Thursday, December 18, 2008

Stop calling Peak Oil a theory!

I recently rediscovered this wonderful introduction to Peak Oil by way of Green Blue Brown.

The author, Chris Martenson, makes an excellent point that "Peak Oil" is just a description of how oil production works. We can observe the data that shows that the extraction of oil from oil wells rises, peaks, and then declines over time. This is historic and observable fact. That is just how oil production works.

The same principle that works for oil wells, works for oil fields. The same for the aggregate of all oil fields in a country - the oil production from each country eventually peaks and goes into decline. For example, United States oil production peaked around 1970, at which point we had to make up for the decline by importing oil from other countries. We became dependent on oil exporters for the welfare of our economy, and they became dependent on us for massive revenues from the purchase of their oil.

Currently, the oil production from 33 of the largest 48 oil-producing countries has peaked. According to the recent and highly anticipated International Energy Agency report, oil production in fields which have passed their peak is falling at a rate of about 6.7% , when the decline is being carefully managed. When post-peak fields are not carefully managed, decline rates are at least 9%. That's every year, folks.

Another fact is that oil cannot be extracted before it is discovered. So when we see that oil discoveries peaked in 1964, we know that production of oil will peak at a later date.

Source: The Oil Drum

In order to just stay even with the oil we are currently producing, we have to find an amount equal to the amount we are losing every year from the oil fields in decline. That's a problem. For years now, we've only been finding 1 barrel of oil for every 6 that we consume. We've been using up the oil found back in the sixties and seventies for thirty to forty years now. And these huge oil fields, which supply so much of the world's oil, are starting to finally peak.

More oil will be discovered. But over the last 100 years, oil companies and oil-exporting countries have scoured the earth to discover oil. The easy oil has all been found, so the oil that has been discovered in recent years is usually in places that are difficult to get to (such as deepwater reserves), or in forms that are expensive and ecologically destructive to extract (tar sands, shale). The Super-Giant fields discovered back in the fifties, sixties, and seventies (Ghawar, Cantarell), and the smaller giants (North Sea, Alaskan North Slope), have not been replaced.

So far we've been talking facts, observable data points. Speculation enters the picture when we discuss the date at which global oil extraction peaks. Predictions range from July of 2008 (the current record - production has fallen since then) to more optimistic views from the IEA that a global peak will occur in 2020.

So that part is theoretical, but also pointless. It has become a waste of time to debate the exact date of peak oil. We know it is coming, soon, and we should start preparing as soon as possible. It will take many years to find ways to live in a lower energy world, when we have become addicted to oil in almost every way imaginable. Currently, there aren't even any net-positive-energy substitutes for oil as a liquid fuel.

Another speculation is the form of consequences from the energy descent. We don't know what will happen when peak oil occurs. We've seen what the observed decline rates are - at least 6.7% every year - but we don't know how the world will react to that decline.

How will demand for oil respond to a fall in supply? How will the price of food and gas respond to a global oil peak? Will there be resource wars? We don't know. However, we do know that our economy, transportation model, production and shipping of many millions of products, and agriculture are completely dependent on oil. It's obviously urgent that we begin looking for ways to mitigate the problem. It's time for the mainstream media to stop calling Peak Oil a theory and start reporting on the facts.

So the next time you hear someone say "Peak Oil Theory", let them know that it is no theory. The world's oil production will peak. We could hit the peak last July, or tomorrow, or in 2013, it doesn't really matter. What matters is how we prepare for the peak, and how we respond to it. What matters is if we try to keep business-as-usual going or if we admit that we will have to live in a world with limits. We've got a lot of decisions to make and a lot of work to do. We'd better think carefully, and then get busy.


Kiashu said...

On TheOilDrum, the founder Heading Out and other writers Euan Mearns and de Sousa are climate change deniers; it's not happening, or if it's happening it's got nothing to do with people, and any evidence is probably just a conspiracy. Unaware of the irony that much the same is said about peak oil, they call it the "AGW theory".

I might start calling it peak oil theory just to annoy them.

Peak Oil Hausfrau said...

Kiashu - that's pretty funny. I like your strategy. I guess that could be applied to pretty much anything. :)

Kiashu said...


There's the theory of evolution, the theory of gravity, the theory of the round Earth, and so on - see? Soon as you put "theory" in front of it, it sounds really dodgy.

We ought to use this to undermine the dangerous things people believe in. There's the -

- A Big Mortgage is Okay Theory
- House Prices Will Always Go Up Theory
- Technology Will Save Us Theory
- Everyone Needs A Car Theory
- I Don't Have Time To Do That Theory
- Conservation Is Impossible Theory
- A Man Needs Meat Theory

and so on. Those are just off the top of my head, I'm sure you can come up with snappier versions :)