Peak Oil

I don't recall ever hearing the term 'Peak Oil' until today.

I came across an odd sounding link yesterday, http://www.lifeaftertheoilcrash.net/. I opened it up in a new tab in FireFox and didn't bother looking at it until today. The title of the article that we find at this address is Peak Oil: Life After the Oil Crash and it starts out:

Dear Reader,
Civilization as we know it is coming to an end soon...

I'm sure I laughed when I read that line. My normal inclination towards 'doom & gloom' preaching on the internet is to quickly move on to something more interesting, something more relevant, something you know... real. For some reason I read on today. I suppose stream of conscience thinking caught hold: Oil... Oil, gas. Gas prices... Why are gas prices so freaking high these days? OK, maybe I will check this out...

I ended up reading the entire article.

The premise is simple, the conclusions astounding (and disturbing). The piece is well-written, rational and well-documented throughout. This guy could definitely be on to something. Something big. Something revolutionary in every conceivable way.

So, what is the Peak Oil phenomenon anyway? It is really quite simple, but not something one tends to generally take time to consider. Not me anyway. Here it is:

Oil is increasingly plentiful on the upslope of the bell curve, increasingly scarce and expensive on the down slope. The peak of the curve coincides with the point at which the endowment of oil has been 50 percent depleted. Once the peak is passed, oil production begins to go down while cost begins to go up.

Well, that's obvious right? I mean we all know that there is only so much oil in the world and when production starts dropping the price is going to go up. What's the big deal? So I have to pay more for gas. So what? I'm going to get one of those hydrogen cars someday anyway...

Unfortunately the effects are much more dramatic then simply paying more at the pump:

The issue is not one of "running out" [of oil] so much as it is not having enough to keep our economy running... A shortfall between demand and supply as little as 10-15 percent is enough to wholly shatter an oil-dependent economy and reduce its citizenry to poverty.

The effects of even a small drop in production can be devastating. For instance, during the 1970s oil shocks, shortfalls in production as small as 5% caused the price of oil to nearly quadruple. The same thing happened in California a few years ago with natural gas: a production drop of less than 5% caused prices to skyrocket by 400%.

Fortunately, previous price shocks were only temporary.

Did that grab your attention? I know it caught mine when I read it. A 5% drop caused prices to go up 400%?! Incredible! And, that's not just gas prices we're talking about here, oil plays a role in virtually every aspect of our economy. Plastics; transportation; medicine; agriculture (think pesticides); you name it... Our economy isn't based on cash, that is only a convenient medium of exchange--our economy is based on energy. Energy that is almost exclusively derived from oil production. Once the global peak is passed and production starts falling off, there's no going back. Meanwhile, demand for oil here and abroad continues to increase at an amazing rate. Sounds like a bad situation no matter how you look at it.

The really astounding thing to me about the article was this fellow's source material. It appears that everybody is talking about this potential crisis--from oil companies, investors, scientist, to Dick Cheney and President Bush--—and yet no one is talking about it! Where is the mainstream media? They are off chasing the bird flu I guess.

I should not be surprised at how thorough the article is, the author is a lawyer, he knows how to build a case and as he states--with evidence like this it wasn't hard to do.

The questions that are raised by this piece are numerous:

• Have we hit the peak of world oil production yet, are we on the downward slope of the production curve? If not, when will it occur?
• Isn't this all just a bit hysterical? I mean, we all (those of us who were around) remember the commercials with the little kid telling us that by the time he grew up there wouldn't be any oil left so we'd better start conserving. That kid is what, forty by now? Isn't this just more of the same?
• Hmm, this sounds like the Y2K scare, that was all hype right? [Wrong! A different crisis altogether. Averted, but it certainly wasn't all hype. I know how much my company spent on fixing the issue before the deadline, compound that the world over and it wasn't quite the non-event everyone happily thinks it was. Or it was simply because billions were spent to fix it at any rate.] What's the difference?
• Who cares anyway? We all know oil is on the way out and the new energy technologies will be ready to take over when it's gone, right?
• Does the government know about this?
• What do they say about it?
• Do they care? Do they have a plan?
• Hey, what are we supposed to do about it if this guy is right?

My suggestion is, read the article. All of it. Check out the links within the article to his source material--find out who's talking about this (I think you will be amazed). Read the responses critical to the theory (and the responses to those responses! ;-). Do your own research. Make up your own mind.

One thing is certain, oil reserves will not last forever. It is a finite resource. At the very least this is probably something that should be looked in to, something that shouldn't be ignored...

PS A coincidence of interest to me as I write this: Technorati today lists numerous folks blogging about the news that the worlds second largest oil field has peaked and is now in decline...

Update 15 November 2005, 1:35am:
Oh this is nice... The Wikipedia page for Peak Oil informs us, "Chevron has launched the Will You Join Us? ad campaign, seeking to inform the public to the possibility of oil depletion and encourage discussion." There they lay out the case for us (and this from an oil company!):

Energy will be one of the defining issues of this century. One thing is clear: the era of easy oil is over. What we do next will determine how well we meet the energy needs of the entire world in this century and beyond. [emphasis mine]

And, for further encouragement there is a lovely little counter zipping along in the page with the caption, "Global oil and gas consumption during this visit." I've only been on that page long enough to get the quotes. Take a look...



This counter is based on statistical data and is obviously meant to dramatize this for us visually. But think about it. Over two million barrels consumed in just a matter of a couple of minutes? Wow. Disregarding the shock value, this is still pretty amazing, IMO.

With China and India on the verge of becoming the next major economic super powers--competing with us for energy resources along with everything else--I can't imagine what the oil demand is going to be like in the coming years. Obviously, whether or not we have hit the global peak yet, energy really is going to be a (possibly 'the') defining geopolitical issue of this century, as Chevron indicated...

Update 15 November 2005, 7:33pm:
I was thinking about a recent interview with Ray Kurzweil. He has a new book out that proposes dramatic expectations for the future with regards to nanotechnology & AI and the convergence of these technologies with human beings. I wondered what his take would be on Peak Oil since a lack of oil would most certainly put a very big damper on his incredible views of our technological future. It may take a while and a bit of searching before I find the answer to this question. In the meantime one of his sites links to a Nanotech article, Molecular Manufacturing vs. Peak Oil. The solution proposed is as dramatic as the problem it presumes to solve:

If corporate and national politics delay admissions of trouble until the signs are unmistakable, or if the Peak Oil camp is even close to right about a peak as early as 2008, then we could have just a few years in which to design and ramp up a new trillion-dollar infrastructure. The only way to do this without severe economic pain is large-scale, general-purpose, exponential manufacturing. And the only technology that appears to fit the bill is molecular manufacturing of the mechanosynthetic variety.

This appears to be a fairly strong argument for early development of advanced molecular manufacturing.

Regardless of whether or not nanotechnology could provide the solution to this apparently looming crisis, there is at least one thing all parties seem to agree on--there is an extremely limited amount of time in which to transfrom our massive infrastructure to utilize alternate energy resources should signs of a slip in oil production begin to surface, and demand for oil begins to overcome the supply...