(Survival Manual/1. Disaster/ Hubbert’s Peak Oil and The Hirsch report)
(The Hubbert peak theory posits that for any given geographical area, from an individual oil-producing region to the planet as a whole, the rate of petroleum production tends to follow a bell-shaped curve. It is one of the primary theories on peak oil.)
I. BACK IN THE 1950s
they saw it coming, we knew what it meant, it was ignored.
A. M. King Hubbert – the first to predict an oil peak
In the 1950s the well known U.S. geologist M. King Hubbert was working for Shell Oil. He noted that oil discoveries, graphed over time, tended to follow a bell shape curve. He supposed that the rate of oil production would follow a similar curve, now known as the Hubbert Curve. In 1956 Hubbert predicted that production from the US lower 48 states would peak between 1965 and 1970.
Despite efforts from his employer to pressure him into not making his projections public, the notoriously stubborn Hubbert did so anyway. In any case, most people inside and outside the industry quickly dismissed the predictions. As it happens, the US lower 48 oil production did peak in 1970/1.
In that year, by definition, US oil producers had never produced as much oil, and Hubbert’s predictions were a fading memory. The peak was only acknowledged with the benefit of several years of hindsight.
No oil producing region fits the bell shaped curve exactly because production is dependent on various geological, economic and political factors, but the Hubbert Curve remains a powerful predictive tool.
In retrospect, the U.S. oil peak might be seen as the most significant geopolitical event of the mid to late 20th Century, creating the conditions for the energy crises of the 1970s, leading to far greater U.S. strategic emphasis on controlling foreign sources of oil, and spelling the beginning of the end of the status of the U.S. as the world’s major creditor nation. The U.S. of course, was able to import oil from elsewhere. Mounting debt has allowed life to continue in the U.S. with only minimal interruption so far. When global oil production peaks, the implications will be felt far more widely, and with much more force.
What does peak oil mean for our societies?
Our industrial societies and our financial systems were built on the assumption of continual growth – growth based on ever more readily available cheap fossil fuels. Oil in particular is the most convenient and multi-purposed of these fossil fuels. Oil currently accounts for about 41% of the world’s total fossil fuel consumption, 33% of all global fuel consumption, and 95% of global energy used for transportation.
Oil and gas are feed stocks for plastics, paints, pharmaceuticals, fertilizers, electronic components, tires and much more.
Oil is so important that the peak will have vast implications across the realms of war and geopolitics, medicine, culture, transport and trade, economic stability and food production. Significantly, for every one joule of food consumed in the United States, around 10 joules of fossil fuel energy have been used to produce it.
B. The ‘Hirsch Report’
A U.S. Dept. of Energy commissioned study “Peaking of World Oil Production: Impacts, Mitigation and Risk Management” [PDF] was released in early 2005. Prepared by Science Applications International Corporation (SAIC), it is known commonly as the Hirsch Report after its primary author Robert L. Hirsch. For many months the report, although available on the website of a Californian High School, remained unacknowledged by the DOE.
The executive summary of the report warns that: as peaking is approached, liquid fuel prices and price volatility will increase dramatically, and, without timely mitigation, the economic, social, and political costs will be unprecedented. Viable mitigation options exist on both the supply and demand sides, but to have substantial impact, they must be initiated more than a decade in advance of peaking.
A later paper by Hirsch recommends the world urgently begin spending $1 trillion per year in crash programs for at least a decade, preferably two, before peaking. Obviously, nothing like the kind of efforts envisaged have yet begun. Hirsch was not asked to speculate on when the peak was likely to occur.
[In retrospect, the peak ocurred between 2000-2005; by 2011 we have quietly entered the decline phase. Although the West is in a double dip recession, gas prices have only slightly declined. Asian markets are absorbing production. Western commercial petroleum bulk storage is the lowest in years, while production cannot rebuild stocks to capacity. Its slow, its quiet. Who’s upset, yet? -Mr Larry]
C. The Olduvai Theory
The theory is a proposed way of measuring industrial civilization by a single ratio – world annual energy use to population. The important idea is that, unlike previous civilizations which have risen and fallen to be replaced by others, industrial civilization would be the last because we would have used up all the easily obtainable resources (oil, coal, minerals) which are necessary for a civilization to form.
The theory is defined by the ratio of world energy production (use) and world population. The details are worked out. The theory is easy. It states that the life expectancy of Industrial Civilization is less than or equal to 100 years: 1930–2030.
World energy production per capita from 1945 to 1973 grew at a breakneck speed of 3.45%/year. Next from 1973 to the all-time peak in 1979, it slowed to a sluggish 0.64%/year. Then suddenly – and for the first time in history – energy production per capita took a long-term decline of 0.33%/year from 1979 to 1999. The Olduvai theory explains the 1979 peak and the subsequent decline. More to the point, it says that energy production per capita will fall to its 1930 value by 2030, thus giving Industrial Civilization a lifetime of less than or equal to 100 years.
The chart above is a graphic showing energy usage/population as a curve with various key points defined. These are:
Note 1: (1930) the beginning of Industrial Civilization
Note 2: (1979) all time peak of world energy production per capita
Note 3: (1999) the end of cheap oil
Note 4: (2000) eruption of violence in the Middle East
Note 5: (2006) all-time peak in world oil production
Note 6: (2008) OPEC crossover when more than 50% of oil comes from the OPEC nations
Note 7: (2012) permanent blackouts spread worldwide
Note 8: (2030) world energy production falls to 1930 level
The future dates may vary but it is easy to see how, with the knowledge we have of peak oil, the world could slip into a Medieval or even Stone Age scenario. Even a Dark Ages world would be difficult to sustain with no coal and little wood to burn. We are so dependent on energy that, unless we find some alternatives to hydrocarbon energy generation pretty quickly, we will find ourselves without the time or energy to switch.
Four Stages of Oil Depletion Through 2020
A. World Oil and Natural Gas Liquids Production & Changes in each stage
Stage 1 (Now to end of 2011): World conventional crude oil and NGL production (CO&NGL) which is currently at 82 mbpd will remain stable with slight decline to 81 mbpd.
Continued economic stagnation with possible weak recovery, continued high unemployment will put little pressure on oil prices; gas prices will be generally stable. Non-OPEC production will begin to all off. Oil at $75 to $90 bbl; Gas at the pump in Dobbs Ferry $2.90 to $3.20.
Stage 2 (2012): Decline will accelerate in 2012 to 80 mbpd. Prices rises will become more pronounced, but still not seen as an emergency.
Global production fall off by end of year gets attention, markets respond with higher prices. Oil at $100 to $120 bbl; Gas at the pump in Dobbs Ferry $3.30 to $3.70. Economy continues to bump along in recession mode.
Stage 3 (2013 to 2015): Decline will be rapid in 2013 – 2015 with world production at 75 mbpd for CO&NGL by end of 2015.
Increasing fall off in production gets serious, news reports start talking about various causes — bad government policy, global conspiracy, return of “Drill, Baby, Drill”. Airlines cut back drastically as air travel becomes expensive. Demand for fuel-efficient cars soars. Government establishes crash programs to conserve, develop alternatives. Economy in terrible shape. By 2015 oil at $150 bbl; Gas at the pump at $6.00 to $10.00.
Stage 4 (2016 to 2020): by 2020 production will be 62 mbpd. Impossible to really estimate what prices will be. Life as we know it will be a memory.
Economy in shambles, oil prices continue higher.
By 2020 oil at $250+ bbl; Gas at the pump, when available, $15+.
B. What will life be like once oil goes into decline. Here are a few things to expect.
1. Near Term Impact
__a) Continued economic decline with high unemployment. Without oil to fuel manufacturing, transportation, and food production, the only possible result is economic decline. Unemployment will continue to be high until people realize that they have no choice but to work for far less than they ever expected. Many of the unemployed will find work in agriculture as reliance on oil fueled machinery declines.
__b) Stagnant or declining stock market. Economic decline will inevitably impact the stock market and, as a result, the retirement savings of millions of Americans.
__c) Population move to urban areas/decline of suburbs. Who will want to (or be able to) live in a 4,000 square foot home 40 miles or more from work? The value of suburban housing (especially big houses) will decline as people try to get closer to urban centers and mass transit. Expect housing abandonment of the type already seen in California.
__d) Decline in construction, more people living together. As real income declines and construction costs increase, people will not be able to afford the square footage of living space they have become accustomed to. The migration from suburb to urban area, without additional construction, will mean more roommates, boarders, and houses cut up for rental.
__e) Air travel only for the rich. This is a no brainer. The airline industry is already in contraction. It won’t take much higher oil prices to push it over the edge.
__f) International trade declines.
__g) Deterioration of infrastructure as government revenues dry up.
__h) Increases in all prices — especially food and fuel.
__i) International conflict over remaining oil resources.
__j) Attempts by government to retain current lifestyle will fail and cause huge deficits, decline of currency.
__k) Solid waste disposal
2. Longer Term Impact
__a) more long distance transportation.
__b) Life becomes entirely local.
__c) Government breakdown.
__d) Social unrest.
__e) Population decline.
__f) Land becomes the main source of wealth.
III. Preparing for Life in a Peak Oil World
23 January 2011, Oil Price.com, by Gail Tverberg
“We know that peak oil will be here soon, and we feel like we should be doing something. But what? It is frustrating to know where to start. In this chapter, we will discuss a few ideas about what we as individuals can do.
1. What will the first few years after peak oil be like? It is hard to know for certain, but a reasonable guess is that the impact will be like a major recession or depression. Many people will be laid off from work.
• Gasoline is likely to be very expensive ($10 a gallon or more) and may not be available, except in limited quantities after waiting in line for a long time. Fewer goods of all types will be available in stores. Imports from third-world countries are likely to be especially unavailable, because of the impact of the oil shortage on their economies.
[Internet image right: Sanyo Enloop AA rechargeable batteries]
• Gasoline prices may not rise as high as $10 gallon; the problem may be that at lower prices than $10 gallon, oil prices send the economy into recession. There may actually be a glut of oil supply because of recession or depression, because many cannot afford the high priced oil. For example, state highway departments cannot afford high priced asphalt. This is related to low “energy return on energy invested”. If the goods and services made with oil aren’t great enough to justify its high price, high oil price can be expected to send the economy into recession. Countries that use a lot of oil for purposes other than creating new goods and services are likely to be especially vulnerable to recession.
• Money may not have the same value as previously–opinion is divided as to whether deflation or rampant inflation will be a problem. Investments, even those previously considered safe, are likely to lose value. Things we take for granted–like bottled water, fast food restaurants, and dry cleaners–may disappear fairly quickly. Electricity may become less reliable, with more frequent outages. Airplane tickets are likely to be extremely expensive, or only available with a special permit based on need.
2. If a scenario like this is coming, what can a person do now? Here are a few ideas:
• Visit family and friends now, especially those at a distance. This may be more difficult to do in the future.
• Learn to know your neighbors. It is likely that you will need each other’s help more in the future.
• If you live by yourself, consider moving in with friends or relatives. In tough times, it is better to have others to rely on. It is also likely to be a lot cheaper.
• Buy a bicycle that you can use as alternate transportation, if the need arises.
• Start walking or jogging for exercise. Get yourself in good enough physical condition that you could walk a few miles if you needed to.
• Take care of your physical health. If you need dental work or new glasses, get them. Don’t put off immunizations and other preventive medicine. These may be more difficult to get, or more expensive, later.
• Move to a walkable neighborhood. If it seems likely that you will be able to keep your job, move closer to your job.
• Trade in your car for one with better mileage. If you have a SUV, you can probably sell it at a better price now than in the future. [Internet image right: Mitsubishi or another make of small electric car.]
• If you have two cars powered by gasoline, consider trading one for a diesel-powered vehicle. That way, if gasoline (or diesel) is not available, you will still have one car you can drive.
• Make sure that you have at least a two-week supply of food and water, if there is some sort of supply disruption. It is always good to have some extra for an emergency–the likelihood of one arising is greater now.
• Keep reasonable supplies of things you may need in an emergency–good walking shoes, boots, coats, rain wear, blankets, flashlights and batteries (or wind-up flashlights).
• Take up hobbies that you will be able to continue in a low energy world, such as gardening, knitting, playing a musical instrument, bird watching, or playing cards with neighbors.
• Join a local sustainability group or “permaculture” group and start learning about sustainable gardening methods.
3. Do I need to do more than these things? It really depends on how much worse things get, and how quickly. If major services like electricity and water remain in place for many years, and if gasoline and diesel remain reasonably available, then relatively simple steps will go a long way.
Some steps that might be helpful to add once the crunch comes include:
• Join a carpool for work, or make arrangements to work at home. If public transportation is available, use it.
• Cut out unnecessary trips. Eat meals at home. Take your lunch to work. Walk or jog in your neighborhood rather than driving to the gym. Order from the internet or buy from stores you can walk to, rather than driving alone to stores.
• If you live a distance from shopping, consider forming a neighborhood carpool for grocery and other shopping. Do this for other trips as well, such as attending church. If closer alternatives are available, consider them instead.
• Plant a garden in your yard. Put in fruit or nut trees. Make a compost pile, and use it in your garden. Put to use what you learned in sustainability or permaculture groups.
• Meat, particularly beef, is likely to be very expensive. Learn to prepare meals using less meat. Make casseroles like your grandmother’s, making a small amount of meat go a long way. Or make soup using a little meat plus vegetables or beans.
• Use hand-me-down clothing for younger children. Or have a neighborhood garage sale, and trade clothing with others near you.
4. Should families continue to have two, three, or four children, as they often do today? With the uncertainties ahead, it would be much better if families were very small–one child, or none at all. The world’s population has grown rapidly in the last 100 years. Part of the reason for growth is the fact that with oil and natural gas, it was possible to grow much more food than in the past. As we lose the use of these fossil fuels, it is likely that we will not be able to produce as much food as in the past, because of reduced ability to irrigate crops, and reduced availability of fertilizers, insecticides, and herbicides. In addition, manufactured goods of all types, including clothing and toys, are likely to be less available, with declining fossil fuel supply. Having smaller families will help fit the population to the available resources.
If couples have completed their families, it would probably be worthwhile for them to consider a permanent method of contraception, since birth control may be less available or more expensive.
5. Are there any reasons why steps such as those outlined in Question 3 might be too little to handle the problem? Besides the decline in oil production, there are a number of other areas of concern. Hopefully, most of these will never happen, or if they do happen, will not occur for several years. If they do happen, greater measures than those outlined in Question 3 are likely to be needed.
• Collapse of the financial system. Our financial system needs growth to sustain it, so that loans can be paid back with interest. Once peak oil hits, growth will be gone. Economic growth may even be replaced with economic decline. It is not clear our financial system can handle this.
• Collapse of foreign trade. Many factors may come into play: The cost of transportation will be higher. Airline transport may not be available at all. Fewer goods are likely to be produced by the poorer countries of the world, because of power outages related to high oil prices. Rapid inflation/deflation may make monetary transactions more difficult.
• Rapid climate change. Recently, scientists have discovered that climate change can take place over a very short period of time–as little as a decade or two. Temperature and precipitation changes may cause crop failures, and may make some areas no longer arable. Sea levels may also rise.
[Image right: Hot water and photovoltiac collectors on the roof of a private residence.]
• Failure of the electrical grid. The grid tends to be vulnerable to many kinds of problems–including deterioration due to poor maintenance, damage during storms, and attacks in times of civil unrest. Maintenance is currently very poor (grade of D) according to the “Report Card on America’s Infrastructure” by the American Society of Civil Engineers. If we cannot maintain the grid, and upgrade it for the new wind and solar capacity being added, we will all be in the dark.
• Water shortages. There are several issues–We are drawing down some aquifers at unsustainable rates, and these may be depleted. Climate change may reduce the amount of water available, by melting ice caps and changing storm patterns. City water and sewer systems require considerable energy inputs to continue functioning. If these are not provided, the systems will stop. Finally, systems must also be adequately maintained–something that is neglected currently.
• Road deterioration. If we don’t have roads, it doesn’t matter whether we have cars. In the future, asphalt (a petroleum product) is expected to become more and more expensive and less available. It is not clear whether recycling asphalt from lesser-used roads will overcome this difficulty.
• Decline in North American natural gas production. Natural gas is especially used for home heating, making plastics and making fertilizer. It is also used in electrical generation, particularly for extra load capacity when demand is high. Conventional natural gas is declining, and it is not clear that supply from other sources can make up the gap.
We now have shale gas and other unconventional making up the gap, but there are uncertainties how long it will stay with us.
• Inadequate mineral supplies. A number of minerals are becoming less available, including copper (used in electric wiring), platinum (used in catalytic converters), phosphorous (used in fertilizer).
• Fighting over available supplies. This could happen at any level. Individuals with inadequate food or gasoline may begin using violence. Or there may be fighting among groups within a nation, or between nations.
6. Are there any reasons for optimism? Yes. We know that people throughout the ages have gotten along successfully with far fewer resources than we have now, and with much less foreign trade. Financial systems have gotten into trouble in the past, and eventually new systems have replaced them. If nothing else, barter works.
We know that among the countries of the world, the United States, Canada, and Russia have reasonably good resource endowments in relation to their populations. They have fairly large amounts of land for crops, moderate rainfall, reasonable amounts of fossil fuels remaining, and populations that are not excessively large.
We also know that Cuba successfully made a transition from high oil usage to much lower oil usage, through the development of local gardens, increased public transit, and bicycles. A movie has been made about the Cuban experience.
7. What should we do, if we want to do more than described in Question 3? Some web sites (such as Life After the Oil Crash and wtdwtshtf.com) advocate moving to a farming area, buying land and hand tools, and learning to farm without fossil fuels. Typically, an individual purchases an existing farmhouse and adds solar panels or a windmill. The web sites generally recommend storing up large supplies of food, clothing, medicine, tools, guns, and ammunition, and learning a wide range of skills. These sites also suggest storing some things (liquor, razor blades, aspirin, etc.) for purposes of barter.
This approach may work for a few people, but it has its drawbacks. Making such a big move is likely to be expensive, and will most likely involve leaving one’s job. The individual will be alone, so security may be a problem. The individual may be dependent on his or her own resources for most things, especially if the farm is in a remote location. If the weather is bad, crops may fail. Living on the edge of a small town may prevent some problems, but such a move would still be a major undertaking.
8. How about Ecovillages? What are they? These are communities dedicated to the idea of sustainable living. These communities were set up in response to many issues facing the world, including global warming, resource depletion, and lifestyles that are not fulfilling. They were generally not formed with peak oil in mind.
Each ecovillage is different. Organizers often buy a large plot of land and lay out a plan for it. Individuals buy into the organization. Homes may be made from sustainable materials, such as bales of straw. Gardening is generally done using “permaculture”- a sustainable organic approach. Individuals may have assigned roles in the community.
The few ecovillages I investigated did not seem to truly be sustainable–they bought much of their food and clothing from outside, and made money by selling tours of their facilities. The ecovilliage approach could theoretically be expanded to provide self-sustaining post-peak oil communities, but would require some work. Some adventuresome readers may want to try this approach.
9. Is there a middle ground? What should people be doing now, if they want to do more than outlined in Questions 2 and 3, but aren’t ready to immerse themselves in a new lifestyle?
As a middle ground, people need to start thinking seriously about how to maintain their own food and water security, and start taking steps in that direction.
a) Food security. We certainly hope our current system of agriculture will continue without interruption, but there is no guarantee of this. Our current method is very productive, but uses huge amounts of energy. If we can keep our current system going, its productivity would likely be higher than that of a large number of individual gardens. The concern is that eventually the current system may break down due to reduced oil supply and need to be supplemented. Vulnerabilities include:
• Making hybrid seed, and transporting it to farmers
• Getting diesel fuel to the farmers who need it
• Transporting food to processing centers by truck
• Creating processed food in energy-intensive factories
• Making boxes and other containers for food
• Transporting processed food to market
[Internet image: Example of a way to grocery shop: Topeak trolley tote folding basket with groceries…also indicating that your home is located nearby a shopping district.]
If diesel fuel is allocated by high price alone, farmers may not be able to afford fuel, and may drop out. Or truck drivers may not be able to get what they need.
It is in our best interest to have a back-up plan. The one most often suggested is growing gardens in our yards–even front yards. Another choice is encouraging local farms, so that transportation is less of an issue. It takes several years to get everything working well (new skills learned, fruit trees to reach maturity), so we need to start early.
One type of crop that is particularly important is grain, since grain provides a lot of calories and stores well. In some parts of the country, potatoes might be a good substitute. It would be good if people started planting grain in gardens in their yards. There is a lot to learn in order to do this, including learning which grains grow well, how much moisture and nutrients the grains need, and how to process them. If the grain that grows well is unfamiliar, like amaranth, there is also a need to learn how to use it in cooking.
Individuals (or local farms) should also begin growing other foods that grow well in their areas, including fruits and nuts, greens of various types, and other more traditional garden crops, including beans. For all types of gardening, non-hybrids seeds (sometimes called heirloom seeds) are probably best for several reasons:
• It makes storing seeds after harvest possible, and reduces dependence on hybrid seeds.
• There is less uniformity, so the harvest is spread over a longer period.
• The reduced uniformity also helps prevent crop failure in years with drought or excessive rain. Some seeds will not grow, but others will. (Hybrids are all or nothing.)
Imported foods are likely to shrink in supply more quickly than other foods. If you live in a country that is dependent on imported foods, you may want to consider moving elsewhere. [Farmers Market sales as seen in the picture above will not feed a community much less a city. Such sales seems to provide some sort of fuzzy safety net. The veggies look so clean and healthy, but they are not an arithmatic solution (in lbs/person/year), but things could change, as they did in Cuba and North Korea, when the people got hungry. The problem is, following a crisis you have to ‘make do’ throught the next planting season to it harvest before the hopeful crop increase is realized.]
b) Water Security. Here, the largest issue is whether there is likely to be sufficient supply in your area. Another issue is whether there will be sufficient water for your garden, at appropriate times. A third issue is whether there will be disruptions in general, because of poor maintenance or because the process of treating fresh water (and sewage) is energy-intensive.
With respect to sufficient water in your area, if it looks like there is a problem (desert Southwest, for example), relocating now rather than later is probably a good idea. Transporting water is energy intensive, and new efforts at developing energy (like shale oil or more ethanol) are likely to make the water supply situation even worse.
With respect to water for gardening, consider a rainwater catchment system for your roof. Runoff water is saved in barrels, and can be used for irrigation in dry periods.
General disruptions of water supply are more difficult. Keep some bottled water on hand. You may also want to consider a tank for greater storage supply. Rainwater catchment can be used for drinking water, with the correct type of roofing (not asphalt shingles!) and proper treatment, but this is not generally legal in the United States.
10. What kind of investments should I be making? A person’s first priority should be buying at least a little protection for a rainy day – some extra food and water, comfortable clothing, blankets and flashlights. I suggested two weeks’ worth in Question 2. If you have money and space, you may want to buy more.
Paying down debt is probably a good idea, if only for the peace of mind it brings. There are some possible scenarios where debt is not a problem (hyper-inflation but you keep your existing job and get a raise). In many other scenarios (deflation; job lay-offs; rising food and energy prices) debt is likely to be even harder to pay off than it is now.
Land for a garden is probably a good investment, as well as garden tools. You will want to invest in gardening equipment, some books on permaculture, and perhaps some heirloom seeds. You may also want to consider a rainwater catchment system, to collect water from your roof.
You may also want to invest in solar panels for your home. If you want round-the-clock solar energy, you will also need back-up batteries. Buying these is questionable–they tend to be very expensive, require lots of maintenance, and need to be replaced often.
There is a possibility that the financial system will run into difficulty in the not-too-distant future. Some ideas for investments that may protect against this are
• Treasury Inflation-Protected Securities (TIPS). [At 69 years of age I recieve Social Security, its suppose to ‘inflation protected’. With the price of every thng going up at the store, doctor’s office and gas station, we haven’t received a COLA raise in two years. I’m afraid TIPS investors will conveniently
encounter the same non inflationary ‘protection.-Mr. Larry]
• Bank accounts protected by the FDIC [Where FDIC means– some of the same folks that brought us here today.]
• Gold coins
• Silver coins
If you want to invest in the stock market, we know that there will be more and more drilling done for oil and gas done in the next few years, so companies making drilling equipment are likely to do well. Small independent oil and gas companies may also do well, doing “work-over” business. We know that there are likely to be shortages in some metals in the years ahead (copper, platinum, uranium), so shares in companies mining these types of metals may do well.
Investments in biofuels should be considered with caution. Most ethanol from corn appears to be heavily dependent on subsidies. If it should ever have to compete with other fuels on a level playing ground, it is likely to do poorly.
I would be cautious about buying insurance policies, except for short-term needs such as automobile coverage, homeowners coverage, and term life insurance. If we encounter a period of significant deflation, insurance companies are likely to fail, because bondholders cannot pay their debt. If we run into a period of rapid inflation, the life insurance or long term care coverage you buy may have very little real value when you come to use it.
11. Should I move to a different location? There are many reasons you might want to consider moving to a different location:
• To find something less expensive. If times are going to be difficult, you do not want to be paying most of your income on a mortgage or rent.
• To be closer to friends or family, in the difficult times ahead.
• To share a house or apartment with friends or family.
• To be closer to work or public transportation.
• To be closer to a type of employment that you believe will have a better chance of continuing in the future.
• To have better fresh water supplies.
• To join a community with similar interests in sustainability.
• To leave a community that you feel may be prone to violence, in time of shortage.
There are disadvantages as well as advantages to moving to a new location. If many others are trying to move at the same time, you may not be welcome in the new community. You will likely not have friends and the support group you would have had in your prior location. Because of these issues, it is probably better to move sooner, rather than later, if you are going to move. If you balance the pluses and the minuses, it may be better to stay where you are.
12. We hear a lot about various things we can do to be “green”, like buying fluorescent light bulbs. Do these save oil? Most of the “green” ideas you read about save energy of some kind, but not necessarily oil. Even so, they are still a good idea. If there is a shortage of one type of energy, it tends to affect other types of energy as well. Doing “green” things is also helpful from a global warming perspective. Here are some green ideas besides using fluorescent light bulbs:
• Move to a smaller house or apartment.
• Insulate your house, and have it professionally sealed to keep out drafts.
• If any rooms are unused, do not heat and cool them.
• Keep your house warmer in summer, and cooler in winter.
• If you no longer need a big refrigerator, buy a smaller one. Be sure it is an “Energy Star” refrigerator.
• If you have more than one refrigerator, get rid of the extra(s). Refrigerators are a big source of energy use. For parties, use ice in a tub.
• Separate freezers are also big energy users. Consider doing without.
• Eat less meat. Also avoid highly processed foods and bottled water. All of these require large amounts of energy for production.
• Get power strips and turn off appliances that drain energy when not in use.
• Turn off lights that are not needed.
• Rewire lights into smaller “banks”, so you do not need to light up the whole basement when all you want is light in a small corner.
• Get a clothes line, so you do not need to use your clothes dryer.
• When cooking, use the microwave whenever possible.
• Reduce air travel to a minimum. Air travel results in a huge number of miles of travel with corresponding fuel use.
• Recycle whenever you can.
• Eliminate disposables as much as possible (coffee cups, napkins, plastic bags, etc.)
13. Should we be talking to our local government officials about these problems? Yes! At the local level, there are many changes that would be helpful:
• Laws permitting people to put up clothes lines in their yards.
• Laws encouraging gardens to be grown, even in the front yards of homes.
• Laws permitting multiple occupancy of houses by unrelated individuals.
• New local public transportation plans, particularly ones that do not require large outlay of funds. For example, a plan that is more like a glorified car pool might work.
• Allocation of funds to study the best crops to be grown in the area, and the best cultivation methods, if energy supplies are much lower in the future.
• It would also be helpful to make changes at higher levels of government, but these are beyond the scope of the discussion in this chapter.”
“The phrase, ‘consent of the governed’ has been turned into a cruel joke. There is no way to vote against the interests of Goldman Sachs. Civil disobedience is the only tool we have left.” —Chris Hedges
IV. Where we’ve been, where we are
The world is rapidly approaching Peak Oil production and will be at an inflection point soon, if not already, after which, real prices will begin a long rise. Price inflection is possible before the next economic recovery, but will certainly come with a recovery, which will then be short lived, because rising energy prices will channel money away from other discretionary expenditures. For the last two years (2009-2010), the USA and Europe have been in recession with lower oil requirements, which have skewered the following 2007 chart by extending the plateau top and pushing the ‘decline in production slope’ (with subsequent increase in prices) into the future another couple years past the original 2007 projection.
Whether we are out of the recession or not by 2015 (within 4 years from now), production declines and the resultant rise in petroleum prices will probably have become an unpleasant factor in our national and personal, financial lives. On Saturday, 4 Sep 2010, FinancialSense.com weekly, ‘News Hour’ podcast, gave leads to the Peak Oil reports listed below. These articles seem to be telling a story, a story which has not yet been shared to any degree with the American people by either the US Government or the news media. Furthermore, there are almost monthly reports being issued by responsible, main stream institutions in Europe, the USA and the Middle East.
As I write, northern Europe is advancing on a program to greatly reduce their fossil fuel dependence; its estimated that in 10 years, by 2020, 20% of Europe’s energy, not just its electricity, will be derived from renewables.
What is happening in the United States? Nothing significant that I’ve heard, seen or read about. Maybe the government is waiting for a Peak Oil–Pearl Harbor type crisis to create a popular mandate for action, as opposed to making plans and choosing an intelligent path while there is time and opportunity to implement and mass test renewable systems.
The energy transition from one type energy to an alternative, historically, only happens about once per century and does so with momentous consequences. We will begin to move away from fossil fuels quite rapidly from here on forward. Business, families and individuals who can adapt to the charge and manage risk will gain an advantage with the shrinking energy pie. [Mr. Larry]
1) February 2010: UK Industry Taskforce on Peak Oil and Energy Security (ITPOES) study on peak oil was released: “Business calls for urgent action on ‘oil crunch’ threat to UK economy
London, 10 February, 2010: A group of leading business people today call for urgent action to prepare the UK for Peak Oil. The second report of the UK Industry Taskforce on Peak Oil and Energy Security (ITPOES) finds that oil shortages, insecurity of supply and price volatility will destabilize economic, political and social activity, potentially by 2015. This means an end to the era of cheap oil.
• Taskforce warns Britain is unprepared for significant risk to companies and consumers
• Poorest to be hit hardest by price rises for travel, food, heating and consumer goods
• New policies must be priority for whoever wins the General Election
• Recommended packages include legislation, new technologies and behavior-change incentives
• Fundamental change in demand patterns triggered by emerging economy countries
2) March 2010: Telegraph.Co.UK, “Oil reserves ‘exaggerated by one third’
The world’s oil reserves have been exaggerated by up to a third, according to Sir David King, the Government’s former chief scientist, who has warned of shortages and price spikes within years.
Published: 9:51PM GMT 22 Mar 2010, by Rowena Mason, City Reporter (Energy)
“The scientists and researchers from Oxford University argue that official figures are inflated because member countries of the oil cartel, OPEC, over-reported reserves in the 1980s when competing for global market share.
Their new research argues that estimates of conventional reserves should be downgraded from 1,150bn to 1,350bn barrels to between 850bn and 900bn barrels and claims that demand may outstrip supply as early as 2014. The researchers claim it is an open secret that OPEC is likely to have inflated its reserves, but that the International Energy Agency (IEA), BP, the Energy Information Administration and World Oil do not take this into account in their statistics.
It’s critically important that reserves have been overstated, and if you take this into account, we’re talking supply not meeting demand in 2014-2015.”
Dr Oliver Inderwildi, who co-wrote the paper with Sir David and Nick Owen for Oxford University’s Smith School, believes radical measures such as switching freight transport to airships could become common in future.
“The belief that alternative fuels such as biofuels could mitigate oil supply shortages and eventually replace fossil fuels is a pie in the sky. Instead of relying on those silver bullet solutions, we have to make better use of the remaining resources by improving efficiency.”
3) March 2010: A heatingoil.com, Kuwait University and Kuwait Oil Company– Peak Oil report
Kuwaiti Researchers Predict Peak Oil Production in 2014
March 10, 2010, by Josh Garrett
“A new study published in the journal, Energy & Fuels, predicts that world conventional oil production will hit its peak in the year 2014. The study, undertaken by researchers at Kuwait University and Kuwait Oil Company (their chart shown above), looked at oil production in the top 47 oil-producing nations and found that humanity has extracted about 54 percent of total world oil reserves and that conventional oil production will reach its peak of 79 million stock tank barrels per day (an industry term, abbreviated as STB, that refers to the number of barrels of crude oil successfully extracted and “treated”) in about four years.
The study began with the Hubbert forecast model, named for peak oil pioneer M. King Hubbert, who successfully predicted that crude oil production in the US would peak in 1970. Though proven to be a useful tool in predicting peak oil, the Hubbert model has limitations when applied to more complex and diverse oil production methods and measures of the 21st century. The Kuwaiti researchers accounted for those limitations in the study, and also allowed for updates of their findings as new oil production data becomes available.
It should be noted that the study, no matter how sound its methods, reports exclusively on conventional oil (liquid crude that can be extracted from the ground relatively cheaply), and in doing so paints an incomplete picture of world oil supplies and the expected arrival of peak oil production.
(Note: If the study were to include data on unconventional sources such as Canada’s tar sands and oil shale deposits of the American West, the supply figures would grow substantially and the date of peak production would likely be pushed forward by at least a decade or two. However, because the technology and costs associated with extraction of unconventional oil vary widely and face an extremely uncertain future, it is logical that the study excludes unconventional oil figures.)
The more prepared governments and citizens are for any supply declines that could lead to rapid price increases in consumer fuels like heating oil, diesel, and gasoline, the less disruptive those increases will be to our daily lives.”
“Very few metro regions, cities or businesses are prepared for the impact of the global peak oil issue on their economies, or finances, operating budgets and mobility.
Cities, households and the economy will be impacted, as will industries. Some industries will be hurt (agriculture, retail, petrochemicals) and some sectors could be positively impacted (smart growth planners, alternative transportation providers, “smart city” technology providers, alternative fuel producers, mixed-use and infill developers)
Whether it’s bonafide peaking of global oil supplies, or a short- to medium-term “oil crunch,” the initial result will be the same. Rapidly rising gas prices and price instability should become evident by 2013, or even earlier if there are any supply shocks because of natural disasters (hurricanes in Gulf), political events, war and terrorists acts.
The most obvious area of impact of rising oil prices is transportation and mobility. During the gas price rises of 2006-2008, U.S. citizens turned to public transportation in record numbers. Light rail ridership was the biggest winner, as was an old and reliable form of gas-free transportation, the bicycle.
The biggest losers: SUVs (RIP Hummer) and personal automotive use. Across the nation, people substantially reduced their driving for the first time in decades, particularly in metro areas that had other mobility options.”
4) April 2010: guardian.co.uk, “US military warns oil output may dip causing massive shortages by 2015” by Terry Macalister
“The US military has warned that surplus oil production capacity could disappear within two years and there could be serious shortages by 2015 with a significant economic and political impact.
The energy crisis outlined in a Joint Operating Environment report from the US Joint Forces Command, comes as the price of petrol in Britain reaches record levels and the cost of crude is predicted to soon top $100 a barrel.
“By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 million barrels per day,” says the report, which has a foreword by a senior commander, General James N. Mattis. It adds: “While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. Such an economic slowdown would exacerbate other unresolved tensions, push fragile and failing states further down the path toward collapse, and perhaps have serious economic impact on both China and India.”
• Shortfall could reach 10 million barrels a day, report says
• Cost of crude oil is predicted to top $100 a barrel
The US military says ‘its views cannot be taken as US government policy’, but admits they are meant to provide the Joint Forces with “an intellectual foundation upon which we will construct the concept to guide out future force developments.”
The warning is the latest in a series from around the world that has turned peak oil – the moment when demand exceeds supply – from a distant threat to a more immediate risk.
Future fuel supplies are of acute importance to the US Army because it is believed to be the biggest single user of petrol in the world. BP chief executive, Tony Hayward, said recently that there was little chance of crude from the carbon-heavy Canadian tar sands being banned in America because the US military like to have local supplies rather than rely on the politically unstable Middle East.
But there are signs that the US Department of Energy might also be changing its stance on peak oil. In a recent interview with French newspaper, Le Monde, Glen Sweetnam, main oil adviser to the Obama administration, admitted that “a chance exists that we may experience a decline” of world liquid fuels production between 2011 and 2015 if the investment was not forthcoming.
“It’s surprising to see that the US Army, unlike the US Department of Energy, publicly warns of major oil shortages in the near-term. “The Energy Information Administration (of the Department Of Energy) has been saying for years that Peak Oil was “decades away”. In light of the report from the US Joint Forces Command, is the EIA still confident of its previous highly optimistic conclusions?”
The Joint Operating Environment report paints a bleak picture of what can happen on occasions when there is serious economic upheaval. “One should not forget that the Great Depression spawned a number of totalitarian regimes that sought economic prosperity for their nations by ruthless conquest,” it points out. From
5) June 2010: Guardian.co.uk, news article posted 11 July 2010, “Lloyd’s adds its voice to dire ‘peak oil’ warnings”, by Terry Macalister
“Business underestimating catastrophic consequences of declining oil, says Lloyd’s of London/Chatham House report. One of the City’s most respected institutions has warned of “catastrophic consequences” for businesses that fail to prepare for a world of increasing oil scarcity and a lower carbon economy.
The Lloyd’s insurance market and the highly regarded Royal Institute of International Affairs, known as Chatham House, says Britain needs to be ready for “peak oil” and disrupted energy supplies at a time of soaring fuel demand in China and India, constraints on production caused by the BP oil spill and political moves to cut CO2 to halt global warming.
“Companies which are able to take advantage of this new energy reality will increase both their resilience and competitiveness. Failure to do so could lead to expensive and potentially catastrophic consequences,” says the Lloyd’s and Chatham House report “Sustainable energy security: strategic risks and opportunities for business”.
The insurance market has a major interest in preparedness to counter climate change because of the fear of rising insurance claims related to property damage and business disruption. The review is groundbreaking because it comes from the heart of the City and contains the kind of dire warnings that are more associated with environmental groups or others accused by critics of resorting to hype. It takes a pot shot at the International Energy Agency which has been under fire for apparently under-estimating the threats, noting: “IEA expectations [on crude output] over the last decade have generally gone unmet.”
The report the world is heading for a global oil supply crunch and high prices owing to insufficient investment in oil production plus a rebound in global demand following recession. It repeats warning from Professor Paul Stevens, a former economist from Dundee University, at an earlier Chatham House conference that lack of oil by 2013 could force the price of crude above $200 (£130) a barrel.
It also quotes from a US department of energy report highlighting the economic chaos that would result from declining oil production as global demand continued to rise, recommending a crash programme to overhaul the transport system. “Even before we reach peak oil,” says the Lloyd’s report, “we could witness an oil supply crunch because of increased Asian demand. Major new investment in energy takes 10-15 years from the initial investment to first production, and to date we have not seen the amount of new projects that would supply the projected increase in demand.”
And while the world is gradually moving to new kinds of clean energy technologies the insurance market warns that there could be shortages of earth metals and other raw materials needed to help them thrive. From
6) August 2010: Spiegal Online International, posted 4 September 2010, “German Military Study Warns of a Potentially Drastic Oil Crisis“, by Stefan Schultz
“A study by a German military think tank has analyzed how “peak oil” might change the global economy. The internal draft document — leaked on the Internet — shows for the first time how carefully the German government has considered a potential energy crisis.
The study is a product of the Future Analysis department of the Bundeswehr Transformation Center, a think tank tasked with fixing a direction for the German military. The team of authors, led by Lieutenant Colonel Thomas Will, uses sometimes-dramatic language to depict the consequences of an irreversible depletion of raw materials. It warns of shifts in the global balance of power, of the formation of new relationships based on interdependency, of a decline in importance of the western industrial nations, of the “total collapse of the markets” and of serious political and economic crises.
The news report from Spiegal Online was specific about their study’s socio-economic findings, pointing out that:
1. “Shortages in the supply of vital goods could arise as a result, for example in food supplies.
2. Oil is used directly or indirectly in the production of 95% of all industrial goods.
3. Price shocks could therefore be seen in almost any industry and throughout all stages of the industrial supply chain.
4. In the medium term the global economic system and every market-oriented national economy would collapse.…
5. (Relapse into planned economy) Since virtually all economic sectors rely heavily on oil, peak oil could lead to a partial or complete failure of markets. A conceivable alternative would be government rationing and the allocation of important goods or the setting of production schedules and other short-term coercive measures to replace market-based mechanisms in times of crisis….
6. (Global chain reaction) A restructuring of oil supplies will not be equally possible in all regions before the onset of peak oil. It is likely that a large number of states will not be in a position to make the necessary investments in time, or with sufficient magnitude.
7. If there were economic crashes in some regions of the world, Germany could be affected. Germany would not escape the crises of other countries, because it’s so tightly integrated into the global economy….”
8. The Bundeswehr study also raises fears for the survival of democracy itself. Parts of the population could perceive the upheaval triggered by peak oil “as a general systemic crisis.” This would create “room for ideological and extremist alternatives to existing forms of government….”
V. The economy of extracting the last half of the oil
6th June 2010, MI2G, “Beyond Oil: Beginning of A New Era?”, London, UK
As the marginal cost of extracting oil has risen ever higher, it has been a red rag to the investment bulls seeking a return. Given that the risk profile of extracting that extra barrel of oil has now grown exponentially, this is likely to act as a new deterrent. The risks are rising much faster than previously anticipated as we approach peak oil.
The inertia which has set in amongst governments, businesses and the investment community in regard to preserving the status quo is going to be knocked sideways by the Gulf oil spill and as the costs of the cleanup mount, it will become imperative to invest in cleaner and safer forms of energy. The change in direction will ultimately be driven by a forced change in our collective value system. The end of oil-dependency is likely to mark the end of an era for the globalised western civilization’s model of oil-centric capitalism. If we survive, the age of oil will be followed by an age of recovery, restoration and a return to local generation of power through alternative means. What does the future look like without oil-dependency? Cleaner forms of energy are likely to proliferate. The possibility of a world in balance with natural resources, clean air, clean water, and with the natural environment, is like a shining light at the end of a dark tunnel.
If the problems were only the current recession, we’d muddle through and eventually it would end; if it were a matter of too much personal and national debt, we’d still muddle through, after increasing taxes and fees on everything and decade or so of unusually high inflation; if the problem were only Peak Oil, we’d muddle through, but with a sense of nervous urgency. However, combining, the recession, massive multi levels of debt and Peak oil is going to be taxing (pun intended), economically and socially exhausting.
It appears that global socio-economic systems are working their way deeper into a period of increasing stress. If there were no other major exogenous events to hit humanity over the next 5-10 years, we could probably pull off a global Manhattan type project of converting to renewable resources. An expansion of the ‘renewable energy’ paradigm would fuel manufacturing employment and consumer spending, banks would loan money, and for a short while there would be an economic boom, until the fallout from Peak Oil caught up. Our conversion from Oil to ‘renewables’ will not be fast enough to make up for the coming price hike in petroleum products. Look for the race from oil to renewables to be a ‘diminishing returns’ scenario, the more renewables we adopt, the higher energy prices go. Why? Because the problem is time related, we are starting too late to mitigate the coming Peak Oil price hikes.
So, even with the recession, massive debt and a late start at converting to renewable, we could with higher taxes and prices, come through with the current system intact, but jarred. Under these conditions the global economic system will be tight, there is little if any economic slack as we move forward through the recession toward Peak Oil. If an unexpected calamity arises, that could very well be the straw that breaks the camel’s back, resulting in serious, wide ranging population ‘hardships’.
[The term ‘hardships’ can cover a lot of unpleasant ground! Think about it. Name 10 inconveniences that could arise in your life from a national calamity, then throw in 10 unknowns you didn’t expect. Mr. Larry]
VI. Energy: Shell’s future scenarios – Staring into energy’s black hole
6 Jul 2008, Author: Tobias Webb
Shell’s “energy scenarios” see fossil fuels remaining a huge part of the energy mix to 2050. And if Shell is right, what does it mean for the planet’s future?
1. Scramble scenerio
Under the Scramble scenario, the current and future “flight to coal” as a relatively cheap energy source cannot last forever. According to Bentham, in this scenario, around the mid part of the decade (ca 2014-2016) comes “a triple squeeze” in energy. This is made up of the logistical difficulties of having to move growing volumes of coal around the world. At the same time, conventional oil and gas supplies are likely to plateau because of a lack of investment and for “political issues” (shorthand for oil nationalism or a lack of big oil company interests in major projects).
These two factors could lead to the “demand levers being pulled rapidly”, Bentham said, and knee-jerk reactions by governments, such as reducing car speed limits to save on fuel use, decommissioning inefficient power plants quickly, and changing building regulations. All this, needless to say, is set to make the world a volatile place.
In Shell’s Scramble scenario, second generation (non-food sourced) biofuels will grow rapidly from 2020 onwards. Meanwhile, renewable energy sources, such as wind and solar, will see local growth but will not yet be able to compete with conventional energy in size and scale. The economic conditions of the 2020s will encourage further renewables growth, Shell says, and renewable energy will “rebound” by the end of that decade. The flip side will be that only by then will serious action be likely on global carbon prices as climate change related weather events begin to be blamed on a lack of action during the world’s previous dash to coal sources for energy. This rather paints a bleak picture for the future for environmentalists and, indeed, anyone else.
2. Blueprints scenerio
Shell believes that its Blueprints scenario presents a much more positive picture. While the company does not believe that achieving a global balance of 450ppm of CO2 by 2050 or earlier is remotely feasible, Shell says that global energy demand can be met by less-polluting sources than fossil fuels, and can be reduced significantly by technology, driven by both regulation and collaboration between governments.
Bentham spoke of the “political reality” of climate change as a key driver for this scenario of collaboration on energy use. He cited two key examples: the law passed in California in 2006 which mandated a cap-and-trade carbon emissions trading system by 2012; and the recent attempts by politicians in Australia to distance themselves from their nation’s past recalcitrant attitude to the Kyoto Protocol and carbon dioxide emissions regulation.
The Californian approach has influenced other US states, Bentham said, noting that in the US, climate change is now “a Federal issue”, with both US presidential candidates saying that they take the threat seriously. Bentham said that the C40 group of cities around the world, which is sharing best practices on transport management and infrastructure development across borders, in both developed and developing economies, is another example of an emerging consensus around the need for collaboration to tackle energy and climate concerns.
Developing countries such as China, and their citizens, are also increasingly concerned about environmental issues and this may drive change towards cleaner economies much faster than in the past, Bentham claimed. China has far more UN-approved clean development mechanism greenhouse gas reduction projects than any other nation.
By 2012 to 2015, under the Blueprints scenario, Bentham thinks that we might see “a critical mass of carbon pricing being applied to a critical mass of sectors in a critical mass of countries”. While this rollout is not global, it begins to influence the choices that people are making in investments. This encourages technological progress such as carbon capture and storage by 2020, and vehicle electrification – by 2050 around 40 per cent of all ‘vehicle miles’ are electric under this scenario. National approaches begin to be harmonized, such as around carbon pricing. This encourages energy efficiency and wind power, while helping electric vehicles come to mass market in the 2020s.
CO2 emissions rise, plateau and then fall by around 2050, under Blueprints. Shell believes that there is no one solution to the global energy and climate conundrum, and that, according to Bentham: “Any technology that is going to be deployed at global scale in the next 50 years is already out of the laboratory.” It’s all about policy and incentive choices, he concluded, “the next five years are crucial”.
3. A third scenario: no fossil fuels
So what do others make of Shell’s predictions and dire warnings about the future of climate change and energy? Opinions are mixed.
“Shell is living in la la land,” says Mark Lynas, author of climate disaster bestseller Six Degrees: Our Future on a Hotter Planet. “They are constructing scenarios where they continue to be relevant as a fossil fuel company.” Lynas points out that the climate crisis is so serious that what he calls the “real world” will not tolerate such a high carbon vision of energy for 2050. “The whole scenario process should be about figuring out realistic outcomes and planning for them, whereas what Shell seems to be doing is deciding what they would most like to happen, and writing it down,” he says, calling Shell’s scenarios a “political exercise”.
Shell’s view that stabilizing global carbon emissions at 450 ppm is unrealistic is “totally irresponsible”, says Lynas. “If we don’t stabilize at way below 450 ppm we’ll see irreversible climate change with several tipping points being crossed as a result,” he argues. “They are obviously saying that the world can go fry and that their profits must come first.” Lynas believes that despite oil company claims that they can innovate around the frameworks set by politicians and prosper in a low-carbon world, the current large energy majors will eventually die off, as newer, hungrier firms replace them with what he calls “disruptive” energy technology.
David Strahan, author of The Last Oil Shock, says Shell’s best case analysis – Blueprints – is a “fairly disastrous scenario, because (by their estimation) coal is getting bigger as we go up to 2050”. Strahan notes that NASA’s Jim Hanson believes that if the planet managed to eliminate the emissions from coal-fired power stations by either closing them or capturing all the carbon, then “we squeak in at around 440 parts per million” of CO2. “What’s interesting about [what] Shell [is] saying [is] that it’s the end of the planet” if they are right, Strahan claims.
The carbon capture dream
Carbon capture and storage (CCS) is still largely wishful thinking, Lynas agrees. Right now only a tiny number of pilot projects exist around the world, with none being commercially viable. He is in favor of an upstream cap-and-trade system for carbon, which he says is “much easier to manage than regulating emissions” and should be discussed further. Under upstream trading systems, carbon is measured before consumers can become responsible for emitting it and effectively taxed heavily, creating energy efficiency and renewable energy investment incentives across the board.
While Lynas believes there is sufficient technology to decarbonizes power generation by 2050, he thinks it will have to come from renewable sources, with even nuclear a possibility, rather than from fossil fuels. He estimates that future scenarios should factor in a carbon price of €200-€300 a ton to make renewable energy power generation and transportation a reality by 2050. “We need to eliminate coal from the energy mix,” he says, noting that “nuclear may be a good option for China and India”.
“I think the scenarios are a good way of focusing policy makers’ attention on the progress we need to make,” says King. But she notes soberly that even with the considerable co-operation and technology implementation envisaged in Shell’s more positive Blueprints scenario: “We would not deliver the reductions that the climate science indicates we need. It is a useful reminder of the size of the challenge and the urgency.”
A bleak message in many ways, but one that Shell appears increasingly comfortable offering – both as a wake-up call to others and to reassure shareholders of the company’s place in the future, after the firm was rocked in 2004 by a massive reserves accounting scandal and struggles to replace oil reserves.
Perhaps the most alarming two facts to emerge from Shell’s scenario planning are the uncertainty around predictions of future energy supply and the potential, or lack of it, of carbon capture and storage technology. No-one knows exactly when “peak oil” – the moment when more of the planet’s oil is out of the ground than left in it – will be reached and what the ramifications for global economics, unrest and politics will be.
Secondly, while many banks and energy firms say 2020 is the earliest when carbon capture and storage will be rolled out, the technology is still at its earliest stages. Unless massive investment in renewable energy is made over the next five to ten years, and if CCS is unable to decarbonize power generation from fossil fuels relatively quickly and on a commercially viable basis, the world will be short of low-carbon power options.
The fight between industry, with their hopeful ideas of carbon capture and storage technology, and those that want to see the whole planet shifting to renewable energy in the next two decades shows no signs of abating.
The peak oil problem
Shell predicts that global oil production will peak around 2020. But the company neatly side-steps the debate in its scenarios by predicting in both the Scramble and Blueprints scenarios that the decline rate of global production will be virtually negligible up to 2040.
David Strahan is surprised that Shell’s oil peak estimation is now 2020. “I haven’t heard them say that before,” he says. The world has already reached the beginnings of a global oil peak, he argues. “The facts are stark. The amount discovered has been falling for 40 years. For every barrel we find each year, we now guzzle three. Output is already falling in more than 60 of the world’s 98 oil-producing countries. And global oil production has been essentially flat, at just less than 86 million barrels per day, since early 2005. Serious analysts now forecast $200 per barrel.”
Blueprints or Scramble
Strahan believes peak oil is coming even earlier than Shell believes and will have a much faster decline rate in production than the company predicts. “Peak oil is this side of 2020”, he says. “Even if you take the most optimistic future discovery numbers that have any credibility and apply a little bit of common-sense you get a peak in 2017”. His fear is that global production will quickly descend to a 4 per cent annual decline rate sometime after that date. “That is the average decline rate of existing oil production capacity.”
All major oil companies are struggling to replace their reserves and increase production, Strahan observes. Many are giving more money back to shareholders than they are spending on exploration and production combined, he claims. “They are basically liquidating themselves. Although the high oil price is giving them high profits for the time being, they are in trouble.”
[Did you understand that last statement (bold, brown text above)? After peak oil production, the rate of decline in oil coming to the market will quickly reach the standard average oil production DECLINE rate of 4% a year. Every year there will be 4% less available oil in the market to sell, and for you, 4% less to buy.
Question: How can there be “growth” if every year there is 4% less work being done? How can we feed 2% more children born into the world with declining food production, when we already have a great deal of dislocation, warfare and starvation on the African continuent?
Since it takes 10 calories of energy input to produce and place 1 calorie of food on your table, if the energy input is declining so are the numbers of available food calories.
Of course there will be a couple years of belt tightening, which will briefly mitigate the food shortage in richer countries, but then with the energy continually declining 4% a year, the deficiencies add up fast: -4%, -8%, -12%, -16%, -20%….in less than 5 years we’ll be unable to hold back to flood tide of misery sweeping across the world, the country, into our homes. In 10 years there would be 40% less petroleum, in 25 years…..in less than 25 years, its all changed. Before 2034.
However, for now, (sadly said) if we can remain in a global recession for the next couple years that will push forward the ‘peak production’ inflection point a few months, while lower recessionary demand may or may not curtail price increases.
Your vote at the polls will not change this. Writing to elected officials or demonstrating on the street will not change this. The global population has voted, they are becoming increasingly concerned and now that they are becoming poorer, they are arming; some are hungry and many are angry, more are in the streets, but none will change the outcome. We are faced with classic ‘overshoot and collapse’.
In closing, a look back at a chart from the book, The Limits to Growth, © 1972, by the Club of Rome. The ‘limits to growth model’ data run is seen below, where there is a cascading effect from the decline in (resources) oil production that spreads like falling dominos across the variables, except death rate. The ‘establishment’ -governement, industry and finance, have found it economically convenient to ignore the concepts discussed by the Club of Rome, they did not heed the warning in Hubbert’s Peak oil or the Hirsch report; time passed and these ‘limiting factors’ have quietly approached. Today, the leadership are ignoring the ‘peak oil’ reports made by various military, business and academic institutions…. Wake up, Neo!
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