As Americans prepare to launch their Memorial Day weekend travels, they are staring gas prices of $4 a gallon squarely in their collective face. Is it now the arrival of Peak Oil? That point, long predicted, where oil production peaks and it’s all downhill from now on?
The signs are not sanguine. T. Boone Pickens, quoted in The Financial Times - May 21, (‘Oil Futures Near $140 Amid fears of Shortage’) page 1A, asserts we are now at the point where demand for oil is 87 billion barrels a day, while only 85 billion can be produced. This is acknowledging Peak Oil by any other name. Meanwhile, in The Wall Street Journal of May 22, there appeared the article ‘Energy Watchdog Warns of Oil-Production Crunch’ (p. A1)
The piece noted that the world’s “premier energy monitor” is preparing a sharp downward revision of its oil supply forecasts. The full formal report will be ready by November, but already word is afoot that it will point to global oil supplies plateauing even as demand continues.
The article also notes (p. A12):
“A growing number of people in the industry are endorsing a version of the ‘peak oil’ theory: that oil production will plateau in coming years, as suppliers fail to replace depleted fields with enough fresh ones to boost overall output.”
The skinny right now is that the IEA will forecast as much as a 12.5 billion barrel a day shortfall by 2015. This will certainly surge oil prices to probably well over $600 a barrel and at least $8 per gallon (or what Europeans are now paying) at the pump. Most Peak Oil signifiers pitch its entry at $7 a gallon.
What does Peak Oil mean? And is there anything that can be done to mitigate it?
The problem is not that difficult to break down.
The planet was endowed with ~ 3,000 billion barrels of oil – of which we’ve consumed one third and another one sixth of relatively cheap oil remains, after there will reside another third of “break-even” oil (costs as much to access as it delivers), after which one -sixth of very expensive oil remains (costs much more to reach it than it deliver in energy).
At the heart of these considerations is the net energy eqn. (cf. Weisz, in Physics Today, July, 2004, p. 51)
Q (net) = Q (PR) – [Q (op) + E/T]
In effect, for break-even oil one would find Q(net) = 0
Thus, there is no net gain in energy given the quantity that must be used to obtain it.
For the last 700 billion barrels,
Q(net) = negative quantity = -Q
since the rate of energy production (Q (PR) must be debited by the energy consumed for its operation Q(op), and the energy E invested during its “lifetime” T
Thus its Q(PR) will be small in relation to the bracketed quantity.
In a similar vein, Robert Heinberg (‘The Party’s Over’) uses the quantity EROEI or ‘Energy returned on energy invested’ which for oil reached a high of 30 (ratio) in the 70s and is still the highest of all energy sources at around 22.
Thus, the problem in a nutshell is not “running out of oil’ but running out of CHEAP oil.
Bottom line, we need not run out of the stuff before the world economy runs into problems of untold, unspeakable proportions!
“Peak Oil’ is somewhat misleading a term, since it suggests a specific date of peak production. In the real world, the top part of the oil production curve is nearly flat (cf. A. Bartlett, Physics Today, op. cit. p. 54)
In more practical terms – what it means is that if 2008 is the year of peak oil production then the worldwide oil production in 2028 will be the SAME as in 1988, demanding that Q(net) > 0.
Also, it means that production in 2048 will be the same as 1968, and 2068 will be the same as 1948, and 2088 will be the same as 1928! All this while the population is expected to reach 9 billion or more in the SAME PERIOD! (cf. Bartlett, ibid.) In other words, as time goes on the available accessible oil constantly diminishes even as population constantly rises with the same demands.
Geologist Marion King Hubbert predicted U.S. oil production would peak around 1970 p which it did (at 2.2 liters per person per day). He also predicted world production would peak around 1995, which it would have – had the severe OPEC-induced oil crises not created an artificial supply problem in 1973, thereby pushing this critical peak back 10 years (to 2005, meaning we’d be three years past Peak oil by now).
Wildly optimistic dates have predicted that 2020-2035 will the “true” date, but as Matt Savinar points out (‘Life After the Oil Crash’ p. 7), these are all based on government agencies “that admit cooking their books” – just like they do the unemployment stats (by dropping all those off the unemployment rolls who’ve been out of work longer than six months)
Jon Thompson, company president for Exxon-Mobil, in a 2003 paper posted on the Exxon-Mobil Exploration website (ibid.) noted more realistically:
“By 2015 we will need to find, develop and produce a volume of new oil equal to EIGHT out of every TEN barrels produced today. In addition, the cost of this new oil is expected to be CONSIDERABLY more than is now spent.”
Thus, he acknowledges the global peak production would have to have taken place before 2015! In other words – a peak occurring either in 2005 or any year after, even now, is perfectly consistent with his projection.
Next: Are other factors operating to mimic Peak Oil?