Peak Oil News: 01/01/2007 - 02/01/2007

Saturday, January 27, 2007

Why life after oil will be better

icWales

By Molly Watson

Experts are predicting that in as little as 12 months' time our global supplies of oil will start to diminish. Demand will exceed supply, prices will rise, and suddenly all of the things we take for granted like commuting from Swansea to Cardiff, buying roses in February and holidaying abroad will be out of the question.

Having achieved a global economy which is dependent on mass production and the mobility of its work force, the change could render us back to a relative dark age where people live and work in small, self-sufficient communities.

A doomsday scenario? Not according to Patrick Holden, director of the Soil Association, which opened its annual conference in Cardiff yesterday.

The organisation is best known for its promotion and certification of organic food.

Pick up a bag of organic carrots or a tub of Green & Black's ice cream and you're likely to see the Soil Association stamp, guaranteeing your food has been produced in accordance with strict animal welfare and environmental standards.

But the message behind this conference is about more than just food.

The conference, titled One Planet Agriculture: Preparing for a post-peak oil food and farming future, aims to kick-start the discussion on what practical measures farmers, consumers and local communities can take to become less energy reliant.

The notion of One Planet Agriculture derives from a comment made by David Miliband at the 2006 Royal of England Show in which he laid down a challenge to farmers reflecting on the World Wide Fund for Nature's calculation that "we are living as if we had three planet's worth of resources to live with, rather than just one", and it's a challenge the Soil Association has embraced.

Mr Holden, who lives in Ceredigion, believes that while agriculture in the 20th century was about government-led, centralised systems of farming and food distribution, in the 21st century it will be defined by localism.

He says that, in hindsight, the fossil fuel era will be described as "a sort of extravaganza where we lived beyond our means, treating capital as income and squandered all this energy," but that things are now changing, and this year's conference is hoping to address that shift.

The academic term for all of this is peak oil, which refers to the point when the maximum amount of oil that can be extracted is reached, and production starts to tail off because reserves become more difficult, and consequently more expensive, to reach.

Experts can't say exactly when this will happen, but predict it will be sometime before 2010. While the world won't suddenly be without oil, environmentalists say rising prices will dramatically change the dynamics of cost effectiveness in transport, food production, housing and alternative energy sources. By 2021 it's estimated we will have just 50% of our current supply of oil, meaning we'll have been forced to change the way we live.

Practically that means introducing a localised food culture, with locally grown food, urban market gardens and producing food without chemical-heavy fertilisers.

But there's also a cultural knock-on effect as well. If people aren't able to commute, they'll have to work close to home which means a return to the days of close-knit communities.

The concept sounds backward but the fact that this is the Soil Association's most over subscribed conference yet (organisers say they could have filled it twice over) and has attracted a host of high profile speakers (including editor of The Ecologist Zac Goldsmith, chef Hugh Fearnley-Whittingstall, presenter Jonathan Dimbleby and Welsh Assembly Government's Minister for Environment, Carwyn Jones), demonstrates how topics such as these are increasingly striking a chord with consumers and producers alike.

Instead of being a step backwards, Mr Holden insists it's a step in the right direction.

"It's not about looking backward but forward," he said. "It's not that we have to give up driving our cars tomorrow or totally transform our lifestyles but we have to bear in mind the more we can do in advance the better prepared we'll be for it," he said. "We have to start imagining a life post fossil fuel. It will happen before the end of the 21st century and it will start to affect us much earlier than that.

"It will take 10 years to begin to prepare the infrastructure so we need to start preparing now.

"I'm not preaching doom and despair, this isn't Big Bang. At the moment we are a world driven by oil which takes economic prosperity and mobility for granted but if the changes we make end up improving the quality of our lives that will be more than adequate compensation for what we lose out of in terms of GDP and mobility.

"This is something which is going to come to dominate our lives over the coming decade."

You could argue that with climate change dominating the headlines, warnings about peak oil are unlikely to get much of a positive response. But Mr Holden argues peak oil is a crisis which empowers consumers because solutions can be sought at a local level.

He said, "Climate change is making headline news and I think many of us feel strongly disenfranchised by the enormity of the challenge. If we are really committed we can do things like reduce the amount of times we fly by easyJet or make sure we turn off our TVs but we feel it's a problem that only the Government can really solve. The truth is our conscience doesn't provoke us into taking action on climate change. But peak oil is already in the pipeline. It's the train coming towards us on the other line and it's going to affect us whether we like it or not. It's going to really hurt.

"After the peak oil year, every year each of us is going to have to manage on 3% less fossil fuel than we did the year before. By 2030 that's nearly half of what we are using now.

"We all know that we have to do something about climate change and peak oil is the sister of that. It's going to affect our lifestyles, our businesses, our food supply.

"You can see how telling people about it could make them even more depressed, another disaster on its way but, strangely, I find it's quite inspirational, that people can take action against it.

"It makes business and planetary sense to try to reduce your carbon footprint especially when it can mean an improved quality of life."

Understandably, the idea of such a transition isn't likely to be popular with everyone. But Wales' Environment Minister Carwyn Jones is enthusiastic about the idea. Having championed sustainable food production in Wales he believes buying not just organic food but locally grown organic food is the key to the future and with developments in new technology, he says a move towards a more local life wouldn't be detrimental to Wales' economy.

He said, "Now that more and more people are online, it's possible for people to work from home. The translators at the Assembly are based all around Wales, some even in Patagonia. You don't have to be in Cardiff to do that work.

"And because of that it means people don't have to move out of rural communities in the way that they used to."

The idea of peak oil is proving popular with a new breed of green celebrities - this week's conference started off with an organic fashion show compered by Zac Goldsmith, and starring celebrity models.

But the nature of this challenge is decidedly local. Which means whether it succeeds or fails rests solely on those on the ground.

The key, according to Rob Hopkins, is that we see peak oil as giving us the chance to make a positive change, not a negative one. Mr Hopkins, who is also speaking at the conference, has pioneered a concept of Transition Towns - towns which have agreed to prepare for a peak oil future by creating locally based, self-reliant communities.

Having experimented with the idea in Kinsale, Ireland, where he drew up an action plan for timetabling how the town could reduce its energy consumption, Mr Hopkins has gone onto pioneer the idea in a number of towns across the UK.

Next on the list could be Lampeter, where environmentalists have arranged a public meeting in April to discuss the possibility of adopting a similar action plan.

The guiding principle behind these towns is that a future without oil and gas could, if sufficient imaginative preparation is put in place, be a better place than the present, with a higher quality of life.

Mr Hopkins said, "I think when you put peak oil and climate change together, it's going to provoke the most immense change and shift in how we do everything. You can't engage people if you see it as a hardship.

"We have been trying to say, this is the great adventure of our time, if we can get it right it will be a historic transition.

"I think people are becoming very aware of climate change and peak oil.

"It's something that is very easy to feel despondent about but the only way we will solve any of these things is through creativity and engaging in this as an exciting transition."


Friday, January 26, 2007

Peak Oil Passnotes: Oil at $35? It's Being Said

Resource Investor

By Edward Tapamor

The oil market has been shaken recently. The break down to $49.90 intraday two weeks ago was a new step after eighteen months of a $55 floor price. And on the way, what has become of the notion of ‘peak oil’? One guy I know who has been relatively at ease with the idea, who supports the idea, found himself questioning it recently. It was a surprise.

The general perception was that we would get oil prices inching ever upwards, an erroneous perception of course. But people really bought in to that idea. Predictions were made that $50 oil or $60 oil would make markets collapse. And not just by odd men on the internet with a healthy imagination. Even here on Resource Investor this columnist thought $80 crude was a shoe-in in 2006. Sure, we got to $78.40, but still.

But there are too many technical sides to markets, in the simplest sense, long and shorts. They prohibit the straight lines on the graphs. When something goes long, eventually enough people have a vested interest in shorting it. We have things like software driven spikes or dips, and year-ends. As in 2005 and 2006 the price has been artificially distorted by the year-end, too low in 2005, too high in 2006.

What we do seem to be seeing clear signs of is more worrying. Inflation has started to get above even political targets in the European and U.S. economies. It is not out of control but it’s not under control either. The wage settlements in Europe are also moving higher, they have to be for ordinary people to be able to afford lives, let alone housing.

Demand for energy is somewhere around flat, the U.S. and China are inching up but nothing the world cannot handle. We are now seeing the effects of the first wave of crude oil price inflation. When it broke out of the $22-$28 OPEC comfort zone for good in 2003 and 2004.

New production will come on stream this year from a great many sources. There has never been a better time to find oil, not at $40 let alone $78. So companies have been on an exploration and production bonanza that has seen many of them, even mid-caps such as Premier Oil [LSE:PMO], Cairn Energy [LSE:CNE], Soco International [LSE:SIA] and others really benefit.

But there it appears things have topped out. Share valuations are well down for many companies in the last twelve months, apart from good old ExxonMobil [NYSE:XOM]. We are seeing lots of new capacity in production and refining coming onstream just when there are gaps appearing economically.

So one analyst this week, who shall remain unnamed here, was talking about $35 crude on technical grounds. Well, that may turn out just to be the other side of the peak oil coin, expecting the price to keep falling.

But of course a drop in price to $49.90 or even $35 really does not signify anything as regards ‘peak oil’. Unhappily for those who thought peak oil would bring about overnight collapse of the U.S. and world economy, whenever peak oil arrives - tomorrow or in a hundred years - it will be a far slower and more drawn out process.

One of the central planks of some ‘peak oilers’ intent on collapse Armageddon-style, was the idea that an oil-induced recession would be coupled with ever rising oil prices. We are not yet at that state. Even major ‘peak oil’ proponents like Chris Skrebowski in London, the editor of Petroleum Review, think that any peak will be delayed by some kind of combination of recession and over capacity.

What the downturn in oil really seems to be signal, is not some kind of magic new world where resources are easy to extract and all the crude reserves in the world magically float to the surface. Instead what the downturn portends, is a period of time ending in recession, eighteen months or two years ahead.


Durango scientist to debunk �myths� - Says predictions about peak oil, global warming overblown

Durango Herald Online

By Dale Rodebaugh

Climate change is real, although the consequences aren't as dire as predicted. And the fear of oil production peaking and then plummeting is a figment of the imagination, according to a retired scientist.
Cohen’s schedule

Roger Cohen, who spent more than 25 years with ExxonMobil Corp. in various capacities, will speak about global warming tonight at Fort Lewis College and about the world's use of energy Sunday at the DoubleTree Hotel.

"There used to be just global-warming advocates and skeptics, but now there are advocates, skeptics and militants, who are taking to the streets to try to turn the world's economy upside down," Cohen said Monday in an interview at his Trappers Crossing home. "The alarmists are distracting us from rational solutions. This is a problem for humanity to manage, not a catastrophe to frighten us into actions we will later regret."

All the information he will present in his "Modern Myths" talks is available to the public, Cohen said.

Global-warming data often is distorted by experts, and the most ominous predictions are accepted by the media as gospel, Cohen said. For example, some media outlets reported on Dec. 15 that the Earth's warming trend continued in 2006.

"In effect, last year was preliminarily the coolest in the past five years," Cohen said. "Statistically, global temperatures have remained static from 1998 on."

Cohen cited other distortions or fudging of facts about global warming:

• Former Vice President Al Gore frightened people with visions of 20-foot sea-level rises.

• The Intergovernmental Panel on Climate Change, which had predicted that melt ing glaciers and icecaps would raise ocean levels 4 to 37 inches in the next 100 years, has revised its estimates to 6 to 17 inches, while most independent researchers foresee a 12- to 14-inch rise in ocean levels - not much more than in the 20th century.

"It's a serious issue," Cohen said. "But 100 years allows time to adapt."

• The glacier on Tanzania's Mt. Kilimanjaro has been receding for 200 years, but what is not said is that the rate has slowed in the last 50 years and the area around the mountain peak has not warmed.

"There are many effects, both natural and human-induced, that change climate, but there is no way to isolate them experimentally to weigh their impacts," Cohen said.

"Therefore, scientists must rely on climate computer models.

"But there are problems with computer models," Cohen said. "Findings don't jibe with observations and the range of predictions is so large - to the year 2100, for example - that people tend to say either 'Ho, hum' or 'Oh, my god.' Such models aren't useful. Also, many scientists believe that the models are fundamentally unreliable and give projections that are too high."

As for a peak and then abrupt decline in world oil production, Cohen called such predictions "an incoherent set of anecdotes." The peak theory is based on a model developed in 1956 by Marion King Hubbert, a Shell Oil Co. geophysicist who predicted that U.S. oil production would peak in 1970.

U.S. oil production today is twice what Hubbert's model predicted, and the nation already has produced more than the model predicted ever would be produced, Cohen said. Petroleum reserves aren't limitless, but about 3.7 trillion barrels remain to be extracted. Only 1 trillion barrels have been produced since the industry began.

"Hubbert's theory fails because it neglects the impact of new technology to find and produce new oil and gas," Cohen said. "It also fails because it's not what is underground that counts but what is above ground - the capital to develop reserves and geopolitical conditions such as the stability of governments."

Peak-oilers are focusing on the wrong things, but the peak-oil theory certainly is popular, resulting in books, blogs and films, Cohen said.

"The theory may not be a cult, but it is certainly an industry," Cohen said.

"If I'm right, CO 2 emissions will peak by midcentury, and by the year 2100, the world will have a nearly emission-less energy system. But the market, not governments, will determine what powers the system, whether it be hydrocarbons (coal with the burial of CO 2 underground), wind, solar, hydrogen, nuclear or a number of other options.

"By then we could be as nostalgic about hydrocarbons as we are about our coal-powered train in Durango now," Cohen said.


Peak Oil, Peak Nonsense

Market Watch

By Robert Folsom

It's been less than a year since the world was nearly as awash in writings about "peak oil" as it is in crude oil itself. The psychology of the moment was so twisted that, for example, the op-ed page of the New York Times ran a 2,850-word piece titled "The End of Oil" (March 2006). It argued, among other things, that while the world's crude supplies may be more than half gone, not enough was being said about peak oil.

Still, a bogus argument will always seems less so in the ears & eyes of an audience that's predisposed to believe it: oversimplification, misstatement, and ignoring the inconvenient (for starters) create nodding heads instead of furrowed brows.

Thus you can say -- as the NYTs did -- "oil is a finite commodity," which sounds simple enough. So no one thinks too hard about how to define "finite" regarding crude oil. And, they get an implicit definition soon enough anyway: increasingly scarce and expensive, to the point that a drop of "4 percent of normal daily supply" would be enough to send oil prices to "$161 a barrel," meaning that "millions are thrown out of work," and the "quintessentially American lifestyle…suddenly becomes unsustainable."

Again, no one asked how a four percent fall in supply could make prices go up by a 2.5 multiple, but the misstatements only got worse:

"In the past several years, the gap between demand and supply, once considerable, has steadily narrowed, and today is almost in balance. Oil at $60 a barrel oil may be one manifestation."

If bringing demand and supply in balance could explain $60 a barrel oil, then that's the price a barrel would have fetched more than 20 years ago -- because that's how long it has been since world supply was even close to falling short of demand. Easily accessible data from the Energy Information Administration make this clear, including the fact that world supply EXCEEDED demand in 2004-2005, when prices went UP dramatically.

If you haven't had enough yet, there's always ignoring the inconvenient:

"Despite the serious bets being placed on the tar sands, unconventional oil won't be available in large enough quantities to make a real difference until well down the road."

Mind you, that was the only mention of "tar sands" in the entire 2850 word piece. And you have to wonder if that's because any further mention might require acknowledging that 3.5 t-t-trillion barrels of oil are in tar sands of Venezuela and Canada… and that the "real difference" they make "well down the road" may just be about the time the supposed "peak oil" theory comes into play?

Mind you, I'm not for or against anyone's pet political cause, at least on this page -- you can Tax The Rich, Hate SUVs, Stop Global Warming or embrace any other cause that's compatible with the agenda(s) that usually seem to find "peak oil" so intriguing.

What I won't do is take off my thinking cap for anyone, ever. If you say likewise, I suspect you'll find our analysis of the markets to be refreshing indeed -- and more.


Thursday, January 25, 2007

End of the Road for Hydrogen

PlanetSave

By Anthony Day

With climate change on everyone’s mind and rumours of an energy crisis, what could be better than a car which doesn’t run on fossil fuels and has no emissions except water? BMW’s new Hydrogen 7 fits the bill. This is the V-12 BMW 7 modified to run on hydrogen. It has a petrol tank as well; it also runs on petrol, which is handy if you are far from the UK’s only hydrogen filling station – one of only six in the world. Of course, if hydrogen catches on there will be filling stations all over the country, won’t there?

Hydrogen cars sound ideal, but there are practical problems. First, the hydrogen tank takes eight minutes to fill and it takes up most of the boot space. Even then, the hydrogen tank provides a range of only 125 miles. To get enough hydrogen into the fuel tank it has to be chilled and liquefied. Gradually it warms up and boils away, so if you don’t use the car over the weekend you’ll find less in the tank. Park up at the airport while you take your three-week holiday and when you get back it’ll be nearly empty.

The fact that the hydrogen has to boil off for safety reasons may be why hydrogen vehicles are illegal in France. Even over here you are advised not to park the vehicle in an enclosed car park. You cannot see hydrogen, you cannot smell it and it burns with an invisible flame. Like petrol vapour, when mixed with air it is highly explosive. At least you can smell petrol!

Where does hydrogen come from? It is either extracted from natural gas or electrolysed by passing a current through water. Extracting hydrogen from natural gas leaves carbon dioxide, which must be captured – otherwise the process produces as much CO2 emissions as if you had just burnt the gas. Electrolysis produces no CO2, but it does produce a lot of waste heat so the energy content of the hydrogen is significantly less than the energy of the electricity used. Electricity itself comes from coal, gas or nuclear, and the electricity produced is also much less than the fuel put into the generation process. Producing hydrogen this way is very inefficient.

All these factors make it very doubtful that hydrogen will be the fuel of the future. As we approach Peak Oil and petrol becomes more and more expensive, economies and cutting back on our travel will be the only solution.

How will you change your lifestyle when petrol costs £5/litre? (That’s $36.95 per US gallon.)


Thursday, January 18, 2007

Congressional Hearings - Round #2

Falls Church News-Press

By Tom Whipple

The first congressional hearings on peak oil were held in December 2005 when a subcommittee of the House Energy and Commerce Committee had a half-day session devoted to the topic. At the hearing several luminaries of the peak oil community testified that indeed the world was about to start running short of cheap, easy to find oil and that indeed there would be serious consequences for the industrialized world. This view was countered by the man from Cambridge Energy Research who testified that to the contrary, world oil production could continue to grow for decades, never really would “peak,” and this was a problem for future generations. Happy motoring everyone!

This apparently was just what the good Congressmen wanted to hear at the time, for after a few desultory comments about how “the oil wells back in my district are still pumping away,” the matter was forgotten.

What a difference a year makes. In the intervening 13 months, the world burned up an additional 31 billion barrels of cheap oil, gasoline flew way up and then way down, and more importantly the international scene with respect to the future of oil production grew far darker.

This time, the hearings were held by the Senate Committee on Energy and Natural Resources. They approached the subject from the perspective of the national security implications of our dependence on foreign oil supplies. By skipping over the arguments on the size of the world’s remaining oil reserves and focusing just on who owned these reserves and what they were going to do with them, the Committee was able to achieve a remarkable amount of bi-partisan agreement that the country is facing a very big problem.

In a remarkable display of just how far we have come recently, the Chief Economist of the International Energy Agency told the Committee that he expected non-OPEC produced oil to peak within ten years. Therefore, most of the projected growth in world oil production will have to come from the OPEC nations. He then went on to explain that while the IEA thinks the OPEC states will have enough reserves to increase production, OPEC does such a good job of hiding the true status of their reserves the IEA can’t be sure.

The heart of the hearings focused on the idea that 75 percent of the world’s oil reserves are now in the hands of national state-controlled oil companies and this percentage is expected to keep growing. High oil prices are making these oil exporting countries so rich, they really don’t need the international oil companies, their capital or their technical expertise anymore.

Moreover, these energy-exporters are now in a position to use the political leverage from their growing oil and natural gas monopoly against the political interests of the US and EU.

If this was not enough to worry the committee, one speaker raised the specter of a Sino-Russian “axis of oil” that, when coupled with the massive Iranian reserves of natural gas, could offset the US’s “superpower hegemony” in world affairs. This is getting scarier all the time.

The notion of “energy independence” was soundly rejected by several panelists. As one panelist said, “simply put, there is no economically plausible scenario for a strategically meaningful reduction in the dependence of the United States and its allies on imported hydrocarbons during the next quarter century.”

The speakers, all certified members of the US foreign policy establishment, made clear and convincing cases that alarming times are ahead. The solutions ranged from the usual, efficiency, biofuels, electric cars, to more innovative ones such as coming to a comprehensive, “grand settlement” with Iran and an energy/environmental pact with China.

Reactions from the senators were nearly all positive with several noting bold and dramatic changes in US policy are needed to deal with this geopolitical threat. Nearly all accepted the assertion of several panelists that “energy independence” was a myth that could never be achieved voluntarily as it would require unacceptable changes to the “American lifestyle.”

By forgoing any discussion that world oil production just might be peaking in the near future, the ambiance of the hearing lost a certain sense of urgency. One panelist did mention, however, that remedies such as biofuels, electric cars, and tax breaks for renewables would take decades to have any real effect, so hard times are ahead.

The hearings gave every indication of having made an impact on the committee. One member mentioned that additional hearings to explore all the issues that were raised in more detail would be helpful. Another outspokenly conservative member noted that while he was adamantly opposed to wasting the peoples’ money, now that he could see the growing national security aspect of the US energy situation, it was time for action.

Capitol Hill clearly is starting to move on energy issues. During the hearing, the chairman mentioned that the committee would be holding an all-day conference on biofuels on February 1. Chairmen of the House and Senate agriculture committees say the next farm package is going to be driven largely by energy issues for the first time, thanks to fears about energy security and greenhouse gases.

So far tough issues such as ordering Detroit to quit building SUVs, or lowering the speed limit back down to 55 mph, or enacting significant gas taxes, are not on the agenda. However, these can wait until inevitable crisis actually comes. Only in Washington can we make more progress on mitigating the effects of peak oil if we don’t actually mention what we are mitigating.


Tuesday, January 16, 2007

The Cheap Oil Mirage

Atlantic Free Press

By James Kunstler

The American public is understandably happy to see the bottom fall out of the oil futures market. But temporary circumstances are only sending them another false signal that everything is perfectly okay on the oil scene. And it only reinforces the foolish belief that when prices go up it is solely because corporate finaglers tweak them up on purpose. In fact, these days it's the other way around: often prices go down because corporate finaglers are tweaking the markets, dumping positions, playing shorts rather than acting like real oil users bidding on real contracts for delivery for real purposes like making gasoline. When oil goes up, as it certainly will again, it is primarily because of geology -- what's left in the ground -- and secondarily because of geopolitics -- where it's left in the ground (and what's happening there).

The supernaturally warm winter temperatures have also played a part, keeping inventories high while the home furnaces idle. (Last week it was 70 degrees in Albany, NY.) There is surely some demand destruction in the background. Third World nations are increasingly dropping out of the bidding (meaning their generators quit making electricity and their trucks stop running). And a contracting US economy may also play a part. But even these circumstances may not overcome the supply problems in the real oil world. Here's what's going on:

As a baseline, it helps to understand that the four largest super-giant oil fields of the world are now in decline. They have been responsible for producing 14 percent of the world's oil supply. They are now old and tired (thirty years is old in the oil world) and they are in depletion. These are The Cantarell field of Mexico, the Burgan field of Kuwait, the Daqing field of China, and the granddaddy of them all, the Ghawar field of Saudi Arabia.ncy.

The Cantarell field is a horror story. Pemex, the Mexican national oil company, tried to conceal the dire developments, because Cantarell alone is practically the whole Mexican oil industry. But it is now self-evident that Cantarell is crashing, with a 40 percent annual decline rate projected ahead, meaning a couple of years and it's out. Mexico is America's second largest source of oil imports (after No. 1 Canada and before No. 3 Saudi Arabia). When Cantarell crashes, the Mexican oil industry will crash and the US will be out a major source of imported oil. The US will also be out of imports that were so conveniently close they could be shipped by pipeline rather than tanker ships. For its part, Mexico will be out of a major source of export hard currency revenue and as its economy crashes will probably become even more politically unstable -- meaning more Mexican citizens desperately seeking to get out. Guess where.

Burgan is is in decline. The Kuwaitis announced it themselves last year. Daqing has been the major source of China's domestic oil, which is otherwise paltry, meaning Daqing's decline will only make China more desperate for imports. Ghawar remains shrouded in mystery, since Saudi Aramco does not welcome outside audits. But at 50 years old it is well past the mean age of peak production for oil fields and that alone probably tells the story. Beyond that, we know that Ghawar is producing with a (best case) 35 percent "water cut" (and perhaps much higher). They have to pump seawater into the field (a standard practice) to keep the oil coming out under pressure. The trouble is that they are getting this substantial water cut after redeploying their equipment for horizontal drilling -- an ominous sign. Saudi Arabia declared last year that it would increase production to 12 million barrels a day by 2009. By close of 2006, it appeared to have trouble producing 9 million, with prospects for a 4 percent annual decline rate in the years just ahead.

Elsewhere, Iran is not only past peak, but its domestic demand is so high that it cannot maintain its export levels. The North Sea, which saved the West's ass through the 1990s, is now crapping out at a steep decline rate. Iraq is on track to Palookaville, despite substantial reserves, and even if, by some miracle, its tired old oil infrastructure survives the war, the US may lose access to future production for geopolitical reasons that should be obvious.

Venezuela is past peak for conventional liquid crude and hurting badly for technical expertise to work its oil fields since Hugo Chavez purged the state oil company's management. Last year, Venezuela had to import Russian oil to avoid defaulting on contracts. Whatever the true condition of Venezuela's industry, Chavez is not disposed favorably toward the US -- he hosted Iran's president Ahmadinejad last week to signal that both of them were on the same page where the US was concerned.

The situation in US production is grim. We peaked in 1970. East Texas is near total depletion, with a 99 percent water cut (it produces "oil-stained water). Prudhoe Bay in Alaska now has a 75 percent water cut. We're on track to produce under 5 million barrels a day in 2007 (down from a 1970 high of about 10 million), and heading relentlessly further down year-on-year. We burn through more than 20 million barrels a day. Do the math and see above (re: potential imports) for our prospects.

So, for now the US public (here in the East, anyway) is enjoying both a winter-of-no-winter and a season of comfortably lower oil prices. The financial markets are doing a triumphal dance in expectation of soaring equity values. And the news media is lumbering along with its head up its ass.

Last week, however, the US Senate Committee on Energy and Natural Resources, in an extraordinary session, heard testimony that the nation is in grave danger of a permanent oil crisis. Some of these senators affected to be shocked and surprised. What planet have they been living on? What is the nation getting for the hundreds of million of dollars paid to their staffers? Outgoing Republican chair, Senator Pete Domenici (R-NM), said to the witnesses that “what you told us today is absolutely startling with reference to the future.” Is it too early for a dumbfuck of the year award?

Perhaps the most valuable message the committee got came from Dr. Flynt Leverett from the New America Foundation, who said: “…there is no economically plausible scenario for a strategically meaningful reduction in the dependence of the United States and its allies on imported hydrocarbons during the next quarter century.” That's the straight dope and we'd better stop pretending otherwise.

We'd also better stop pretending that alt.fuels such as ethanol, bio-diesel, coal liquids, or hydrogen will allow us to keep up the happy motoring. We have to make other arrangements for daily life. We don't have a moment to lose. Our "to do" list is very long. If we waste our time in recrimination or hand wringing we are going to lose the things we value most, including an orderly society. So, don't be fooled by the temporary fall in oil prices. We're in the zone of the long emerge.


Thursday, January 11, 2007

Confronting our addiction to oil

Times-Standard Online

By David Cobb

Modern industrial society is completely dependent upon the availability of oil. It is no exaggeration to say that modern civilization is addicted to the stuff. Over the last 150 years, the burning of oil powered an economic and population growth spurt unlike anything that has ever been experienced in human history.

But of course, oil is a finite resource. Stated bluntly -- it will run out. It is a question of when, not if.

But it is overly simplistic to merely say that oil will “run out.” Historically, the rate of oil “production” (more accurately described as extraction and refining) increases every year. In other words, more oil is produced this year than last year. And more oil will be produced this year than last year. And so on. But once the halfway point of all world-wide reserves is reached, production will begin to decline, or “peak.” Peak Oil means not exactly “running out of oil,” but “running out of cheap oil.”

There is a growing consensus amongst geologists that global oil production has either already peaked, or it will within the next few years. The most optimistic forecasts predict the peak to occur absolutely no later than 2035. Thereafter, even if industrial societies begin to switch to alternative energy sources, we will have less net energy each year to do all the work essential to the survival of complex societies. We are entering a new era, as different from the industrial era as the latter was from medieval times.

This will mean dramatic changes in the way we as individuals and as a society function. Oil provides not only fuel for our vehicles and power plants, but also plastics, pesticides, fertilizers, pharmaceuticals, etc. Hydrogen, an often-touted replacement fuel, still has a myriad of problems to overcome, including energy efficient production, transportation and storage.

As oil begins to grow more expensive, the potential for our society to continue commuting long distance to work or play will be the first to go, followed by deliveries of consumable products and then, essential products (both manufacturing and delivery of the same).

In the meantime, humanity's thirst for petroleum continues to run wild. Producing nations are pumping at maximum capacity. Yet the competing energy demands of America and rapidly industrializing China and India are already threatening to outstrip global oil output. China has displaced Japan as the No. 2 oil importer, after the United States.

Chinese oil imports are projected to double to 14 million barrels a day over the next 20 years. Many credible analysts foresee a new “energy cold war” as the U.S. and China square off over the planet's last reserves.

And U.S. soldiers are currently killing and dying in Iraq in order to satisfy the oil addiction. Even George Bush has acknowledged our relationship to oil us an addiction. (Sadly, his response was to launch a war to secure access to a supply of the stuff). The global outlook is indeed grim.

It is against this backdrop that local citizens formed the Humboldt Peak Oil Action Group (POAG).

POAG is a community group dedicated to educating Humboldt County citizens about Peak Oil and the changes this will demand on individuals and our community. They also want to inspire people to take action to localize their personal, economic and community lives.

Their concrete suggestions for immediate action are simple and straightforward:

* Walk and bike more -- it's healthy, good for you, and saves oil!

* Eat locally produced food

* Insulate your house

Ultimately, we must create the political will necessary to create and implement a transition towards a truly sustainable and localized economy.

That will mean building a stronger, more caring community. We must seek creative ways to become economic partners with each other and our environment that empower the local community while moving away from imported resources imported from long distances.

Economic localization enhances national security, and is the responsible way to organize an economy. It also takes advantage of the creativity and ingenuity of local residents, and builds a healthy thriving community.

To get involved, check out www.peakoilhumboldt.org

David Cobb was the Green Party candidate for President in 2004 and currently works for Democracy Unlimited of Humboldt County. He can be reached at david@duhc.org or 269-0984.


Wednesday, January 10, 2007

The Closer We Get, the Worse It Looks

By Richard Heinberg

Bridging Peak Oil and Climate Change Activism

The problems of Climate Change and Peak Oil both result from societal dependence on fossil fuels. But just how the impacts of these two problems relate to one another, and how policies to address them should differ or overlap, are questions that have so far not been adequately discussed.

Despite the fact that they are closely related, the two issues are in many respects dissimilar. Climate Change has to do with carbon emissions and their effects-including the impacts on human societies from rising sea levels, widespread and prolonged droughts, habitat loss, extreme weather events, and so on. Peak Oil, on the other hand, has to do with coming shortfalls in the supply of fuels on which society has become overwhelmingly dependent-leading certainly to higher prices for oil and its many products, and perhaps to massive economic disruption and more oil wars. Thus the first has more directly to do with the environment, the second with human society and its dependencies and vulnerabilities. At the most superficial level, we could say that Climate Change is an end-of-tailpipe problem, while Peak Oil is an into-fuel-tank problem.

Because of this crucial divergence, the training and priorities of people who study one problem often differ from those of people who study the other. Most advocates for the Peak Oil concept-sometimes known as "depletionists"-are energy experts, economists, journalists, urban planners, or workers retired from the oil industry (usually geologists or petroleum engineers). Among climate analysts and activists there are more environmentalists, fewer energy experts, and far fewer retired oil industry employees. It is my experience that, when placed in the same room together, the two groups often talk past one another.

My own background is primarily as an environmentalist: I teach a college course on human ecology and have been writing about ecological issues for 15 years or so; at the same time, I find myself identified primarily as a Peak Oil activist, having written three books about the subject and having given something like 300 lectures on it. To me, head-butting arguments between the two groups as to which problem is more serious constitute a peculiar kind of hell, in that such arguments can only hamper the efforts of both groups in doing what we all agree is essential-averting environmental and human catastrophe. Nevertheless, disagreements and misunderstandings are already emerging for the simple reason that advocates on both issues are competing to persuade the public of the central importance of their cause.

Since such competitive disagreements are ultimately damaging to our broader collective interests, it seems important to devote some effort toward openly discussing the differences and similarities of the issues themselves, as well as the priorities and views of their respective interest groups. This essay is intended to be exploratory and descriptive rather than polemic; my assumption is that it is better for the issues to be clarified and discussed than for them to remain unarticulated. My thesis is that both groups are essentially working toward a reduction in society's consumption of fossil fuels, and that cooperative efforts between the two groups could substantially strengthen their arguments and their effectiveness at persuading policymakers.

Differing Perspectives

While the Peak Oil and Climate Change issues may themselves be relatively clear and discrete, the groups of scientists and activists who study and organize around them are far from being distinct and internally homogeneous. Some individuals and groups working on issues related to oil and natural gas depletion are well informed about climate science, while some are not. Some climate protection groups are sensitive to fuel-supply vulnerability issues; others are not. Some Peak Oil activists are what have come to be known in the blog world as "doomers"-that is, they believe that there is no hope at this point for the preservation of modern civilization in any recognizable form; others are "techno-fixers," who think that the world will adjust-painfully perhaps, but in the end successfully-to oil depletion through conservation and the development of alternative energy sources.

Similarly there are "moderate" climate-change scientists and activists who see the problem as serious but solvable, while there are some who believe that the world has already passed a "tipping point" beyond which catastrophic impacts are inevitable. It is probably fair to say that the substantial majority of both groups find themselves somewhere midway between extreme positions staked out by some of their spokespeople.

So, given this lack of homogeneity among the groups, it would be inappropriate to generalize too much and I will try as best I can to remain sensitive to these differences and overlaps during the following discussion. After giving some thought to the matter, I have chosen not to mention names of individuals who hold the views that I will be describing.

Let us begin with the group I know better-the depletionists. It is fair to note that some Peak Oil analysts seem to be of the opinion that oil depletion constitutes a solution to the dilemma of global greenhouse gas emissions, or that Climate Change is actually not a problem at all. This appears to be the view primarily of some former oil industry geologists, but is probably not that of the majority of depletion analysts. The view is rarely stated openly (I was unable to find a glaring instance in print, though I have heard it expressed in conversation). Nevertheless, it is a notion that understandably causes concern and consternation among Climate Change activists.

For their part, many Climate Change activists and experts see global warming as potentially having such devastating consequences, not just for humans but for the whole biosphere, that Peak Oil seems a trivial concern by comparison. They argue that, even if global oil production peaks soon, this will provide no solution whatever to Climate Change because society will replace oil with coal and other low-grade fossil fuels-which will simply worsen greenhouse gas emissions. Moreover, since the remedies for carbon emissions that climate activists propose will inevitably lead to increased energy efficiency and a reduction in oil consumption, they often feel such efforts constitute an adequate answer to the Peak Oil problem.

Most oil depletionists (excepting the small group discussed above) appear to hold the opinion that Climate Change is indeed a legitimate concern; however, since the economic impact of Peak Oil looms in the immediate future, the economic and geopolitical chaos that may be triggered by declining global fuel supplies pose the more timely threat. Some have argued that if Peak Oil results in near-term economic collapse and wars over dwindling energy resources, these events will seriously or terminally undermine the ability of national leaders to undertake the cooperative, long-range planning necessary to reduce carbon emissions.

For many Climate Change activists, theirs is primarily a moral issue having to do with the fate of future generations and other species. Their message implies an appeal to self-preservation, but since they cannot prove that the most horrific climate consequences being predicted (the drowning of coastal cities by rising seas, rapidly expanding deserts, collapsing agricultural production) will occur within the next decade or two, the motive of self-preservation is often downplayed. This emphasis on the moral dimension of climate activism is clear in Al Gore's documentary film, An Inconvenient Truth.

It is probably safe to say that most Peak Oil activists are motivated more by their immediate concerns for preservation of self, family, and community. They see the peak of global oil production as happening soon and the effects accumulating quickly. This concern for self-preservation is prominent in the quasi-survivalist tone of several Peak Oil websites.

Perhaps because Climate Change activists see that a dramatic reduction in emissions must be undertaken voluntarily and proactively, and that the depletion of fossil fuels will not occur quickly enough to deter catastrophic emissions levels, they tend to accept generous estimates of remaining fossil fuels as a way of dramatizing the need for action. They see the argument that depletion will take care of the carbon emissions problem as a threat, because it could lead to apathy. They argue that there are enough fossil fuels left on the planet to trigger a climatic doomsday; and, to underscore the argument, Climate Change often quote robust estimates of remaining oil reserves and amounts awaiting discovery issued by agencies such as the United States Energy Information Administration (EIA), and by companies like ExxonMobil and Cambridge Energy Research Associates (CERA)-most of whose forecasts seem unrealistically optimistic compared to the majority of expert forecasts. Climate protectors understandably feel fully justified in doing this, because these, after all, are official estimates and forecasts.

Peak Oil activists adhere to more pessimistic resource estimates and production forecasts, and it is tempting to think that this is partly because doing so makes their case appear stronger. However, the track record of prediction by the optimists is not good:


-- During the 1960s, the U.S. Geological Survey issued successive reports forecasting a peak in U.S. oil production around the year 2000; this followed M. King Hubbert's controversial forecast of a peak around the year 1970. Confounding the official view, U.S. oil production did reach its maximum in 1970 and has been generally declining ever since, despite the subsequent discovery of the largest conventional oilfield ever found in North America-on the North Slope of Alaska-in the 1970s.

-- In their International Energy Outlook (IEO) 2001 report, the EIA stated that "The United Kingdom is expected to produce about 3.1 mb/d by the middle of this decade, followed by a decline to 2.7 mb/d by 2020," implying a peak around 2005. Britain's oil production from the North Sea actually peaked in 1999, two years before this forecast was issued, at 2.684 mb/d, declining to less than 1.7 mb/d by 2005.

-- In their IEO 2003 report, the EIA predicted that the country of Oman was "expected to increase output gradually over the first half of this decade" with "only a gradual production decline after 2005." In fact, Oman's production had already peaked in 2000, three years before the forecast was published.

This pattern of unrealistic optimism on the part of the official forecasting agencies continues with regard to other countries, and thus probably, by extrapolation, to the world as a whole. So it might be unrealistic for the climate protectors to give credence to such forecasts, official though they may be, or even to assume that the truth lies somewhere equidistant between the extreme resource estimates of the so-called optimists and pessimists.

Parenthetically, both groups have reasons (though different ones) to regard ExxonMobil as an arch-foe. That company has consistently funded groups undermining public concern about Climate Change. And recently ExxonMobil has placed prominent magazine ads proclaiming that the global oil production peak is so far in the future that it is something we need not worry about. One ExxonMobil executive has been widely quoted as saying, "Peak oil theory is garbage."

Differing Recommendations

These differences in perspective lead to somewhat diverging policy recommendations.

For Climate Change analysts and activists, emissions are the essence of the problem, and so anything that will reduce emissions is viewed as a solution. If societies shift from using a high-carbon fossil fuel (coal) to a fossil fuel with lower carbon content (natural gas), this an obvious benefit in terms of climate risk-and it is potentially an easy sell to politicians and the general public, because it merely requires a change of fuel, not a sacrifice of convenience or comfort on the part of the general public. And so, again, climate analysts tend to accept at face value official high reserves estimates and production forecasts-in this case, for natural gas.

However, as with oil, production forecasts by the official agencies for natural gas supply have tended to be overly robust. For example, in the U.S. the EIA issued no warning whatever of future domestic natural gas problems prior to the supply shortfalls that became painfully apparent after 2000, as prices more than quadrupled. Nevertheless a few industry insiders had noted disturbing signs: companies were drilling at an accelerating pace in order to maintain production rates, and newer fields (which tended to be smaller) were depleting ever more quickly. By 2003 the U.S. Energy Secretary was proclaiming a natural gas crisis. In the following three years, warm weather (perhaps due to Climate Change) and demand destruction (from the off-shoring of many industrial users of natural gas due to high domestic prices) led to a partial relaxing of prices and general complacency. However, U.S. domestic production appears set to decline further, and likely at a rapid pace.

For depletion analysts and activists, societal dependence on vanishing, non-renewable energy resources is the essence of the greatest dilemma that our society currently faces. We have created a complex, global economic infrastructure built to run on fuels that will start to become scarce and expensive very soon. From this perspective, natural gas is not a solution but an enormous problem: even if the global peak in gas production is 10 to 20 years away, regional shortages are already appearing and will continue to intensify. This means enormous risks for home heating, for the chemicals and plastics industries, and for electrical power generation. Natural gas is and will always be a fuel that is, for the most part, regionally traded (as opposed to liquid fuels, which are more easily shipped). Thus for many nations critical to the world economy-the U.S., Britain, and most of continental Europe-gas cannot serve as a "transition fuel."

Coal presents another controversial topic for both depletion and emissions analysts. Most members of both groups feel a keen need to articulate some politically palatable transition strategy so as to gain the ears of policy makers. If coal were entirely ruled out of the discussion, such a strategy would become more difficult to cobble together. However, the two groups tend to think of very different future roles for coal.

Some emissions activists and analysts look to "clean coal" as a partial solution to the problem of Climate Change. "Clean coal" practices include gasifying coal underground, in situ, and then separating the resulting greenhouse gases (carbon dioxide and carbon monoxide) and then burying these in ocean sediments or old oilfields or coalmines This theoretically allows society to gain an energy benefit while reducing additions to atmospheric greenhouse gases.

Many depletion analysts are skeptical of such "carbon capture" schemes, believing that, when the world is mired in a supply-driven energy crisis, few nations will be adequately motivated to pay the extra cost (in both financial and energy terms) to separate, handle, and store the carbon from coal; instead they will simply burn whatever is available in order to keep their economies from crashing.

Some depletionists see the world's enormous coal reserves as a partial supply-side answer to Peak Oil. Using a time-proven process, it is possible to gasify coal and then use the resulting gases to synthesize a high-quality diesel fuel. The South African company Sasol, which has updated the process, is currently under contract to provide several new coal-to-liquids (CTL) plants to China and has announced a plant in Montana.

CTL is not attractive to emissions analysts, however. While some carbon could be captured during the gasification stage (at a modest energy cost), burning the final liquid fuel would release as much carbon into the atmosphere as would burning conventional petroleum diesel.

A few depletion analysts tend to take a skeptical view of future coal supplies. According to most widely-quoted estimates, the world has at least two hundred years' worth of coal-at current rates of usage. However, factoring in dramatic increases in usage (to substitute for declining oil and gas supplies), while also taking account of the Hubbert peak phenomenon and the fact that coal resources are of varying quality and accessibility, leads to the surprising conclusion that a global peak in coal production could come in as few as 30 years (this conclusion can be extrapolated from a recent study for the DOE regarding the US coal supply).1

That raises the question: does it make sense to place great hope in largely untested and expensive carbon sequestration technologies if the new infrastructure needed will be obsolete in just a couple of decades? Imagine the world investing trillions of dollars and working mightily for the next twenty years to build hundreds of "clean" coal (and/or CTL) plants, with the world's electrical grids and transportation systems now becoming overwhelmingly dependent on these technologies, only to see global coal supplies rapidly dwindle. Would the world then have the capital to engage in another strenuous and costly energy transition? And what would be the next energy source?

Other low-grade fossil fuels, such as tar sands, oil shale, and heavy oil are also problematic from both the depletion and emissions perspectives. Some depletion analysts recommend full-speed development of these resources. However, the energetic extraction costs for these are usually quite high compared to the energy payoff from the resource extracted (also known as the energy returned on energy invested, or EROEI). Their already-low energy profit ratio would be compromised still further by efforts to capture and sequester carbon, since, as with coal, these low-grade fuels have a high carbon content as compared to natural gas or conventional oil.

Currently, natural gas is used in the processing of tar sands and heavy oil; from an emissions point of view, this is rather like turning gold into lead. Many depletionists point out that, while the total resource base for these substances is enormous, the rate of extraction for each is likely to remain limited by physical factors (such as the availability of natural gas and fresh water needed for processing), so that synthetic liquid fuels from such substances may not help much in dealing with the problem of oil depletion in any case.

Supply Side, Demand Side

By now a disturbing trend becomes clear: the two problems of Climate Change and Peak Oil together are worse than either by itself. Strategies that might help to keep lights burning and trucks moving while reducing emissions are questionable from a depletionist point of view, while most strategies to keep the economy energized as oil and gas disappear imply increasing greenhouse gas emissions. As we will see, the closer we look, the worse it gets.

As noted above, both groups need to design a survivable energy transition strategy in order to "sell" their message to policy makers. Carbon emissions come from burning depleting fossil fuels, the primary energy sources for modern societies. Thus both problems boil down to energy problems-and energy is essential to the maintenance of agriculture, transportation, communication, and just about everything else that makes up the modern global economy.

With regard to both problems there are only two kinds of solutions: substitution solutions (finding replacement energy sources) and conservation solutions (using energy more efficiently or just doing without). The former is politically preferable, as it does not require behavioral change or sacrifice, though it tends to require more planning and investment. The least palatable option, from a political standpoint, is also the quickest and cheapest-doing without (curtailing current usage). We have gotten used to using enormous amounts of energy, at rates unprecedented in history. If we had to use much less, could we maintain the levels of comfort and economic growth that we have become accustomed to? Could we even keep the lights on?

Several questions become critical: How much of a change in energy supply will be imposed by the peaking of production of oil and natural gas? How much will be required in order to minimize Climate Change? And how much of that supply shortfall can be made up for with substitution and how much with efficiency, before we have to resort to curtailment?

Climate analysts agree the world needs to reduce emissions considerably. In 1996 the European Environment Council said that the global average surface temperature increase should be held to a maximum of 2 degrees C above pre-industrial levels, and that to accomplish this the atmospheric concentration of carbon dioxide (CO2) will have to be stabilized at 550 parts per million (the current concentration is 380 ppm, though the addition of other greenhouse gases raises the figure to the equivalent of 440 to 450 ppm of CO2). But recent studies have tended to suggest that, in order to achieve the 2 degree cap, much lower CO2 levels will be needed. One study by researchers at the Potsdam Institute for Climate Impact in Germany concluded that-again, to keep the temperature from increasing more than 2 degrees C-the atmospheric concentration target should be 440 ppm of CO2 equivalents, implying that the atmospheric concentration of greenhouse gases will need to be stabilized at current levels.

But, to make the challenge even more difficult, it turns out that the biosphere's ability to absorb carbon is being reduced by human activity, and this must be factored into the equation; by 2030, this carbon-absorbing ability will have been reduced from the current 4 billion tons per year to 2.7 billion. Thus if an equilibrium level of atmospheric carbon is to be maintained through 2030, emissions will have to be reduced from the current annual level of 7 billion tons to 2.7 billion tons, a reduction of 60 percent. It is hard to imagine how, if that translated to a 60 percent reduction in energy consumption, it could mean anything but economic ruin for the world.

Depletion analysts look to about a 2 percent per year decline in oil extraction following the peak of global oil production, with the rate increasing somewhat as time goes on. Regional natural gas decline rates will be much steeper. The dates for global production peaks for both fuels are of course still a matter for speculation; however, it is reasonable to estimate that we might see more than a 25 percent or more decline in energy available to the world's growing population over the next quarter-century as a result of depletion.

Everyone would be happy if it were possible simply to substitute renewable sources of energy for oil, coal, and gas, and both depletion activists and climate activists support the expansion of most renewable energy technologies, including solar and wind. But there are realistic limits to the scale at which renewables can be deployed, and to the speed with which this can be accomplished.

Not all depletion or emissions activists support the large-scale development of biofuels (ethanol, butanol, and biodiesel), which are the only realistic replacements for liquid transport fuels, because of the low energy return on investment entailed in making these fuels, and because these substitutes imply worrisome tradeoffs with food production.

Some depletionists and some climate analysts recommend expanding nuclear power, arguing that technological advances could make it a safe and affordable alternative. Others argue against it, noting that high-grade ores will be depleted in 60 years, and that the entire nuclear cycle of mining, refining, enrichment, plant construction, and so on (excluding fission itself) is carbon intensive. One analysis suggests that, from the mid-2020s, the task of clearing up all past and future nuclear wastes will require more energy than the industry can generate from the remaining ore.

Then comes the equity issue. A few nations have benefited disproportionately from fossil fuels. If "developing" nations that have not yet had that opportunity are now required to forgo it, they will understandably perceive this as grossly unfair. They are unlikely to agree to dramatically reduce their own carbon emissions (i.e., fossil fuel consumption) voluntarily unless already-industrialized nations lead the way and reduce theirs proportionally more. Also, it's necessary that at least a few of the "developing" nations-the ones that are rapidly industrializing now-be brought on board any global emissions or depletion agreement in order for it to have real meaning, as they have the economies with the fastest growth in energy demand. The prime example: while for practical purposes Americans will probably continue to lead the world in per capita fossil fuel use for some time, China will likely overtake the U.S. in 2009 as the world's foremost national emitter of greenhouse gases.

Where does this leave us? Let's assume that the more pessimistic critical analyses of both groups are correct. That is, let's say that a 60 percent reduction in emissions is needed within 25 years, that natural gas will not be available in sufficient quantities to serve as a transition fuel, that "clean" coal will not help much, that low-grade fossil fuels will not make up for shortfalls in oil production, that CTL production will (or should) remain marginal, that renewables will not come on line in sufficient quantity or soon enough, that nuclear power won't come to the rescue-and that modest contributions from each or most of these sources added together will not come close to making up for shortfalls from oil and gas depletion or from the voluntary phasing out of carbon fuels.

If this turns out to be the case, we may face a staggering need for energy efficiency and curtailment. Neither group wants this as its political platform.

The theoretically fairest solution, from an emissions point of view, would be to assign each living human an equal per capita right to emit carbon, and to create a market for those rights, so that continued disproportionate fossil fuel consumption by already-industrialized nations would entail substantial payments to less-industrialized nations. Fairness would also imply a steeper rate of reduction in fossil fuel consumption by the heavy users-a cut in emissions of considerably more than 60 percent.

However, to ask industrialized nations to share their wealth with less-industrialized nations while the former are engaged in a partially self-imposed energy famine seems highly problematic. What politician could demand the extra sacrifice? What public would vote for such a policy?

Common Ground

As we have seen, there are understandable reasons for some climate activists to ignore the arguments and priorities of depletionists, and vice versa. Dealing with only one of the two problems is much easier than confronting both. But our goal must be to deal with reality (rather than merely our preferred image of reality), and reality is complicated. Our world faces the interacting impacts not only of Peak Oil and Climate Change, but also of water scarcity, overpopulation, over-fishing, chemical pollution, and war (among others). In the end, there are too many of us using too much too fast, while competing for dwindling resources.

What would it take to solve all of these problems at once? A good start would be to require a global across-the-board 5 percent per year reduction in fossil fuel consumption and the provision of substantial financial and technical aid by industrialized nations to less-industrialized nations in creating a renewable energy infrastructure. But to the patient (the primary fossil fuel users) this medicine might seem worse than the disease. A grand plan like this has almost no chance of gaining political backing.

Realistically, we are left with the customary policy tools aimed to ameliorate the world's ills piecemeal: emissions and depletion protocols, tradable quotas, emissions rights, import and export quotas, carbon taxes, and cap-and-trade mechanisms.

Thus for practical reasons it is probably inevitable that emissions and depletion activists will continue to pursue their separate policy goals. But it makes sense for the two groups to be informed by one another, and to cooperate wherever possible.

It is fairly obvious why such cooperation would benefit the depletionists: Climate Change is already a subject of considerable international concern and action, whereas Peak Oil is still a relatively new topic of discussion.
But how would such cooperation aid emissions activists?

In a word: motivation. As discussed earlier, emissions activists appeal to an ethical impulse to avert future harm to the environment and human society, while the Peak Oil issue appeals to a more immediate concern for self-preservation. In extreme circumstances, the latter is unquestionably the stronger motive. Strong motivation will certainly be required in order for the people of the world to undertake the enormous personal and social sacrifices required in order to quickly and dramatically reduce their fossil fuel dependency. Sustainability and equity are issues that are hard enough to campaign on in times of prosperity; when families and nations are struggling to maintain themselves due to fuel shortages and soaring prices, only a mobilization of public support through massive education and persuasion campaigns could possibly summon the needed support.

Taken together, Climate Change and Peak Oil make a nearly air-tight argument. We should reduce our dependency on fossil fuels for the sake of future generations and the rest of the biosphere; but even if we choose not to do so because of the costs involved, the most important of those fossil fuels will soon become more scarce and expensive anyway, so complacency is simply not an option.

What would cooperation between the two groups look like? It would help, first of all, for activists on one issue to spend more time studying the literature of the other, and for both groups to arrange meetings and conferences where the intersections of the two issues can be further explored.

Both groups could work together more explicitly to promote proactive, policy-driven reductions in fossil fuel consumption.

Climate activists could start using depletion arguments and data in tandem with their ongoing discussions of ice cores and melting glaciers, but to do so they would need to stop taking unrealistically robust resource estimates at face value.

For their part, depletionists-if they are to take advantage of increased collaboration with emissions activists-must better familiarize themselves with climate science, so that their Peak Oil mitigation proposals are ones that lead to a reduction rather than an increase of carbon emissions into the atmosphere.

Perhaps, for both groups, with a stronger potential for motivating the public will come the courage to tell a truth that few policy makers want to hear: energy efficiency and curtailment will almost certainly have to be the world's dominant responses to both issues.

1. Vaux, Gregson, "The Peak in US Coal Production" (FTW, 2004),


Thursday, January 04, 2007

The Peak Oil Chris: 2006 in Review

Falls Church News-Press

By Tom Whipple

As the year draws to a close, it is a good time to look back at what has happened and what clues we can discern about 2007.

The most notable event affecting the advent of peak oil during 2006 was, most likely, the great summer price spike. Oil started the year around $62 a barrel, steadily increased to just below $80 and then fell to close out the year about where it started. Now there are a number of observations that can be made about this spike.

First it drove average US gasoline prices from $2.21 in late December 2005 to a high of over $3.00 per gallon during the summer. This was significant in that it caught a lot of people’s attention for the first time that there just might be a problem out there. At the height of the spike, Congressmen were running around like rabbits proposing new laws and making pious speeches about how they were doing something about gasoline prices. Although the US economy as a whole seems to have held up pretty well under $3 gasoline, Detroit took a hard hit. Sales of low-mileage vehicles that had been the bread and butter of the US auto industry plunged, tens of thousands of auto workers lost their jobs, and dozens of factories closed. By year’s end Toyota was poised to become the world’s largest automotive manufacturer.

From the public’s point of view and unfortunately most of the media’s, peak oil seems to be only about gasoline prices. Above $3 a gallon there is concern. Let gasoline sink back towards $2 and we are back in Camelot.

The 2006 price spike is widely perceived as being caused by an excess of speculation. Hedge fund managers read forecasts of a bang-up hurricane season in the offing and that, coupled with greater-than-normal turmoil in the Middle East, led them to speculate wildly in oil futures. When the Middle East turmoil subsided a bit and the hurricanes failed to appear as advertised, oil prices collapsed. All this of course is perfectly true, but is only part of the story.

Largely unnoticed was the underlying supply and demand situation, and a new factor: oil affordability. The final returns won’t be in for several months, but it is beginning to look as if world oil production stayed about the same or increased insignificantly during 2006. Consumption in China, Russia, and the Gulf oil states increased while staying about the same in the industrialized states of North America, Europe and Asia.

With flat production and steady or increasing consumption in those countries that publish detailed reports, something had to give or else we would be seeing considerably higher oil prices. The give came in the underdeveloped world where $20 or $30 oil was affordable for generating electricity, running pumps, and for cooking, but $60 or $70 per barrel oil was not. Again, the returns are not in yet, but anecdotal evidence is accumulating that many parts of Africa, Central America, and Asia are starting to shut down. For these peoples, the oil age, such as it was, is already over. There is little to look forward to for a long, long time.

Nearly every aspect of the various Middle Eastern political conflicts deteriorated further during 2006. From the peak oil perspective 1.5 million barrels a day of Iraqi oil exports appear to be the most precarious, but what ever falls out of Iran’s nuclear ambitions are a close second. A general conflagration occasioned by the collapse of the Iraqi government or renewed Arab-Israeli fighting are well with in the realm of possibility for the near future. The insurgency in Nigeria is picking up steam and there will be either a presidential election or civil war there next year. The prospects for a large percentage of the world’s petroleum exports sure did not get any better in 2006.

When the history of the year is written, resurgent Russian nationalism is sure to have prominent place. During the year, Moscow made good on its goal to bring exploitation of Russian oil by the international oil companies back under its control. President Putin clearly sees the opportunity to regain superpower status by controlling a significant share of pipeline-supplied natural gas on the Eurasia landmass. It seems likely a reduced role for the international oil companies can only lead to reduced investment and delays in the exploitation of Russian oil and gas deposits.

As yet no major developments in the world’s oil depletion story have emerged in 2006. Production from numerous major oil deposits – the North Sea, Mexico’s Cantarell, Alaska’s Prudhoe Bay, Kuwait’s Burgan – continues to decline. Many analysts harbor suspicions that Saudi production has or will shortly go into decline. The situation is obscured, perhaps on purpose, by OPEC production cuts that have “required” the Saudi’s to make reductions in their oil production. It may take many years to sort out their actual production capacity.

So where do all the developments of 2006 leave us as regards to peak oil? Maybe further than is currently apparent. One thing is for certain, the earth has 30 billion barrels less cheap, easy-to-produce crude at its disposal than it did 12 months ago because we burned it up. World oil production currently is giving every indication of at least plateauing for a while, perhaps forever. Many new production projects are being delayed as the cost of exploration and drilling new wells increases to unheard of heights. Oil availability for the rich nations still appears adequate because the poor are shutting down. But this is a one-time phenomenon. Soon, increasing demand from the rich and rapidly developing nations will cause them to bid against each other for stagnant or decreasing production.

Then the troubles will begin in earnest.


Tuesday, January 02, 2007

Seattle peak-oilers prepare for a world without petroleum

The Seattle Times

By Andrew Garber

Dave Reid, a member of Seattle Peak Oil Awareness, added solar panels to his Beacon Hill home, which he purchased close to the new light-rail line.

Food shortages, cars abandoned, another depression. It's the stuff of nightmares — and the type of future an eclectic group of engineers, computer experts and others in Seattle believe could await us.

They're not religious zealots predicting Armageddon, nor survivalists digging bomb shelters. They believe the world is about to start running out of gas.

Literally.

Members of Seattle Peak Oil Awareness expect world production of oil and gasoline to peak soon, if it hasn't already, and hard times to follow. Similar groups are popping up around the country from Boston to Portland, despite oil-industry assertions that there's nothing to worry about.

How bad things could get depends on whom you talk to. Some peak-oilers expect car travel to largely disappear and food supplies, which depend heavily on fuel to produce and distribute, to decline.

"We're probably going to end up with some sort of die-off in the world, of people," said Rocky Willson, a Seattle Peak Oil Awareness member with an unsettling outlook.

"You can look at it like a black box," said Willson, a foosball-table seller who has taken up gardening. "The oil goes in and creates people. When the oil gets cut off, the people go away."
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Other members of the group talk about a financial shock caused by soaring oil prices, followed by something approaching the Great Depression.

"I think we're looking at recession upon recession upon recession," but not a complete breakdown of civilization, said Dave Reid, an electrical engineer with a touch of a Scottish accent.

"We're not going to Mad Max," he said, referring to the post-apocalyptic movie.

Reid, who is 43, is preparing by investing in gold, installing solar panels and buying a home near the new light-rail line, which he figures would still operate. Other members of the group are making similar preparations for a low-energy future.

Plenty of industry experts say groups like the one in Seattle fret over nothing. Peak oil has been described as a liberals' version of "Left Behind," the series of books and films about what would happen if all of God's followers ascended into heaven.

Cambridge Energy Research Associates, an oil consulting firm based in Cambridge, Mass., projects world oil production won't peak for at least 30 years and that even then it will hit an "undulating plateau" before declining.

"People have been prophesizing the end of the industry for 150 years," said John Felmy, chief economist for the American Petroleum Institute. "The [oil] reserves continue to build up."

Peak-oil groups don't buy it. They're fueled by a pile of books and government reports predicting rough times ahead.

David Goodstein, vice provost at the California Institute of Technology, starts and finishes his book "Out of Gas" saying "civilization as we know it will not survive unless we can find a way to live without fossil fuels." Goodstein says nothing has changed his mind since the book was published in 2004.

U.S. Rep. Roscoe Bartlett, R-Md., is so worried he started a peak-oil caucus in Congress with about a dozen members from both parties. "Every night I go to bed hoping I'm wrong, but I see no reason why I'm wrong. The world is facing a fairly imminent crisis," he said.

Big decline predicted

Peak oil refers to the point when half the world's oil supply has been pumped from the ground.

Groups worried about peak oil predict a dramatic shortfall in petroleum after the peak is reached. That's because they expect oil production to drop at the same time demand from industrialized nations, including the U.S., India and China, is increasing.

What happens next, they say, will at first be similar to the 1973 oil embargo by OPEC nations — high gasoline prices, shortages, long lines at the pump — except it will never end and will only get worse.

Much of the peak-oil debate revolves around when the peak will be reached, and whether we can switch to other forms of energy in time to avoid a prolonged crisis. Both sides cite studies that say we're either in a world of trouble, or there's nothing to worry about.

Seattle Peak Oil Awareness meets at the Phinney Neighborhood Center in North Seattle. About 50 people are involved in the group, either by attending meetings or joining the Web forum.

More than a dozen people showed up at their most recent monthly meeting, arriving by foot, bike, motorcycle and fuel-efficient cars. One guy parked his car at the bottom of a nearby hill because he didn't want to waste the gas driving up.

It's an informal gathering with no clear rules. They start off talking about a resolution they want the Seattle City Council to approve. It states, in part, that peak oil is likely to hit the city with little warning and "intervention at all levels of government will be required to avert social and economic chaos."

Many members say the group should alert the public at large and see the resolution as a way to do that. But Reid says there's an ongoing split.

"There are people who think that if you do enough work and get enough people on board then you can solve the problem," he said. "And then there's people who think we don't have time for that."

"Extremely depressing"

Reid, who moved to the U.S. from Scotland a decade ago, says it's hard to get people to understand the peak-oil issue, much less prompt them to action.

"The trouble with this is that it's an extremely depressing subject," he said. "A lot of people don't even want to know about it because it's so depressing. And when people do take it on, they just get depressed."

Members of Seattle Peak Oil Awareness went through that, he said, but decided it was better to prepare than do nothing.

The group's members are taking incremental steps to adjust their finances and their lifestyles.

They talk about how to grow, cook and store seasonal foods. Their Web site has forums about creating a seed bank, saving rainwater for gardening and building raised planting beds. There's discussion by some members of eventually buying some property that can be planted. They also discuss widening their social networks and establishing strong connections with neighbors, so they'll have people to count on if life gets tough.

Robert Nelson, a 36-year-old computer systems engineer, says he put a wood stove in his house after he learned about peak oil. He also stopped investing in the stock market and decided not to replace his pickup truck when it conked out recently. He and his wife now have one car.

Nelson expects the future will be a lot slower than our current fast-paced lifestyle, given that travel by car and plane will be a rarity. It's a waste of money, he said, to add lanes to interstates 5 and 405. "I look forward to the day when it's actually a nice biking surface," he said.

He also expects a much lower standard of living where work will be hard to come by. That's why many members are trying to get rid of debt by paying off everything except their mortgages.

Many of the lifestyle changes fit with members' environmental beliefs, they say, and they'd probably make them even if they didn't believe the world is running out of oil.

"I think peak oil is inevitable," Nelson said. "It's not escapable and it's going to happen within our lifetimes, so why not try to change our lives so we can live with those changes and be ready."