 14-17 of The Hirsch report at http://www.netl.doe.gov/publications/others/pdf/Oil_Peaking_NETL.pdf).
Won’t improved technology produce more oil?
The experience in the lower 48 US states suggests that even greatly improved oilfield technology will not be able to overcome the fundamental geological constraints on producing enough oil to meet growing world demand.
The economic feasibility of more expensive oil field technology should have been enhanced by higher oil prices in recent years. However, the continuing tight oil market suggests that improvements in oil recovery technology are not making enough of a difference - any additional quantities of oil recovered are being swamped by declines in production in many older fields and steadily increasing world oil demand (see pages 14-17 of The Hirsch report at http://www.netl.doe.gov/publications/others/pdf/Oil_Peaking_NETL.pdf).
Will renewable energy cover the shortfall in oil supply?
Most renewable energy sources e.g. solar, wind and hydro, don’t produce liquid fuels. Only biofuels (ethanol and biodiesel) could potentially cover some of the oil shortfall.
While there has recently been a big increase in the use of ethanol and biodiesel, these biofuels still makes up a very small proportion of current liquid fuel consumption. It would take many years to scale up the production of biofuels and there are major environmental and climate change problems associated with large-scale use of biofuels (see executive summary in The Hirsch report at http://www.netl.doe.gov/publications/others/pdf/Oil_Peaking_NETL.pdf).
To illustrate the scale of what would be required, the UK would need to use 4.5 times its area of arable land to produce enough biofuels for its vehicle fleet (source?). Because oil is so energy-intensive, convenient and (to date) relatively inexpensive, other energy sources will not be able to readily do for us what oil has done.
While hydrogen is sometimes promoted as a vehicle fuel, it is not expected to become available within the next 20 years and then take many years to roll out (see pages 45-46 in The Hirsch report at http://www.netl.doe.gov/publications/others/pdf/Oil_Peaking_NETL.pdf link to source).
Why wouldn't the market respond when prices trigger the need for alternatives?
The market will respond to higher prices but the construction of the plant and equipment to produce alternative fuels in sufficient quantities will take at least 10 years. By the time prices reach levels high enough to trigger large investment in alternative fuels, it is likely to be too late to prevent major economic disruption (see executive summary in The Hirsch report at http://www.netl.doe.gov/publications/others/pdf/Oil_Peaking_NETL.pdf).
Even assuming that alternative fuels can be made available in large enough quantities, the existing vehicle fleet is so large (about 250 million vehicles in the US alone) that it would take many years to convert enough of these vehicles to run on the new fuels to make any difference. Change will be slow and expensive.
When will Peak Oil occur?
There is widespread agreement that the production of ‘conventional’ oil (this excludes tar sands, shale oil and the like) is likely to occur within the next 20 years with many analysts suggesting that it will be within 5-10 years (see http://en.wikipedia.org/wiki/Peak_oil).
The August 2007 market outlook report from the International Energy Agency (a body established within the framework of the Organisation for Economic Cooperation and Development (OECD)) comments that ‘oil looks extremely tight in five years’ time’ prompting some to say that the peak is imminent (see http://www.timesonline.co.uk/tol/comment/columnists/william_rees_mogg/article2080497.ece).
There is considerable uncertainty about the remaining reserves of oil, largely because the size of reserves in the Middle East has not been independently verified (link to ASPO?).
Because there is a significant risk that Peak Oil will occur within the next 5-10 years (as many experts predict), action needs to commence now to reduce the likelihood of severe worldwide economic and social consequences.
Does it matter when Peak Oil occurs?
There is much speculation over when peak oil will occur (or whether it has already occurred). It may well be that the decline in production by over 100 million barrels between 2005/06 and 2006/07 indicates that we are already past the peak and the decline has begun. Others predict that production will recover and keep increasing to at least 2030 (refer to Dr Roger Bezdek's recent Australian presentation at http://www.aspo-australia.org.au/References/Bezdek/SMART-2007-Slides.ppt for various forecasts of when the peak will occur). Any of those scenarios (and the myriad of projections in between) are possible, depending on how insistent the global market is in forcing production capacity to meet demand.
The truth of the matter is that, since we passed the peak of discovery in the 1960's, any increase in production simply increases the rate at which remaining reserves are depleted (see diagram below). The sooner we are able to reduce production (effectively to align with the natural production decline), the better we will be able to 'manage' the process of decline.
THE WORLD IS CONSUMING MORE OIL AND FINDING LESS
If we continue to force production to match the relatively unconstrained demand (for example, supporting India and China's incredibly rapid development of their oil-based economies, as well as continuing to pander to the oil-consumptive behaviours of Europe, the Americas and Australasia), we will deplete the remaining reserves at an accelerating rate.
It is fundamentally a case of not being able to have our cake and eat it too. We will be unable to manage our reserves and learn to utilise them more efficiently and effectively if we continue to consume those reserves at ever-increasing rates. We can't expect our cookie jar to last longer by eating cookies faster.
The 'Hubbert curve' of oil depletion is generally illustrated as a smooth and relatively symmetrical shape Hubbert's calculations assumed that, as the extraction process got harder and less cost-effective when reserves were approximately halved, the peak would occur and the decline would be relatively gradual. Contrast that with the experience of the UK North Sea reserves. As the field neared its optimal production phase, more and deeper wells were sunk and production forced to the limits of technology and human persistence. By the time no more increases in production could be forced, the reserves were already seriously depleted and the subsequent decline was precipitous. The UK went from being a major exporter to a major importer in a very short space of time (see http://www.aspo-australia.org.au/References/Bezdek/SMART-2007-Slides.ppt for different production decline curves).
The further we artificially delay the acceptance of the peak by forcing greater and greater production, the more the global depletion curve will match that of the UK North Sea example and the steeper the decline.
It is therefore not the optimist that sees a delay in the onset of the peak. The optimist would have us recognise the peak early, while we still have substantial reserves to manage and to support the transition to a more sustainable future. It is the pessimist who would have us continue to force the increased production beyond the point of a manageable buffer of reserves and plunge us into a sudden catastrophic economic failure.
Early recognition of the peak and the creative application of early management measures such as the 'oil depletion protocol' or 'Rimini protocol' (see http://www.energybulletin.net/7552.html) will allow us to respond to the phenomenon and to continue a more sustainable future for generations to come.
What impact will Peak Oil have on the food supply?
The capacity of societies to produce food is limited by soil fertility, water availability, human capacity to manage and harvest crops, and the ability to trade with other societies for resources not available locally.
Oil and natural gas play a key role in modern day food production and is responsible for four technological breakthroughs which impact directly on the amount of food available globally (see Figure 1 below). These are:
- the production of synthetic fertilisers
- the internal combustion engine
- the synthesis of pesticides, fungicides and herbicides
- huge improvements in transportation systems
Prior to the use of synthetic fertilisers, crops were fertilised by using crop rotation, green manures and animal manures. The widespread use of synthetic fertilisers has allowed previously poor soils to be capable of producing large quantities of food
The use of the internal combustion engine in agriculture has been revolutionary in food production. Its use in tractors, harvesters and other agricultural machinery has replaced human and animal labour and has been responsible for clearing huge areas of land for food production. The internal combustion engine has also played a key role in the irrigation of crops with their widespread use in water pumps. This has facilitated reliable food production across dry seasons as well as the opening up of previously unproductive land to agriculture. The net result has been greatly enhanced global food production.
The synthesis of pesticides, fungicides and herbicides has driven what is known as the Green Revolution. Such large increases in agricultural productivity due to the widespread use of these chemicals between the 1940s and 1960s increased food production and the reliability of food production to a point where the world population has since grown by about four billion people.
The final technological breakthrough facilitated by oil is the massive improvements made in transportation technologies. Food is now distributed globally to a point where previously out of season food is now widely available due to this global trade. Food now travels vast distances to get to the average dinner plate (the concept of Food Miles see http://en.wikipedia.org/wiki/Food_miles) For example, 95% of fruit and 50% of vegetables eaten in the UK are imported http://www.fwi.co.uk/gr/foodmiles/facts.html). Significantly, every one joule of food consumed in the United States requires around 10 joules of fossil fuel energy to produce it (see http://www.energybulletin.net/281.html).
The net result of the widespread use of oil in agricultural and food distribution systems is that human populations have outstripped local carrying capacities. This means that global oil production peaking will severely test our capacity to produce enough food to meet demand
What can be done?
With the growing interest in peak oil, many people in Australia and around the world are working on solutions. These efforts are hugely important and are beginning to make a difference. However bipartisan political support across all three tiers of government would make such efforts much more effective. Peak oil presents the potential for quite severe upheavals to the contemporary way of life. It is the purpose of 2degrees to generate such a groundswell of community influence that governments will feel they have a mandate to act with urgency and effectiveness.
Some early shifting in political attitudes can already be seen. Many local authorities, particularly in the U.S. are taking tentative steps in the right direction. Local governments have turned out to be some of the most important players preparing us for life after cheap oil. Cities throughout the U.S. and Canada have pursued peak oil studies and task forces with the first truly comprehensive vulnerability and response report coming out of Portland, Oregon in early 2007 (see http://www.portlandonline.com/osd/index.cfm?c=ecije). Closer to home, the Brisbane City Council formed its own task force in late 2006 and produced its report in March 2007 (see http://www.brisbane.qld.gov.au/BCC:BASE::pc=PC_2526).
While it is indeed commendable that local authorities such as those listed above have produced their reports, it is another thing for them to act with the urgency and clarity of purpose that is outlined in their own reports. Local politicians are influenced by many different interest groups, particularly around election time. It is our hope that 2degrees can play a pivotal role in keeping this clarity and sense of urgency in the forefront of their minds.
