Wednesday, January 09, 2008

Oil : The Times they are a Peaking

Have you calculated your annual carbon footprint? For those of you getting around to it, I’m reposting the links:

DirectGov’t’s Carbon Calculator

There’s another reason why we need to reduce our dependency on fossil fuels, aside from warming the planet and endangering the biosphere. We may be entering a new era – one in which the price of oil and natural gas is increasingly expensive.

On January 2nd the price of a barrel of oil reached $100 not seen since 1980 during the Iran-Iraq war. In response, gas retailers hiked their prices and some consumers drove away without paying - as if the increase was an affront to their right to drive.

What these thieving drivers don’t seem to realize (or care) is that this so-called ‘right’ is completely unsustainable. Here’s why (aside from the fact that it’s warming the planet and endangering the biosphere):

  • The demand for oil and natural gas has spiked dramatically due to the insatiable demand from rising countries like China and India.
  • Regions that contain the bulk of sweet crude have become increasingly hostile to the West and a number of extreme weather events, such as Hurricane Katrina, have hampered oil refinery production.
  • Oil and natural gas production may have peaked.

Peak Oil

Very few people talk about the phenomenon known as Peak Oil or Hubbard’s Peak. I find this fascinating and disturbing. It’s reminiscent of the time up until a year ago when global warming was not on the radar. While the scientific community was in agreement that climate change represented a grave threat, very few wanted to listen.

Very soon Peak Oil will make headlines.

M. King Hubbard

In 1956, M. King Hubbard, a renowned geologist and employee of Shell, made an announcement to his colleagues that seemed so preposterous at the time it created an uproar and subsequently damaged his career.

Based on his assessments, Hubbard predicted that American oil production would peak at some point between 1966 and 1971. By peak, he meant that half of all the oil buried in the US would be extracted by that time. In other words, from the 1870s when oil was first drilled in Pennsylvania to the late 1960s the US would have used up half the oil under American soil.

This situation doesn’t sound problematic. It is. Or was. You see, at the time when Hubbard made his prediction, America had enough oil to satisfy its energy needs. Geologists, oilmen, politicians and everyone else thought that this great bounty of cheap energy would last and last and last and last some more. Any talk that the crude would dwindle was…well un-American.

1966 came along and America still had oil to spare. In 1967 Israel defeated Egypt in the Six-Day war. The Saudis orchestrated an embargo against countries, including the US, that supported Israel. The sanctions failed because the US had enough oil to satisfy demand.

Then came 1973. During the fall of that year Israel defeated Egypt and Syria in the Yom Kippur war, thanks in part to American support. In retaliation, OPEC, led by the Saudis, issued oil sanctions against the US. Suddenly, Americans found themselves in long line ups at gas bars, discussing energy conservation and struggling with an economic tummy upset. And the reason….

Oil production in the US peaked in 1970. It maxed out at 11.7 barrels per day and it would never produce that much ever again.

From then on, OPEC called the shots. The US became more and more dependent on foreign oil to meet consumer demand. That’s why we have snapshots of Donald Rumsfeld shaking hands with Saddam Hussein in the 1980s and why the US became very very good friends with the Saudi Royal Family. Saudi Arabia is home to the largest pools of oil in the world. Or was home to the largest pools. Their resources, like everyone’s, are depleting. It also explains the Iraq war, but well, you get the picture.

Peak Oil is a Bell

Peak Oil is illustrated as a bell curve with the top of the bell representing the ‘peak’ and the rising curve representing an era of sweet crude – the easy to get at stuff or cheap oil. The descending curve represents oil that is difficult to access and therefore more expensive. It is a time of volatility. As prices increase, demand decreases as people embrace conservation. The price drops, demand increases and on it goes. But there will be a time when the cost of extracting oil is greater than its value. When it costs a dollar to extract a dollar worth of oil or natural gas, oil companies will walk away. It won’t matter if there are pools of oil left. If they are too expensive to access, they won’t be touched. There is strong indication that natural gas will peak soon as well.

The global economy depends on cheap fuel. In fact, cheap fuel is its life blood. You think I’m exaggerating? Consider this. Cheap oil is responsible for all of our transportation – bringing all that cheap clothing, food, toys, cars, electronics, furniture, knick knacks, you name it to our favourite big box stores. We drive to the big box stores from the suburbs where most of us reside, usually in big houses heated by cheap fuel. Petroleum is in the fertilizers and pesticides that make possible industrial farming and processed food. And let’s not forget plastic, that wonderful petroleum by-product that is in most things we own. Petroleum is also present in our pharmaceutical drugs on which so many seem dependant.

Fossil fuel is currently the only source for electricity. As it stands, right now, renewable energy depends on cheap oil to be manufactured. Renewables such as photovoltaic panels rely on batteries to store energy. Batteries currently depend on fossil fuel for their existence. Of course, we still have plenty of coal, but that’s the dirtiest fossil fuel and quite effective in warming and polluting the planet.

The End of Cheap Oil

Will we benefit from the end of fossil fuel? Absolutely. It will solve our warming problem, get us out of the Middle East and, if weaned off in time, lead to renewable energy sources that will no longer depend on fossil fuel for development.

The problem is timing. There have been various predictions regarding the peaking of global oil production. Some calculate between the years 2000 and 2008. Others give us until 2030. Keep in mind the last time an oil field of substance was discovered was in the 1960s. No other discovery of this sort has been made since then. The Alberta Oil Sands? The tar sands represent the expensive and difficult to get at oil. In terms of world consumption, the sands will satisfy about 10% of world demand. And for this Alberta is undermining its pristine ecosystems and making its communities sick.

When fossil fuel peaks so begins diminishing supply in the face of hungry demand. It’s the start of a very bumpy ride that could lead to a terrible economic depression. The question will be: how do we best use the diminishing supplies? To fuel more wars to secure limited oil? Or do we focus on renewable energy to support greatly scaled down consumption?

What Can You Do?

  • Learn all you can about Peak Oil
  • Make your home as energy efficient as possible. Conserve electricity.
  • Wean yourself off your car. Don’t be dependent on it.
    Wean yourself off flying and piggy consumption. Scale down.
  • If you are buying a house, pick one near public transit routes and amenities. Avoid the suburbs.
  • Learn to grow your own vegetables and fruits. Connect with other gardeners to learn and share.
  • Get to know your neigbours.
  • Support your local economy.
  • Invest in a solar oven and barbecue, and devices to hang up your laundry.
  • Look into renewable energy options for your home.
  • Start buying gold.


The Association for the Study of Peak Oil & Gas

The Oil Depletion Analysis Centre

Post Carbon Institute

In the News

Federal report calls for carbon tax, trading in Canada

China bans plastic shopping bags
Toronto considers ways to reduce plastic bags. Click here to learn more.

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