Peak Oil Overview

     Evolutionary psychology and peak oil:
      A Malthusian inspired "heads up" for humanity.

          -- by
Michael E. Mills, Ph.D.

 

 

Chapter 3: Possible economic and social scenarios following peak oil.


       
"Alas, poor world, what treasure hast thou lost!"

                          
-- William Shakespeare (Venus and Adonis)

Without the quick development of dense, renewable and rapidly scalable energy
sources, we may be in for a very difficult ride ahead.  If we don't act
now, oil may be to modern industrial/technological civilization what trees
were to the Easter Islanders, what grape juice was to the yeast colony,
and what grass was to the St. Mathew Island reindeer. 
 

Cheap, abundant energy is the oxygen of modern civilization.


There is no substitute for energy. The whole edifice of modern society is
built upon it. It is not "just another commodity" but the precondition of
all commodities, a basic factor equal with air, water and earth.

       -- E. F. Schumacher (1973)


...the real basis of any economy is energy. The horror of our current situation
is that we're losing access to our main source of energy. When that goes, the
economy will go with it.

       -- "lodo_bear,"
http://www.doomers.us/forum2/index.php/topic,71976.0.htm
 

 

         Video:  World Peak Oil Song

 

          

 

 

When critical resources are decreasing, game theorists call this
situation a
negative sum game.  Such "shrinking overall pie" situations
can often lead to intense conflict, unless social structures are developed to
help to enable cooperation, and, in the case of peak oil, a massive
effort to develop renewable energy is started immediately.

Whether we will have enough time at that point to make
the transition to renewable energy is the question.
 

                   
                    Source: http://www.guardian.co.uk/business/2010/jul/11/peak-oil-energy-disruption
 

              


So, what does this mean for me?  For example, what will a gallon
of gasoline likely cost in the future?

 

Superhighways, coast to coast.
Easy to get anywhere.
On the transcontinental over road,
just climb behind the wheel.
How does it feel?
When there's no destination that's too far?
And somewhere on the way,
you might find out who you are...

    -- "Living in America," James Brown, song lyrics.
 

 

 

Ok, let's bring this home to what we all understand -- gasoline prices.  

Historically, the price of a gallon of gasoline has been about the price
of a barrel of oil divided by 20, with a lag of up to a year and a half.
According to this historical relationship, oil at US $200 a barrel might
equate to gasoline at US $10 a gallon.

How would that affect you?  How would it affect the world economy?

Alternately, the price might not increase in a deflationary monetary environment.  However,
when many people are jobless and don't have much money, even the current price of gas
will be unaffordable.   That is the 'real price' (not the 'nominal price') of gasoline will
be very expensive.
 

The Economic Impacts of Peak Oil

     

"The challenge over the next several decades is to manage the consequences
of unavoidable dependence on oil and gas that is traded in world markets
and to begin the transition to an economy that relies less on petroleum.
The longer the delay, the greater will be the subsequent trauma
...the transition could be especially disruptive
."
      -- Council on Foreign Relations. "Independent Task Force Report #58
             "National Security Consequences of Oil Dependency"
              http://www.cfr.org/content/publications/attachments/EnergyTFR.pd
 

"Humans encountered a giant lottery ticket in fossil fuels. As the gradient
began to dissipate in 1970s consuming nations replaced it with debt,
imported energy, and borrowing from nature, future, and thin air."
    -- Nate Hagens http://campfire.theoildrum.com/node/5422#more

 

The graph below shows the percent of total world gross domestic product (GDP)
(economic output) that is spent on oil.   The vertical axis is price, the horizontal
axis is world oil production per year.   The graph is a bit difficult to interpret
because there is no axis for time.  However, each dot represents a particular
year, and time would pretty much correspond to the horizontal axis of oil production
per year.  Note that as oil production has maxed out, the percent of world
GDP spent on oil has shot up. 


Graph: Percent of world economic output spent on oil.

 

           
             
Source:  http://www.princeton.edu/hubbert/current-events.html (see May, 2008 article)

Kenneth Deffeyes, who developed the graph, goes on to say:


"Multiplying production (barrels per year) times the oil price (dollars per barrel)
gives a total cost in dollars per year. It's an enormous number; tens of trillions
of dollars per year...  Oil production obviously cannot consume 100 percent
of the world's income.   My intuitive, uninformed guess is that it cannot go
above 15 percent. If we see oil at $300 per barrel, we will be looking out
over the smoldering ruins of the world's economy."
 

To further exacerbate the problem, world GDP will itself shrink
as the price of oil increases.  That is, not only will the cost of oil
consume a greater percentage of the world economic pie, but the
size of the economic pie itself will shrink as the price of oil increases.  That
is a self-reinforcing feedback loop.

As noted in the graphic below, oil production growth is highly
correlated with world GDP growth.   A decline in oil production
will likely lead to a corresponding decline in world GDP.

   

From "Estimating the Economic Impacts of Peak Oil"
http://www.inspiringgreenleadership.com/blog/aangel/estimating-economic-impacts-peak-oil

 

 

 

"How fast does the economy decline as oil production declines?  In his latest report, drawing on various sources, Robert Hirsch reasons  that the correlation is 1:1. A 2.5% annual decline rate will shrink the  global economy by 25% in 10 years. Other reports substantiate that ratio.

...our GDP will decline at approximately the rate oil declines.

...With the annual oil decline rate expected to range between 2%  and 5% (see Hirsch, 2008) and the Oakland Peak Oil report using  2.6%, we will have a massive unemployment and homelessness  problem on our hands. It also seems reasonable to expect that a great deal of wealth will be destroyed during the decline, as is happening now in the current credit crunch but on a larger scale."

 

 

In fact, 4 of the past 5 economic recessions in the U.S. followed oil price spikes.
 


Source:  http://www.theoildrum.com/node/4727
 

Note the relationship between oil price spikes and economic contraction.

 


Historically, when oil production has peaked in one country it has been able
to turn to other countries to import oil.  For example, after U.S. domestic oil
production peaked in 1970, Saudi Arabia came to the rescue with more oil. 
Who will come to the rescue when Saudi Arabia reaches its own peak of oil production?
There is no one else to turn to.  

Demitry Orlov has explored the Russian economic collapse after its
oil production fell.  The world came to its rescue, and provided the
oil imports it needed for an economic recovery.

Who will come to the Earth's rescue after world peak oil? 

Here is Demitry Orlov's (tongue-in-cheek) solution:
 

 

Had the Former Soviet Union remained economically isolated, the free-fall would have continued. Kolodziej and Reynolds drew some interesting conclusions based on these data. Firstly, the crash in oil production preceded collapse in USSR's Gross Domestic Product. The lag time between the two, and the severity of the collapse are clear enough to ascribe causality: to say that the oil crash caused the economic collapse. On the other hand, coal and natural gas production, which also crashed, did so after the GDP collapsed, again, with a significant enough lag time to say with confidence that it was economic collapse that caused coal and gas production to crash.

What actually happens to an economy and a society under such circumstances? With oil in short supply, industrial production plummets, the economy stalls, there is a financial crisis because of debts going bad, followed by a commercial crisis because of falling demand and lack of credit, followed by political collapse caused by dwindling government revenues, followed by social collapse as unemployment rises and crime becomes rampant. After a while of this, the idea of you and your friends going out to the oil field and pumping some more oil starts to seem rather odd, and so oil production heads to zero.

The global oil peak is different from all the little localized peaks in that the planet as a whole cannot import its way out of an oil shortage, resulting in a global economic collapse. The economic collapse will, in turn, cause global oil production to crash even faster, extinguishing the industrial economy.

As Russian oil production was saved by foreigners, so Earthling oil production must be be saved by aliens from outer space.

Although we have absolutely zero data on which to base this assumption, we must assume that oil production throughout the rest of the universe has not peaked yet. Further, we must assume that interstellar vessels will deliver this oil to Earth in a timely manner, making up for any planetary production shortfall before Earth's economy collapses. Further, since Earth has few resources to trade for this oil, let us assume that the aliens will be happy to give us their oil in exchange for a truly excellent recipe for brioche à tête which (for reasons we should find intuitively obvious) no-one in the rest of the universe has been able to perfect.



  -- Demitry Orlov

        http://cluborlov.blogspot.com/2009/06/slope-of-dysfunction.html

 

 

But, what if the alien's don't save us?

The nominal price of oil might fluctuate wildly as the underlying
monetary supply expands (inflation) or contracts (deflation).  

Economic systems may become so unhinged by oil price fluctuations that
the system becomes wildly chaotic, with extreme cyclical swings prices as
economies shrink to due high oil prices, recover, shrink again,
and so on, in a downward stair-step.
 

                              

                                Source: http://www.postpeakliving.com/files/presentations/PostPeakPreparationChecklist.pdf

 

                       
                      
Source: http://www.declineoftheempire.com/2010/09/the-next-oil-price-shock-an-update.html


Here is a brief video clip about the cyclical rise and fall of oil prices that we
are likely to see in the future:

 

                                 

                                  Source: http://www.youtube.com/watch?v=T7vGDwGLU7s


 

The bottom line is this:  oil will become increasing expensive in real terms, even as
it goes through wild swings of nominal decreases (due to general economic contraction
and deflation) or nominal increases (due to monetary inflation).   During an economic
depression, the real price of oil will be too expensive for most people despite nominally
low oil prices.   That is, if you don't have much money, oil is pretty expensive even
when it is nominally cheap.

 

US gasoline - number of gallons bought with an hour of work
Source: http://fingfx.thomsonreuters.com/2012/09/14/1233004768.htm

 

So, what might we expect in the near future?
 

 

In the article The Expected Economic Impact of an Energy Downturn,
by Gail Tverberg, the possibility that the "economic pie" will
be shrinking in the future is explored:
 

             
               
Source: http://www.theoildrum.com/node/3747
 

As noted earlier, a shrinking economy is a "negative sum game"  (similar
to the game of "musical chairs").    Such situations typically lead to intense
conflicts over resources (and make resource wars more likely).

A secret German military think tank report warning about peak oil,
and its likely economic effects, was recently leaked to the press:

 

                  
                  Source: http://www.spiegel.de/international/germany/0,1518,715138,00.html

 

Will Stewart has summarized the economic forecasts made in this
German military report:
(Source: http://www.theoildrum.com/node/6910#more)
 

 

 Banks lose their business base. Cannot pay interest on deposits, because
   they can not find creditworthy companies.

• Loss of confidence in currencies. The belief in the value-preserving function
   of money is lost. It only comes to hyper inflation and black markets, then
   to a barter economy at the local level.

• Collapse of value chains. Labor processes are based on the possibility of
   trade in precursors. The processing of the necessary transactions without
   money is extremely difficult.

• Unbound monetary collapse. If currencies lose their value in their country
   of origin, they are no longer exchangeable for foreign currency.
   International value chains collapse as well.

• Mass unemployment. Modern societies are organized labor and have
   throughout their history ever differentiated (specialized). Many professions
   have to deal only with the management of this high degree of complexity
   and nothing more with the direct production of consumer goods. The suggested
   here to reduce complexity of economies would in all modern societies, a       dramatic  increase in unemployment.

• State bankruptcies. In the situation described State Revenue break away.
   The possibilities of more debt are limited.

• Collapse of critical infrastructure. Neither the physical nor the financial resources
   for the maintenance of adequate infrastructures. The problem is compounded by
   the interdependence between infrastructure and with different subsystems.

• Famines. Ultimately, it will provide a challenge to produce food in sufficient
   quantity.

 

Below is an excerpt from an internal British Department of Energy
and Climate report on peak oil.   The government only released the report
when it was forced to do so under the Freedom of Information Act.
 

 

  Source: http://www.theoildrum.com/node/8044
 

Video:  Peak Oil

                     

 

 

Historical precedents for the consequences of reductions in access to oil

"When all the world is overcharged with inhabitants,
then the last remedy of all is war; which provideth
for every man, by victory, or death."
    - Thomas Hobbs, Leviathan

There are some historical precedents -- we can look to see what happened in
countries that have suffered a severe reduction in their access to oil.   North Korea
and Cuba both had an energy crisis in the 1990s when the collapse of the Soviet Union
stopped the Soviet subsidies of oil to these countries.  Cuba and North Korea both
suffered over a 50% reduction in oil availability.    As a consequence, North Korea
suffered mass starvation; Cuba mobilized a massive effort of re-localization (including growing
food in local communities, including cities) and just barely avoided mass starvation.
There was one upside:  the average Cuban lost body weight.

Japan, with no oil resources of its own,  got most of its oil from California before WWII. 
However, they anticipated  that this would stop once WWII began.  Japan then initiated
military actions to seize oil resources in the East Indies.

 

Source: http://www.energybulletin.net/node/52722

For more information on this topic, see Peak oil futures: same crisis, different responses,
by Jörg Friedrichs, University of Oxford.
 

Why aren't we getting a "heads up" about peak oil? 

It is difficult to get a man to understand something when his salary depends on
his not understanding it.
     --Upton Sinclair


Question: What happened after you published your 2005 report on ‘peak oil’
    for the US Department of Energy?
Answer: The people that I was dealing with said: No more work on peak
    oil, no more talk about it.

      -- Dr. Robert L. Hirsch, author, U.S. Department of Energy sponsored report:
               
Peaking of World Oil Production: Impacts,  Mitigation, & Risk Management


I think a lot of governments are taking (peak oil) very seriously. But they are
not talking about it in public because they don't want to frighten anybody.
...we are already pretty much on a knife edge with regards to finance and
they just do not want anyone spooked at this point.

    -- Nicole Foss
  ( Source  / Transcript )
 

Brief answer: Governments  and corporations are not in the business of communicating
bad news to their constituents (although ethically they should), especially
when such bad news will threaten  short term profits or chances of
re-election.   They are "near-sighted."

The first sobering "heads up" was presented by geologist M. King Hubbert, in 1956. 
He warned that  oil production in the lower US 48 states would peak in 1970.  

In 1957, Rear Admiral Hyman Rickover gave a speech in which he warned about the future
decline in fossil fuel resources, and he stressed the need to tell the younger
generation.  However, there were no warnings about peak oil from the government.

U.S. oil production did peak in 1970, just as had Hubbert predicted in 1956.  
He also warned that world oil production would peak sometime around 2000.  
Given that Hubbert had already gotten one prediction right, you might think
that the government and corporations would warn us about the predicted
2000 world oil production peak. 

They didn't. 

In her article, Peak Oil and Politicians, Kelpie Wilson, notes:

Since 1956, the world economy has proceeded under a sort
of oil company spell that has woven the illusion all around us
that oil depletion is so far into the future that we don't
need to worry about it. That belief was essential to support
the aim of an endlessly growing economy.

 ...Today, despite skyrocketing oil prices, most politicians
still avoid the term "peak oil." Most of the media still treat
peak oil advocates with skepticism, using epithets like "fringe"
and "so-called" to describe peak oil theory

When speaking of energy issues, politicians will often use
the euphemism of energy security, acknowledging that the US
has only three percent of the world's oil reserves and warning
that most of the rest of it belongs to unfriendly or unstable
governments. While there is truth to this type of statement,
it sets up a framework for conflict by creating the perception
that there is plenty of oil left but bad people are keeping it
away from us.  Both Democrats and Republicans buy into this view.
In this election season, some Democrats seem even more willing
than Republicans to play the oil fear card and promote quick-fix
measures that are ineffectual or downright ridiculous.

 ...After years of toning down the message of peak oil in public
discourse, voters need to let candidates know that now is the
time to tone it up.

 

From 1970, when U.S. oil production peaked, until today, when world oil production
is peaking, instead of warning us about peak oil, the U.S. leaders allowed us to
became increasingly dependent on foreign oil by failing to start a massive program
to produce renewable energy.

President Carter did make a bit of an effort to warn us.  In a televised televised
speech on April 18, 1977, Carter said:

Tonight I want to have an unpleasant talk with you about a problem unprecedented
in our history. With the exception of preventing war, this is the greatest
challenge our country will face during our lifetimes. The energy crisis
has not yet overwhelmed us, but it will if we do not act quickly.

 ...The most important thing about these proposals is that the alternative
may be a national catastrophe. Further delay can affect our strength
and our power as a nation.

Our decision about energy will test the character of the American people
and the ability of the President and the Congress to govern. This difficult
effort will be the "moral equivalent of war" -- except that we will be uniting
our efforts to build and not destroy.

 

Here is a video of this speech:
 

                              

 

This theme was expanded in his July 15th, 1979 "Crisis of Confidence"  speech. Carter
warned that the 1979 oil crisis was the "moral equivalent of war."  He also said:
"We believed that our nation's resources were limitless until 1973, when we had
to face a growing dependence on foreign oil."  Note that he came close, but he
didn't quite explain why our oil resources were not "limitless."

President Carter set the following national goals in that speech (goals, which in
retrospect, were a stunning failure):

Beginning this moment, this nation will never use more foreign
oil than we did in 1977 -- never. From now on, every new addition to our
demand for energy will be met from our own production and our own conservation.

 ...I am asking for the most massive peacetime commitment of funds
and resources in our nation's history to develop America's own alternative
sources of fuel -- from coal, from oil shale, from plant products for gasohol,
from unconventional gas, from the sun.

I propose the creation of an energy security corporation to lead this effort
to replace 2-1/2 million barrels of imported oil per day by 1990. The corporation
I will issue up to $5 billion in energy bonds...

 ...we will mobilize American determination and ability to win the energy war. Moreover,
I will soon submit legislation to Congress calling for the creation of this
nation's first solar bank, which will help us achieve the crucial goal of 20 percent
of our energy coming from solar power by the year 2000.

Wait... did he say 20 percent of our energy would be from solar power
by the year 2000?  Did he say that we would reduce imported oil to zero by 1990?

Most egregiously, President Carter never really explicitly mentioned the words "peak oil."
He never mentioned the more general problem of world oil depletion, or the declining
world oil EROEI.   He did not mention that renewable sources of energy could not
replace the equivalent amount of energy provided by oil.

Had the real, underlying problem been clearly articulated back then, might things have turned
out differently 30 years later?   What if, back in 1979, President Carter had mentioned
that oil production in the U.S. had peaked nine years ago, and we were on a
irreversible decline?   What if he had mentioned that Hubbert had forecasted that peak,
and that we had only about 20 years to prepare before Hubbert's prediction that
world oil production would peak around the year 2000?

At least President Carter mentioned the general problem, albeit without mentioning
peak oil.   To be fair, none of the subsequent presidents have ever mentioned
the words "peak oil" in public, either.

In 1980 Carter proclaimed, in what came to be called the Carter Doctrine,  that the
U.S. would intervene militarily if our oil supply from the mid-east was threatened.
Apparently he was aware that renewable sources of energy were not going to
replace oil quickly enough, despite his earlier comments to the contrary.

In 1993, President Clinton, along with the heads of the major U.S. car companies,
launched the Partnership for the New Generation of Vehicles.  By 1997, they had
produced an 72 mpg concept "supercar" that would be a diesel-hybrid combination.  After a
billion dollars of government money, in 2000 the concept cars were wheeled out.

But none were actually sold to consumers.  Why? Isn't it rather strange to spend
over a billion dollars of taxpayer money to develop a 72mpg car, but then not
ensure that it is actually available to consumers for purchase?

To view a PBS Frontline video on this topic, see: 
http://www.pbs.org/wgbh/pages/frontline/video/flv/generic.html?s=frol02s1514q4b7&continuous=1
 

By 2002 the U.S. government scrapped the project. 

However, in 2001 President G. W. Bush created the Energy Task Force -- its
purpose was to "develop a national energy policy... (to) promote dependable,
affordable, and environmentally sound production and distribution of energy
for the future." Then Vice President Dick Cheney was named to chair the group.
Major oil companies met in secret with the Energy Task Force to help to
develop national energy policy.  Despite requests made on the basis of the Freedom of
Information Act the details of these meetings were never made public.   In
non-sworn testimony before the U. S. Senate, several energy companies that
were believed to have participated in these meetings denied doing so.

Here is a video clip of this Senate testimony:

 

                                 
                                  
Video clip from the film "Fuel" see: http://www.thefuelfilm.com/

 

In the video clip below, Jon Stewart skewers the last 8 US Presidents.  They all promised
to reduce our addiction to foreign oil, and all promised to promote the rapid development
of alternative, clean renewable energy.  

None of them delivered.

                   

           

The Daily Show With Jon StewartMon - Thurs 11p / 10c
An Energy-Independent Future
www.thedailyshow.com
Daily Show Full Episodes Political Humor Tea Party

Source: http://www.thedailyshow.com/watch/wed-june-16-2010/an-energy-independent-future


Further, none of them have used the term "peak oil" and then fully described what
it is, and the consequences it will likely have.

However, to give credit where it is due, Jimmy Carter did reduce oil imports
by half during his term in office:

 

                 

 

It is likely that government officials at the highest levels are very aware
of peak oil and its implications, but they are afraid to speak of it directly.
 

(There is) speculation that government ministers are far more concerned about
a future (oil) supply crunch than they have admitted... The (British) Department of
Energy and Climate Change (DECC) is also refusing to hand over policy documents
about "peak oil"... under the Freedom of Information Act... (because discussions)
are "ongoing" and "high profile" in nature.   ...an internal IEA (International Energy
Administration) source said: "there are fears that panic could spread on the financial
markets if the (IEA projected future oil production) figures were brought down further.

  -- From article "Peak oil alarm revealed by secret official talks,"  The Observer, Guardian.co.uk
      http://www.guardian.co.uk/business/2010/aug/22/peak-oil-department-energy-climate-change

 

Even the main stream media, which "...frequently brags on its role as the public’s
watchdog..." is asleep at the wheel.  
(See:  The Silent Side of Oil: Press needs to pump information on peak supply by
Katherine Bagley, in the Columbia Journalism Review.  And:  While the Watchdog Sleeps.)

News that is unfolding in slow motion seems to get far less attention than far
less important, but fast moving, "breaking news" stories.   We rarely hear newscasters
say breathlessly: "Now, in slow breaking news, preparations for the coming energy
famine are being supported by governments and large corporations around the world..."

Here is a video parody of how the mainstream media has failed to inform us about peak oil,
while giving us far more information about celebrity gossip than we really need to know.

 

               

 

If a bus is barreling down the street toward you, don't your leaders, and the
mainstream media, have an ethical duty to warn you?  

We have had a severe failure of leadership.   (Note the small print in
the graphic below).
 

                           

 

Although we have not gotten a clear warning about peak oil from most
top government and business leaders, or from the majority of the
main stream media, the word is now starting to get out.

A very small group of U.S. congressional representatives -- the US Congressional
Peak Oil Caucus,
with representatives Udall and Bartlett, is sounding a warning.  
But this issue is so  important, it should be coming from the very top national and
international leaders.

One warning that did come from the main stream media was the CNN production "We Were
Warned: Out of Gas
" with Frank Sesno.
( http://www.cnn.com/2008/US/05/14/bts.sesno.gas/index.html )
 


 

From the video transcript: 

Frank Sesno: What is your worst case scenario?

Mathew Simmons:
My worst case scenario is so bad
    that you don't want to go there.


(Source: http://transcripts.cnn.com/TRANSCRIPTS/0706/02/siu.01.html )

 

Also, CNBC ran an special program in October 2008 about the problem:


 

For some video clips from the program, see this link: 
http://www.cnbc.com/id/26334704

 

And, recently a British industry task force made a sobering warning: an
oil crunch is coming by 2015.   (See the British
Industry Taskforce on
Peak Oil & Energy Security
.)   It is disappointing that this warning did not
also come from the British government.

 

             

                Source: http://www.businessinsider.com/virgins-richard-branson-predicts-oil-crunch-by-2015-2010-2

 

Finally, on June 16, 2010 in his first televised address to the nation, President Obama
described the problem (albeit without mentioning the term: "peak oil").  It took
the BP oil disaster in the Gulf of Mexico to prompt it:


" ... oil is a finite resource. We consume more than 20% of the world’s oil,
but have less than 2% of the world’s oil reserves. And that’s part of the
reason oil companies are drilling a mile beneath the surface of the
ocean – because we’re running out of places to drill on land and in
shallow water.

For decades, we have known the days of cheap and easily accessible
oil were numbered. For decades, we have talked and talked about the
need to end America’s century-long addiction to fossil fuels. And for decades,
we have failed to act with the sense of urgency that this challenge requires.
Time and again, the path forward has been blocked – not only by oil
industry lobbyists, but also by a lack of political courage and candor."

 

Here is a video clip of this part of his speech:

 

                         

 

Whew.  It took awhile, didn't it? 

Wait... but he still didn't mention peak oil, did he?  At least he came close.

 

Is there enough time (and oil) left to make the transition to renewable energy?

 

"The era of procrastination, of half-measures, of soothing and baffling
expedients, of delays, is coming to a close. In its place we
are entering a period of consequences."

      -- Winston Churchill, November 1939

In 1977 Barry Commoner wrote in The Politics of Energy that we must
begin developing renewable energy now because
the remaining oil
reserves themselves
will be needed to serve as the transitional medium

to build a renewable energy infrastructure.
 

That was over 30 years ago.  

More recently, Dr. Robert Hirsch, in a study sponsored by
the U.S. Department of Energy titled Peaking of World Oil Production: Impacts,
Mitigation, & Risk Management
concluded that to avoid serious impacts, a peak oil
mitigation crash program must start 20 years before peak oil.  We apparently are at peak
oil now, and the crash mitigation program has yet to begin.

Again, the critical issue is this: once peak oil and its potential consequences
become generally known and accepted, will there be enough time to make
the transition to renewable energy sources quickly enough to avoid major
economic and social disruptions?  

Will the last precious barrels of oil be used to power SUVs, or will they
be used to build the renewable energy infrastructure that is
needed to avoid an energy famine?


For now, what currently available sources of renewable sources of energy
can help to at least mitigate the upcoming energy famine?

Let's evaluate several sources of energy in terms of their current potential.

The data in the tables are my rough estimates, and, could be a bit off the mark.

Point values in the tables below: 

5 - Very Good
4 - Good
3 - Medium
2 - Poor
1 - Very Poor

  

CURRENT ENERGY SOURCES:

 

 

EROEI*(estimated
EROEI in parens)

Energy
Density

Easily Stored

Easily Transported

Safety

Easily
Used for
Transport-ation

Low Infrast-ructure Costs

Summary
Score
(Average)

 

NON- RENEWALBE, FINITE ENERGY SOURCES:

Oil

5 (20)

5

5

5

4

5

5

4.8

 

Coal

3   (9)

4

4

4

5

2

3

3.5

 

Natural Gas

5 (20)

4

3

2

2

2

4

3.1

 

Nuclear

1  (4)

5

5

5

3

2

2

3.3

 

RENEWABLE ENERGY SOURCES:

Hydro (dams)

4 (11)

3

5

1

3

2

3

3.0

 

Wind

3 (7?)

2

2

2

5

2

4

2.8

 

Solar PV

3 (5)

2

2

2

5

2

4

2.8

 

Biomass
Ethanol

1(1.3)

4

4

4

4

4

4

3.5

 

Geo-
thermal

2 (6)

3

2

1

4

2

3

2.4

 

Ocean

waves / tides

2 (?)

3

2

1

4

2

2 (?)

2.3

 

 

*EROEI:  "Energy Returned on Energy Invested."   Approximate EROEI values are in parenthesis.
E.g., a score of 2 means that twice as much energy is returned as energy invested;
an oil EROEI of 20 means it would take one barrel of oil ("invested") to produce 20 barrels of oil ('returned").
Reference source for EROEI figures:  http://eroei.com/eval/net_energy_list.htm 
Also, see article on energy density here.

What is most disconcerting is that there is no renewable energy source
that comes close to the energy advantages of oil, especially with respect
to its energy density and its "net energy" (or "EROEI" -- energy returned on
energy invested).

 

POTENTIAL OF SEVERAL CURRENT ENERGY SOURCES AS A FUTURE,
LONG TERM ENERGY SOURCE:

  

 

Summary
Score (from previous table)

Low
depletion
rate

Low
Greenhouse
Gases

Low
Future
Costs

Summary

Score
(Average)

NON- RENEWALBE, FINITE ENERGY SOURCES:

 

Oil

4.8

2

2

2.7

Coal

3.5

3   

1

3

2.6

Natural Gas

3.1

1

2

1

1.8

Nuclear

3.3

2

5

2

2.8

RENEWABLE ENERGY SOURCES:

 

Hydro (dams)

3.0

3

5

3

3.5

Wind

2.8

5

5

5

4.5

Solar PV

2.8

5

5

5

4.5

Biomass
Ethanol

3.5

3

3

3

2.8

Geo-
thermal

2.4

4

5

4

3.9

Ocean

waves / tides

2.3

5

5

3

3.8

      

 

RANK ORDERING OF CURRENT RENEWABLE ENERGY SOURCES
(based on the above tables):

 

 

Here is another energy matrix, created by UC San Diego physicist Tom Murphy:

 


Source 

 

For more discussion about the pros and cons of various forms of
energy, see:

Energy in a Nutshell, by Alice Friedemann. Also see
Peak Oil and Alternative Energy -- why there is no good alternative to oil
(in terms of net energy). 

Peak Oil: Alternatives, Renewables, And Impact, by Clifford Wirth, Ph.D.
Energy Grades and Historic Economic Growth, by oil and energy
economist Douglas Reynolds:
 "In our own day, we must eventually
move to lower grade energy resources as we slowly run out of oil.
Therefore, we might expect the transition from oil to oil alternatives
to be a decisively less successful energy transition than previous
energy transitions in history, since all the previous transitions were
from low grade to high grade energy resources, and the coming oil
transition is from a high energy resource of oil to lower grade energy resources."

 

However, one problem with transitioning to renewable energy
is that the volatility of oil prices can kill free market attempts to develop
renewable energy.   That is, renewable energy projects that could be profitable with
high oil prices go bankrupt when oil prices drop (due to economic contractions
caused, ironically, by the high oil prices themselves).   This is one argument why
governments need to be involved in supporting renewable energy.   They need
to guarantee that oil prices, due to temporary price volatility, don't decline below a level
that would kill off renewable energy projects.

 

                 
                         
Source: http://www.oftwominds.com/blogjuly10/oil-headfake07-10.html

For more on this see: Oil Head-Fake Update: Why Alt Energy Will Never "Pencil Out."

 

In the future, as we increasingly rely on renewable energy sources that do
not provide as much energy as did oil, our economies will steadily shrink over time.
The sooner a crash program in developing renewable energy infrastructure begins
the more likely we are to be on trajectory A, rather than B, in the graphic below.
 

                
                    
Source: Andre Angelantoni,  PostPeakLiving.com    /  http://europe.theoildrum.com/node/7001
 

 

In addition, as noted earlier, there might not be enough time left to
transition to energy dense renewable energy sources to avoid the more
pessimistic scenarios.
 

                
                          
Source: http://news.yahoo.com/s/afp/20101115/ts_alt_afp/usenergyrenewableoilinvestment


Will a scientific breakthrough come in time to save us from a worldwide
energy famine?

 "...the tactic of using the remaining fossil fuels to prepare to prepare for a post-fossil fuel
future is a matter of buying time until "they," the scientist-nerd-innovator-geniuses,
come up with a new a superior energy source.  For all I know, this miracle will occur.
 ...but it puts the human race into a jam, cramming for a final exam that it can't
afford to lose."

  
--
James Howard Kunstler, "The Long Emergency"


"As a scientist I have asked myself: What is the most challenging problem that science
and technology must solve in the coming decades? It is going to be sustainable energy.
If we can't solve that, we have got a real problem."

     -- Dr. Steven Chew,  Secretary of the U.S. Dept of Energy


"...a free market system is about the best system available for society, but that
does not mean free markets are powerful enough to overcome peak oil."

    -- Dr. Douglas B. Reynolds, Professor of Energy Economics at the
          University of Alaska, Fairbanks 
(Source)
 

I had a colleague and good friend who contracted a deadly form of ovarian
cancer.   She was a scientist, and she investigated the medical literature herself.
She read every research article she could find.  She was convinced that if
she could live another five years (the limit of her prognosis), a breakthrough
cure might be found in time to save her.  

Tragically, a technofix did not come in time.

A scientific breakthrough cure for our terminal energy decline might come in time, or,
it might not.   To save us, the breakthrough must provide renewable, dense,
clean, safe, and transportable energy that can scale up rapidly, with an EROEI
equivalent, or better, than that of oil.
 

In short, we need an energy source scientific discovery "miracle" to avoid the coming
energy famine.   Bill Gates is aware of this.

 

Source:  http://www.cnn.com/2010/TECH/02/12/bill.gates.clean.energy/index.html

 

As are others...

 

           

              To view or download this report, click on this link:
             
http://www.postcarbon.org/new-site-files/Reports/Searching_for_a_Miracle_web10nov09.pdf


However, keep in mind that, as was the case with my friend, there
are no guarantees that a scientific miracle technofix will come in time.
  

 

What will happen if we don't make the transition to renewable energy in time?
  
 
 

"So let us not talk falsely now, the hour is getting late."
      
-- Bob Dylan

 "Running low on gas...  "
              -- Amelia Earhart


"...we're now, in my view, inevitably going to pass through a rough patch... and in the
geopolitical, economic, and climate chaos involved I expect we'll tragically
lose a few billion people."
     -- Paul Gilding, The Great Disruption

" ...the oil economy is going away. While it is still here, we can use it to fuel
the transition to the energy economy of the future. If it goes away before we've
done it, we are screwed."

      -- Omri Schwarz  (source)

"Finding a new source of energy to replace fossil fuels may
be the most daunting task ever to face mankind."
   
-- Jim Puplava

 

                  

 

If we do not quickly transition to rapidly scalable and energy dense renewable energy,
the predictions made in the following graphs paint some very grim scenarios.


Caution:  The graphics below are pretty explicit.

As you review these graphs, keep in mind that these nightmares are not in some
distant future.  They may arrive in less than one or two decades from now.

 


Source: http://www.theoildrum.com/node/3091


Note in the graph above that, without some type of scientific energy
breakthrough,  the low energy density of current renewable energy
sources (
in green)
result in renewable energy sources that barely
make a dent in the total energy picture. 

Surprising, isn't it? 

And, disturbing.
 

A possible scenario for total world energy use.

Source: http://www.theoildrum.com/node/3091

 

A very sobering projection for possible world population resulting
from an energy famine (and consequent food famine).  Like the
reindeer of St. Mathew Island, we have no special dispensation from ecological
overshoot and population collapse.

 

Source: http://www.theoildrum.com/node/3091
Also see:
Peak Oil and famine: Four Billion Deaths, by Peter Goodchild  and the
Time Magazine article After the Oil Crisis, a Food Crisis?

Yes, the graph above suggests that billions of people may have an early,
unpleasant demise if the oil (i.e., energy) depletion problem is not solved.
 
Soon.   

This isn't just about forgoing a summer vacation road trip.       
 

But weren't predictions of doom made before, and they didn't happen?

Yes.  Some previous predictions of population collapse did not come true. 

Paul R. Ehrlich predicted in his 1968 book The Population Bomb that a mass
starvation would occur in the 1970s or 1980s.  It didn't.   The green revolution scientific
technofix literally arrived just in time with new agricultural pesticides, fertilizers, irrigation,
and the breeding of high yielding crops.

However, this still did not prevent  famine, or the severe malnourishment, of people
in many countries.

Even today, hunger is common for one in six people on the planet.
 


Source: http://news.yahoo.com/s/ap/20090619/ap_on_re_eu/eu_un_world_hunger
 

As with the fable, calling "Wolf!" too often will get you ignored.   But do you
recall what happened at the end of the story?  

Yes, the wolf finally did arrive. 

The book Limits to Growth also made some pretty frightening predictions back in 1972,
as did the follow up book Limits to Growth: The 30 Year Update in 2004.

 

 

Here are the original predictions that were made in 1972:
 

 


Instead of falsely calling "wolf," these predictions appear to be on track
as of today.

 


Several prominent scientists, including Jared Diamond, Stephen Hawking,
and E. O. Wilson, concur that the consequences of human ecological overshoot are likely
to be severe by 2050. 

Several books have recently explored some these predictions (click on the graphic
for more information):

    

   

 

   

   

    


   

                 

             

           

 

 

American ABC News presented a special video documentary:

 

 

Whoa...  wait a second.  All of this is getting just way too negative
and scary for me!  Can't we go back to reviewing possible technofixes? 
Ray Kurzweil and others are still optimists -- what would they say?

  
Indeed, as noted at the outset,  Kurzweil and others have suggested
that the increase in the rate of computer power, human knowledge,
and scientific advances related to energy production are on an upward
geometric progression.

Some of these possible energy technofixes were explored in a four part
Science Channel television series called
Powering the Future, hosted
by Dr. M. A. Sanjayan.   Below is a screen shot of the TV series web site:



 

To see some video clips from the series, see the website:

    http://science.discovery.com/tv/powering-the-future/
 

Here is one video clip from the program that focuses on renewable
energy sources. 
 

                            
 

The video notes that despite the fact that we are surrounded
by solar, wind, hydro and geothermal energy, the problem is this:
How can we efficiently access it?   And how to rapidly develop a massive
program to build the infrastructure to access this energy in time
to avoid an energy famine?   It is rather like dying of thirst on a
lifeboat on the ocean.  You are surrounded by water,
but you don't have the means to transform salt water into the
fresh water that your body desperately needs to survive.

Another problem that is overlooked in the video clip is that in order to
build renewable energy infrastructure, we need oil energy to do it.
At this point, it is not possible to build renewable energy infrastructure
with renewable energy.   And, as oil production declines, the price
of oil will increase.  High oil prices cause the economy to go into recession,
making the cost and feasibility of developing renewable energy
increasingly difficult.

If traditional sources of renewable energy cannot scale up rapidly enough,
what are we left with?  

We are left hoping for a renewable energy miracle.

 

Areas where we desperately need to see a breakthrough scientific discovery.
 

                    

I know what you’re thinking: 'Oil prices are rising. Have we already past peak oil?
Or do we still have five more years?' Well, to tell you the truth, in all this excitement,
I’ve kinda lost track myself. But being that oil is the oxygen of modern civilization,
and  that no combination of alternative energy sources can provide as much energy
or scale up in time, you’ve got to ask yourself one question about a potential
energy 'miracle' discovery: 'Do I feel lucky?'

Well do ya, punk?
    --
 Scene from the film "Dirty Harry" with Clint Eastwood (slightly reworded)

Again, keep this in mind: current renewable energy sources have low net
energy (ERORI), are not energy dense, are not self-bootable, and they would
take too long to scale up to avoid an energy famine.

So we are left hoping for a renewable energy miracle breakthrough.  Below are some
possibilities -- keep your fingers crossed that one of them provides an
energy source techofix breakthrough.   Soon.  Very soon -- we don't have
much time left.

1. Nuclear fusion.  Fifty years ago they said it would be ready in fifty years.  Ahh... not.
            Now when do they say it will be ready?  Fifty years from now...   (I am not putting
            my bet on this.)

2. Solar photovoltaic.   Can it scale up rapidly?  Can its efficiency be increased?  Can
            its cost be radically reduced?   Can it avoid using rare earth minerals?

3. Oil made by genetically modified algae or bacteria via photosynthesis.
         
Can it scale up rapidly?  What is the EROEI?  Can genetic breakthroughs
            to modify algae come in time?

Keep an eye on this one -- it might work and it might scale up rapidly. 
Also, imagine that you could buy an affordable, personal algae to oil system
for use in your own backyard.  Well, now that would be quite cool. 
You could fill up the gas tank of your algae biodiesel car at home.

For more information see:

Video: J. Craig Venter's TED talk (algae comments start at 13:00 into the video)
Video: FORA.tv  J. Craig Venter
Joining 3.5 Billion Years of Microbial Invention
Video: Brink episode on
algae to oil.
Newsweek article: 
A Bug to Save the Planet. Genome pioneer Craig Venter wants to
make a bacterium that will eat CO2 and produce fuel
.
Article:  15 Algae Fuel Startups, 2010 Edition
Website:
http://www.oilgae.com/

News item: Mass. Company Making Diesel With Sun, Water, CO2
      Company website:  Joule Unlimited    Video

For more sobering views about the potential of algae:

bulletBook Review: Green Algae Strategy
bullet5 Issues with Algae Fuels

 

                      Here is a video clip re algae to oil from the film "Fuel."
 

                                       
                                      For more info re the film "Fuel" see:
                                       http://www.thefuelfilm.com/

 

4. Some other energy breakthrough.

A different, exotic energy breakthrough may be in the labs
now.  The question is:  can it be brought to market and
scale up rapidly?
 

Like you, I hope Kurzweil is right, and I hope that some of the possible
solutions outlined in the video programs above are correct.   But even
the experts interviewed on these video programs clearly stated several times
that we don't have much time left to transition to clean, renewable energy.  

The outcome of Kurzweil vs. Malthus match is still open for betting.

One thing we can all agree on:  the more we delay, the more the odds move
in favor of Malthus.   We need a massive, crash program to build renewable energy.
Now.

 

Personal reactions to peak oil.

                                  
                                               Deer in the headlights.

"...something is happening here but you don't know what it is
 do you, Mr. Jones?"
      
-- Bob Dylan, song lyrics (Ballad of a Thin Man)

"(After giving a talk on peak oil)... there’s always one guy at the
back whose head has seized up like a crashed computer and who’s desperately
trying to reboot to a more familiar welcome screen. He’s the one spewing
out a dozen variations on 'This can’t be so.' "

      -- Dave Hughes
(source)   

           " ...the shock that is going to occur, in my opinion, is going to be a
           psychological shock. (Peak oil) really isn't yet in the public
           consciousness. ...people will all of a sudden wake up to the reality
           of this, and begin to think about what it means."
                   
-- Dr. Robert L. Hirsch

"As individuals and as a social species we put up huge psychological defenses
to protect the status quo. We've heard this doom prophesied for decades, all is
still well! What about technology? Rising energy prices will bring more oil!
We need a Green New Deal! We still have time! We’re busy with a financial crisis!
This is depressing! If this were important, everybody would be talking about it!
Yet the evidence for such a scenario is as close to cast iron as any upon which
policy is built: Oil production must peak..."

     -- David Korowicz, Tipping Point: Near-Term Systemic Implications of a Peak in Global
         Oil Production An Outline Review

        
http://www.feasta.org/documents/risk_resilience/Tipping_Point.pdf
 

Denial vs. Catastrophizing


         "I can't think about that right now. If I do, I'll go crazy.
          I'll think about that tomorrow."
                     -- Scarlett O'Hara, Gone with the Wind


(When we finally can no longer deny peak oil, climate change,
or the limits to growth, it will hit us) " ...like a grenade in a
glasshouse, shattering denial and delusion and leaving it like a
pile of broken glass on the floor of the old economic model.
Then we’ll be ready for change."
--
Paul Gilding, The Great Disruption


There seems to be a spectrum of reactions to peak oil, especially when first
learning about the problem.  On one end are the deniers; on the other end
of the spectrum are the catastrophizers.   


Jews in Germany in 1939 paid a dear price for denial.   Those who saw
a catastrophe ahead left the country.  (The film Nowhere in Africa, and the
book by the same name, is a true story about a Jewish family that decided to
uproot themselves from their home in Germany and flee to Africa.  Some of their
extended family and friends who remained in Germany did not survive.)

On the other end of the spectrum from denial is catastrophizing.  
Catastrophizing is believing the worst possible situation will happen,
and imagining it vividly, to the point of obsession.   We all did this as teenagers
when we found a pimple on our face and couldn't imagine facing our school mates
the next day.   We got over it.

But, some didn't. Catasrophizers under the mind control of religious
zealots have many times throughout history believed the end of the
world was nigh -- and sold all of their possessions in their anticipation of
their ascension into the rapturous light.  It was a bit embarrassing when the
target date passed uneventfully.  Sometimes they re-set the date.  And waited.
Sometimes they made it a self-fulfilling prophesy by drinking suicidal or
homicidal Kool-aid.

It would be interesting to compare peak oil catastrophizers vs.
peak oil deniers.  Most likely there are some personality or developmental
background differences there.

Here is a (humorous) example of denial:
 

 



Bottom line: the future is very, very hard to predict.  However, doing some best
estimate risk management is still prudent.  My house is unlikely to burn down,
but I still buy fire insurance.

 

First step: Let's all admit that we have a serious, self-destructive
addition to oil.

     
Source: http://oilcrash.com/articles/t_shirts.htm

As "oilcoholics," the first step is admitting that as a society that we have a serious problem,
something that is akin to a self-destructive addiction.

 

Second Step:  Work Though the Stages of Oil Depletion Grief -- both
        on a personal and on a social level.

We may only be in the first stage (or entering stage two?) of oil
depletion grief.  It may generally follow this progression:

1. Denial.   "Peak oil?  Baloney! There's lots of oil left.  No worries, mate."

2. Anger.   "It's the damn ________'s (oil companies, governments, OPEC, etc.) fault
that oil prices  are going up.  They're gouging us.  The bastards!"

3. Bargaining.  "But what about new oil discovery technologies?  What about biofuels?
I can keep my SUV, right?  Someone, or some new discovery will save us ...right?"

4. Depression.  "Damn... no renewable energy source is as energy dense as oil, or quickly
scalable... Holy crap.  We are   _________ (in for a rough ride, doomed, etc.)"

5. Acceptance.  "Ok, even if we are in for a rough ride, what I can do?  What can I ask
my government representatives to do?  How can I make a difference?  How can I
prepare?  How can we support research into potential technological breakthroughs?"

 

Continue to Chapter 4: What can psychological science, and evolutionary psychology in particular,
offer to help to address these problems?