what is "peak oil"?

What is "Peak Oil"?



All oil production follows a bell curve, whether in an individual field or on the planet as a whole. On the upslope of the curve production costs are significantly lower than on the downslope when extra effort (expense) is required to extract oil from reservoirs that are emptying out.



Put simply: oil is abundant and cheap on the upslope, scarce and expensive on the downslope.



For the past 150 years, we have been moving up the upslope of the global oil production curve. "Peak Oil" is the industry term for the top of the curve. It's often referred to as "Hubbert's Peak" a reference to King Hubbert, the geologist who discovered that oil production follows a bell curve.



Once we pass the peak, we will go down the very steep downslope. The further we go down the slope, the more it costs to produce oil, and its cousin, natural gas.



In practical terms, this means that if 2000 was the year of Peak Oil, worldwide oil production in the year 2020 will be the same as it was in 1980. However, the world's population in 2020 will be both much larger (approximately twice as big) and much more industrialized than it was in 1980. Consequently, worldwide demand for oil will outpace the worldwide production of oil by a significant margin.



The more demand for oil exceeds production of oil, the higher the price goes.



Ultimately, the question is not "When will we run out of oil?" but rather, "When will we run out of cheap oil?"



When will Peak Oil occur?



The most wildly optimistic estimates indicate 2020 will be the year in which worldwide oil production peaks. Generally, these estimates come from the government.



A more realistic estimate is between the year 2004-2010. Unfortunately, we won't know that we hit the peak until 3-4 years after we actually hit it. Even on the upslope of the curve, oil production varies a bit from year to year. It is possible that the year 2000 was the year of peak oil production, as production has dipped every year since.



The energy industry has quietly acknowledged the seriousness of the situation. For instance, the president of Exxon Mobil Exploration Company, Jon Thompson, recently stated:



By 2015, we will need to find, develop and produce a volume of new oil and gas that is equal to eight out of every 10 barrels being produced today. In addition, the cost associated with providing this additional oil and gas is expected to be considerably more than what industry is now spending.



Equally daunting is the fact that many of the most promising prospects are far from major markets — some in regions that lack even basic infrastructure. Others are in extreme climates, such as the Arctic, that present extraordinary technical challenges.



If Mr. Thompson is that frank in an article posted on the Exxon Mobil webpage, you have to wonder what he says behind closed days when he talks about oil depletion. (note - if you read the link, read it in the context of what Matthew Simmons says - see below)



Even the Saudis are aware of the situation. They have a saying that goes, "My father rode a camel. I drive a car. My son flies a jet airplane. His son will ride a camel."



That sounds pretty bad, but if gas prices get too high, I'll just carpool or take public transportation more. Why should I be concerned?



Almost every current human endeavor from transportation, to manufacturing, to electricity to plastics, and especially food and water production is inextricably intertwined with oil and natural gas supplies.



Food Production and Oil:



Commercial food production is oil powered. Most pesticides are petroleum (oil) based, and all commercial fertilizers are ammonia based. Ammonia is produced from natural gas.



Oil based agriculture is primarily responsible for the world's population exploding from 1 billion at the middle of the 19th century to 6.3 billion at the turn of the 21st.



Oil allowed for farming implements such as tractors, food storage systems such as refrigerators, and food transport systems such as trucks.



As oil production went up, so did food production. As food production went up, so did the population. As the population went up, the demand for food went up, which increased the demand for oil.



Within a few years of Peak Oil occurring, the price of food will skyrocket because of the cost of fertilizer will soar. The cost of storing (electricity) and transporting (gasoline) the food that is produced will also soar.



Water Supply and Oil:



Inexpensive oil is also needed to construct and maintain the massive infrastructure that delivers our fresh water.



Healthcare and Oil:



Oil is largely responsible for the advances in medicine that have been made in the last 150 years. Oil allowed for the mass production of pharmaceutical drugs, and the development of health care infrastructure such as hospitals, ambulances, roads, etc . . .



Everything Else and Oil:



Oil is required for a lot more than just food, water, medicine, and transportation. It is also required for nearly every consumer item, sewage disposal, garbage disposal, street/park maintenance, hospitals & health systems, police, fire services, and national defense.



Thus, the aftermath of Peak Oil will extend far beyond how much you will pay for gas. Simply stated, you can expect: war, starvation, economic collapse, possibly even the extinction of Homo sapiens.



This is known as the post-oil "die-off". The term "die-off" captures perfectly the nightmare that is at our doorstep.



What do you mean by "die-off"?



Exactly what it sounds like. It is estimated that the world's population will contract to 500 million during the Oil Crash. (current world population: 6 billion)





Are you serious? That's over 90% of our current population. How could that many people perish? Where does that estimate come from?



That estimate comes from biologists who have studied what happens to every species when it exceeds the carrying capacity of its environment in one life giving aspect or another.



For instance, bacteria in a petri dish will grow exponentially until they run out of resources, at which point their population will crash. Only one generation prior to the crash, the bacteria will have used up half the resources available to them. To the bacteria, there will be no hint of a problem until they starve to death.



But humans are smarter than bacteria, right? You would think so, but the evidence indicates otherwise:



The first commercial oil well was drilled in 1859. At that time, the world's population was about 1.5 billion. Less than 150 years later, our population has exploded to 6.3 billion. In that time, we have used up half the world's recoverable oil. Of the half that's left, most will be very expensive to extract . If the experts are correct, we are less than one generation away from a crash. Yet to most of us, there appears to be no hint of a problem.



We need not look solely to the petri dish to predict what will happen to the planet. We can look to our own history.



Take the case of the famous Irish potato famine. For well over a century, year after steady year, the British encouraged and the Irish developed a near-total dependency upon a single dietary mainstay, the potato, and the population of the island grew from 2 million people to more than 8 million.



Then suddenly in 1845, a parasitic fungus turned the potatoes into sticky, inedible, mucous globs. Within a generation the country was devastated, more than half the population died or emigrated, and those who remained were reduced to a poverty that diminished only a century later.



In some ways, planet Earth's future is likely to be worse than Ireland's past. The severity of the potato famine was offset by the fact that many of the Irish could emigrate to the land of plenty: America. This allowed those who remained to make the most of what little resources were left.



Unlike the Irish, we have nowhere else to go. But we do have lots of WMD's to toss at each other.



Oh, by the way: you want to know what the bacteria do as their population crashes?



They eat each other.



I still can't imagine that number of deaths. It's just too ghastly to imagine. Only 10% of us are going to make it? How can that possibly be?



I know how you feel. This is all very difficult to handle, both emotionally and intellectually. As former UK environmental minister Michael Meacher recently wrote, "It's hard to envisage the effects of a radically reduced oil supply on a modern economy or society. The implications are mind blowing."



Perhaps the following explanation, while a bit over simplified, will help to illustrate the situation:



As explained above, oil production follows a bell curve. Thus, if the year 2000 was the year of peak production, then oil production in the year 2025 will be about the same as it was in the year 1975.



The population in the year 2025 is projected to be roughly 8 billion. The population in 1975 was roughly 4 billion.



Since oil production essentially equals food production, this means that we will have 8 billion people on the planet but only enough food for 4 billion or less, since even in 1975 we were unable to feed everybody.



Now think about it this way: say you, me, and 6 other people were locked in a room, with only enough food and water for 4 of us. At least 4 of us will die from starvation. Another one or two will likely die as we all fight each other for what little food we have.



That's what will happen if we are fighting with just our fists. Give each of us weapons, and you can imagine what that room will look like when were done with each other.



If you're asking, "What about switching to renewable energy to keep the food production up?" - just keep reading - we'll get to that on page two.



Where are you getting this information from? Who else is talking about Peak Oil? What type of backgrounds do they have?



When you're done reading through this site, take a look at this page. It has links to over 50 news articles about Peak Oil, all are from highly reputable sources. You will find, much to your dismay as well as my own, that everything on this site is supported by facts.



For the sake of brevity, here is what just two highly credible individuals have to say about Peak Oil. As you can see, this is not the typical "end of the world" crowd:



Dr. David Goodstein, Professor of Physics and Vice Provost of Cal Tech University:



In his just-released book, Out of Gas: The End of Oil, Dr. Goodstein argues forcefully that the worldwide production of oil will peak soon, possibly within this decade. That will be followed by declining availability of fossil fuels that could plunge the world into global conflicts as nations struggle to capture their piece of a shrinking pie.



In a recent article on ABC, Dr. Goodstein had this to say about Peak Oil:



Worst case: After Hubbert's peak, all efforts to produce, distribute, and consume alternative fuels fast enough to fill the gap between falling supplies and rising demand fail. Runaway inflation and worldwide depression leave many billions of people with no alternative but to burn coal in vast quantities for warmth, cooking, and primitive industry. The change in the greenhouse effect that results eventually tips Earth's climate into a new state hostile to life. End of story.



Matthew Simmons, Energy Advisor to George W. Bush



In a recent interview, Matthew Simmons largely echoed Dr. Goodstein's sentiments. When asked if it was time for Peak Oil to become part of the public policy debate, Simmons responded:



It is past time. As I have said, the experts and politicians have no Plan B to fall back on. If energy peaks, particularly while 5 of the world’s 6.5 billion people have little or no use of modern energy, it will be a tremendous jolt to our economic well-being and to our health — greater than anyone could ever imagine.



When asked if there is a solution, Simmons responded:



I don’t think there is one. The solution is to pray. Under the best of circumstances, if all prayers are answered there will be no crisis for maybe two years. After that it’s a certainty.



Simmons recently made a power point presentation to the Center for Strategic and International Studies, regarding the coming oil crisis. You can view the entire presentation if you wish.



Other than Simmons, has anybody else in the Bush administration mentioned Peak Oil?



Here is what Dick Cheney said in late 1999:



By some estimates, there will be an average of two percent annual growth in global oil demand over the years ahead, along with, conservatively, a three percent natural decline in production from existing reserves.



Cheney ended on an alarming note, "That means by 2010 we will need on the order of an additional fifty million barrels a day."



This is equivalent to more than six Saudi Arabia's of today's size.



According to a report commissioned by Cheney from the US Council on Foreign Relations and released in April 2001:



Perhaps the most significant difference between now and 10 years ago is the extraordinarily rapid erosion of spare capacities at critical segments of energy chains. Today, shortfalls appear to be endemic. Among the most extraordinary of these loses of spare capacity is in the oil arena.





What about people outside of the Bush administration? Does anybody on the left think this is a serious issue?



In 1980, Jimmy Carter told the American public that we needed to prepare in 1980 for the end of the oil age in 2005.



More recently, Michael Moore dedicated an entire chapter "Oils Well That Ends Well" in his book Dude, Where's My Country? to the end of the oil age and subsequent die off.



How will things progress once production peaks?



If you'd like to use history as a guide, I feel the following timeline is a reasonable approximation of what to expect in developed nations such as the United States:



1-5 years post-peak: Major recession comparable to those experienced during the artificially created oil shortages of the 1970's.



5-15 years post-peak: Recession worsens into a second Great Depression.



15-25 years post-peak: Society begins to collapse. Conditions in the United States begin to resemble those in the modern day former U.S.S.R.



25-50 years post-peak: Societal collapse worsens. Conditions in the United States begin to resemble those in modern day Iraq: electrical grid collapse, clean water shortages, super high unemployment, military police state. Many localities begin to resemble modern day third world countries such as Liberia.



50-100 years post-peak: Society begins to stabilize, albeit in a form drastically different than anything most of us have imagined.



If you want an in depth look at how things are likely to progress, read this when you get the chance.



Is it possible that we have already hit Peak Oil and are now in the first stages of the Oil Crash?



Yes. As stated above, we won't know we have hit the Peak until a few years after we hit it. Global oil production has dipped every year since 2000, so it is quite possible we've hit the peak.



Ample evidence exists that we are in the first stages of the Oil Crash. As of 12/03 the "adjusted" unemployment, which has been squeezed out of as much meaning as conceivably possible, still hovers in the 6% range. However, if you factor in the quality of employment, then the real numbers are closer to 12%-15%.



The rolling blackouts experienced in California during Fall 2000, the massive East Coast blackout of August, 2003 and the various other massive blackouts that occurred throughout the world during late summer of 2003, are simply a sign of things to come.



At the Paris Peak Oil Conference in May, 2003, Princeton Professor Kenneth Deffeyes, author of Hubbert's Peak: The Impending World Oil Shortage, explained that Peak Oil actually arrived in 2000 by noting that production has actually been declining since that time.



As further evidence of the production peak, Deffeyes noted that since 2000, there has been a 30% drop in stock values, interest rate cuts have not helped, 2.5 million have become unemployed and the employed have been unable to retire, budget surpluses have vanished, the middle class has vanished, and the World Trade Center has vanished.



If you need more convincing that we are already crashing, just check breaking news.



I just read an article that states that known oil reserves keep growing.



That article is most likely citing the U.S. government agency such as the United States Geological Survey or the Energy Information Agency (EIA). While USGS and EIA reports on past production are largely reliable, their predictions for the future are largely propaganda.



They admit this themselves. For instance, after recently revising oil supply projections upward, the EIA stated:



These adjustments to the estimates are based on non-technical considerations that support domestic supply growth to the levels necessary to meet projected demand levels.



In other words, they predict how much they think we're going to use, and then tell us, "Guess what, nothing to worry about - that is how much we've got!"



We had oil problems back in the 1970's. They were tough, but we got through them. How is this any different?



In 1973, OPEC stopped selling oil to the United States in protest of American support of Israel in the Yom Kippur or Ramadan War. This coincided with the peaking of U.S. domestic oil production. Without a supply of cheap energy, the US economy went into deep recession.



In the 1970's there were other 'swing' oil producers like Venezuela who could step in to fill the supply gap. Once worldwide oil production peaks (if it hasn't already), there won't be any swing producers to fill in the gap.



The oil shocks of the 1970's were like the tremors before an earthquake. The coming crisis is driven by resource constraints, not politics - although of course politics do enter into it.



It is not a temporary interruption but the onset of a permanent new condition. The warning signals have been flying for a long time. They have been plain to see, but the world turned a blind eye, and failed to read the message.



In the future, comparing the oil shortages of the 1970's to the Oil Crash of 2005-2050 will be akin to comparing a fender bender to a head-on collision.



Didn't the Club of Rome make this exact same prediction back in the 70's?



Unfortunately, the Club of Rome turned out to be correct.



Says who? None other than Matthew Simmons, who stated in 2000, "In hindsight, The Club of Rome turned out to be right. We simply wasted 30 important years by ignoring this work."



(scroll down to "Simmons")



The "end of the world" is here, once again. Y2K was supposed to be the end of the world, and it turned out to be much ado about nothing. What's different about this?



What's different is that this is the real thing. It isn't a fire drill. It isn't paranoid hysteria. It is the real deal.



Peak Oil isn't "Y2K Reloaded." In contrast to Peak Oil, Y2K was an "if", not a "when". We know that Peak Oil is going to happen. The only question is at what point between 2004-2010 it will occur, if it hasn't occurred already.



Y2K was "announced" in the early to mid 1990's, a full 5 - 10 years before the problem was to occur. Peak Oil will occur within 1 - 5 years, and we have made no preparations to deal with it. The preparations necessary to deal with the Oil Crash will require a complete overhaul of every aspect of our civilization. This is much more complex than fixing a computer bug.



Furthermore, oil is more fundamental to our existence than anything else, even computers. Had the Y2K predictions come true, our civilization would have been knocked back to 1965. With time, we would have recovered.



When the Oil Crash comes, our civilization is going to get knocked back to 1765. We will not recover, as there is no economically available oil left to discover that would help us recover.