Peak Oil Discussion

Given the flurry of heated discussion on the topic of ‘peak oil‘ on another BNC post, I invited one of the protagonists, Dave Lankshear (a.k.a. “Eclipse Now” — see here for his blog), to write up a summary piece which described his position on the topic. This is given below, and should provide a good context for discussion; I also hope that this thread will help corral comments on this topic to a central point.

For earlier posts on BNC regarding peak oil (all done, incidentally, prior to BNC’s nuclear awakening), see:

Michael Lardelli on peak oil

Olduvai theory – crackpot idea or dawning reality?

Earth as a magic pudding and

Beyond peak oil – will black gold turn green?

I made some comments on the other comments thread about my position. To paraphrase: a fundamental problem with arguing that authorities like the IEA, EIA and ABARE are overlooking the looming ‘peak oil crisis’ is that so far, they have been correct — at least in the sense that it hasn’t yet happened, just like they predicted (or at least if it has, its ramifications to date on oil prices and availability have been minimal). As such, their predictions which ignore peak oil are, on the bald face of it, justified. Peak oil HAS happened in limited jurisdictions (including the US), but has always, to date, been compensated for by imports, or gas substitutes, other technological improvements etc., such that no nation has so far gone from being an high oil consumer to a low oil consumer on the back of peak oil.

Now I’m not making the argument here that peak oil is an invalid concept — at least regionally — and I’m not even arguing that it’s not a potentially serious future issue for which we ought to be preparing to counter now. But as far as authoritative energy bodies have been concerned, they currently have nothing to hang their heads in shame over in that regard. They’ve got it right. If they are right by luck, and misfortune is about to strike Australia and other industrial nations any time soon, then we may well curse their lack of foresight. But that’s a big IF, and there are many eminent people, including Prof Richard Hillis at my own University, who argue that by the time rising oil prices is a really serious issue, alternatives and substitutes will have been found, as they always have before. Price, they argue, will always be the principal driver of innovation. (In passing I note that this is the reason I argue that full recycling of used nuclear fuel has not yet taken hold with any real enthusiasm — mined uranium is still too cheap).

Anyway, now on to EN’s comprehensive primer, from a ‘peakist’s’ perspective…

——————————-

On peak oil authorities

by David Lankshear (Eclipse Now), Peak oil activist since 2004

Background

Recent debate on BNC has focussed on the issue of the reliability of government energy authorities in regards to the global peak oil debate. As someone with a mere Social Sciences background and no technical training, I was asked to submit an article on why I have the audacity to hold certain ‘energy authorities’ with a high degree of suspicion. Was it all just paranoid conspiracy theories I absorbed from the net? Or is there something fundamentally wrong with the way our governments have been informed regarding our most important resource, oil?

Introduction to peak oil

In the last 5 years a handful of new government sponsored reports and agencies have suddenly sprung to address an urgent question. Are we suddenly facing the final oil crisis? Are we only years from the beginning of the end of the oil age? Has it already begun? With Scientific American just today predicting global peak oil by 2014 [1], how did we come to be asking such an important question so late in the picture?

But first a quick-catch up to newcomers not familiar with the term ‘peak oil’. Oil fields tend to ramp up in production as new wells are drilled and the full size of the field is confirmed. But after about half the oil has been pumped out, production stabilises… and eventually declines. It’s to do with oil pressure, which forces the first oil out at high speed. We’ve all seen iconic images of drills ‘striking oil’ where the gusher shoot high into the air. But once enough oil is pumped, the pressure goes down. The going gets tough. Think about sucking on an ice-cone slurry. The first half is fast and thick and juicy, the second half is hard work and slow and watery. The life of an oil field is just like that, but spread out over years or even decades. For a further introduction to peak oil the ABC has some brilliant free online movies to watch, starting with Catalyst [2], Crude [3], and Four Corners [4]. Or you can read the Peak Oil Primer at Energy Bulletin [5].

The history of peak oil in one minute

In 1956 M. King Hubbert (wiki) famously stood up at the American Petroleum Institute seminar, and predicted that within 14 or so years American oil would reach its maximum production or ‘peak’ and then begin to decline. Hubbert was laughed off the stage, as the American oil industry had pumped exponentially more oil every year for decades, with no end in site. As time rolled on and 1970 rolled around, the oil industry laughed at Hubbert and claimed “We’ve never pumped so much oil!” The irony was they never would again, as 1970 was the year they peaked.

How did he do it? In extremely simple terms, you have to find oil before you can pump it. Hubbert noticed that the discovery of oil in America had peaked and declined, and with a little math could plot when the exponentially growing consumption of oil would follow the same pattern. Watch this 2 minute youtube clip as an illustration.

Of course this was a vastly complex data management issue involving thousands of wells and production profiles, but that’s it in a nutshell. Hubbert then made a stab at world peak oil, which he predicted for 1995. But the world soon forgot. Other than Limits to Growth and a smattering of articles here and there, the world assumed we would all be flying “Mr Fusion” powered hover-cars with Marty McFly. This was all ‘in the future’, and something would turn up by then!

New authorities challenge the old

The peak oil discussion started up again in earnest when lifetime geologists Colin Campbell and Jean H. Laherrère wrote a 1998 article for Scientific American, The End of Cheap Oil. [6]. This article re-ignited the debate. It carries the weight of two grandfathers of the oil industry. Other geologists craved a clearer, more scientific approach than was currently being practised by the official government agencies. Colin Campbell eventually founded the Association for Peak Oil and Gas (ASPO) at Uppsala University, Sweden [7]. This university think tank receives papers from all the ‘good old boys’ of the oil industry, veterans with a lifetime on the front line of oil exploration and production. They have a range of publications [8] in everything from newspapers and magazines, academic theses, through to peer-reviewed works [9]. This coalition of oil professionals and professors is was the first Association to present peak oil as a scientific case unfettered by economic bias.

Joining ASPO is an act of rebellion against the status quo. These experts are taking a stand against the might of the USGS, and all those agencies the USGS advises. This includes the American Department of Energy (DOE) and their sub-agency, the Energy Information Agency (EIA).

Even international concerns depend on the USGS. The International Energy Agency (IEA) was set up by the OECD after the 1970’s oil crisis. The IEA advises Australia on the international oil situation as well. (ABARE focus on our domestic resource issues. Dr Brian Fisher indicated to Four Corners [4] that he felt ABARE had not been commissioned to report on the international oil scene, even though it advises the Australian government on the oil price.)

ASPO is even winning sceptics in this titanic battle. Lifetime oil professionals are shifting from trusting the USGS to battling them in the peer reviewed literature. One such person was Chris Skrebowski (wiki):

Chris has 38 years experience in the Oil Industry, starting work in 1970 as a long-term planner for BP. His career has been divided between industry planning/market analysis and oil journalism. He was Senior Analyst for the Saudi Oil Ministry in London (1985-1994) , Editor of Petroleum Economist (1994-97) [8] and Editor of Petroleum Review (1997-2008)[9]

Chris now questions the USGS methodology [10], writes extensively to the UK Parliament about the dangers of peak oil, and formed the All Party Parliamentary Group on Peak Oil and Gas (APPGOPO). As this coalition of geologists and energy experts grows and forms their own consensus that peak oil is imminent, the contrast with the established authorities could not be more profound. It is as if the world’s climatologists had reached a consensus on global warming with the IPCC all along rejecting it!

What are the main arguments that are convincing the likes of Chris Skrebowksi to abandon the ‘IPCC’ of oil, the USGS?

1. The USGS uses incorrect categories

Campbell and Aleklett [11] explain how the term ‘Proved’ reserves evolved in the unique historical setting of early Texas drilling. In this chaotic environment back in the heyday of American oil exploration, it was not unreasonable to simply multiply annual production volumes by 10 to give a rough ‘Proved’ resource. But today we use seismic mapping technologies that give a far more accurate estimation in the first place, and so using this ‘Proved’ formula can artificially inflate reserve estimates.

Unfortunately the world also has a variety of definitions of ‘Proved’ and ‘Probable’ and ‘Possible’ reserves, which also confuse the real story. Half the battle for accuracy seems to focus on terminology alone.

Campbell shows some respect for decades of US Geological Survey work right up until the 2000 report. Then it all went horribly wrong. The USGS inappropriately extrapolated specifically American categories to the rest of the world. Not only that, but magical technological improvements were assumed to allow ‘reserve growth’ – getting more out of existing fields – by an astonishing 76%! Economic paradigms were forced over the data. As Campbell and Aleklett explain in their abstract:

…what may be called the Flat-Earth Approach, in which the resource is deemed to be virtually limitless, with extraction being treated as if it were controlled only by economic, political and technological factors.

The University of Reading study by Bentley also raises concerns about the categories used [12].

2. It doesn’t work

The USGS 2000 study doesn’t work in practice. The USGS have such a vastly inflated estimate of the oil on this planet that their projected discovery rates were double what actually occurred in the real world [11].

USGS Projections

3. The Growing Gap: those ‘twin peaks’ appear again

As we saw above, Hubbert predicted American peak oil from the ‘twin peaks’ of the discovery bell curve forecasting the consumption bell curve. We can now clearly see the same pattern unfolding on the world stage, as modelled by ASPO from Exxon Mobil data [13].

Discovery peaked way back in 1965, 45 years ago. Also note that as production keeps climbing, discovery keeps dying. The last time we found more oil than we burned was in the early 1980’s. A whole generation has been born, educated, attended university and entered the workforce since we stopped even finding as much oil as we burn each year. We now burn 4 or 5 times more than we find, and are eating into the oil our grandparents discovered. The discovered volumes of oil look quite high compared to our current consumption peak, it is a tricky thing to judge visually. The experts have to mathematically ‘smooth out’ the already discovered oil to supply the world’s oil on the downside of the consumption bell curve, just as Hubbert did back in 1956 to predict the American peak of 1970. ASPO add their more grounded future discovery trends and come to an Ultimately Recoverable Reserve (URR) figure. Apply this to the bell curve, and we get the peak somewhere in this decade. I call this the ‘working from the end’ method.

4. Megaprojects — looking forward

This is in contrast to the forward estimates method of Chris Skrebowski. As his wiki says:

Initially sceptical about Peak Oil predictions,[4] he was persuaded by Colin Campbell of the unreliability of oil reserves data and the risks this posed to energy supply projections.[5] His insight was to recognise that future production flows, rather than oil reserves, were the key determinant of global oil supply. Consequently, he developed Peak Flow Analysis based on the future oil flows identified in his own Global Oil Megaprojects Database[6]. Using this methodology he concluded that major supply/demand imbalances would occur by 2007 with actual Peak Oil flows occurring no later than 2011[7].

The Megaprojects report is a database of the performance of every megaproject, or oil field that pumps over 100 thousand barrels a day [14]. The whole of Australia’s current production would only add up to about 4 of these fields. We are a drop in the ocean. The world needs the equivalent of 840 ‘megaprojects’, or 84 million barrels a day!

Aleklett claims we now live in a world where 54 out of the top 65 oil producing nations have already peaked [15]. These fields are now permanently producing less oil every year. Skrebowski’s concern is to look ahead, and forecast the ability of the new megaprojects that start each year to offset the oil we lose each year. Skrebowski published his Megaproject Reports in the prestigious Petroleum Review [16]. He is also responsible for variety of magazine articles, video conferences, and podcasts with his ODAC group in the UK. Dr Fredrik Robelius wrote his Phd thesis to also focus on how tracking trends in the world’s super-giant fields alone proves peak oil to be imminent. [17]

5. The consensus is growing — and grouping around this decade

The Australian Federal Senate Committee showed in Chapter 3.86 that many other significant geologists, energy companies, and even energy investment bankers have also disagreed with the USGS 2000 study [18]. A graph from the Peak Oil wiki also illustrates the point.

6. The USGS is under review

The word is spreading. The IEA now appears to be reviewing their practice of relying on the USGS for oil data [19]. A senior IEA official has even warned the Guardian of undue American influence in denying peak oil in the IEA [20]. And government’s are starting to hold their own independent inquiries, such as the American DOE’s Hirsch Report [21], the UK’s APPGOPO and of course Australia’s own Senate Committee [18].

7. OPEC hidden

ASPO and the other major peak oil agencies and authors doubt OPEC’s reporting. We had over 30 years of Western oil companies surveying Saudi Arabia before the oil industries were nationalised in 1970 and Western nations were banned. Since then, they want us to believe they have conveniently discovered exactly much oil as they have pumped over the last 40 years of production! Only they don’t let Western nations audit their fields. Robert Hirsch put it best when he told Four Corners [4]:

ROBERT HIRSCH, CONSULTANT US DEPT OF ENERGY: Basically, what they’re asking us to do is to trust them. And, frankly, on something that’s the lifeblood of our civilisation and the way we live, to trust somebody who won’t allow any audits is extremely risky. I personally don’t believe the numbers that are out there.

A difficult transition

The Australian Senate Committee [18] decided to remain agnostic towards a final peak oil date. But even the possibility of peak oil in the next few decades has them spooked. Chapter 3 states:

3.137 The committee cannot take sides with any particular suggested date for peak oil. However in the committee’s view the possibility of a peak of conventional oil production before 2030 should be a matter of concern. Exactly when it occurs (which is very uncertain) is not the important point. In view of the enormous changes that will be needed to move to a less oil dependent future, Australia should be planning for it now.

3.138 Most of the official publications mentioned in this report seem to regard the ‘long term’ as extending to 2030, and are silent about the future after that. The committee regards this as inadequate. Longer term planning is needed. Even the prospect of peak oil in the period 2030-2050 – well within the lifespan of today’s children – should be a concern. Hirsch suggests that mitigation measures to reduce oil dependence ‘will require an intense effort over decades…’

This inescapable conclusion is based on the time required to replace vast numbers of liquid fuel consuming vehicles and the time required to build a substantial number of substitute fuel production facilities… Initiating a mitigation crash program 20 years before peaking appears to offer the possibility of avoiding a world liquid fuels shortfall for the forecast period.

If the peak in global oil production is in fact this or next year, the implications for the world economy are profound, but beyond the scope of this article.

Footnotes

[1] Scientific American (September 2010) How much is Left? The Limits of Earth’s Resources.
http://www.scientificamerican.com/article.cfm?id=how-much-is-left

[2] ABC Science Catalyst (2005) The Real Oil Crisis (12 minutes)
http://www.abc.net.au/catalyst/stories/s1515141.htm

[3] ABC Science (2007) Crude – the incredible journey of oil
Part 2: Last hours of ancient sunlight (31 minutes)
http://www.abc.net.au/science/crude/resources/links.htm

[4] ABC Documentary 4 Corners (2006) Peak oil? (43 minutes)
http://www.abc.net.au/4corners/special_eds/20060710/

Transcript:
http://www.abc.net.au/4corners/content/2006/s1683060.htm

[5] Energy Bulletin — EnergyBulletin.net is a clearinghouse for information regarding the peak in global energy supply. We publish news, research and analysis concerning:
http://www.energybulletin.net/primer

[6] Scientific American (1998) THE END OF CHEAP OIL by Colin J. Campbell and Jean H. Laherrère,
http://www.hubbertpeak.com/_archive/ScientificAmerican199803/EndOfCheapOil.htm

[7] Association for Peak Oil and Gas
http://www.peakoil.net/about-aspo

[8] Range of published material
http://www.peakoil.net/publications

[9] Peer reviewed works from ASPO are generally behind paywalls
http://www.peakoil.net/publications/peer-reviewed-articles
However, Uppsala Universitet hosts a variety of their work for free.
http://www.tsl.uu.se/uhdsg/Publications.html

[10] Depletion – the missing demand element? by Chris Skrebowski — questions the IEA paradigms
http://www.energyinst.org.uk/index.cfm?PageID=952

[11] Minerals and Energy (2003) The Peak and Decline of World Oil and Gas Production by Kjell Aleklett and Colin J. Campbell
http://www.abc.net.au/4corners/content/2006/s1683060.htm

[12] University of Reading, Reading (2007) Assessing the date of the global oil peak: The need to use 2P reserves byR.W. Bentley, S.A. Mannan, S.J. Wheeler
http://eclipsenow.wordpress.com/why-now/bentley/

[13] World Energy Vol. 5 No.3 (2002) The future of the Oil and Gas Industry: Past Approaches, New Challenges by Harry J. Longwell, Exxon Mobil Corporation
http://www.aspo-australia.org.au/References/Exxon-WE-Longwell-dec-02.pdf
Longwell denies peak oil is imminent, but the data supplied by Exxon Mobil shows the 40 year trend in declining discoveries

[14] Heading For Peak: Skrebowski’s Oilfield Megaprojects Update (2005) Julian Darley interviews Chris Skrebowski
http://www.energybulletin.net/node/5266

[15] The oil supply tsunami alert (2005) by Kjell Aleklett
http://www.peakoil.net/Oil_tsunami.html

[16] Petroleum Review (2006) Prices holding steady, despite massive planned capacity additions: Petroleum Review regularly updates its listing of the upcoming so-called ‘megaprojects’. The aim of the listing is to attempt to answer the question as to whether sufficient oil is being developed to meet likely requirements going forward, writes Chris
Skrebowski.

[17] University of Uppsala, Sweden (2007) Giant Oil Fields – The Highway to Oil by Dr Fredrik Robelius
http://uu.diva-portal.org/smash/record.jsf?pid=diva2:169774

[18] Senate Rural and Regional Affairs and Transport Committee, Australia’s future oil supply and alternative transport fuels (2007), © Commonwealth of Australia 2007, ISBN 0 642 71726 5
http://www.aph.gov.au/senate/committee/rrat_ctte/completed_inquiries/2004-07/oil_supply/report/index.htm

[19] Journalist and author David Strahan (2007) IEA reviews reliance on USGS resource estimates
http://www.davidstrahan.com/blog/?p=69

[20] Guardian (November 2009) Key oil figures were distorted by US pressure, says whistleblower
http://www.guardian.co.uk/environment/2009/nov/09/peak-oil-international-energy-agency

[21] Download the entire Hirsch Report PDF from the wiki references and footnotes
http://en.wikipedia.org/wiki/Hirsch_report

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189 Comments

  1. We will only see peak oil in the rear view mirror but it is likely that the peak was in 2005.We are currently on a plateau.There probably won’t be a cliff at the end of the plateau,just a decline,steady or otherwise.

    But it is an academic discussion because all fossil fuels are a finite resource and will deplete sooner rather than later at the present rate of consumption.

    Naturally,little or nothing is being done in Australia to prepare for this eventuality.The Growth At Any Cost mindset just can’t/won’t see the bleeding obvious.

  2. dave:

    nice job.

    I’ve found ken deffeyes work on this question useful. also matt simmons graphs of declining major oil fields towards end of “twilight in the desert.”

    I think it’s really important not to dismiss all this material written by long term geologists as junk.

  3. To survive Peak Oil, electricity has to be CHEAP. We’ve got to get that into the heads of politicians and public.

    Oil has two important characteristics, and it is easy to get confused.

    The most immediate characteristic is as a source of energy. However once the price of oil gets above a certain level then we stop using oil just for energy. The first step in this process was when people stopped using oil for electric power generation, which happened 40 years ago. The next step, which is happening rapidly in North America, is that people stop using heating oil to heat their houses in winter. We are not running out of energy. Indeed it seems certain that we will get Nuclear Power working and producing cheap electricity well before there is any shortage of coal or natural gas.

    The 2nd characteristic of oil is as an energy carrier. Liquid hydrocarbons are the ideal fuel for transport. And we have an enormous infrastructure using that. But the oil price has already disengaged from the price of energy. Natural gas is cheaper, electricity is cheaper if it doesn’t come from renewable sources.

    So Peak Oil folk talk about oil’s declining EROEI: Energy Return on Energy Invested. We can see that EROEI is declining markedly. But this is now irrelevant. Oil is no longer being used mainly as an energy source. It is being used mainly as an energy transporter. The Peak Oil folk are quick to rubbish “The Hydrogen Economy”. Hydrogen is not an energy source at all, and it is easy to see that it is a very silly energy transporter. Time to wake up and rethink oil as energy transport, and stop worrying about its EROEI.

    Once we stop worrying about its EROEI, we can see that it doesn’t matter if Canadian tar sands or very heavy oil requires a lot of energy to extract. We could even make oil out of thin air, using algae for example. The EROEI no longer matters.

    This is not to say that we aren’t going to have a nasty decade or two. At the end the successful countries will be the ones that make Nuclear Power work. Certainly India and China agree on that point.

  4. I think oil depletion is a more pressing problem than climate change but the evidence is even more subtle. There is some kind of interaction between high debt levels and the need to constantly inject more energy into the economy. Remove the energy variable and the economy stagnates. Thus the Europe and US economies are flat seemingly unable to get out of the doldrums. If that flows on to China and India those countries may import less minerals from Australia. We could be next. It may even be turn out in hindsight that a year like 2007 could be as good as it gets for the whole of the 21st century.

    This is a two edged sword. If the oil price remains moderate we won’t prepare alternatives like electric transport in time for a sudden supply crunch. Since serious carbon taxes are unlikely coal will remain the cheapest form of energy. We will squander natural gas in power plants when it should be conserved as an oil replacement transport fuel. Note that many believe that global peak oil has already occurred and global peak coal (net energy not tonnage) could be as early as 2011.

    Meanwhile global population increases and 2 bn poor aspire to middle class lifestyles … owning a car, a high protein diet, air conditioning, plane travel. Those who are or were until recently in the middle class see it all slipping away. Middle aged US stockbrokers go from McMansions to living in trailers with no prospect of ever going back. However even a frugal middle class will need adequate energy when oil, gas and coal are gone. Wind and solar won’t cut it.

    Therefore we must urgently find reliable alternatives to fossil fuels. Views on whether this will moderate AGW seem to be divided. James Hansen says we must phase out coal immediately. Others (Aleklett, Rutledge et al) think it will happen anyway albeit with locked in warming. That doesn’t solve the problem of those who want to be middle class and those who want to stay middle class – they need a new form of scalable energy.

  5. Pingback: My article has been published at BNC | Eclipse Now

  6. It’s a very hard concept to dismiss, but the sacred notion that a rising oil price will make new, unconventional reserves ‘economic’ to produce (along with ‘alternatives’) just doesn’t hold water. This conventional economic thinking holds for a specific range on the viability curve of a particular commodity but there comes a time when the ‘end user’ simply cannot afford to pay the price required for the ‘economic replacement’ of reserves! Simply seeing rising prices as a resolving mechanism that will make more available relies on ‘bubble thinking’ – imagining that the end users (you and I) can go on funding a rising price indefinitely. This of course is complete rubbish and applies to the notion of (necessarily expensive ) alternatives as well as to oil itself. There will be no cheap and/or plentiful transport fuel that will become available as the oil price rises. That’s one side of the ‘rock and a hard place’. The other that is ignored by ABARE and most other Government-sponsored analyses of the issue is the likely breakdown of the current oil market. We tend to forget that only around 16% of oil is produced and/or marketed by public companies (‘Big Oil’). The rest – over 80% – is produced by state-owned companies with the profits being part of the revenues of the countries concerned. In the final analysis the oil market has limited control over this enormous volume of oil. The countries concerned will have their own needs to contend with – both the needs of their own oil consumers as well as the imperative to ‘hold something in reserve’ for future generations. As it becomes obvious that conventional oil is truly a fiinite resource you can bet your last dollar that every energy minister in every producing country (especially those with burgeoning domestic demands) will be considering this question very closely. The clear implication is that there is no guarantee at all that future oil production will be available to the free market to the extent it is at present. Oil-available-to-market is not a given! As I’ve said, a rock and a hard place…

  7. @ Barry, thanks again for this opportunity.

    But as far as authoritative energy bodies have been concerned, they currently have nothing to hang their heads in shame over in that regard. They’ve got it right.

    I’m wondering about this statement. Doesn’t point 2 empirically demonstrated their modelling to be flawed?

    Price, they argue, will always be the principal driver of innovation.

    
Sadly, I have come to agree. The science behind this argument appears too subtle, the vested interests too powerful, and the alternatives to oil too confused to deploy.

    But we need to move now.

    1. Electric transport needs scaling up now while we have some oil to do so! This is not a ‘normal’ market situation. It’s not about switching from Coke to Pepsi because Coke has become too expensive. In this rather dangerous situation, ‘Coke’ is sadly the means with which we can build out the ‘Pepsi’. As the doomers regularly point out, every wind turbine or nuclear power plant we’ve ever built was built with oil.

    2. Peak oil is not the issue! The global depletion rate may in fact prove irrelevant. Who cares if the decline rate is 4% if the global MARKET for oil has in fact halved within a decade. Welcome to peak exports!
    http://eclipsenow.wordpress.com/export-land-model/
    If nations don’t sign up to an Oil Depletion Protocol oil sharing arrangement and producers start to hog it for themselves as demand from their own citizens overtakes their ability to pump oil in a post-peak world, then again: the MARKET for oil could dry up much faster than the global depletion rate. This is the complicated geopolitics of oil depletion, where producers who are currently sellers might become selfish ‘hoggers’ of oil.

    I’m not arguing that there will not be enough oil to make the transition, but that the rationing we’ll experience will be that much more profound and the economic disruption will be that much worse. I’m not a ‘doomer’ (I don’t predict Mad Max) precisely because our society has so much ‘energy fat’ it could cut and still be a functioning civilisation, even if unemployment and interest rates and bankruptcies are like nothing the modern world has ever seen.

    3. Relying on price could prove too volatile and destructive on world markets. We have legislated moving off CFC’s to save the ozone layer, off lead in our fuels for public health concerns; so why does price get to be the final arbiter in weaning off oil? Why can’t we install an “Oil Depletion Protocol” now, just to be safe? Why let high oil prices bankrupt our economies that will need to get the jump on depletion rates to build out the next big thing?

    Imagine that “peak exports” has cut Australia’s ability to buy oil by about half. Imagine we have to ration oil to the most important liquid fuels sectors, such as agriculture and mining and construction and freight. 97% of our goods are moved by truck. Now I used to take some hope from the BZE ZCA plan that discussed how fast we could deploy fast rail etc around Australia. That has since been debunked as far too optimistic. EV’s might take the pressure off oil demand in private transport at a rate roughly equivalent to the global depletion rate. But this could prove irrelevant in the face of the Export Land Model. So who gets the oil rations? Will Qantas get it for tourism? How’s our tourism sector going to go? Exactly how bad will unemployment in this country be?

    Basically, I’m concerned about the liquid fuels energy bottleneck we have to squeeze through. I expect our grandchildren to be living in a prosperous post-fossil fuels world. But the journey from here to there could be far harder than it has to be if governments don’t take action now.

    It’s the precautionary principle writ large across our civilisation, both from a climate viewpoint, public health viewpoint, and depletion viewpoint. Now that’s an argument for leaving oil before oil first leaves us!

  8. One last point: price is not a good guide to geology. We also HAVE TO remember the effects of the GFC on world demand for oil. The peak may well have come and gone, and we may be about to crash into 4,5, or even 6% declines… but the price effects of peak oil may have partially helped the GFC become that much worse… which in turn dropped demand for oil and lowered the price.

    (Anyone arguing “Yay for the marketplace” from crashing oil prices just has to look at unemployment figures in America over the last few years, and historic debt levels in America, to judge whether or not the oil price crashing due to a recession is really a good thing).

  9. I hate to agree with Podargus but I can’t get excited about people trying to predict when the “Peak” will occur. It is not unlike the folks who keep issuing hurricane predictions. Although they are wrong most of the time eventually they get lucky and crow “I told you so”

    It makes little difference who gets the prediction right; “Que será, será”. As Prof. Hillis suggests, new energy sources will be developed in due time.

    What we need to fear is the interference of governments in the market. Governments all around the world are pouring money into “Renewables” and “Green” technologies in ways that will appear laughable to our descendants.

  10. It’s a very hard concept to dismiss, but the sacred notion that a rising oil price will make new, unconventional reserves ‘economic’ to produce (along with ‘alternatives’) just doesn’t hold water. This conventional economic thinking holds for a specific range on the viability curve of a particular commodity but there comes a time when the ‘end user’ simply cannot afford to pay the price required for the ‘economic replacement’ of reserves! Simply seeing rising prices as a resolving mechanism that will make more available relies on ‘bubble thinking’ – imagining that the end users (you and I) can go on funding a rising price indefinitely. This of course is complete rubbish and applies to the notion of (necessarily expensive ) alternatives as well as to oil itself. There will be no cheap and/or plentiful transport fuel that will become available as the oil price rises.

    Nuclear powered synfuel production plants will save us. Provided we get around to building them, of course.

  11. What I find interesting about Richard Hillis’ and, now, Barry Brook’s standpoints on “peak oil” is that both are highly respected scientists and yet both use economic arguments to counter the idea that energy supply will be limiting in our future. In the past, innovation has been used to substitute for limiting resources but the underlying factor that made the innovation and substitution possible was cheap and abundant energy. However, when the limiting resource is energy itself then the old paradigm no longer applies. High tech alternative energy devices do not exist in an economic vacuum – they require a complex technological society to support them and that society, in turn, requires a high level of energy consumption to fuel its rapid and complex interconnectivity.

    When the price of a limiting element rises (e.g. a rare earth metal) we can apply abundant cheap energy to finding alternative technologies that no longer require it or we can expend large amounts of energy to extract it from ever more impure sources. However, when the price of energy rises (i.e. energy becomes limiting), unless one finds another source of abundant, concentrated energy that can be accessed RAPIDLY at a high energy profit ratio then substitution cannot occur. (Many arguments on possible energy futures fail to consider the scale of energy substitution that fossil fuel decline requires and the rate at which that scale must be attained.)

    It is all very well to argue that Gen III or Gen IV nuclear reactors offer very high energy profit ratios but can they be scaled up rapidly enough to substitute for the predicted rate of drop-off of fossil fuel production? If they cannot do so then society will “de-complexify” faster than it can put the nuclear reactors in place. I would argue that the rapidly rising price of doing anything technological nowadays is the expression in economic terms of the fact that net energy in society is stalling or already in decline. (The example I have given to Dave a couple of times is that it took $100 million recently to build a 4 km tram line in Adelaide – so how much money do you think it will cost to roll out nukes in Australia and where will the money [energy] come from?)

    Economics is not a science and the energy conservation laws in Nature will always give superior predictions than any economic theory. I can understand engineers falling under the spell of economic theory since so much of their training and work involves calculation of price, demand and profitability – it become part of their mental model of the world and integral to their thinking. However, when scientists use economic arguments to support ideas that (upon close inspection) can be seen to defy natural laws in which we have great confidence, then it worries me.

    The two essays that sum up my position on our likely future energy path and the connection between energy and economics are:

    “Energy is everything”
    http://www.energybulletin.net/node/48731

    and

    The Oil-Economy Connection”
    http://www.energybulletin.net/node/50827

    The latter essay is particularly relevant to this discussion.

  12. It is all very well to argue that Gen III or Gen IV nuclear reactors offer very high energy profit ratios but can they be scaled up rapidly enough to substitute for the predicted rate of drop-off of fossil fuel production?

    Mr. Lardelli, do you have any solid figures on what portion of the energy used to construct an NPP is derived from oil? I would venture to guess that even if we do fall off the oil production slope in the near future, oil derived from coal could still be used to see us through to the implementation of a mature nuclear economy.

  13. Finrod,
    Rising prices are not inevitable. New technology can cause large drops in energy prices. Rising prices cause people to get innovative. We are forced to consider energy sources that we ignore when the current energy sources are seen as relatively cheap.

    There are some instructive examples to be found in history. For 200 years the dominant technology for lighting was whale oil. If Eclipsenow had lived in the 1840s he would have worried (correctly as it turned out) about “Peak Whale Oil”.

    As the demand for whale oil soared and the supply of whales diminished prices rose to the point that alternatives such as lard, acetylene and camphene became competitive. Eventually, we had Spindletop; mineral oil soon became ten times cheaper than whale oil (thank you J.D. Rockefeller for saving the whales).

    Today, much of our energy is coming from fossil fuels that will (someday) follow whale oil into the history books. We are being forced to look at all kinds of solutions and while prophesy is dangerous I predict that nuclear fission will become our primary energy source, with energy prices falling well below what they are today.

  14. Hi Sam Powrie,

    he rest – over 80% – is produced by state-owned companies with the profits being part of the revenues of the countries concerned. In the final analysis the oil market has limited control over this enormous volume of oil. The countries concerned will have their own needs to contend with – both the needs of their own oil consumers as well as the imperative to ‘hold something in reserve’ for future generations. As it becomes obvious that conventional oil is truly a fiinite resource you can bet your last dollar that every energy minister in every producing country (especially those with burgeoning domestic demands) will be considering this question very closely.

    And that is the heart of the “Peak Exports” or “Export Land model” debate. You put it well!

  15. Finrod:

    Nuclear powered synfuel production plants will save us. Provided we get around to building them, of course.

    Why not just take the electrons we’ve generated and charge electric cars? On a price / km basis, electricity is half the cost of oil and that is with today’s battery technologies!

    Even better, why not design urban villages where we don’t require 60% of the trips we make now. Indeed, with some new urban designs, we could eliminate the vast majority of driving we do and just hire a car or van on those occasions we really need it.

  16. @ Michael:

    It is all very well to argue that Gen III or Gen IV nuclear reactors offer very high energy profit ratios but can they be scaled up rapidly enough to substitute for the predicted rate of drop-off of fossil fuel production? If they cannot do so then society will “de-complexify” faster than it can put the nuclear reactors in place.

    How do we double the energy efficiency of a V8? Chuck another passenger in. I agree that there is an energy crisis, but society has a lot of ‘energy fat’ we can cut and still maintain a complex industrial society. We can buy pushbikes with trailers, use internet websites to book carpooling arrangements, and use the internet in other ways to co-ordinate our CAS (Cascading Adaptive System) in ways not yet really appreciated.

    I agree with you that governments should mandate the solutions now and not wait for the crisis, but I just think talk of society ‘decomplexifiying’ is a bit premature. We’ll have more localised economies in some sectors, but others that require scale and specialisation may still be international.

    I would argue that the rapidly rising price of doing anything technological nowadays is the expression in economic terms of the fact that net energy in society is stalling or already in decline. (The example I have given to Dave a couple of times is that it took $100 million recently to build a 4 km tram line in Adelaide – so how much money do you think it will cost to roll out nukes in Australia and where will the money [energy] come from?)

    The cost to replace all our energy in Australia with nukes is tiny when compared to our GDP. The example of an expensive tram line is just silly when trolley-buses are 5 times cheaper (and probably 5 times faster!) to build.

  17. Michael,
    http://www.adelaide.edu.au/directory/michael.lardelli

    That’s a nice body of work you’ve contributed to the peak oil discussion since I pretty much burnt out in 2007. (PTSD stuff with my sick son, etc).

    While I disagree with the particular spectrum of ‘inevitability’ you’re on regarding our destiny, most of my mates and family still call me “doomer Dave” because I think we’re heading into a Greater Depression unlike anything the modern world has ever seen.

    (However at this stage I’ll quietly point out that the Hoover Dam was built in the Great Depression, as a jobs creation program. Imagine our governments mandating all Australian car manufacturers to retool around EV’s, etc, the way America switched its economy around pretty much overnight in WW2.)

  18. GC

    If Eclipsenow had lived in the 1840s he would have worried (correctly as it turned out) about “Peak Whale Oil”.

    Peak exports mate. If the oil sellers suddenly become oil buyers, who’s going to sell you the oil to build out the next big thing? So there’s an energy crunch coming, and I think Michael is asking all the right questions that you’re just assuming rather cliché answers to, and haven’t even begun to ask.

    I predict that nuclear fission will become our primary energy source, with energy prices falling well below what they are today.

    Unless something even BETTER turns up, I completely agree! But how rough is the journey there going to be? The world economy has already been weakened by 9/11, Katrina and other natural disasters, the GFC, and now the unparalleled debts we picked up in trying to solve the GFC. A friend had lunch with the CEO of Barclay’s bank, and bluntly said on sheer financial terms that America simply would not exist in 20 years! (The economy would crash so bad the place will be unrecognisable).
    Add peak oil, stir in some climate catastrophes, and serve on a very cold plate.

  19. @gallopingcamel:

    That’s kind of what I was getting at. Did you not see that?

    @eclipsenow:

    I think we’ve had that discussion before, haven’t we? I’m no fan of our extensive use of FFs for goods transport (and I’m particularly annoyed at the intensive non-stop heavy vehicle traffic plaguing our interstate highways), but it will be some time before we see either a national electric rail network, or an electric semi-trailor. Or an electric combine harvester, bulldozer or dump-truck. Nor do I see the world’s urban design philosophy altering quickly enough to get us past this. Redesigning the urban environment is something I’m actually very much in favour of as a long-term sustainability policy, but we cannot use tomorrow’s capital to solve today’s problems. If it is true that we face an impending oil shortage, then we need to address it as a matter of urgency. Fixing the urban environment is a long-term goal.

  20. But how urgent is it? If the world hit’s 4% decline, that sounds fairly imaginable. What Sam highlighted above is the way nationalised oil production could easily decide, “Sorry world market for oil, but our folks need this right now”.

    When it’s all said and done, I doubt that the major oil producers have as much freedom of action in this regard as you imagine. But whether we need to be concerned about a precipitous decline in oil production or not, this does not affect the fact that less energy and other forms of wealth will need to be expended in building nuclear-powered synfuel plants to provide for transport and heavy machinery needs than to largely rebuild the bulk of the world’s modern cities.

  21. Dear Dave and Finrod, Read the two essays. The answers to your questions/comments are all in there. The latest Hubbert analysis of coal production also indicates that coal may peak next year (see Paztek and Croft: http://www.utexas.edu/news/2010/07/26/engineering_patzek_coal/ ) and the USA is already beyond peak net energy from coal (see http://www.energybulletin.net/52810 ). As energy declines my prediction is that the remainder will be squandered on useless attempts at “economic stimulus” and will eventually be focussed into food production that currently consumes 30% of world fossil fuel energy (http://aleklett.wordpress.com/2010/05/19/agriculture-as-provider-of-both-food-and-fuel-2/). As economies localise and “just in time” logistics disappear then high tech manufacturing will grind to a halt. (The production of a “simple” photovoltaic cell requires thousands of materials and processes that can only be performed by a functioning network of mining and manufacturing.) A rollout of nuclear energy expansion to the scale required would require decades and, in that time, societies and economies will be thrown into chaos by the decline in fossil fuels, increasing population (demand for food, goods and services), climate change (esp. effects on food production) and decreasing other resources such as phosphate (affecting food production once again). The best strategy is to get ahead of the curve by relocalising food production, collecting low energy technologies for use after the decline and concentrating on preservation of the knowledge that we obtained during our century-long, high energy “growth party”.

  22. Finrod, Read the two essays. The answers to your questions/comments are all in there.

    I didn’t see an answer to my question about what portion of the energy required to construct an NPP is covered by oil in either essay. If I’ve missed it, can you please detail where to find it? Actual numbers too, rather than general statements.

  23. I’m more interested in generalised statistics. EG: If we halved private oil consumption (normal suburban driving) through car-pooling etc, how much would that free up the annual depletion rate?

    EG: Under point 3 of my “Dark Mountain Bulverises” article, I said:

    But where is Dark Mountain’s debunking of the speed at which Rezoning could retrofit our cities to become oil free? What about the fact that because the car fleet turns over every 16 years it effectively means 6% of the car fleet is replaced each year?

    Governments could mandate that all new cars had to be electric. This means that if we break down oil dependency into the various energy market segments (such as agriculture, heavy transport, construction and airlines) then we can see that the natural rate of electric car substitution could about keep up with oil decline for that market segment! (Other segments may require other solutions).

    What is going to charge all these cars? Existing ‘off peak’ overnight electricity could run 70% of American cars! But not only that, existing technologies for Gen3 nuclear reactors could be cheaply built out to both keep up with new demand for electricity AND gradually replace coal.

    http://eclipsenow.wordpress.com/2010/08/12/dark-mountain-bulverises/

    I was just struggling to say that as pressure in one sector decreases, it frees up fuel for the more important sectors as we deal with those (whether biochar gas, algae, nuke-synfuel, or whatever).

  24. Hi Finrod – what you needed to understand from the second essay is that it is not possible to draw a line around the energy required for a NPP. NPPs do not exist independent of a functioning technological society and if you do not have that you cannot have your NPP rollout.

    Like eclipse you are sounding a little fundamentalist here as if the future is “peasants” (aka a “doomer’s” existence) or “rational engineered solutions” (by which you really mean a “business as usual” lifestyle only with the energy required supplied by NPPs rather than fossil fuels). The alternative path is to stop economic and population growth, retain our knowledge and valuable technologies (such as vaccines, contraceptives, antibiotics, bicycles, water pumps etc.) and put our efforts into developing something that is truly sustainable rather than squandering our remaining energy on technologies on growthist dreams that, ultimately, cannot be sustained in a finite world. (Understand too that it is not only energy limits that we are up against – we are facing converging multiple resource declines and so solutions focussed only on energy cannot work.)

    You say “no sale” but I say that nature does not care what you think or what you want. Those that believe they can defy energy laws (i.e. as reflected in the functioning of our human ecology/economy) will be punished severely.

  25. Hi Finrod – what you needed to understand from the second essay is that it is not possible to draw a line around the energy required for a NPP. NPPs do not exist independent of a functioning technological society and if you do not have that you cannot have your NPP rollout.

    Michael, now you’re just covering yourself with a verbal smokescreen. If you don’t know the answer, just say so. These details are important for giving meaning to these discussions. If you haven’t bothered quantifying the amounts of oil needed for certain key technologies and manufacturing techniques, you’re just arm-waving. You also run the risk of not recognising paths and strategies which may help overcome peak-oil issues.

    Like eclipse you are sounding a little fundamentalist here as if the future is “peasants” (aka a “doomer’s” existence) or “rational engineered solutions” (by which you really mean a “business as usual” lifestyle only with the energy required supplied by NPPs rather than fossil fuels). The alternative path is to stop economic and population growth, retain our knowledge and valuable technologies (such as vaccines, contraceptives, antibiotics, bicycles, water pumps etc.) and put our efforts into developing something that is truly sustainable rather than squandering our remaining energy on technologies on growthist dreams that, ultimately, cannot be sustained in a finite world. (Understand too that it is not only energy limits that we are up against – we are facing converging multiple resource declines and so solutions focussed only on energy cannot work.)

    I apologise if you are not of the ‘doomer’ mindset, but if it seems I’ve judged you to be so, it’s hardly my fault. Your prescription would result in billions of deaths by starvation, and you’re talking down the nuclear solution necessary to avoid this. You might not call yourself a doomer, but your recommended policy is in accord with doomer ideology, and would indeed act in the manner of a self-fulfilling prophecy if acted on. Of course, your contention that we are up against limits other than energy is only true id energy is expensive, or in short supply. Nuclear power need be neither, and once we have that virtually unlimited energy source powering the world, we can go to dull recycling, or to the extraction of low-grade reserves of stuff like phosphates from sources which would not be considered economical today.

    You say “no sale” but I say that nature does not care what you think or what you want. Those that believe they can defy energy laws (i.e. as reflected in the functioning of our human ecology/economy) will be punished severely.

    Very true, but I suspect that I shall have better cause for comfort from the literal meaning of your statement than yourself as time wears on.

  26. We will most likely need hydrogenated synfuels for high power-to-weight applications like aircraft. I think that means fewer people will fly hence the case for electric high speed rail. Reading The Oil Drum about the decline of net energy measured as (energy out)/(energy in) this ratio had a value of about 30 for petroleum fuels back around 1950. These days for fuel from Canadian tar sands the ratio is 3 to 5 and for corn ethanol 0. 8 to 1.25 . Thus if an energy return of 1 is breakeven after tractors, fertilisers and distilling there is no real point in making corn ethanol fuel.

    Windpower enthusiasts point to energy return ratios of 20-30. Great but what happens when there is no gas backup? If I recall nuclear is about 100. The case has been made that primary energy sources need an averaged return of at least 10 that will last as long as the human race. Otherwise it’s back to the Neolithic.

    Some might say how can this be when oil based fuels and chemicals are moderately priced. Either wait a few years or ask why the world economy remains sluggish.

  27. The alternative path is to stop economic and population growth

    I think the world needs a little bit more economic growth, in the 3rd world at least. I think the only way population growth is naturally curbed without draconian 1-child policies is by meeting all human needs. (Which creates the demographic transition. Note: I did not say “all human wants”, and I agree with you that there is probably a much larger societal discussion that needs to happen about how we can satisfy wants in different ways).

    So I find your assertion here…

    rather than squandering our remaining energy on technologies on growthist dreams

    …to be a false dichotomy. Abundant cheap electricity is the only way we’re going to get through peak oil without dieoff.
    Your article “Energy is everything” neatly dodges that we have enough nuclear waste to run the world for 500 years in GenIV reactors. It also makes this claim:

    This is very unlikely to happen in democratic nations since it would require large, voluntary reductions in living standards in the midst of a serious and worsening economic crisis.

    http://www.energybulletin.net/node/48731
    Maybe, but if the economy is crashing anyway, won’t governments be seen as stimulating work by a massive build out of nuclear power? In other words, this next statement is a bit rich.

    The immediate cries for help now (e.g. unemployment benefits, company bailouts) will outweigh any future possibility of improved living standards.

    You only have to go back to the Greater Depression and see what they accomplished in employment on National Parks and building the Hoover Dam to see that sometimes massive government intervention is not a choice of “building nukes OR jobs and lifestyle” but both.

    Wartime crash programs can work because a nation’s population literally has a gun pointed to its head – the population fears death at the hand of the enemy. Energy decline can be just as deadly as any human enemy but, like climate change, its effects are slower and most people do not understand enough about energy to fear its loss.

    I’m sorry, but this is the ultimate case of special pleading! It’s almost like your dredging the bottom of the barrel to find excuses for why governments won’t prioritise when peak oil forces them to! I can almost imagine such scenarios, but really it sounds pretty thin.

    Overall, I agree with the questions you are asking in your 2 articles. If anyone hasn’t read them, please grab a coffee. Read them. Slowly.

    http://www.energybulletin.net/node/48731

    http://www.energybulletin.net/node/50827
    But if anything, Michael has just made the case for GenIV nukes that much stronger and more urgent.

  28. I have said my bit and people can either take the message to heart or not. It makes little difference in the end. I am not interested in saving the entire world when it seems obvious to me that it cannot be saved. Rather, I concentrate on my little patch. Here in Australia is where we might have a chance at some sort of survival if we stop population growth, localise our agriculture and adopt “low tech” solutions. World energy growth appears to be over so world economic growth is over – although it might continue for a while in some areas while other areas decline. If I could have my wishes fulfilled I would like the world to continue to develop and “grow” but that is not determined by what I, or anyone else, wants. It is determined by the volume of energy throughput. Humankind is about to relearn that it exists at nature’s sufferance and is not nature’s master.

  29. I have said my bit and people can either take the message to heart or not.

    Good. Take your counsel of despair elsewhere, or better still, cease bothering people with it at all. Some of us still recognise value in humanity and are unwilling to surrender the struggle unfought, or casually accept the ugly death of billions of people with your ‘I’m all right Jack’ detachment.

    For the bearer of such dire tidings, you are curiously averse to providing actual numbers to back up your case. Why should anyone accept such a miserable prognosis on your math-free say-so?

  30. Here’s some big picture reasoning on the magnitude of the fossil replacement problem. If I recall the David Mackay book said that Brits used 125 kwh of energy a day, call it 6kw continuous. Perhaps the Brits drive less than Aussies but they need more more winter heating. Aussies will also need desalination and thermal comfort in heatwaves approaching 50C. Anyway 6kw X 22m people = 132 GW continuous power. That is for overall fossil fuel replacement; oil free transport, no gas for ammonia or process heat and no coal for electrical generation or cement manufacture.

    I don’t think 10% cuts savings here and there aided by smart meters and pink batts in the ceiling will get close to replacing this demand. The system will disintegrate without some essential energy flows. We could get rid of SUVs but must keep ambulances. The world is coping so far because oil is just coming off a plateau. I think the depth of the problem will show itself within just a few years.

  31. Well, this is an interesting discussion.

    My only problem with it is that it is filled with far too many IFs.

    IF we roll out nuclear now… Don’t make me laugh – it takes twenty years to go through the rigmarole and commission a nuclear plant. PLUS nobody anywhere in the world has sorted out waste storage and decommissioning costs.

    IF we turn to a hydrogen economy. IF we suddenly, magically get our food delivered to the local shop – be it a little village shop like here or some great hypermarket – by electric powered semi-trailers.

    And on and on.

    I am not a geologist or economist or any such but I have been quietly following this topic for years. The really big problem as I see it is that informed opinion seems to be converging on Peak Oil arriving somewhen round about 2014-2015.

    NOBODY in power – i.e. governments – is doing ANYTHING about it. In the mean time we have the likes of BP scouring the most inhospitable environments on earth trying to access mere puddles of hydrocarbons. The Arctic – don’t make me laugh. Eighty billion barrels. Do the maths! Eighty five MILLION barrels a day!

    Remember the Hirsch report? Twenty years to mitigate Peak Oil without substantial world wide effects. Ten years and we see considerable economic and social impacts. WAKE UP EVERYBODY – we are looking at four or five years. Those nuke plants will NEVER get built. We might scrape by on ten percent of the energy we enjoy now with whatever renewables we can get in place by then.

    In the meantime Business as Usual will prevail. Governments will, by necessity continue to ignore it – they are all in the pockets of big money anyway, and to try to do anything about it would make them not re-electable.

    Me, a doomer? Yep! Happily watching from a corner of the world which I found purely by chance and where I think at least Life as Usual has as good a chance of continuing as anywhere else in the world.

  32. Michael Lardelli,
    If you are right the human race will be punished for its vigorous, technology based growth. The punishment exacted could be as severe as extinction.

    While the nattering nabobs of negativity may eventually be able to congratulate themselves (posthumously) for being right, I refuse to plan for failure and defeat.

    My vision is a future with far more abundant and cheaper energy than today. When the fossil fuels run out we will have advanced fission reactors. When the Thorium runs out we will have fusion power.

    As Eclipsenow says there could be something completely unforeseen, comparable to cold fusion. Anyone for anti-matter mining?

  33. If society did collapse and millions / billions died, I imagine all sorts of scenarios where it would bounce back again relatively quickly.

    We’ve tasted the lightning, and we LIKE IT!

    It might start off much like these “Otherpower” hippies up off the grid in the mountainous USA, living off super-energy efficiency and local renewables. But soon society would want something more. It would only take a few generations before villages were coalescing to pay people to dig deep into the old pre-collapse libraries and learn about nuclear power again.

    Check out the sheer ‘romance’ of building your own power supply (in on a windy enough mountain top where most of us DON’T live) out of local timber, a few car parts, some magnets and copper wire. This is Mad Max living at its best. ;-)
    http://tinyurl.com/2ctogdm

  34. The whole problem with ‘I think…’ is that it’s simply opinion, dream or at best, hope. None of these constitute a strategy or plan. Galloping Camel’s last sentence says it all for me. Thousands of scientists, economists, geologists and technicians have been studying resource depletion, and specifically that our ff energy resources for some 40 years now. The understanding of the challenge has been increasingly refined yet there is still no productive solution. As a result, those who dream of a future for humankind that simply reproduces a civilization built on oil can do nothing but dream. There is no such thing as ‘cold fusion’ so there is no point in using it as some kind of benchmark. There is no such thing as ‘antimatter minding’ either. Even if you are joking such fantasies remain just that. The simple fact of the matter is that human population growth has tracked the growth in availability and use of fossil fuels almost exactly. As ff availability and use declines, we must naturally ask if there is some natural law that says population growth can continue unabated. We find that there is no such law! We must naturally ask if there is some alternative to oil that will allow us to forge ever onward. There are of course many alternatives. The problem is that none will accomplish the ‘work’ (in the Newtonian sense) that oil currently accomplishes for us. In this sense, while there will always appear to be alternatives at an individual level, there is no alternative to oil that can do what it currently does for humanity. Including the work involved in forging a bright and expanding future. So we need a different idea to sustain us into the future. That is all that Michael Lardelli is saying as far as I can see. He is simply pointing out that most of the current ideas that civilization holds gear of the future are inevitably corrupted by unfounded promise and hope. If humanity as a whole truly wants a way forward then we need a very different idea. Personally I don’ think such a collective notion will find nuclear solutions useful – they are too inflexible, too shortlived and far, far too unwieldy to create and manage. But that’s just me putting 2 and 2 together…
    Sam Powrie,
    Adelaide.

  35. Personally I don’ think such a collective notion will find nuclear solutions useful – they are too inflexible, too shortlived and far, far too unwieldy to create and manage.

    Why do you feel this Sam? GenIII nukes are ready to roll out today, and there are various plans for GenIV nukes that are still being commercialised. Russia and China are building a few GenIV reactors now, but with all sorts of ‘first of a kind’ costs associated with them. (How expensive is a car? Depends on the car!)

    So once the GenIV nuke is adopted on a factory line, and is mass-produced, costs will plummet and we’ll see one of the fastest roll outs of clean power in history.

    All governments have to do is mandate various fast-charge EV’s or even Better Place battery-swaps, and natural attrition of old cars being replaced by newer cars could ‘pretty much’ keep up with the worldwide depletion rate (IF we can get nations to sign up to the ODP and not be adversely impacted by ‘peak exports’).

    Now, agriculture and airlines may even require some Coal-to-liquids until we get nuke synfuels perfected, but nuke-synfuels do appear on the way.

    http://www.lanl.gov/news/index.php/fuseaction/home.story/story_id/12554

    We can rezone our cities and create FAR more energy efficient cities over the next generation.
    http://eclipsenow.wordpress.com/rezone/

    We can use plasma converters to rip apart our municipal waste and get synfuel from the hydrocarbons and plastics, and sand/metals or even rock-wool (safe asbestos replacement) from the other solids in our garbage. Even council ‘green waste’ could go into this for more synfuel, although I’d hope rural areas pushed their green waste through into biochar cookers to improve the soils that feed us.

    All sorts of new material sciences and green chemistry are being developed to gradually reduce our need for mining. I know peak oil doomers that have allowed that ‘peak metals’ is not really a problem if we just assuming enough energy to run various low-grade ore mining schemes and metal recycling schemes.

    Basically, Industrialisation 2.0 is practically ready to roll out. Our grandchildren may even live in a world that hardly requires mining. Or if they did, they’d know how to restore ecosystems after mining the useful ores out of an area. They’ll have answers to ecosystem and biological questions we don’t even know to ask yet.

    By then, assuming these technologies are rolled out fast enough, we’ll also have a stable population, and maybe even have developed stable state economies. Whole new systems of economic thought will be developed over the coming years. I have a mate in economics who thinks we already have the tools for a stable state economy. Look at Japan, who’s population hasn’t really grown and economy hasn’t really boomed for a decade now. It hasn’t collapsed into the dark ages.

    So peak oil is a real risk. Climate change is a risk. War is a risk. Anything could happen. But if I get to have a say on what we’ll do, then we’ll roll out the GenIII nukes, put some serious R&D into commercialising the GenIV technologies we already know work, and we’ll see our cities shrink in area but grow in quality and beauty, we’ll see ecosystems restored, we’ll see farmlands rebuilt at the chemical and biological level by adding biochar, we’ll see public health and societal community systems restored through good urban planning and public transport, and we’ll see our children growing up in healthier, cleaner, trendier cities. Sounds good to me!

  36. Personally I don’ think such a collective notion will find nuclear solutions useful – they are too inflexible, too shortlived and far, far too unwieldy to create and manage.

    This assertion runs contrary to the general thrust of two years discussion and debate on this site, so if you have some new, credible information on the matter, best you put it to us. After all, you’re basically saying that the case against nuclear power is so persuasive that we shouldn’t waste our time trying to save all those billions of lives which will inevitably be lost in your idea of a post peak oil world. So, rather than leave yourself open to the charge that you have casually accepted a future embracing genocide on an unprecedented scale when it isn’t necessary, the moral burden is on you to convince others that nuclear power should not be pursued. It will take more than your casual, unsupported say-so to do this. Back to you.

  37. Steve, 20 years to build? Are you serious? You know that in an emergency legislation can get passed to fast-track things. You should also read up on nuclear power a bit, because you sound like me 8 months ago and it’s a bit embarrassing to be reminded of how ignorant I was.

    Nuclear waste a problem? Far out man! Get with the times. I was so embarrassed when I found out the reality that I got my wife to design this poster!

    http://eclipsenow.wordpress.com/nuclear-posters/

  38. In the first of Michael Lardelli’s essays that he linked to, the ‘net energy cliff’ graph which is pretty fundamental to the whole hypothesis, plots nuclear as having ERoEI of only 5.

    This strikes me as incredible. As John Newlands said above on the subject of energy return ratios…”if I recall nuclear is about 100″.

    What gives? Has this issue been covered quantitatively on BNC somewhere?

  39. There is no mention made about reducing our demand for energy by increasing our efficiency in using it.
    The nuclear industry have been promising great things for years but these waste heat stations (power stations) keep getting to be more expensive and the size of their government subsidies keeps increasing, they do not even pay for their own insurance in case of a nuclear accident.
    The manufacture of Electric vehicles need quite a large amount of fossil fuels.
    I see very little mention of wind power, solar energy, wave power and geothermal power as a low polluting and sustainable scource of energy for the future.
    We have to realise that we live on a planet with finite resources and that we must increase our use of renewable resources in place of depleting the finite resources.

  40. Think, I’m all for energy efficiency. I think there is a really strong case for more beautiful ‘walkable’ cities. The Senate inquiry into peak oil basically recommended increasing public transport and New Urbanism / Transit Orientated Developments. Please see the first few youtube clips on my blog page on this topic for more.
    http://eclipsenow.wordpress.com/rezone/

    But we also need to guarantee our energy supply with reliable baseload power DESPITE the weather, season, or time of day or night. As peak oil hits, we’re going to need far more electricity, pure and simple.

    One comment on renewables: How many times have you read that just 50km by 50km of solar PV would provide all Australia’s energy?

    Do they mention what to do at NIGHT in these scenarios? ;-) Until storing electricity comes down 1000 times in cost and maybe increases 100 fold in power storage, renewables just can’t cut it. Check the tab at the top of this page, “Renewable limits” for more.

  41. That the USGS were over-optimistic in their predictions, but equally, that the supply-demand gap hasn’t widened sufficiently to make it worth seriously exploiting unconventional sources on a large scale – yet. Remember, I’m not denying that peak oil will happen, nor that energy agencies get things wrong – they clearly do. I’m simply saying that they’ve made the best predictions so far, and that it is very unlikely that there will be a cliff after the peak.

  42. EN, one problem I see immediately with the Export Land Model is that it doesn’t follow through its own consequences. Especially when (as here) you’re using it to argue for precipitous declines in global oil availability. That would lead to equally precipitous price rises, and so to reduced consumption in Export Land as well as everywhere else. Those sorts of negative feedbacks need to be accounted for properly, even in cases where domestic consumption is subsidised (as the cost of those subsidies will drag down the whole economy).

    In the same vein, why do governments have to mandate “various fast-charge EV’s or even Better Place battery-swaps”? If oil prices do anything like what even the moderate PO scenarios propose, those technologies will be adopted willy-nilly, without any help from governments.

    As someone once said, the best cure for high oil prices is…high oil prices. This is fundamentally why, as Barry says, it is very unlikely that there will be a cliff after the peak.

  43. As someone once said, the best cure for high oil prices is…high oil prices. This is fundamentally why, as Barry says, it is very unlikely that there will be a cliff after the peak.

    Spoken like a true economist! But this is energy we are talking about, not Coke or Pepsi. It takes oil to wean off oil. Oil is so fundamental to every other product in our society, that we are NOT just talking about the price of oil going up here. It’s food, it’s freight, it’s plastic, it’s fertiliser, it’s everything!

    The Hirsch report indicates that energy economics dictates that we need a 20 year program of weaning off oil to adjust, or a 10 year ‘big government’ crash mitigation to have any hope of a soft landing.

    $300 a barrel oil is not the solution… it’s high unemployment, bankruptcy, rationing, a Greater Depression, bankrupt airlines and bankrupt tourism. It’s international competition for oil, bidding wars, maybe even war! It’s 3rd world countries hitting Mad Max because somehow even they became hooked on oil. It’s massive societal disruption.

    In short, we’ve got to leave oil before it leaves us. Or the following trailers indicates where we are heading.

    See Kjell Aleklett of ASPO and Dr Robelius.

  44. I put my faith in speculators. If oil is going to run short in ten or twenty years then speculators will be:-

    i) pouring their money into researching new energy sources.
    ii) buying oil futures to cash in on the coming crunch. Of course in so doing they will drive up the current oil price and hasten the technological shift.

    If you’re worried about peak oil and confident in your predictions then go buy oil futures on mass and persuade other people to do the same. In short put your money where your mouth is, make a killing and help save us in the process. You could be a rich hero if your predictions are right.

  45. Eclipse – you’re assuming that a high oil price would only come from a current shortage. A future shortage can cause a rise in the current price as people stock oil for the future. Further more a high future price can cause a current shortage for the same reason which is what happened when OPEC saw the US leave the gold standard and expected inflation.

  46. Terje,

    Sorry, but I don’t think the oil market runs that way. They’re trading it as if there’s 20 years left before peak, which is what the USGS and others seem to be forecasting. Everyone just assumes that it is lack of investment… that we’ll be pumping 95 or 100 or 130 million barrels a day in 20 years.

    They’re studying the oil ‘moving into and off the shelves’ rather than what’s happening under the ground.

    The marketplace doesn’t know. It just doesn’t.

  47. Eclipse, though you didn’t say so outright, it seems to me your $300/bbl scenario is predicated on an sudden step change. I’ve had a look at Hirsch et al, and it’s not at all clear to me how and where they make the case that the post-peak transition will necessarily be abrupt.

    Moreover, Hirsch et al themselves list a number of ‘upsides’ that “might ease the problem of world oil peaking”. Since their report was written over five years ago, subsequent events have put ticks in several of those boxes:

    • A number of new super-giant oil fields are found and brought into production, well before oil peaking might otherwise have occurred.

    Entirely new oil fields containing over a billion barrels have been identified off Brazil and in the East African Rift, both eminently extractable.

    • High world oil prices over a sustained period (a decade or more) induce a higher level of structural conservation and energy efficiency.

    When Hirsch et al was published in early 2005, the world oil price was around $50/bbl, and that was considered high at the time. Since then it’s averaged $72/bbl, and it’s been steady at or a little above this level for the last year. Not up to ‘a decade or more’ yet, but we’re well down this path.

    • The U.S. and other nations decide to institute significantly more stringent fuel efficiency standards well before world oil peaking.

    There have been moves in this direction.

    • World economic and population growth slows and future demand is much less than anticipated.

    Tick, the GFC did indeed knock a significant hole in consumption, and population growth continues to slow.

    • China and India decide to institute vehicle efficiency standards and other energy efficiency requirements, reducing the rate of growth of their oil requirements.

    I believe this has indeed eventuated.

    • Oil prices stay at a high enough level on a sustained basis so that industry begins construction of substitute fuels plants well before oil peaking.

    See second point above; we have indeed seen significant tooling up of manufacturing capacity to produce hybrids and electric vehicles.

    • Some kind of scientific breakthrough comes into commercial use, mitigating oil demand well before oil production peaks.

    Maybe not any ‘breakthroughs’, but steady progress continues to be made with hybrid and EV technology and affordability.

  48. • A number of new super-giant oil fields are found and brought into production, well before oil peaking might otherwise have occurred. Entirely new oil fields containing over a billion barrels have been identified off Brazil and in the East African Rift, both eminently extractable.

    Evidence please? Megaprojects to Aleklett and Robelius is anything over 500 million barrels or about 100 thousand barrels a day. What is the peak rate of extraction from a billion barrel field? 200 thousand a day? 300 thousand a day? Demand from India and China is expected to rise by about 1 million barrels a day each year after this year. Basically, when exponential growth in demand keeps rolling along, you can expect the world to need a new Saudi Arabia every 3 or 4 years to account for growth in demand and offset depletion. It just isn’t going to happen. Moves in fuel efficiency are important, but what we really need is moves towards oil substitution, especially from America who are close to being bankrupt from financial matters alone.

    Maybe not any ‘breakthroughs’, but steady progress continues to be made with hybrid and EV technology and affordability.

    Agreed, but when are we going to get serious about deployment? Having the technology on a shelf where various companies are allowed to take a few demonstration models out for a play now and then isn’t the same as independence from an increasingly fragile oil market. My argument is that the kind of collapse or decline of civilisation scenarios Michael present above are not inevitable. But when I encounter denial of the seriousness and imminence of peak oil, I pretty much think a Greater Depression is inevitable, as action will only really occur after people see the sh*t hit the fan. And then it will be too late. You thought the GFC sucked? Just wait for the next decade! But if we somehow muddle through the next few decades without getting into real oil wars, then maybe our grandchildren will see a brighter future. I do worry for my kid’s generation though. It’s going to be horrible to watch.

  49. There are few reassuring signs that the big end of town has any answer to Peak Oil. They do say drilling in the Arctic will be easier when it is free of ice. Note at the onset of the GFC (which industry failed to see coming) in July 2008 the price of oil was $147 a barrel, double what it is now. Yet economic fundamentals suggest strong demand in the face of declining supply should see steady price increases. Perhaps the speculators don’t want to frighten the horses this time.

    The once mighty General Motors company is putting all its faith in plug-in hybrid cars charged from the grid. The problem is their own market research suggests customers are unenthusiastic. On the other hand post private cars the alternative may be bringing a trolley load of groceries home on the bus. That’s if food is still affordable.

    What if oil goes to $200 a barrel and stays there? Battling out of town commuters won’t earn enough to get to work. Farmers won’t be able to run tractors or buy fertiliser. Tourist resorts will be deserted. It is hard to see how the tiny steps we are taking to reduce oil dependence can achieve the huge adjustments needed. Even with cheap oil Europe and the US seem unable to emerge from the economic doldrums. What happens when there is 20% less oil, 50% ?

  50. All very good questions John, and I wish I had comforting answers. Anything is possible. I hope we can bring on the EV’s and trolley-buses and New Urbanism and TOD’s and biochar biofarming and nukes all in time as the depletion accumulates… but why oh why is action on this so painfully slow?

    I personally had 10 minutes briefing Maxine McKew during the 2007 election. 3 days later she heard the excellent 45 minute brief by Dr Bezdek (co-author of the Hirsch report) to a Sydney function full of CEO’s. A friend of mine filmed this talk. What did Maxine do about peak oil? What press conference did she hold? Nothing! And I happen to know from my networks that every significant State and Federal politician has been briefed. What kind of cognitive dissonance are they running to just blot this out?

  51. Hi all,

    and thanks for a great site, Barry!

    As one of the people who are convinced that Peak Oil is an imminent and serious concern, I thought I’d chime in here…

    A very good short introduction to Hubbert’s thinking is “King Hubbert – Updated” (PDF!) from 1997 by the late L. F. “Buz” Ivanhoe, who was a colleague of Hubbert.

    Ivanhoe wrote:

    The critical “Hubbert Peak” year will be close to 2010 (curve B) due to normal oil fields’ decline, or a little later depending on post-1992 discoveries.

    (Note that the term “Peak Oil” was coined by the founders of ASPO, ca. 2000; prior to this it was usually referred to as the Hubbert Peak, if it was referred to at all).

    Another good intro is “An Explanation of Oil Peaking” by R. W. Bentley, which can be downloaded from ASPO.

    Bentley argues that

    The resource-limited peak of conventional oil production is not an obvious phenomenon, and many analysts do not understand it. This report sets out to explain the concept, and to give reasons why it is poorly understood.

    Thus it is not that the EIA, IEA and others are (necessarily) willfuly misleading us, as too many peakists argue, but that the tools they commonly use are not up to the job of predicting a peak.

    I have a quibble with Bentley though, in that he repeatedly states that a geological estimate of how much oil is left to find is a necessary ingredient of a peak forecast; I think the “Dispersive Discovery” – model (here, here, here and here, for starters) of the pseudonymous WebHubbleTelescope shows we can come a long way with discovery data. WHT also contests the notion that the largest fields are found first.

  52. That’s exactly right Kode. The largest fields are found first. I compare field discovery to what happens when you break a glass. You go around picking up the biggest bits first, and then try to vacuum up all the rest. The easy bits just pick up pretty much without gloves on and are easiest to find and handle, but the small stuff takes far more effort and energy to find and get.

  53. OK, so your offshore Brazil quote says:

    Petrobras recently announced the discovery of three super-giant oil fields in Brazil’s offshore Santos Basin. The company confirmed its Tupi discovery on Block BM-S-11 (Fig. 1) on November 8, 2007 and stated that the field has probable recoverable reserves between 5 and 8 billion bbl of light oil.

    A few things to note:
    1. Probable reserves, not Proved
    2. Offshore, not onshore. This is the expensive stuff! There is no more ‘cheap’ oil super-giants left
    3. We burn over 30 billion barrels a year. This is about a 3rd of a year at the most (and again this is ‘probable’ not proved).
    4. Where’s the Saudi Arabia we’ll need to discover every few years from here on in to offset depletion of the 54 of the top 65 oil producing nations?

    The African field was “950 million barrels of oil” which is only 11 days of world oil consumption (84 million barrels a day).

  54. EN, don’t make the classic mistake of hanging everything off ‘proved reserves’, as if anything beyond that is wishful thinking. Albeit you’re in good company – this fallacy committed typically by non-earth scientists has a long and fine pedigree going all the way back to the Club of Rome and their Limits to Growth.

    (Incidentally, a report released just today by some academics at UTS who really ought to know better trumpeting ‘peak phosphorus’ makes the same error, though much more egregiously. But I digress).

    ‘Proved reserves’ is a very specific concept tailored primarily for investment analysts. Almost invariably, the ultimate yield of a given field/prospect far exceeds even the initial ‘inferred resource’ (let alone ‘proved reserves’), as exploration proceeds throughout the life of the project.

    Yes, the Santos Basin is a long way offshore in fairly deep water, and as such will be expensive to develop. But that is all of a piece with a gradual, sustained rise in global oil price (and consequent pressure to reduce consumption) rather than a catastrophic skyrocket. The main reason it wasn’t discovered before 2007 is doubtless because it wouldn’t have been economic to develop at 2003 prices ($30/bbl), but at 2006-7 prices ($65/bbl) it’s a different story.

  55. I’m not hanging everything off ‘proved reserves’, and if you think I was that’s reading a different post to the one I actually wrote.

    If anything, the rather sad size estimates of these megaprojects indicates that we are right on track. Do the math.

    Remember, that small 8 billion barrels or ‘3rd of a year’ won’t all come to market at once. It will take years to develop, probably post peak. It will have it’s own tiny little peak as it ramps up to maximum production. And really, when comparing it to the global volumes of oil we are talking about, it’s like trying to raise the peak of Mt Everest by throwing a truckload of sand on it.

  56. I’m not hanging everything off ‘proved reserves’, and if you think I was that’s reading a different post to the one I actually wrote.

    When you make the point twice (and employ it a third time in using the 950 million rather than 1.5 billion figure), it does rather indicate you rely pretty heavily on it.

    And these are “rather sad” in size, are they? That’s not what you implied when you introduced the threshold of 500 million bbl as defining a ‘megaproject’.

    In any case, I never said these discoveries were the be-all and end-all. They are examples illustrating the point that we’re not at the point of extracting shards with tweezers (to use your analogy) just yet.

  57. And I’m just reminding you that these finds are exactly what ASPO modelled off the Exxon data. Nothing here seems out of the ordinary. Nothing here challenges the ASPO depletion model.

    To put it bluntly, go back and check the “Growing Gap” graph under Point 3 and see whether the discoveries you have mentioned here rise above the sad, whimpering discoveries projected for this period in yellow. These really are the shards being extracted with tweasers, and soon we’ll be onto the dust that requires industrial strength vacuum cleaners.

    Or to put it another way, where are the multi-year discoveries of 50 and 60 and 62 billion barrels a year like the late 40’s and 60’s? Now that was discovery.

  58. If you take a trip to fill up a ute with bags of fertiliser and pass by the bowser on the way something becomes clear — Peak Phosphorus is giving out price signals but Peak Oil isn’t. That could be because the demand for plant nutrition is less elastic than that of driving around. Since PO is just on the 50% depletion point but some reckon PP is at 75% (for ‘economic’ phosphate) perhaps the serious PO price signals have yet to arrive. My fear is that when it doesn’t happen it will be too fast to cope. The double whammy will be felt in places like the WA wheat belt with farm input prices increasing several fold, say tractor diesel at $3/L and diammonium phosphate (DAP) at $100 for a 50kg bag. I think this is possible within a decade and we won’t have ready alternatives.

  59. Despite impressions I may have given above, my take on PO is actually rather similar to that of Robert Rapier, who I’ve been following for quite a while now and have a lot of time for. His prediction is for ‘The Long Recession’ – pretty much a continuation and extension of the malaise the US is currently experiencing. But not catastrophe.

    Also, something I realised I didn’t make clear above – the Santos Basin and East African Rift discoveries represent not just new fields, but new provinces. There is every chance that more fields of similar size will be discovered in those regions.

    @John Newlands, I’d argue that PO is giving out price signals, evidenced by the sustained tripling in US$ price since 2003 (even ignoring the spike in 2008). It’s just that those signals have been largely masked in Australia by the appreciation of our currency vs the US$ over a similar period.

  60. Hi Mark,
    thanks for clarifying that. Could you please bookmark this thread in your ‘to follow up one day’ folder and update us as you find out more? I for one will be surprised if either of those finds actually ends up near the upper estimates, let alone being whole new provinces.

    Jeremy Leggett has a Phd in oil geology and had a respectable career before (sadly) switching to solar (and not nuclear). He claims in his book “Half Gone” that pretty much all the provinces have been found.

    The quantities of oil we require are SO vast, and the decline from existing fields is so substantial, that even a new Saudi Arabia would only stretch the actual peak out a few extra years and then we’d enter a period of declining production of ever vastly more expensive oil.

    I predict an economic catastrophe ahead (but not Mad Max!) unless I wake up tomorrow and find:
    * the G20 have mandated the fast build of a whole fleet of assembly line produced GenIII reactors
    * all new cars from here on in must be full EV
    * massive upgrades to rail to move trucks onto trains
    * New Urbanism
    … then peak oil is going to be harsh. Very harsh. The numbers are just overwhelming.

  61. On the issue of oil price, it is worth considering that commodity prices have in general risen sharply since 2003 and in many cases by as much as or more than oil. I think it would be oversimplifying matters to just attribute that to the oil price. Other factors may include the increased pricing power of producers, speculation and general market sentiment.

    There are a number of commodity index charts that are worth a look here:

    http://www.crbtrader.com/crbindex/spot_calc.asp

  62. Barry Brook, on 30 August 2010 at 11.12 Said:

    That the USGS were over-optimistic in their predictions, but equally, that the supply-demand gap hasn’t widened sufficiently to make it worth seriously exploiting unconventional sources on a large scale – yet. Remember, I’m not denying that peak oil will happen, nor that energy agencies get things wrong – they clearly do. I’m simply saying that they’ve made the best predictions so far, and that it is very unlikely that there will be a cliff after the peak.

    I don’t know how you square that with the huge reversal of the IEA – up to 2008, everything’s great, production will go to 100M+ bbl/dy; after 2008, production declines at 6.7%pa.
    Where can I see supporting evidence for your belief that there will not be a cliff after the peak? And of course a cliff should be defined, I use the definition from the Hirsch report – anything more that 2%pa is a disaster.
    http://www.mnforsustain.org/oil_peaking_of_world_oil_production_partsviiandviii.htm
    “Referring to U.S. Lower 48 production history, the decline after the 1970 peaking was roughly 1.7 percent per year, which we have chosen to round off to two percent per year as our estimated world conventional oil decline rate.112″

  63. Hi Lawrence,
    anything above 2% is a disaster? Ouch. Surely Hirsch was influenced by fossil fuel sponsors? Note the strong influence of non-conventional fossil fuels and coal to liquids as the ‘solution’ in their report? (The idea of peak coal didn’t seem to enter their minds, or the problems of global warming).

    So while I respect his depletion modelling, with many other peakniks I hold some concerns over the emphasis of getting hooked on yet another depleting and greenhouse intensive combination of fuel/s.

  64. Several problems with Coal To Liquids. It doubles well-to-wheel CO2 compared to petro-fuel and would need carbon capture to get it down to the same level. Carbon tax could add 15c a litre to costs. It uses I think 4-5X as much once-through water as coal in the process. Even South Africa with its SASOL plants still imports 60% of its liquid fuel. Lastly they should have starting building CTL plants 10 years ago. Global oil production is declining faster than we can build CTL plants.

  65. Lawrence, the IEA are not predicting a cliff, and nowhere in the world has so far has experienced a cliff because imports + unconventional production has made up for domestic production deficits without a significant rise in the price. Despite what the ‘cliff peakists’ argue, there is no real-world evidence to back up their theory, and similarly no real-world evidence to dissuade me from the notion that a strong and rising price signal will encourage innovation and alternative deployment — ideally (and probably, I think) the increased production of synthetic oil alternatives. I will say once again, I don’t buy the theory of ongoing rises in oil production — it’s ended, or about to end, the data is pretty clear on this. But a cliff — can’t see it happening, and history is behind me.

  66. Lawrence,
    My understanding is that several MSRs have been built but none of them on the scale suited to delivering affordable electric power to the general public.

    Is the failure to “Scale Up” due to economics, technical issues or politics?

    For what its worth, I endorse Barry Brook’s statement above.

  67. Barry said: “no where in the world has so far has experienced a cliff because imports + unconventional production has made up for domestic production deficits without a significant rise in the price”. This is not quite correct Barry, but leaving that aside, I believe that the ‘peakists’ are not talking about the experience of those negotiating oil supplies to domestic markets – they are talking about a ‘cliff’ phenomenon on a world-wide scale. This hasn’t been experienced because we haven’t reached this point yet. So your statement seems to be trying to argue that because we haven’t seen one, we won’t see the other – doesn’t really make sense to me I’m afraid. Back to the domestic ‘cliff’ experience – when oil went to US$147 pb, there were several African countries where oil was no longer available – they simply could not afford to purchase on the spot market. Namibia was one – the bus and truck transport that that country relies on ground to a halt and everything bulky had to transfer to rail travel. I think that if the ‘energy cliff’ analysis is to be properly argued and appreciated, it needs to be articulated in terms of ‘net energy’ (and a ‘net energy cliff’), that acknowledges a bundle of phenomena including decreasing EROEI (which becomes a complex entity when applied to Hubbert’s curve), the high likelihood of reducing exports-to-market (the ‘Export Land’ proposition) and the whole question of whether rapidly declining profit forecasts will be capable of sustaining the complexity required to extract the remaining 5-% (or whatever the URR will turn out to be). I’ve been trying to read a lot on this lately and it seems to me that quantifying the possibilities regarding an ”energy cliff’ is far more complex that people imagine it to be and indeed, far less predictable and knowable that we might hope! And we need to remember that only part of a ‘net energy cliff’ will be apparent in the behaviour of the oil production process. We also have to look to the impacts of reducing net energy supply on the essential mechanisms governing credit and investment, food and water production and the maintenance of essential social mechanisms such as education, research and governance. As Dr. Lardelli has said, ‘energy is everything’…

  68. Sam, if oil prices rise to the point where no one can afford it, oil prices will plummet. Supply and demand, it can’t be any other way. That’s another reason why a cliff is implausible. I wasn’t referring to Namibia — sorry to be unclear — I meant OECD nations and other large-scale industrial economies such as China. Africa is a whole ‘nuther world, and always has been.

  69. Lawrence – could be, and if so (and the historical first occurs), it’ll be a apt and timely wakeup call for the other 30 OECD nations. If not, the supply-and-demand theory holds again. Either way, it will be a useful test for peak oil and national response to it. I do see the response to peak oil being geographically uneven, with some nations feeling the pinch sooner than others, and this may be another reason why a global cliff never eventuates.

  70. I do see the response to peak oil being geographically uneven, with some nations feeling the pinch sooner than others, and this may be another reason why a global cliff never eventuates.

    Barry,
    There will definitely be various nations trading oil to other favoured nations, but that only guarantees the disintegration of the *world* market for oil. The USA is the biggest bully on the block, and demands the most oil. So are we going to see any of Canada’s tar-sands? Canada also has China knocking on their door, demanding their fair share. So the tight Canada and USA trading block could see the USA increasingly putting pressure on Canada to supply their oil once other trading partners peak and start to decline. They’re on the other side of the Pacific from us. They’ll sort something out *over there*, which of course means maybe some nations will be protected from globally high oil prices while others imply miss out.

    There was a *reason* I quoted the DOE’s Hirsch report. This guy is a smart cookie, and worked on various fusion reactor prototypes for the DOE before turning to other energy projects! Hirsch is not some tree-hugging hippie doomer rejoicing that the peak oil apocalypse is about to bitch-slap the naughty industrial world back to the stone age. Hirsch is a conservative, business orientated man, a ‘market man’. (Four Corners).

    I suggest you check out the 91 pages Hirsch and his team put together. Download the Hirsch report from footnotes here.
    http://en.wikipedia.org/wiki/Hirsch_report
    No alternative liquid fuels can scale up overnight. Zero. Hirsch (amongst others) made that amply clear, but the world decided not to listen. He is as sceptical of overnight replacements to oil as you are of renewable energy scaling up to replace coal. Similar questions of COST, ERoEI, land use, ecological impact, reliability of supply, and the sheer TIME TO DEPLOY all come up again and again and again.

    For example, Australia can all just relax because we’ve got natural gas and coal-seam gas right? Well, how much of that has already been promised to China in lucrative contracts? How long will it take to retrofit every car and petrol station? How many petrol stations near you are already full to overflowing in peak hour traffic, yet only have 1 gas pump? What would the queues be like if every car were now waiting to use just that one pump? Who will trade us some oil while we struggle to adjust? What will they sell 2 years into 3% declines? What if they are crashing by 5% a year? What about 7%? What if the export land model kicks in with them, and we suddenly have to move onto another seller? How many sellers will be left after just 10 years?

    I wrote to Robert Hirsch a few years ago and asked for a 2 paragraph summary of his 91 page report. His team looked at EVERY alternative liquid fuels, from algae to coal-to-liquids. Here’s what he gave me (about 5 years ago! There goes MORE time!)

    No one knows with certainty when the world production of conventional oil will peak, but a number of experts think it will happen in the next 5-15 years. Our work illustrates that the oil peaking problem can be mitigated with available technologies, but the time required for implementation is measured on a 15-20 year time line, at best.
    The character of the oil peaking problem is like none other; without timely mitigation, the impacts will be dire, worldwide, and long-lasting. Prudent risk management dictates serious attention and massive action soon, which is difficult for most people and many decision-makers, who tend to wait until a problem is obvious before taking action.
    Use this as you see fit.

    Now, you just said to Sam:

    “Sam, if oil prices rise to the point where no one can afford it, oil prices will plummet.”

    “
You missed a step. I grant that a steadily increasing cost of oil will eventually reduces the price… but how exactly? Well, demand will reduce, because people don’t want to spend $200 to fill their car or buy super expensive airline tickets. Okay, so what does that mean?

    Reduced demand for oil means devastation for our economies. Reduced demand for oil means reduced demand for overseas holidays, airline travel, reduced demand for tourism in Australia, reduced demand for cross-country trips, freighted goods, international trade slowing down, market contraction, market instability, stock-market crashes, cancelled construction projects, and skyrocketing unemployment.

    Just look at the last few years. The price skyrocketed and then crashed to $80 a barrel. Why? One word: recession. The price rises, the economy tanks, then the price tanks. I admit to a little detail called the “GFC” but I’m trying to establish what Hirsch and others have argued.

    Price rises, economy tanks, price tanks. Then because the price has tanked, the economy starts to pick up a bit again, and around and around we go. They call it the “Bumpy Plateau”. The cycle is not just destructive for economies but disastrous for sending clear price signals to alternative car manufacturers like “Better Place” etc. One minute a synthetic jet fuel from nukes might be competitive, the next minute it isn’t. A biochar manufacturer might just have got the funding for his synfuel plant for a rural area, and then the bank pulls the plug on it because the whole market environment has changed again. What is preferable is a steady but affordable high price, not a cycle of crazy climbs and then sudden crashes.

    As Hirsch has said, the market ‘solving’ peak oil for us is the *problem*, not the solution! Yet sadly, I think that’s what we are in for.

    I’ve twice been in the same room as politicians being briefed on peak oil, and it just doesn’t work. I give up. We’re about to be bitch slapped into the Greater Depression.

    You know I have no love for Mad Max scenarios and those doomers that find all of that end-of-civilisation stuff just so exciting! They seem to *relish* the thought of 4 or 5 billion of us starving to death in the cold.

    Yet I have to agree with Robert Hirsch. Grab a coffee and watch the 45 minute peak oil special on Four Corners. It’s fun.
    http://www.abc.net.au/4corners/special_eds/20060710/

    Regards
    Eclipse.

  71. I read somewhere that liquids from Canada’s tar sands are expected to max out at 4 million barrels a day. We not only want low fossil carbon alternative fuels to replace 86 mbpd but to have that grow to 120 equivalent by mid century. Some analysts are talking 65 mbpd all-liquids by 2030.

    Others go even further and suggest the fact that the oil production curve is not growing just by itself has caused an economic slowdown. In the US for example millions of formerly middle class professionals may never return to the lifestyles they enjoyed until only recently.

    If I recall ABARE said Australia needed about 3915 PJ a year which I think is 124 GW continuous average power demand. That is for stationary generation, transport and process heat which together are currently 93% supplied by fossil fuels. It is hard to see a timely, adequate and non-disruptive transition away from that.

  72. Barry Brook, on 4 September 2010 at 19.02 Said:

    Lawrence – could be, and if so (and the historical first occurs), it’ll be a apt and timely wakeup call for the other 30 OECD nations. If not, the supply-and-demand theory holds again. Either way, it will be a useful test for peak oil and national response to it. I do see the response to peak oil being geographically uneven, with some nations feeling the pinch sooner than others, and this may be another reason why a global cliff never eventuates.

    Btw, I did ask you for specific references to support your point. An essay somewhere, anything, not just your assertion here.

  73. Barry said “Sam, if oil prices rise to the point where no one can afford it, oil prices will plummet. Supply and demand, it can’t be any other way. That’s another reason why a cliff is implausible.” and then Eclipse wrote: “As Hirsch has said, the market ‘solving’ peak oil for us is the *problem*, not the solution!”.

    Barry, I don’t believe that the monetary price of oil, let alone any source of energy is going to be the real issue. It’s supply which we will have to come to terms with. Financial cost is a symptom, not the disease. We are so used to watching the volatility of the fuel cycle that we forget to look for underlying causes. Indeed I have heard my local politicians here in Adelaide (where I believe you too are based) talk all evening of transport sustainability purely in terms of fuel prices. But conversely, as Eclipse suggests, the operation of the market is indeed the problem mechanism we have to deal with because it is masking what is really happening. There is no reason at all why an ‘energy cliff’ needs to me marked by either rocketing or by plummeting oil prices. We now have examples from all domestic economies as to why this is so. Rising prices – anything beyond about US$80 pb – seems to send the major industrial economies into recession (call it a ‘severe dampener on demand’ if you like) which sends the price back to some sort of threshold, probably such as where we are now. But no lower I believe – not consistently anyway – simply because there will always (and increasingly) be winners and losers on the spot market and because an adequate and unimpeded supply of oil at all costs is absolutely essential for the functioning of the advanced economies. There are very few economies, societies and governments that can function meaningfully with any major constraint on oil these days. Maybe some Pacific islands or maybe some smaller African countries. New Zealand maybe. There are also no doubt quite a few local economies that can muddle by – smaller cantons in China, Italy and Switzerland perhaps – where localised markets and suitable division and organisation of labour are still intact. However most economies and societies have become completely dependent on oil to maintain at all levels the complexity required to sustain everything from food and water supply to industry, higher education and knowledge transfer. We have to stop thinking about the economics of energy depletion in terms of money. We need to try to understand it in terms of the maintenance of complexity and our ability to engage in specific forms of ‘work’ (people sometimes refer to this as ‘energy efficiency’). Everything we see around us represents such ‘work’ yet we don’t seem to run around attaching a price tag to it. Adelaide for example has a small population and very limited revenue base yet is half the size of Los Angeles (a city of 12 M people). That fact alone represents a base-line amount of ‘work’ simply required to live here and to keep our transport systems running as well as some very real economic constraints on what can realistically be done. An increasing amount of Adelaide’s food comes from Queensland, largely because the city has built over its productive hinterland. Again on this food front, the demands for ‘work’ just to sustain life are increasing. So don’t buy this notion that the monetary costs of energy will resolve themselves due to market mechanisms simply because they cannot and because they are not the main game anyway. In terms of per-capita primary energy access, it’s a depleting world and persistent need will always trump established market positions. Energy access and cost will come to be measured per-capita and in terms of where it is actually used and what work it is required to do, rather than by the currently quite artificial international ‘supply and demand’ mechanism. There will be no guarantees in the oil (and the energy) market simply because the market is perfectly capable of disintegrating and transforming into something else. It is already, it’s just that the OECD and Australia in particular doesn’t seem to have figured this out. Bolivia, Venezuela, Columbia and others have already formed an ‘oil for bananas/doctors’ trading bloc. Something similar is evolving in central Asia. The oil market is inherently chaotic and ungoverned by anything approaching international treaty. Chaos and the disappearance of the current ‘fungible’ international market is only held off by blind faith in swing supply – as soon reducing swing supply disappears bets are off and the market seems very likely to revert to something less gentlemanly. But as I’ve suggested, observing the market is only one window into the prospect of an ‘energy cliff’. To my thinking, the major indications why such a phenomenon may well be a very real prospect has to do with complexity – how we maintain the enormous degree of interconnection, timeliness, responsiveness and active maintenance required to keep advanced industrial society running. The notion tests the limits of my own understanding and I strongly suspect it also does so for any scientific system of measurement or analysis. Hence we are unlikely to see the effects of any such ‘energy cliff’ close up in the west until it is too late – until things have gone to far and until amputation becomes the preferred response rather than cure. I’ve now given up hoping for some rational response by Governments in Australia. I have worked professionally for 24 years in the social services field with people with severe disabilities. Prior to that I worked extensively in the minerals industry in exploration across the outback. So I have seen Australia’s vulnerability to energy depletion from two angles – those who are socially marginalised due to dependence on others, and for communities which face the marginalising challenges of distance and removal from the centres of political power (and where the per-capita dependency on oil is far, far greater than it is for city dwellers). The sustaining of remote and regional communities is as much an aspect of complexity as is effective care for those with disability. Maintaining complexity, especially over time and distance, will be how Australia’s ‘energy cliff’ is measured. If we are to face PO in the next decade I can’t see any prospect of solutions based on mass roll-out of new energy technologies, renewable or otherwise. I don’t even see that massive introduction of efficiencies will be able to resolve the challenge over such a short time frame. All I see is the prospect of having to do more with less – a problem of ‘supply’ anyway you cut it!

  74. David Benson wrote: “An analogous situation already happened to whale oil.”

    Lots of things happened David – oil wells, rapid urbanisation, subscription-based energy contracts, coal gasification, the light bulb etc. Ask yourself what whale oil was used for in the 19th century? Most of it was used for domestic lighting in the USA and a few other industrialising nations and not much else. An extremely important function at the time that added enormously to individual productivity and the rise of better education. Whale oil was quite rapidly replaced by gas which incidentally turned out to be much cheaper (once distribution networks were established) and then by electricity. Whale oil, like kerosene is ideal for standalone applications but not very useful for subscription-based distribution in urban areas (as gas and electricity turned out to be). It’s becoming increasingly obvious that the oft-quoted example of whale oil’s replacement by gas and electricity is actually a very poor analogue for the situation facing oil production. The Hubbert curve may look similar but the context is completely different in many, many ways. There were several very good domestic lighting technology options available and waiting in the wings when the whale fisheries collapsed. These options had the added benefit of having many broader and parallel applications as well as being cheaper and more reliable. That was all 100 years ago.The world’s population has grown enormously since then as has dependency on mass transport and complex systems. Systems are hundreds of times more complex and the great bulk of energy use now goes into simply keeping the machinery of civilization alive and ticking over. It would be needed for this even if we all eschewed electric lighting, fridges are cars tomorrow. The real question for me must not be a backwards-focused ‘what happened to whale oil?’ I think this is one of those situations where the past is no longer a useful guide to the future. I conclude that we need to ask forwards-focused questions such as ‘what real options do we have now?’ Meaning ‘right now’!

  75. An analogous situation already happened to whale oil.
    What occurred then?

    Hi David Benson,
    As Lawrence and Sam have already said, it’s about timing and the *essential* nature of oil to our economies, and yet it was all entirely preventable. There are solutions, but it will take decades to implement.

    Timing: If you read the Hirsch report, you’ll see that no other liquid fuel substitute can keep up with the expected declines. A mere 2% p.a. decline was modelled and came out as quite catastrophic for developed economies, yet the reality may be a far higher decline rate.

    Essential: While there is a lot of oil wastage and ‘energy fat’ in our society that can be cut without doing damage to essential systems like food and emergency services, cuts in ‘discretionary’ oil use will prove devastating to big employers like airlines and tourism.

    It was preventable: we’ve had decades of warning, and yet built wall-to-wall suburban sprawl. It is without a doubt the most oil dependent city plan ever. We have built a town plan around the assumption that you can and MUST drive to work, the school, the shops, church, sports, movies, bookshops, everything. If we had built TOD’s (Transit Orientated Developments) we’d not only be far more oil independent, have far cleaner cities, and far more beautiful places to live with character and a ‘soul’ to them, but our communities would be richer and have less depression!

    The solutions will take decades: electric cars can be deployed, nukes can be built, cities can be rezoned, and life can get better but it will ALL TAKE TIME!

  76. Lawerence, Sam Powrie & Eclipse Now — Yes, substitutes were found and substitutes will be found again. Beyond the rather inefficient “electric cars” are efficient electirc trains; beyond the rather inefficient CNG light trucks are the potentialities of using biodiesel.

    While AUssies seem to have an adversion to jatropha and its most benificial oil, your (relatively near) neighbors do not. For example Myanmar (aka Burma) has taken up producing more than trivial amounts. For another, at least two off-grid villages in India use jatropha oil to run stationary diesels to generate a modest amount of electricity for the evenings. Maybe the same in Africa and Mozambique.

    The impetus was the recent spike in the price of petroleum diesel. More people will catch on as the plateau in oil begins to turn toward an actual spike in prices.

  77. Hi David, I have no doubt that electric trains are nice to ride in and biodiesel cars and trucks work out OK. I had a biodiesel car (a Golf) myself until a few months ago. It was running on 100% canola oil grown locally untl both car and biodiesel company went bust. The key point I was trying to make had nothing to do with whether such technologies work or not or whether such fuels are ‘substitutes’ in theory. What worries me greatly is whether they will provide the ‘work’ required to deal effectively with the declines in oil production forecast. Running a stationary pump in a village in Burma where everything else is done by hand is one thing. Running an advanced and complex economy and society dependent on cheap oil for long distance transport is another. ‘Work’ must be done on an efficient thermodynamic basis. As far as I know, the only place that has managed to do this with biodiesel or rather bioethanol is Brazil where the stuff can be produced close to where it is consumed because of the extensive established scale of production and because it is a byproduct of an already lucrative crop – sugar. As soon as you have to truck biofuels any distance you run into the problem of rapidly reducing energy return, and reducing economic advantage. Ted Trainer has written an excellent book on this subject. I haven’t seen any refutation of his analysis which concludes that biofuels, while practical on the village scale you point to, have no effective application in Australia as a large scale substitute for petroleum fuels, whatever the cost involved. It has been calculated (I believe) that substituting only 30% of Australia’s current petroleum consumption would require all of our wheat production to be replaced by biofuel crops. I may not have the number quite right but that’s the general scenario. I grant that biofuels may have a place as an additive or a fraction in the mix but it will never be more than that as far as I can see. And I feel focusing on substitutes misses the point simply because there is no effective substitute for oil in thermodynamic terms. What is required is first to look at using less and then to look to efficiences. Far more advantage to be gained from both of those levers. Remember that, even if we all start to ‘live locally’, grow our own vegies and chooks (hard work BTW) and adopt Ted Trainer’s ‘simpler way’, we still have a complex, highly organised and technologically developed society to run with universities, industries, wholesale and retail structures, thousands of commercial services, research institutions, government processes and services, agricultural industries, fishing, defence, and voluntary or not for profit community services to run into the future and indefinitely. Even if everything ‘goes green’ how do we keep this vast mechanism running? That is the challenge. to Australia. As far as I can see it has nothing to do with a villages in Myanmar or Africa. It would seem to have much more to do with cultural change in this country. And the IEA is forecasting a 6% decline in conventional oil from 2012 onwards. That’s a halving in about 12 years…

  78. DB biodiesel is a premium fuel but will compete with food production. The ideal niche seems to be getting the oil from tree nuts like jatropha and from waste cooking oils, not from dedicated legume crops. CNG is clunky but can scale up. When petro-diesel hits say $3/L it will be prudent to convert trucks, buses and tradesmen’s vehicles to CNG dual fuel. They can ‘gas-up’ at the truck depot then refill with expensive diesel on the highway if there are no CNG filling stations. The number of filling points should increase with time.

    If they can be made cheap enough compact urban cars could use battery assist with home charging. In a collision we worry about the battery with EVs and the 220 bar gas cylinder with NGVs. Neither will have the range and quick filling of petrol and diesel vehicles.

  79. Yes, that German military report certainly is thought provoking!

    Politics in place of the market: The Bundeswehr Transformation Center expects that a supply crisis would roll back the liberalization of the energy market. “The proportion of oil traded on the global, freely accessible oil market will diminish as more oil is traded through bi-national contracts,” the study states. In the long run, the study goes on, the global oil market, will only be able to follow the laws of the free market in a restricted way. “Bilateral, conditioned supply agreements and privileged partnerships, such as those seen prior to the oil crises of the 1970s, will once again come to the fore.”

    This is exactly what I was trying to say above about the collapse of the global oil market. It will be an ad-hoc thing, depending on who can barter for what. And that’s not good for political stability and international tensions, not good at all.

    While I’m glad the German military are taking this seriously, it will no doubt play out politically exactly the way it has done here and in the USA. Certain ‘officials’ will cluck their tongues, make a few newspaper releases, and then put it to bed, hoping it doesn’t happen on their watch.

    Also, this was astonishing.

    Part 2: A Litany of Market Failures
    According to the German report, there is “some probability that peak oil will occur around the year 2010 and that the impact on security is expected to be felt 15 to 30 years later.” The Bundeswehr prediction is consistent with those of well-known scientists who assume global oil production has either already passed its peak or will do so this year.

    Haven’t they read Hirsch, Campbell, and the dozens of independent geologists quoted by ASPO, the UK think tank, and even the Aussie Senate report and American GAO reports? Yes global peak oil looks like a plateau right now, but if 2010 is peak oil, once terminal decline sets in it could affect price drastically within 5 years, and access to supply and oil security within 10 years. (No time to quote chapter and verse but this effect is documented in the reports I’ve quoted above.)
    So what do they mean by ‘medium term’?

    Market failures: The authors paint a bleak picture of the consequences resulting from a shortage of petroleum. As the transportation of goods depends on crude oil, international trade could be subject to colossal tax hikes. “Shortages in the supply of vital goods could arise” as a result, for example in food supplies. Oil is used directly or indirectly in the production of 95 percent of all industrial goods. Price shocks could therefore be seen in almost any industry and throughout all stages of the industrial supply chain. “In the medium term the global economic system and every market-oriented national economy would collapse.”

    The following is the kind of ‘thunder’ I think a peak oil report demands. It shows the appropriate level of respect for the challenges ahead. It’s not the end of the world, the human race, or even law and order. But it could be the end of the ‘world as we know it’ in terms of our assumptions of market prosperity.

    Global chain reaction: “A restructuring of oil supplies will not be equally possible in all regions before the onset of peak oil,” says the study. “It is likely that a large number of states will not be in a position to make the necessary investments in time,” or with “sufficient magnitude.” If there were economic crashes in some regions of the world, Germany could be affected. Germany would not escape the crises of other countries, because it’s so tightly integrated into the global economy.

    We can and I hope *will* adapt to peak oil, but how many nations will make it through with functional economies and a strong industrial manufacturing base? How many will make the investments necessary to prevent the kind of crash Michael Lardelli and others predict?

  80. A few days ago Eclipse now said “Why do you feel this Sam? GenIII nukes are ready to roll out today, and there are various plans for GenIV nukes that are still being commercialised….So once the GenIV nuke is adopted on a factory line, and is mass-produced, costs will plummet and we’ll see one of the fastest roll outs of clean power in history.”

    &

    Finrod said “This assertion runs contrary to the general thrust of two years discussion and debate on this site, so if you have some new, credible information on the matter, best you put it to us. After all, you’re basically saying that the case against nuclear power is so persuasive that we shouldn’t waste our time trying to save all those billions of lives which will inevitably be lost in your idea of a post peak oil world. So, rather than leave yourself open to the charge that you have casually accepted a future embracing genocide on an unprecedented scale when it isn’t necessary, the moral burden is on you to convince others that nuclear power should not be pursued.”

    I’m sorry to both of you – I didn’t express myself clearly enough it seems. I said “I don’ think such a collective notion will find nuclear solutions useful – they are too inflexible, too shortlived and far, far too unwieldy to create and manage.”

    By ‘collective notion’ I’m referring to the people of the future – the next generation of consumers if you like – who will have to live with and support (in various ways) a nuclear future. Personally I have nothing against nuclear power (both of you seem to imagine my words indicate that I have). What I find impossible to see is how communities of the future can possibly support the ongoing funding and support for nuclear power. I don’t care what ‘generation’ the reactor technology belongs too – you are dealing with need for the construction and then the maintenance and the rebuilding every generation or two of thousands of new nuclear reactors. Thousands!!! Not just say 5000 over 20 years (I’ve read it would take 10,000 to replace the coal-fired generation needs of the earth’s current 6.5billion pop’n) but another 5000 30 years later to replace the first lot and so on. Ad infinitum. All this in a world where the oil bounty inexorably reduces, where water becomes scarecer everyday and where living space is diminishing rapidly. Now THAT sounds like a Mad Max scenario!

    That’s why I say that I can’t see nuclear technology either being useful or even getting off the ground on the scale that both of you seem to put so much faith in. I stress, this is my considered p.o.v. It has nothing to do with putting a case against nuclear power – if you want to see NP stations built fine – I just see it as a waste of time. And for some I guess only time will tell. Finrod also seems to accuse me of “casually accepted a future embracing genocide on an unprecedented scale”. I do not have this bleak view of a future where millions are killed (a necessary component of genocide I imagine). I mentioned nothing about people dying! If any societies in the world collapse over the next 100 years for whatever reason it won’t be the most populous. India and China have very solid practice in living with scarce and expensive oil. It will be the western nations like Australia that have problems.

    Finrod also suggests that I have some sort of ‘moral burden’ in this matter. Well I guess we all do which is why I am exercising what I regard as sound judgement in forming a p.o.v. However you are wrong if you think that moral burden extends to responsibility “to convince others that nuclear power should not be pursued.” I couldn’t care less because I don’t see it having legs. How many nuclear reactors do you think Australia can build and sustain before our economy goes down the tube? Three, four, five?. Remember we’ll be building them in a world where credit on the scale required to build even one reactor is likely to become nonexistent and where the technology is also required in hundreds if not thousands of similar projects around the world.

    If we were serious about having access to nuclear technology we would have build the blasted things 2 decades ago. We’d have our own home-grown NP industry maturing right now. It’s too late to attempt to become a nuclear consumer now because realistically our only choice is to become a nuclear slave to the technology of others. We suffer from the same insular, ‘she’ll be right’, ‘let the future take care of itself’ mentality that the other great island, the USA, suffers from. If, as I presume an ordinary citizen of this country, you want to engage in some useful planning for our children (and I do have a child BTW) then I believe that the real moral burden that Finrod mentions demands a realistic view of the future – not some techno-utopian fantasy.

    Basically this is a ‘show me the money’ situation mate. I’ve spent the last 32 years working across this nation doing everything from trucking and mining to academia and being a health professional. I am not schooled in the mathematical sciences but I know many who are and I’ve also learned that the numbers don’t lie. I’ve also learned that it’s a real world out there beyond cyberland. A world where in a very real sense and as Michael lardelli says, ‘energy is everything’. I don’t care if Gen-whatever reactors are ready to roll today. As I’ve said, what’s important are the numbers, including the money!

  81. John Bennetts said:

    eclipsenow, you have gone out of your way to be aggressive to each of us who have tried to help you. You are a waste of time and space.
    In the interests of CO2 reduction, please cease breathing.

    John, now that we have a peak oil thread and have linked to considerable reputable sources that confirm an imminent crisis in oil, do you want to reconsider your ‘drop dead’ comment above? How about having a go at defending ABARE’s oil price pontifications? You and Peter have been conspicuously absent from the peak oil thread. I wonder why? ;-)

  82. @Sam Powrie

    I’d say the least most convincing argument against nuclear power in Australia is that it’s not affordable. Lets try some back of the envelope stuff:

    If Australia was to build 40 GWe nuclear capacity over the next 20 years at around $4 billion per GWe, total cost in today’s dollars would be ~$160 billion. Thats $8 billion per year. Australia’s GDP is more than $1,000 billion.

    http://www.google.com/publicdata?ds=wb-wdi&met=ny_gdp_mktp_cd&idim=country:AUS&dl=en&hl=en&q=australia+gdp

    So you are looking at the order of 1% of GDP per year. Note that Generation III+ reactors have design lifetime of 60 years. Furthermore the cost of electricity from nuclear is likely to more stable and predictable than that from fossil fuels as the latter are very, very likely to see sharp price rises.

    Also consider that there will need to be capital expenditure in electricity generation in any case.

    Far from being unaffordable, it’s likely that nuclear will be the most affordable path.

  83. @Sam Powrie:

    For a start, my words which you are quoting were directed at Michael Lardelli, not you, but if the shoe fits, you go for it.

    By ‘collective notion’ I’m referring to the people of the future – the next generation of consumers if you like – who will have to live with and support (in various ways) a nuclear future. Personally I have nothing against nuclear power (both of you seem to imagine my words indicate that I have). What I find impossible to see is how communities of the future can possibly support the ongoing funding and support for nuclear power. I don’t care what ‘generation’ the reactor technology belongs too – you are dealing with need for the construction and then the maintenance and the rebuilding every generation or two of thousands of new nuclear reactors. Thousands!!! Not just say 5000 over 20 years (I’ve read it would take 10,000 to replace the coal-fired generation needs of the earth’s current 6.5billion pop’n) but another 5000 30 years later to replace the first lot and so on. Ad infinitum. All this in a world where the oil bounty inexorably reduces, where water becomes scarecer everyday and where living space is diminishing rapidly. Now THAT sounds like a Mad Max scenario!

    Nuclear power can pretty much support itself, in the same manner and for the same reasons that coal and oil can. It is a concentrated energy source with a virtually inexhaustable fuel supply easily able to carry its infrastructure needs while also providing great quantities of cheap power to customers. It can be used to synthesize chemical fuels to support those sectors of the economy in need of a continuing supply of them, and provide all the process heat and electrical power needed for industry in all its forms, as well as providing for commercial and residential customers.

    I personally think that the installed generating capacity we will need in the long run is considerably more than the 10,000 figure occasionally given, possibly as much as ten rimes more, or even higher, but I see no difficulty at all in achieving and maintaining the necessary infrastructure for this.

    I note that you use unrealistically pessemistic figures for the lifetime of nuclear plants. Thirty years? Even now there are plants forty years old which have been granted license extensions for another twenty years, and there is no reason to think that when the time comes, eighty or even one hundred year operating lifetimes won’t be approved. Ongoing maintenance will allow us to achieve this.

    So suppose that in the long run we have a global population of 10 billion people supported by 100,000 1GW nuclear plants (averaged out). This is one 1GW plant per 100,000 people. Let’s assume a construction cost of US$5 billion/NPP in current money, and a plant lifetime of 100 years, or $50K/person/century. Now lets assume that amortisation plus O&M costs multiply that cost by five to arrive at the full price of this power. Please note that my asumptions are very generous toward your case. We then end up with a quarter million bucks per person per century, or $2,500 per person per year. This includes all power used by civilisation; industry, transport, agriculture, electrical power… the lot, needed to maintain a world population of ten billion humans at the energy consumption level currently enjoyed in the United States from all energy sources, electrical and non-electrical. And we haven’t even factored in the cost reductions which would accompany such a major rollout of new nuclear capacity, or technological and manufacturing improvements which the experts are even now discussing.

    In short, your reasons for believing that nuclear power is not a viable solution to our energy supply problems are simply not credible.

    Finrod also seems to accuse me of “casually accepted a future embracing genocide on an unprecedented scale”. I do not have this bleak view of a future where millions are killed (a necessary component of genocide I imagine). I mentioned nothing about people dying! If any societies in the world collapse over the next 100 years for whatever reason it won’t be the most populous. India and China have very solid practice in living with scarce and expensive oil. It will be the western nations like Australia that have problems.

    Before the proper dawn of the modern industrial era, the great economist Adam Smith observed that the natural carrying capacity of this planet was about 1 billion humans, maybe 2 billion if we really pushed things to the limit. He was essentially correct. The reason we have managed to exceed this natural limit so greatly over the past century is fown to the Haber-Bosh process, which has given us the ability to use atmospheric nitrogen for fertiliser production. It is an energy intensive process, and abandoning it, as we would have to in a non-nuclear peak oil future would indeed have exactly the genocidal effects I alluded to. You don’t need to mention them for others to realise the disastrous implications of your advice, and kindly do not protest that you were not aware of the issue when you gave that advice. If that is the case, it makes your culpability even worse. It means you’ve been spouting off this nonsense in a public discourse on a most grave issue for the future of billions of people, and haven’t even bothered looking into the very serious implications of your position.

    If we were serious about having access to nuclear technology we would have build the blasted things 2 decades ago. We’d have our own home-grown NP industry maturing right now. It’s too late to attempt to become a nuclear consumer now because realistically our only choice is to become a nuclear slave to the technology of others. We suffer from the same insular, ‘she’ll be right’, ‘let the future take care of itself’ mentality that the other great island, the USA, suffers from. If, as I presume an ordinary citizen of this country, you want to engage in some useful planning for our children (and I do have a child BTW) then I believe that the real moral burden that Finrod mentions demands a realistic view of the future – not some techno-utopian fantasy.

    What a miserable defeatist attitude. The political whims of the previous generation of decision makers are not like unto laws of nature. We have choices.

    If by some unhappy chance the doomers are correct in asserting that peak oil has hopelessly compromised our ability to switch to a nuclear powered civilisation, it will matter little whether we attempt it or not. If they are wrong, heeding their advice will be the greatest of treacheries we could inflict on out descendents.

    I am not schooled in the mathematical sciences but I know many who are and I’ve also learned that the numbers don’t lie.

    It’s a shame you didn’t bother learning enough to put some of the advice you’ve recieved from your contacts through a bit of critical analysis.

  84. Hi Sam,

    Quokka makes some good points.

    Also, forget about credit: the world marketplace for international finance will probably be unrecognisable just 5 or 10 years out. But what about big government programs? What about taxpayer cash being injected into an emergency roll out of nuclear power for our nation’s energy security? (This sounds unimaginable, but things really could get this funky).

    My frustration is that I can visualise a post-oil world, but don’t have the number crunching skills to model how drastic the oil rationing will have to be to get there. The Nazi’s whacked up some coal-to-liquid plants in a hurry in WW2 when their oil supplies were cut short. I’m not for a moment suggesting we’ll be able to roll out CTL to supply all our needs. South Africa had decades of sanctions against them and so developed the world’s largest CTL industry, which is only 100 thousand barrels a day. That’s only one tenth of our oil requirements after decades of development! So I’m talking about CTL for essential sectors only.

    If ABARE’s domestic oil reports are correct, and I take on board the Australian Senate’s concerns about their projections being Geoscience data being massaged by economic assumptions, then we’ll make it.

    A mix of rationing, gas conversions for our trucks, and CTL will give Australia enough energy to run the essential sectors while our fleet of nukes are built. And for us city folks: bikes, lots of bikes. With trailers! Have you come across the ‘bike move’ craze in some parts of America? Biking enthusiasts get together and move home by bike. If oil is prioritised to agriculture, mining and construction, then maybe us city folk will get fit using bikes for a generation or so.

    My old mantra used to read:

    “Peak oil. Don’t ask if you will be able to drive to the supermarket, but whether they’ll have any food when you get there”.

    In an emergency, I for one will vote for rationing to prevent that scenario!

  85. Hi Finrod,
    That 100 thousand GW reactors paragraph boggles the imagination. Wow. So could you just unpack the cash-flow for the $2500 per person? From the way you described it, I’m assuming that’s not one’s electricity bill but is included in everything you buy from shoes, groceries, car servicing, through to movie tickets and trips to the zoo?

    If by some unhappy chance the doomers are correct in asserting that peak oil has hopelessly compromised our ability to switch to a nuclear powered civilisation, it will matter little whether we attempt it or not. If they are wrong, heeding their advice will be the greatest of treacheries we could inflict on out descendants.

    That sounds a lot like Pascal’s wager and is pretty much spot on.

    http://en.wikipedia.org/wiki/Pascal%27s_wager

  86. When the petroleum begins to become pricey, people will indeed move o alternate sources of transportation fuels; jatrophra or algae based or even from a fungus. There is also some research on micrombs which use electrosysnthesis instead of photosynthesis.

    As for using up all your farm land; make more. Australia is blessed with lots of available land. All it takes is added desalinated water (at currently less than $2 per tonne, delivered in quantity). So all it takes is some energy sources for the desal and pumping. These are actually potential applications for intermittent sources such as wind and solar. But NPPs need somehere to dispose of excess power generated overnight; pumping and desal fits the bill nicely.

    In any case, Oz certainly has plenty of biological potential that way. Read
    Irrigated afforestation of the Sahara and Australian Outback to end global warming
    http://www.springerlink.com/content/55436u2122u77525/
    in that light.

  87. Hi Finrod,
    That 100 thousand GW reactors paragraph boggles the imagination. Wow. So could you just unpack the cash-flow for the $2500 per person? From the way you described it, I’m assuming that’s not one’s electricity bill but is included in everything you buy from shoes, groceries, car servicing, through to movie tickets and trips to the zoo?

    Hmm. Not precisely. That’s to cover the energy costs. Doubtless other costs will be imposed on manufactured goods. My back-of-the-envelope type calculations were simply intended to show that such a future is achieveable without grossly absurd assumptions about resources needed for it. No doubt there will be many complex issues surrounding the achievement of such an ambitious vision, and it won’t all be smooth sailing. I just wanted to demonstrate that industrial activity on our current first-world scale for all the future inhabitants of this planet is not an impossible dream if we use nuclear power.

  88. The dark horse in all of this is gas, both natural and coal seam. The de facto alternative to new coal fired plant appears to be mid sized air cooled gas plant mixing open and combined cycle. They are springing up at a steady rate.. Tamar, Tallawarra, Darling Downs, Mortlake. OK so far but Australia needs to replace a million barrels of oil a day to make fuel, plastic and other petrochemicals. In domestic transport the gas could be chilled or compressed (LNG, CNG, ANG) or converted to petrol GTL. All up it could require another 50 Mt a year of gas.

    Something’s gotta give. I don’t think we can use gas as replacement for both coal and oil yet still export large amounts plus meet the usual domestic demand for heating and ammonia production. Logically we should use NP for baseload electricity and use sparing amounts of gas for peaking. When gas is gone we might have to make hydrogen or synthetic methane to replace it. Can’t happen? That’s what the Brits with their North Sea reserves now Norway is starting to worry. Unbelievably even Saudi Arabia has thought of importing LNG for power generation to conserve oil.

    I’d like whoever becomes Federal energy minister to make some noises about the long term issues with gas.

  89. I’ll say one more thing (I may have said this before) – yes we could technically fix things. But I don’t think we will. I think the world is too corrupt. It’s not a technical problem, it’s a socio-political problem. It’s the golden rule. He who has the gold makes the rules. The people who have the gold now are corrupt, and they’re making the rules.

  90. Well, they might be now. But what about after? What about when it hits? What about when society and politicians realise that this is not a game, and that energy security is *important*?

    Then trite answers from renewable protagonists will not be enough. The false assurances from big oil will not be enough. Politically correct platitudes will not be enough. Our leaders will want answers that work. And that’s when we have to support Barry in whatever strategy Barry tries to use to get this message out there. So as well as linking to BNC all over the net, and as well as Barry’s book, his radio interviews and university lectures, some of which have become podcasts; as well as all of this WE need to do our bit. Simple activists that can print out a poster and let people know the technical truths that we discuss here.

    Because by and large, Aussies are just not that interested. Yet. But they will be.

  91. A further thought on competition for gas; truckies will happily pay several times as much per unit as power companies. I’m told that heavy vehicle operators can get the cost of diesel down to around $1.05 a litre after bulk discounts and the fuel rebate. Let’s suppose in the near future truckers will pay $1.50 for a litre equivalent which is 35 MJ or 4.3c per MJ.

    Contract prices for piped gas are a commercial secret but we can suspect new contracts will be between $4 and $8 per gigajoule (a million BTUs), call it $6. That’s 0.6c per MJ. Therefore other things being equal truckers could pay 7X as much for gas as electricity generators. Adjustments need to be made for fuel taxes, reselling margin and compression effort.

    Thus we are heading for conflict over gas use. If Australia has a million trucks, buses, tradies utes and bulldozers on compressed natural gas CNG they will all happily pay over $40 per GJ. Operators of the currently favoured gas fired plants probably don’t want to pay more than $6. Truckies will win this one and power prices under a gas heavy mix will go up even more.

  92. And, at least on this thread, I note that Barry Brook has not answered my questions since 4 September 2010 19.02, nor did he ever provide a substantive answer with referential support. That’s a pretty shit stool for an academic to stand on.

  93. And I absolutely do not mean to provide support for the likes of the idiot Eclipsenow or his minions. I have provided some detail to support the question, for example Hirsch’s 2% decline rate assumption and the apparently different IEA’s 6.7% decline rate. I have never seen the likes of Eclipsenow or Sam Powrie actually reference anything worthwhile, or display any worthwhile logical facility, so I am not talking to them, I am specifically asking them to stand aside, until the thread owner, Barry Brook, says something with worthwhile support.

  94. Everyone, pay attention now, Lawrence is speaking!

    I have never seen the likes of Eclipsenow or Sam Powrie actually reference anything worthwhile

    Hirsch, Campbell, Skrebowski, ASPO, Phd works in oil depletion, none of these matter for LAWRENCE IS SPEAKING!

    I forgot about your Phd in geology and lifetime of experience in the field. Everyone, Mr Right Royal Lawrence is speaking!

    (You go ahead Lawrence, they’re all properly prepared now. They’ll give you the respect you deserve.)

  95. I think the plug-in approach will suit intracity delivery vans, not 18 wheelers travelling between cities. Really big trucks can accommodate cryogenic LNG tanks but they need to be filled at the depot, not on the highway.
    Some claim that variable electricity pricing will allow greater wind penetration for electric vehicle charging but I think we have to see the outcome of US trials.

    I note until yesterday the big end of town thought the global economy would improve. Peak Oil theory suggests it will be all downhill from now on. They can’t both be right. With time and money we can solve problems like low carbon baseload and petroleum free transport but not immediately. My hunch is that the world economy will be weaker in 2015 than in 2010 with China importing less of our iron ore. After that it is anybody’s guess.

  96. So, what do we all make of Peter Lang’s characteristically charitable comments below? ;-)

    EclipseNow,
    you clearly were not at school in the early 1960s. In those days we were taught we had only about 11 years supply of oil left! A few years before that Australia had a ban on exporting iron ore because we didn’t have enough iron in Australia to meet our own needs!!
    The Club of Rome had us running out of everything we needed before 2000.

    Spare me the doomseday scenarios. There will always be a new scare campaign just around the corner.

    We can prioritise and handle what we need to handle if only we could get rational. Unfortunately, our ability to do that has evaded us for the past 40 odd years, and continues.

  97. I happen to agree that some of the Club of Rome projections were silly, such as Ehrlich famously losing his bet. But that does not disprove the general principles, just his application .

    http://en.wikipedia.org/wiki/Simon%E2%80%93Ehrlich_wager

    As far as I understand it, Limits to Growth was pretty much on track, although I haven’t read it. I’ve been too busy reading about the new geological consensus that oil IS about to peak, despite what Mr Right-Wing Lang happens to believe.

  98. PS: LTG gets kudos amongst futurists I know who regard it as one of the best examples of future extrapolation and modelling. We designed Craig Rispin’s book. At one point in Craig’s presentation he raves about the great modelling in LTG.

    http://www.futuretrendsgroup.com/author/
    
For example, if Peter Lang had bothered to just look at the Limits to Growth WIKI he would have learned that their *modelling* of when oil would “run out” had a *range of dates* based on various resource estimates. These ranged from the oil they had discovered in the 1970s through to 5 TIMES that oil reserve! Growth in resource consumption was also based on an exponential growth pattern, which has more or less been true.

    So based on their ‘5 times 1972 known oil reserves’, with oil “running out” in about 2020, when does it peak? ;-)

    If you ask me, they are pretty much on track.

    http://en.wikipedia.org/wiki/Limits_to_growth

    No doubt having hurled the accusations in the other thread, Peter will just quietly wander off to sulk somewhere and not engage in this one.

  99. The sheer irony of all this is that just a few weeks ago Peter Lang posted an article defending ABARE’s reputation against attack by comparing their projections with real-world data and how the 2 compared. Yet because LTG doesn’t fit in Peter’s worldview, he just ignores a CSIRO work that did exactly the same thing for LTG’s 40 year forecasts for the GLOBE with real-world data, and comes up smelling roses.

    In 2008 Graham Turner at the Commonwealth Scientific and Industrial Research Organisation (CSIRO) in Australia published a paper called “A Comparison of `The Limits to Growth` with Thirty Years of Reality”.[5][6] It examined the past thirty years of reality with the predictions made in 1972 and found that changes in industrial production, food production and pollution are all in line with the book’s predictions of economic and societal collapse in the 21st century.[7]

    http://www.csiro.au/files/files/plje.pdf

    http://www.newscientist.com/article/dn16058-prophesy-of-economic-collapse-coming-true.html

  100. Eclipsenow,

    You ask:

    So, what do we all make of Peter Lang’s characteristically charitable comments below? ;-)

    Well you may ask given your comments to someone above. I changed the name to yours so you might get the meaning:

    Everyone, pay attention now, Eclipsenow is speaking!
    ECLIPSENOW IS SPEAKING!
    I forgot about your PhD in windpower and lifetime of experience in the field. Everyone, Mr Right Royal Eclipsenow is speaking!
    (You go ahead EclipseNow, they’re all properly prepared now. They’ll give you the respect you deserve.)

    edited from EclipseNow’s post here:
    http://bravenewclimate.com/2010/08/29/peak-oil-discussion/#comment-96317

  101. (Sighs)
    I encourage everyone to look at not only the post Peter linked to, but the context of the preceding 3 posts by Lawrence. If anything, I was reacting not just to Lawrences insult of “the idiot Eclipsenow or his minions” but also the way Lawrence dared to write to Barry Brook, “That’s a pretty shit stool for an academic to stand on.” I thought that was a bit rich to the owner of this blog, and reacted accordingly! However, to Lawrence’s credit, he later apologised to Barry. (But not to Sam or myself, but that’s Lawrence’s choice).
    
The reason I have business with you is that from the beginning you have misunderstood my argument with ABARE. You spent 20 or so posts unkindly attacking a deranged straw-man of your own construction — nothing to do with anything I ever said — and now not only attack the credibility of the entire Club of Rome, some of which has stood the test of time as well as any ABARE projections, but also attack the vast majority of independent oil geologists who bother to actually look at the *world* oil situation. Your post attempted to smear a growing consensus of geologists with the same tar-brush you used to attack the Club of Rome: which turns out to be yet another straw-man caricature of your own construction.

    I don’t have to be a scientist to tell that you don’t read very broadly.

  102. Hi Finrod

    A good many highly qualified engineers and scientists have attacked the perspective of the CoR over the years. Peter is in quite good company in this.

    Again Finrod, it is a huge group. One has to specify who and what one is disagreeing with. Some, like Ehrlich, raised important questions but came down too hard with suspect methodology for their answers. He may have deserved criticism for some of his modelling. But others like the Limits to Growth report has gained respect as their modelling is put to the test of 35 years of real-world history. If you have credible sources debunking the 2008 Graham Turner CSIRO report into LTG’s accuracy, I’d be happy to read it. But for now I’m sticking with the New Scientist review of his work:

    In 1972, the seminal book Limits to Growth by a group called the Club of Rome claimed that exponential growth would eventually lead to economic and environmental collapse.
    The group used computer models that assessed the interaction of rising populations, pollution, industrial production, resource consumption and food production.
    Most economists rubbished the book and its recommendations have been ignored by governments, although a growing band of experts today continues to argue that we need to reshape our economy to become more sustainable.
    Now Graham Turner at theCommonwealth Scientific and Industrial Research Organisation (CSIRO) in Australia has compared the book’s predictions with data from the intervening years.
    ‘Steady state economy’
    Changes in industrial production, food production and pollution are all in line with the book’s predictions of collapse in the 21st century, says Turner. According to the book, the path we have taken will cause decreasing resource availability and an escalating cost of extraction that triggers a slowdown of industry, which eventually results in economic collapse some time after 2020.
    “For the first 30 years of the model, the world has been tracking along an unsustainable trajectory,” he says.
    According to Herman Daly of the University of Maryland, Turner’s results show that we “must get off the growth path of business as usual, and move to a steady state economy,” stopping population growth, resource depletion, and pollution.
    Yet Turner reckons his report [pdf format] shows that a sustainable economy is attainable. “We wouldn’t have to go back to the caves,” he says.?

    http://www.newscientist.com/article/dn16058-prophesy-of-economic-collapse-coming-true.html

  103. Peter Lang has posted irrelevant attacks against peak oil and then run for cover. Come on Peter, you were in the business! Show us peakniks where the oil is going to come from. I’d love peak oil to just ‘go away’.

  104. You’re the one who wrote a whole paper on why ABARE are so reliable. But now you’re backing out on the question of their pricing projections for oil, which is a question of *global* supply and demand. You dodged that completely in your ‘article’, and now want to pretend that it’s because you don’t want to hurt *my* feelings because *my* skill sets are not developed enough!

    That is just silly. It’s the papers from your peers you’re hiding from Peter! If you actually have any ‘knock down’ arguments or references that debunk the many peer reviewed sources in my article, I’d be quite interested to check them out. But I sensed in the many comments to that thread that there are quite a few readers of BNC that are *far more* informed on the world oil situation than myself. That’s probably what you are refusing to engage.

    The peer-reviewed consensus I’m reading says we have about 5 to 10 years at most before supply can never again meet expectations. When that happens, I’ll wonder how someone with *skill sets* like yours can be so blinkered.

  105. eclipsenow,

    I am not “backing out of the question”. We discussed it to death. The point I made is clear and was not refuted. I believe it has been clearly demonstrated. You are on a different wavelength that is more about a passionately held belief of yours. You would not answer the questions I put to you and I see no point in taking the discussion any further with you.

    By the way, you make lots of comments about me making directed personal comments: may I suggest you stop it yourself if you don’t like the responses.

  106. You asked me to match up ABARE’s projections of Australian resource production and demand against the actual history of Australian resource production and demand. In other words, you asked me to do something entirely irrelevant to the question of WORLD resources, especially oil.

    I have asked you repeatedly to GET ON TOPIC and either show us which other Australian agency has the responsibility to present GLOBAL OIL scenarios to the government, OR I’ve asked you to simply come up with their peak oil report! You have done neither.

    The irony is you JUST slagged off against the Club of Rome in the other thread, and the CSIRO has done *exactly what you asked me to do* but at the *global* level. It compared one institution’s projections against real world historical data. You just didn’t like the fact that the CSIRO confirmed the reliability of that institution, the Club of Rome’s “Limits to Growth” report.

  107. We discussed it to death. The point I made is clear and was not refuted.

    There’s that basic comprehension issue again! The point you made was irrelevant to the global situation, and was not refuted because there was nothing to refute. You confirmed that ABARE studies Australian resources. Great. Now do you want to catch up with the rest of us and get on the topic of who actually supplies our government with advice about the *global* situation?

    I don’t know if I can be any clearer?

  108. Calling all peakniks. Do you have any other questions you might add to a “Top 10″ list for peak oil sceptics? Here are my suggestions for people who care enough about proving peak oil wrong.

    Would you put anything slightly different? What have I missed?

    Peak oil Top 10

    1. In which decade did we discover the most oil?
    2. How has the discovery of conventional oil been going since then? Keep in mind that oil is probably only 2nd to the military in terms of the money and technology available to their enterprise. Big oil have BILLIONS at their disposal for the latest discovery and drilling technologies.
    3. What is the ratio of discovery to consumption? Are we discovering more than we use, or less? How good or ‘bad’ is the ratio?
    4. How long has the trend been in this direction?
    5. How many oil producing countries have already peaked and are in irreversible decline? What are their decline rates?
    6. Which countries are still able to increase production and have not reached their all time historical peak?
    7. Is there an ‘international oil cop’ agency that audits the fields and confirms the books of various oil blocks? Who reports to who? What is the chain of command down which the oil data has to travel in the non-OPEC western world?
    8. How do we know whether OPEC reports are legitimate? Who do they report to? Who can audit their books? Does the western world get access to their fields? How do we confirm what they know?
    9. If domestic consumption of oil exporting nations rises too fast (because of a booming domestic economy), how quickly can domestic consumption outpace their ability to export oil once they themselves peak? (Hint: there are historical precedents — google “Export Land Model”).
    10. If those few exporting nations that are left suddenly DO decide to keep the oil for their own economies, how relevant is a global depletion rate of 5% per annum if the OIL MARKET has collapsed because ‘sellers’ are becoming ‘buyers’?

  109. Great quote from Crikey!

    http://www.crikey.com.au/2008/05/30/addressing-abares-serious-flaws/

    Based on its record, however, ABARE continues to be one of the most seriously flawed institutions within the entire Public Service. Further evidence of this emerged during the week in Estimates hearings.

    ABARE regularly forecasts the world price of oil. Tricky stuff, admittedly, and anyone who could forecast it accurately in recent years wouldn’t be working for ABARE but making billions on the stockmarket. But the extent to which ABARE has refused to accept the ongoing increase in the oil price is truly remarkable.

    Here’s the comparison of the actual oil price – not even including the most recent spike — and ABARE’s predictions since 2004:

  110. EclipseNow, a tip; if you want your top 10 FAQ to have any impact on this particular skepticambivalent, at least one and probably more of them needs to address the scope for substitution, synthesis and demand fungibility.

  111. I was hoping just to confirm peak oil. The shock of realising for themselves that our most important resource was about to start declining usually propels newcomers (with half a brain) onto the search for the alternatives.

  112. Peter Lang,
    until you reply to the substance of my article above and address my reply to your last post in this thread, I’m afraid I can’t believe anything you say. Ever. Until then I’ll borrow this choice line from your last post here, and use it as my own.

    “The point I made is clear and was not refuted.”

  113. “Maxwell, who has been involved in the oil industry for more than half a century, speaks with the slow cadence and easy charm of a man who has mastered his subject. The problem is that if you take his message seriously—and there are plenty of reasons to believe it unreservedly—it can pretty much ruin your day. From having to eat more root vegetables in winter instead of enjoying oranges from Chile, to watching oil prices spike to $300 a barrel by 2020, a world of slowly but steadily dwindling supplies of petroleum would be very different indeed.”

    ….

    “Maxwell: Yes. Globally, I believe we’re quite close to the peak, simply because we’ve gone from 6 percent increases in production to 3 percent per year increases, to half a percent per year increases. I think peak will come between 2015 and 2017. So, we’re nearly on it.”

    http://www.energybulletin.net/stories/2010-11-06/energy-nov-7

  114. Rename it at all costs!

    Just five years ago everyone from government officials to oil company executives treated Peak Oil theory as the work of a lunatic fringe, but now that conventional world oil production peaked in 2005, and all liquids world production peaked in 2008, everyone is ready to concede that there are serious problems with growing the global oil supply. And although some people still feel skittish about using the term Peak Oil (and a few experts still insist that the peak must be referred to as “an undulating plateau,” which, if anything, is a graceful turn of phrase) the differences of opinion now largely stem from a refusal to accept the terminology of Peak Oil rather than the substance of peaking global oil production. This is, of course, quite understandable: it is awkward to suddenly jump from shouting “Peak Oil is bunk!” to shouting “Peak Oil is history!” in a single bound. Such acrobatics are only safe if you happen to be a politician or an economist.

    http://cluborlov.blogspot.com/2010/11/peak-oil-is-history.html

  115. ABC Science Show…

    Oil production peaked in 2008. It has been in decline since. Kjell Aleklett says the reserves are there, but the flow is lower than in the past. Kjell Aleklett disputes predictions of The International Energy Association. He says the price spike in oil in July 2008 was the trigger for the Global Financial Crisis.

    http://www.abc.net.au/rn/scienceshow/stories/2010/3061272.htm

    As Princess Lei say, “Help me ABARE, you’re our only hope!”

  116. It sounds like the ABC is going to feature a number of peak oil specials next year. We’ll see. Sadly, it’s all too little too late. The peak oil community have been laughed at for the last 5 years, but now it’s becoming mainstream… it’s too late.

  117. Hi Barry,
    yeah, those articles are a slap in the face to many economists. It sounds like we need a new breed of economist & resource experts that understand both the market and scientific realities.

    What do you make of the early peak coal argument? Is that a surprise to your colleagues at the Environment Institute?

  118. Nice quote:

    ABARE’s determined forecasts of falling oil prices have been consistently wrong for five years, as it is geological limits that control oil production not economics. Economists do not realise that geological forces are more powerful than market forces. A random number generator would perform better than ABARE’s forecasters.

    See graph at http://www.ASPO-Australia.org.au/References/Bruce/abare-mar-08.jpg

    http://www.aspo-australia.org.au/general/peak-oil-the-elephant-at-the-summit.html

  119. Hirsch is a brilliant guy who worked on fusion reactor prototypes, and was commissioned by the DOE to report on peak oil. So why oh why is he a climate sceptic?

    I know from engineers and town planners that have contact with him that he tends to think proposals for increasing rail and New Urbanism are ‘communist’. Wow.

  120. Hi Barry,
    I’ve just noticed that Kjell Aleklett spoke at the Environment Institute. Did you get a chance to go to his peak fossil fuels talk, and how was it received? What’s the word on the ground?

  121. Thanks for that link JN, that’s easier than me trying to explain it. I’m still sceptical that his forecasts are correct, mainly because I don’t think there’s been sufficient market pressure yet to increase production from non-conventional sources. For instance, Aramco are already talking about moving into new resources that would double their reserves (to date, in Arabia, there has been little point in going after the harder stuff – they still flare their gas after all): http://bit.ly/fU9prX

    The most interesting thing that he said, in my opinion, is that oil will probably never get much above $100/barrel over the long-term, because the world economy can’t sustain it. He may be right – even if the ultimate price ends up higher. We’ll see. I think the picture will be much clearer in a few years time.

  122. “$100/barrel over the long-term, because the world economy can’t sustain it”
    Wow Barry, that *is* an interesting perspective. It has long term ramifications. EG: What would you expect liquid fuels from nuclear power to cost?

  123. PS: Doubling the resource from non-conventional resources doesn’t necessarily delay the peak. It might slow the decline, but they are listed as ‘non-conventional’ resources for a reason. They are harder to extract, slower to access, and cost more. And with a $100 ceiling, they may not be able to double the *reserves* either! We must always remember that resource is one conversation, and reserves are a very different conversation all together, involving jittery markets that may not be willing to pay exorbitant prices.

  124. It depends on future capital costs of the nuclear power plants, but almost certainly <$100/barrel, especially if nuclear heat is used for hydrogen production (e.g. via Cu-Cl catalysis).

    Also remember, what is non-conventional in Saudia Arabia may be conventional in most other places. It’s all relative (and the Aramco guy didn’t even talk about non-conventional in this context of getting an addition 2 trillion barrels – he was still talking about liquid crude).

  125. At around the 25 minute mark KA hinted he was working on something with the ABC, a Four Corners episode for next year perhaps?

    For unconventional fuels I think we should henceforth think in terms of net energy which we already know is lousy from grain ethanol. If say 80% CCS and low sulphur are mandated then heavy oils and coal derived liquids will struggle and may not be financially viable. I think synfuels using biocarbon and nuclear hydrogen are probably the way to go. Heaven forbid what a litre of liquid synfuel could cost …$5, $10?There goes the Sunday afternoon drive.

    That’s why I think battery and natural gas powered cars are coming soon. Aleklett didn’t touch on gas vs nuclear as a coal replacement but he evidently approves of nuclear from the brief mention of Swedish NP. He did stress the need for reduced fossil fuel input to food production and distribution. When expensive fuel combines with dry farming conditions I think things will move fast.

  126. It is possible that negative income feedbacks may keep the price of oil under $100 a barrel til the last drop. Absent visuals I gather one of Aleklett’s slides showed oil volumes in lock step with global GDP. Now think of the converse.

    With or without oil price rises we may already be heading to more expensive food. Drought in Russia and WA accompanied rain spoiled wheat harvests in eastern Australia. Thus bread prices may go up say 10% in 2011 while incomes go up no more than 5%. Then if petrol goes up, the power bill and maybe interest rates as well I’d say the grumblings will be loud.

    Maybe 2011 will be a transitional year with 2012 the long winter of discontent. In real terms $100 oil will still be less affordable if people have less to spend. People will be in no mood for ZCA style dreaming.

  127. ABC’s Catalyst reports that the IEA have moved their position from one of peak oil Denialism to it being a real and present danger. But did anyone take notice?

    The Sydney Morning Herald saw it.

    ///Whereas five years ago the IEA expected total production – including oil from deep-sea drilling and unconventional sources such as tar sands – could rise to 120 million barrels a day by 2030, the agency now expects production will reach only 96 million barrels. And Birol reckons there are no guarantees it can be brought out of the ground in a timely fashion.
    Advertisement: Story continues below

    ”Existing fields are declining so sharply that in order to stay where we are in terms of production levels, in the next 25 years we have to find and develop four new Saudi Arabias. That is a huge challenge.”

    In the lucky country, of course, we’ll be fine. Rising income from coal and gas exports will help us pay higher oil prices, even as our oil trade deficit blows out and oil hits $US200 ($A183) a barrel, as is forecast often enough. Can we go back to sleep now?

    Not when the climate implications are taken into account, says Ian Dunlop, a former Shell executive and deputy convenor of the Association for the Study of Peak Oil.

    Dunlop says the manifestations of peak oil were temporarily masked by the financial crisis – itself partly triggered by high oil prices which hurt struggling homeowners in the US subprime mortgage belts – but are now confronting us as the developed world increases consumption. The world faces a 20-30 per cent reduction in oil availability by 2020, he says.

    The problem with future oil production, Dunlop says, is the amount of energy you get out for the energy you expend – your return on investment – is dropping.

    ”Cheap oil is disappearing. A lot of major exporting countries in the Middle East are now finding they need more for domestic markets, and there’s not as much available for export.”///
    http://www.smh.com.au/business/peak-oil-highlights-need-for-a-unified-policy-20110429-1e0of.html

    The Brisbane Times saw it, and ran the same article. A dad I know at my kid’s school saw it. But the PM? Nah, she was getting ready for the Royal Wedding. So while the rest of the world and their dog knows about peak oil, we’ll just continue to spend 4 times as much money on roads as we do on public transport. Way to go Australia! ;-)

    PS: It was interesting that this SMH plan automatically went to BZE for a renewable energy plan for Australia, not nukes.

    And Barry should ask for a right of reply to the ABC Catalyst episode which basically condemned nukes for Australia on the grounds that we:

    1/ Don’t know what to do with the waste! (Slaps hand to forehead… to think I used to believe that a year ago)

    2/ Couldn’t build it fast enough
    (Slaps hand to head as they somehow think we’re gong to build solar thermal plants faster? ;-)

    http://www.abc.net.au/catalyst/oilcrunch/

  128. When we get $2/L petrol and 45 C summer temps Fukushima will be a distant memory, even if it’s only by 2013 or so. I think reduced oil supply will take coal demand with it which is why I favour a CO2 cap not a fixed price. I think total emissions will reduce more than 5% yr 2020 over yr 2000 simply because crude oil production will probably have declined ~30% in that time. The suits can’t see it.

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  132. Could you please bookmark this thread in your ‘to follow up one day’ folder and update us as you find out more?

    As requested by Eclipse Now, an update in The Economist on developments in the Santos Basin, in deep water off Brazil:

    http://www.economist.com/node/21536570

    “Conservative estimates for the total recoverable pré-sal oil now come in at 50 billion barrels: a little less than everything in the North Sea, all in the waters of one country. Optimists expect three times as much…By 2020 Petrobras expects to be pumping 4.9m barrels each day from Brazilian fields”

  133. MD several points to be made
    – suddenly the hype has gone about cane ethanol and flex fuel cars
    – 4.9 beats 3.7 m max barrels for Canadian tar sands
    – it will replace just 5.5 % of current world production.

  134. There have been a couple of new reports on peak oil appear in the last week or so that I wanted to point people to. Eclipse Now has just mentioned the first – an article in Nature by James Murray and David King – on the Open Thread, but its proper home is probably here.

    The article in this week’s Nature reports that we hit peak production capacity in 2005. Prior to 2005, production was rising. After 2005, production has been steady, despite increasing demand – the implication being we’ve topped out.

    The oil price vs. production shows a very clear break point. Before 2005, increasing demand was met by increasing production and prices did not greatly rise with demand. After 2005 the oil price is both extremely sensitive to demand, and highly volatile. We are now in a period of inelastic production – increases in demand are not being met by production increases, so the price becomes very sensitive to demand.

    Murray and King make the point that climate change will not force a change in energy policy that drives a shift to less greenhouse intensive energy – it will be peak oil, and indeed peak coal, which they suggest may be as early as 2025 (as EN noted).

    The article can be found here, behind Nature’s paywall if you have access, or for free here. There is an excellent commentary at Ars Technica that EN linked to.

    Murray and King observe that

    .. if oil production can’t grow, the implication is that the economy can’t grow either. This is such a frightening prospect
    that many have simply avoided considering it.

    Which brings me to the second report. The Australian government’s Bureau of Infrastructure, Transport, and Regional Economics has just released a huge and comprehensive report on world oil supply.

    Transport energy futures: Long term oil supply trends and projections.

    Oh wait, it didn’t. That link is from a French site that somehow got a hold of this report. It was published in 2009, but seems it was never made public and is not available from the BITRE website.

    The report is nothing if not comprehensive – two years of research and 436 pages of oil supply analysis. All significant global oil production regions are examined. The history of discovery and production is used to determine the time lag, so future production can be forecast from current discovery. The methodology gives accurate results in hindcasting, giving confidence in the forecast behavior. This is a huge piece of work and appears well validated.

    The cumulative result from this analysis is Figure 13.11 on page 351. Take a look. This shows a sharp drop in world oil production in 2016, then

    .. after that, the modelling is forecasting what can be termed ‘the 2017 drop-off’. The outlook under a base case scenario is for a long decline in oil production to begin in 2017, which will stretch to the end of the century and beyond. Projected increases in deep water and non-conventional oil, which are ‘rate-constrained’ in ways that conventional oil is not, will not change this pattern.

    It concludes

    There are really three options:
    1. Oil is replaced with other (equally rich and abundant) energy sources (opening the whole debate about alternative energy sources).
    2. Improved energy efficiency results in energy use per unit of GDP declining markedly to match the shortfall.
    3. GDP declines to match the shortfall.

    Given current policy settings we appear to have chosen to go with number 3.

    This conclusion is the result of directly examining, at considerable expense and effort, the question of our oil supply, by government researchers using the best available data and methodologies, to inform policy. And it appears to have been buried. Piers Ackerman picked this up in The Telegraph last week and went ballistic:

    All evidence of this treachery went down the memory hole

    I don’t normally have a lot of time for Piers but he’s nailed the perfidy. (He then uses it to whip his hobby horses till they bleed but thats beside the point.)

    There is a detailed review of the BITRE report by Matt Mushalik here, as part of a very comprehensive critique of the Australian Draft Energy White Paper. Mushalik focusses on the disconnect between the White Paper and the energy picture painted by the BITRE report.

    So the question posed earlier by Eclipse Now, still stands, and is rather more pointed: if coal peaks around 2025, and we are now at a peak oil plateau where supply is inelastic, and a sharp drop in production is forecast for the vicinity of 2017, what can be done to massively ramp clean energy, principally nuclear, in the next 5 years?

  135. John Morgan, 28Jan,2012…..there are really 3 options
    Why not a bit of all three options, ie (1)some oil replaced by alternatives such as electric powered vehicles (2) improved efficiency of oil use; lots of room for improvements here(3) some GDP declines. I think we would all prefer options 1 and 2.

  136. Why not indeed. But from where I sit it looks like option 3 will be doing the heavy lifting. Options 1 & 2 require an active choice to change from current policy, but so long as the government buries reports like this we’ll keep doing what we’re already doing, leading to option 3.

  137. Here are the things that keep me busy wrt peak oil.

    Individual oil fields produce less as more is produced from them. Resevoir pressure just drops. Simple geology. All the unconventional oil resources are low productivity.

    Plateau petroleum may be a good description, the question is how long will it plateau. It must eventually decline. So far technological improvements such as enhanced oil recovery (EOR) with CO2 injection, and new field developments, have helped to keep production steady. But future tech developments aren’t expected to be as useful as EOR, and we’re finding fewer newer fields as time goes by.

    If we have a 50+ year plateau on a global level then there’s nothing to be worried about. We’ll all be driving electric cars by 2050 anyway, and will have phased out oil in many thermal and electric markets too. If it the plateau period is much less then we are in big trouble.

    One major uncertainty is what I call the local versus global effect. Locally, peak has occurred such as it has in the USA but it got covered up by more imports from other regions. So the question is, can we generalize this observation to the world at large? If no imports are available to cover the gap, then what happens? I guess you can ask whether peak oil was allowed to happen in the USA and other countries due to import alternatives being available. What happens when such alternatives are not available, simply because global production is in decline?

  138. Cyril R., on 28 January 2012 at 11:52 PM said:

    What happens when such alternatives are not available, simply because global production is in decline?

    Being old enough to remember the Arab Oil Embargo what happens in the vehicle fleet sheds weight in a hurry.

    The average weight of a passenger car sold in the US in 1975 was 4,000+ pounds, within 5 years that dropped to 3,000 pounds.

    http://www1.eere.energy.gov/vehiclesandfuels/facts/2007_fcvt_fotw475.html

  139. You can double the existing car fleet efficiency overnight by doing what Cuba did: make driving into the city a P2 or P3 thing. (Have to be taking a passenger!) With mobile phones and social networking, it would be easy to rig up quick car-sharing clubs. Cut’s traffic, and makes even ugly great hummer’s more energy efficient.

    Mind you, I think motor-bikes will make a big comeback. And don’t forget pushbikes!

  140. One of my favourite quotes for a change of pace and mood, for any who might be utterly floored by the reality of peak oil and the possibility of a Greater Depression starting soon. (If it hasn’t already started!)

    ***

    “But real apocalypses are sordid, banal, insane. If things do come unraveled, they present not a golden opportunity for lone wolves and well-armed geeks, but a reality of babies with diarrhea, of bugs and weird weather and dust everywhere, of never enough to eat, of famine and starving, hollow-eyed people, of drunken soldiers full of boredom and self-hate, of random murder and rape and wars which accomplish nothing, of many fine things lost for no reason and nothing of any value gained. And survivalists, if they actually manage to avoid becoming the prey of larger groups, sitting bitter and cold and hungry and paranoid, watching their supplies run low and wishing they had a clean bed and some friends. Of all the lies we tell ourselves, this is the biggest: that there is any world worth living in that involves the breakdown of society.”
    http://www.worldchanging.com/archives//001413.html

    Today I read this wondering if there was more I could have done to save the life of a young guy in a peak oil forum I used to belong to. A young 19 year old guy, bright as could be, studying engineering. Who committed suicide because he couldn’t face the *inevitable* collapse of the world and everything he loved. If only he’d met some of you guys online, back then, before his last few months of darkness? If only he’d known there really was hope.

  141. EN, that’s so very sad, on so many levels. I’m reminded of all those abortions that took place in Europe in the aftermath of Chernobyl because mothers were convinced their unborn children would be horribly deformed by radiation. This sort of thing is one reason why I get so angry with those who seem to positively and blithely look forward to the collapse of civilisation because it would be ‘good for the planet’, or who effectively counsel despair.

    But my main reason for posting was to take issue with John Morgan back on 28 January: “Options 1 & 2 require an active choice to change from current policy…”. Rather, I’d argue that given clear price signals from increasing oil scarcity and demand, market forces will exert quite powerfully in both those directions, at least as framed by Neil Howes (substitution of oil with electric vehicles for Option 1). Admittedly, however, a significant alternative energy source is closed to us (at least in Australia) under current settings.

  142. What worries me is that oil will stay at $100 a barrel while its output and world GDP shrinks. Thus the price rise will be relative not absolute as required by ‘the market’ as a spur to action. An analogy is a person suffering hypothermia who doesn’t know he or she needs more warmth.

    Some will interpret the power down as a necessary belt tightening of energy demand but it could easily slip into global energy poverty. Australia’s defacto policy on liquid fuels seems to be to export more coal to pay for more oil imports. A policy that involves neither seems to be beyond the grasp of our politicians.

  143. Hi Mark,
    while I’m no doomer, market forces will be far too little, too late. As the Australian Senate taskforce into peak oil said:

    4.64 The committee notes concerns that markets will not respond in time to provide a smooth transition to a post peak oil world without government action. Given the uncertainty about much of the information on world oil supplies and the geopolitical instability of some key oil bearing regions, it is possible that there may be a risk that markets will under invest in oil and energy technologies, resulting in economic and social hardship when supply of conventional oil falls below demand.

    4.65 The information required to make a clear determination on whether peak oil will occur before the market can provide mitigating action is not available. The following chapters discuss possible mitigation actions. These offer options for a prudent approach to managing the possibility of peak oil and associated issues contributing to oil vulnerability, resulting in substantially higher oil prices and a constraint on liquid fuel availability.

    http://tinyurl.com/6tl3ule

    By the time the price signals kick in, we’re already on the downward slope! Let the bidding wars and rationing begin!

    This is why so many are so ‘doomer’. We’ve simply left it too late. Sure the market signal WILL be strong. But that’s the problem, not the solution. It will be too strong. Letting the market ‘solve’ peak oil for you is inviting a Greater Depression.

    Regards

  144. Hi John,
    //An analogy is a person suffering hypothermia who doesn’t know he or she needs more warmth.//
    This is a fairly good analogy, but I’d stretch it by saying the person is on a train, in a T-Shirt, heading over the Arctic circle. If they don’t take action too soon, it might be too late to avoid a *major* hospital stay.

    So while I don’t see Mad Max as inevitable, I do think we’re in for a Greater Depression. I imagine airlines going bankrupt, tourism collapsing, and unemployment skyrocketing. Interest rates will have to rise to fight inflation as oil climbs higher. Or not. Your hypothermia analogy does justice to the fact that inflation might not be our most serious issue. Access to oil and oil-related-employment might be. Oil prices might not skyrocket after all, but might just reach a point where they slow the economy, slowing demand on new money. Interesting times.

  145. EN my understanding is that the RBA tries to increase interest rates when consumers are going crazy with their credit cards and loans causing higher prices. These price rises (relative or absolute) are quite different because the commodity (oil) is physically running out.

    Several credible authors on The Oil Drum attribute the global economic slowdown to the combination of high debt and the non-increase in liquid fuels. They make more sense to me than the suits in the business media who mostly failed to see it coming. If this interpretation is right it gets tougher from now on i.e. this is not a temporary glitch but the start of the slippery slope. In all likelihood any CO2 reductions will be attributable to the economic slowdown not to carbon tax which I suspect will be weakened further.

    I see no easy way out. I don’t think electric cars or biofuels are the large scale answer. I’m sure however we should not be squandering natural gas like there’s no tomorrow as that’s our last truly flexible hydrocarbon fuel.

  146. In the interests of maintaining this thread as a record of developments on all sides of this debate, I submit the following:

    http://www.foreignpolicy.com/articles/2012/06/05/can_we_survive_the_new_golden_age_of_oil?page=0,0

    “A flurry of new finds has analysts giddy over a new age of energy abundance. Just don’t ask about global warming.”

    While the evidence that “the world is moving into a period of petroleum abundance, and not the scarcity that most industry hands embraced just months ago” is somewhat thin, there are enough new contributions to daily production rates to suggest the downward slope will be much more gentle than cliff-like.

  147. New techniques are being developed to extract oil/gas and they add to the cost of production. It is time to re-categorize the fossil fuels from energy minerals to carbon minerals. Development of DME as a synthetic fuel is a step in the right direction. More and more of nuclear heat must be utilized in its production.
    To reduce the loss of lives in coal mining, in-situ gasification has to be used. Nuclear steam must be used where possible to reduce carbon consumption.

  148. Hi Mark,
    yes, peak oil seems to have been pushed back a generation! Barry told me his peers had some special new insights into the new technologies that were coming. Fracking is an old technology but with the higher prices and newer fracking methods, gas supply has *exploded* in the USA.
    http://www.nytimes.com/2012/02/26/opinion/sunday/friedman-a-good-question.html?_r=1

    Thomas Friedman is wondering if America should join OPEC!
    http://www.nytimes.com/2012/02/26/opinion/sunday/friedman-a-good-question.html?_r=1

  149. America and China the big two energy users should best be self sufficient. They should use everything to achieve that, including conversion. America should use the “Fracked” gas as starting point and China its coal.Both should have nuclear energy in the kitty for balancing any shortfall.

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