What is Peak Oil?

What is Peak Oil?

by Graham Strouts

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Sometimes known as “Hubberts’ Peak” after the American geologist M.K. Hubbert who accurately predicted the peak in US oil production in 1971, ” Peak Oil” refers to the maximum extraction rate of oil, after which the rate of extraction will decline.

It has been found that the extraction of oil always follows more or less a bell-shaped curve: first the oil is discovered and once it starts to be pumped out, the rate increases steadily until it reaches a peak, after which it becomes impossible to pump at the same rate: production will inexorably decline.

World discovery of oil peaked in 1964 and has been declining ever since, despite considerable improvements in technology, and there is no prospect of any significant new large discoveries. We are currently consuming more than 4 barrels of oil for every one discovered.

It is widely believed that we are now approaching World Oil Peak .

Does this mean that the world is running out of oil? Not exactly. Globally, it is thought that approximately half of all oil that was laid down in the earth has been extracted. We have currently used about 1Trillion barrels of the 2Trillion barrels that was the legacy from geological vents of over 90million years ago.

**So what’s the problem? If it has taken us 150 years to burn the first Trillion barrels, we have plenty left for at least a couple of generations- right?**

It is true that there is still a lot of oil left. The problem is really that we are running out of cheap oil. We have picked the low hanging fruit first and both the quality and accessibility of the remaining oil is declining- fast. The light sweet oil that was near the surface has been largely exhausted , as have the more accessible oil fields. Oil companies are starting to look in ever-more inhospitable environments such as the Arctic , Antarctic and deep seas in the quest for more oil. Drilling in these locations presents extraordinary technical and other difficulties, and we can be sure they would not be there unless there was nowhere else to go.

**So when is the world Oil Peak expected?**

According to the Association for the Study of Peak Oil (ASPO) world oil peak is likely to occur sometime between 2008 and 2010. Some analysts believe we may have already passed the peak and are currently on an uneven plateau. It seems certain however that within a few years, the effects of oil peak will begin to be felt as for the first time in history the amount of available energy in the world begins to decline.

James Howard Kunstler suggests in ” The Long Emergency: Surviving the End of the Oil Age, Climate Change, and Other Converging Catastrophes of the Twenty-first Century” that peak could well be this year judging by the repeated failure of OPEC to control spiralling price increases despite promises of increased output. It would seem that the world’s biggest producer, Saudi Arabia , has no spare capacity. If Saudi Arabia has peaked, then the world must also have peaked.

**What will be the rate of decline?**

ASPO calculate the rate of decline after peak to be about 2% per year. That doesn’t sound to drastic- surely we can make up the shortfall by taking measures to increase energy efficiency and avoid waste?

Energy efficiency and more frugal use of energy are certainly important steps we can take, but if the Peak in production is already upon us, we may be forced to make sudden and abrupt changes to our lifestyles if we are to avoid the worst consequences of oil depletion in a world so heavily dependent on oil for the lions share of its economy, trade, industry and general lifestyle.

**Won’t higher prices just destroy demand and thereby let the market balance the situation out?**

In addition to production steadily increasing through the 20th Century, so has demand. Unfortunately, while production will now start to decline, demand is still growing- faster than ever, with the emergence of both China and India as major new energy consumers entering the market place and looking for their share of the industrial and consumerist lifestyle.

What Peak Oil really means is that there will be a gap between supply and demand. There will be less to go around just as more and more countries want more and more.

Another major factor is that because we live in an economy that demands unending growth, the decline in oil availability will lead to economic recession and, later, depression- a depression we will never come out of because the economy simply cannot grow without a growth in energy.

After Peak Oil, we will be looking at something neither our governments nor economists are preparing us for- a permanently shrinking economy.

**But why cant we just switch to alternatives like solar and wind?**

It takes a while to really let it sink in the truly extraordinary properties of oil which make it effectively irreplaceable by any combination of alternatives. Apart from uranium, oil has the greatest energy density of any other substance known.

One way to understand this is the Energy Return on Energy Invested (EROEI) ratio for any given energy source. In the 1930s, for every unit of energy invested in getting oil, the return was 30 times as much, and in the case of some oil wells in Louisiana , the ratio was a high as 100:1.

Currently, oil is yielding an EROEI of about 8:1 and this will only decline as the remaining reserves become increasingly difficult to obtain. Still, this is far higher a return than anything else- solar photovoltaic cells have apparently yet to break even and all alternatives currently require oil in their manufacture and maintenance, be it high quality steel in windmills or simply keeping the service roads and vehicles going.

Bio diesel would require perhaps all the available agricultural land just to supply petrol at the pumps, but when you consider that it takes 80-90 barrels of oil just to manufacture a car, it becomes clear that alternatives will come nowhere near to making up the shortfall.

The problem is that not just that we need more energy than we can get , but that we have created a society that depends very largely on a particular kind of energy. We are dependent on oil because of its versatility, liquidity -which makes it easy to move around- and also because we can make so many things out of it, including plastics and asphalt for our roads. We wont be powering the vast fleets of international air transport on wind power. And we wont be repairing roads with sunbeams.

**What else can we expect after oil peak?**

It is not just higher prices at the pumps that will indicate a looming energy crises. The more you look into it, the more it becomes apparent that nearly everything we do in the modern world is predicated on an unending availability of cheap fossil fuels.

This includes even the most basic commodities like food. In the modern world, the average food item has travelled between 1000 and 1500 miles before it arrives on our plates. For every 1 calorie of energy in our food we have burned 10 calories of fossil fuel energy in farm machinery, fertiliser, pesticides and packaging. If you want a definition of “unsustainable”, there it is. This situation simply cannot continue, and one of the most pressing responses we need to make is to start growing our food closer to home using organic and low-energy intensive methods.

In fact, the use of fossil fuels to produce food is the single most important factor in the rapid explosion in the human population since the industrial era began. In the 1850s, world population was only about 1.7billion. Now it is over 6.5billion but with food production also peaking and under serious threat from energy decline, we can only speculate as to what may be the likely population levels 50 years from now.

**What about Hydrogen? I just read that the world’s first hydrogen powered motorbike has just been produced.**

Hydrogen is not an energy source but and energy store- all you need is water and electricity, but the electricity has to be produced from conventional sources of energy. At present, most Hydrogen is created from natural gas which is itself likely to peak in production a few years after oil- and unlike oil, will fall very sharply since the nature of a gas is that it can be extracted more completely than liquids like oil. The last thing the world needs is a new user of natural gas. Furthermore, it must be remembered that the world’s infrastructure is built to run on the properties of oil such as ease of transport. It will be no easy task to refit everything to run off a different form of energy, especially something as volatile and hard to transport as hydrogen. It would cost far too much and take far too long.

For these reasons, the dream of a new, clean “Hydrogen Economy” is likely to remain just that- a dream.

**What about coal? Both China and the US have vast reserves of coal.**

That is true, but if we started using coal as a replacement for oil we would soon find ourselves in a “Peak Coal” situation. Coal shares some of the difficulties with oil in that the good quality coal is already in short supply and thus the EROEI is declining rapidly. Coal extraction involves a huge human and environmental cost that also makes it unsustainable- and again, we wont easily be able to convert the world’s 500 million internal combustion engines to run on coal.

**What about Nuclear? There are reports of new breeds of fail-safe reactors.**

Even if nuclear power were a safe option- and the record of the nuclear industry thus far is lamentable- we would need ultimately thousands more nuclear power stations to replace the energy we get from oil and this would require an enormous capital investment- and energy investment. There is a time-lapse of 10-20years from drawing board to energy production from nuclear power and we may be entering a world of energy descent within the next 5 years or les. There simply won’t be the spare capacity to build the power stations. Not only that, but uranium is itself a depleting resource, mined and transported at great environmental cost and risk, that will deplete all the more rapidly if we use it to replace fossil fuels.

But surely we have the ingenuity to find alternatives to oil in some combination of wind or solar, or invent some new form of energy?
The bottom line is, it will take at least 20-30 years to switch over to any new or alternative energy resource, and we wont have the time or the spare capacity to do so. Blackouts and energy shortages such as effected millions of people across the NE United States in 2002 are increasingly likely as of now, and as I write this, more reports of escalating oil prices are reported on the radio. Technology has never invented a new source of energy; it has only devised new ways to use energy. The whole fabric of what we know of as “the modern world” has been woven from cheap oil, and we are soon going to find that this world is going to change dramatically and in ways we can as yet scarcely contemplate as we begin to run out. Many analysts see the US invasion of Iraq as only the first blow of what could become globally escalating resource wars for the last remaining oil supplies. In Ireland , social relations could be severely strained and shortages and soaring prices could mean queuing at petrol stations and unaffordable heating bills for many. Unemployment may increase and ultimately there may be a shortage of basic commodities such as food as the economic relationships of world trade begin to break down with the unavailability of oil.

**This sounds all very gloom and doom. No one is going to listen to you unless you give us some good news!**

The first thing to remember is that Peak Oil is a geological reality. It is not just a fantasy created by negative thinking. In fact , quite the reverse- the biggest problem is that few people are aware of the wider issues and would rather not know, perhaps. Everyone wants to believe we can continue with business as usual.

The real issue is not about the amount of energy per se but what we want do we want the energy for? How much do we really need? What will we use energy for if we have it? And do we need an economic system that requires unending growth which itself requires endlessly more energy?

Now is a golden opportunity to ask these deeper questions about the kind of society we want to live in. There is abundant evidence that simply more growth, more money and more energy will not bring us a higher quality of life or more fulfilment. For example, Elizabeth Cullen in the Feasta Review published earlier this year has shown that there was little increase in happiness or satisfaction during the Celtic Tiger years, and that many negative indicators such as poverty in old age, the gap between rich and poor, male suicide and alcohol consumption increased in parallel with a growing economy.

The good news is that Peak Oil also presents an unrivalled opportunity to embrace the reality that environmentalist have known for over 40 years- that the Industrial Growth Society is unsustainable and therefore will inevitably come to an end. Like Communism, the Capitalist system has not fulfilled its promise. In a word, it is a failed system. We now have a window of opportunity to implement ideas and structures that do not rely on an endless supply of cheap oil but can provide a high quality of life that is socially just and ecologically sustainable.

**Sounds good. What will we have to do to achieve this?**

There are things we can all do right now to move towards a sustainable world. Invest in alternative technologies, reduce dependency on the electricity grid, cycle or walk rather than drive, try to create work nearer to where you live, make efforts to provide more of your basic needs of shelter, heating and food production closer to home and within your own communities. There are already many initiatives around the world trying to create locally self-reliant communities. One method is that proposed by permaculture – a system of design that models human settlements on natural processes and attempts to find benign and sustainable ways to harvest the suns energy to meet our needs.

The main changes we need to effect are a move away from globalization towards local economies that value and preserve their own stores of natural capital- such as local food supplies, traditional skills, trees and woodlands, the practices of good land use and urban design. Peak Oil presents an enormous challenge to us all, but if we respond now we may yet be looking forward to a more harmonious future .

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Peak Oil Reality: Discoveries & Production Won’t Match Future Demand

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Click here to see the list of countries that are past peak oil production