On Monday, something momentous happened in the US House of Representatives. The words "peak oil" were spoken and spoken on for an hour in a presentation by Congressman Roscoe Bartlett (R-Maryland), Chairman of the Projection Forces Subcommittee of the Armed Services Committee.

What follows is an hour long presentation with many many charts that while you cannot see them, the importance of what they represent is inferred.

Bartlett, to his credit, gave whoever happened to be sitting in the House at the time a fairly frank assessment. He even admitted that 3-4 years ago, had he given the same presentation, his fellow members might have put him in "the lunatic fringe."

This is long, but a very worthwhile read. The whole idea of peak oil as myth, I would think, will now be put to rest forever. And clearly, Bartlett has some ideas he'd like to consider and does speak of a mass project (like the Moon project or Manhattan Project). I think he is a bit optimistic and pulls his punches a little. But only a little and that is remarkable.

With the price of oil now reaching record heights, the predictions do seem to be starting to come true.

Peak Oil Presentation in the US Congress

Part 2.

Senate Votes to Open Alaskan Oil Drilling

The story said there are believed to be 10.4 billion barrels of oil in ANWR. The US currently uses 20 million a day. The oil will come online in about 10 years the story says, which will be too late anyway. But for the sake of argument, if the US can average 22 million bpd by then, the entire reserves of ANWR, by my calculations, would provide the USA with 473 days of oil. 1 year, 108 days and that's probably very optimistic and not counting the costs of drilling when ANWR passes its peak.

Part 3.

Mike Ruppert, author of Crossing the Rubicon, quits trying to convince people of Peak Oil. Its either here or staring us in the face. A sobering read from the man who wrote the book on the geopolitical roots and realities of peak oil:

THE FIRE IS NO LONGER ON ITS WAY. IT HAS BEGUN.

Part 4

Today:

OPEC here Wednesday agreed to raise its production ceiling to the tune of 500,000 bpd

Too little, too late. And the oil business wiseguys know it and so does OPEC.

OPEC says it has lost control of oil prices

Part 5

If you needed any futher convincing, the Wall Street research company that "called bullshit" on Enron, is now forecasting peak production for the major oil companies.

Slate, reprinted in GNN --The world's major oil companies are almost tapped out.

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Originally posted by Egalitarian American:
... The whole idea of peak oil as myth, I would think, will now be put to rest forever...

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Note this isn't some dismissal of predicting the end of the oil; it's something to keep in mind about Hubbert.

Listen to this interview for more interesting stuff:

http://www.leftbusinessobserver.com/Radio.html#041007

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Originally posted by Contrarian:
You poor naive man. That won't happen until after 2008 when Exxon peaks out and can't afford to pay its propagandists anymore.

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The other to remember about extracting crude from shale and sand - it takes oil to do that.

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And a lot of natural gas. For the oil sands (in the old days they were referred to as the 'tar' sands - hmmm) the energy consumed to make a barrel of oil is close to a barrel of oil equivalent. So there's lots there, but most of it will be used to extract itself.

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he (Hubbert) wasn't quite so accurate wrt (sic) the global supply (he predicted a 1995 peak, but global production rose past that at that time and has continued to do so).

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It ain't rising much anymore. The peak is also something that can't be determined in advance.

It will take several years after the peak has been reached before we'll know for sure when the peak was.

A real indication of how close we are to the peak of production is the news today that even promises from OPEC to increase supply has not had an effect on the price. That means that oil traders don't believe production can be increased by enough to make a difference.

Whenever the peak acutally occurs, the fact is we are close now. As demand from China and India increases, spare capacity will diminish.

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Originally posted by maestro:

It ain't rising much anymore. The peak is also something that can't be determined in advance.

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Well, he managed to do it wrt the US peak.

Fluke?

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A real indication of how close we are to the peak of production is the news today that even promises from OPEC to increase supply has not had an effect on the price. That means that oil traders don't believe production can be increased by enough to make a difference.

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Not neccessarily. See here for a list of things that can drive the price of oil in the first paragraph:

http://www.leftbusinessobserver.com/DrivingMadness.html

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Another indicator is the amount of money the US is willing to spend to secure Iraqi oil. Believe me, without the oil at the end of the rainbow, they would have never even considered an invasion

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Again, not necessarily.

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Originally posted by maestro:
It ain't rising much anymore. The peak is also something that can't be determined in advance.

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Well, he managed to do it wrt the US peak.

Fluke?

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...And there are people who believe in abiotic oil, that is, the Earth simply makes more of it all the time and we just need to find where it is.[/QB]

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Originally posted by maestro:
It ain't rising much anymore. The peak is also something that can't be determined in advance.

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Well, he managed to do it wrt the US peak.

Fluke?

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There's a difference between predicting and confirming. Because of normal production fluctuations year to year, you don't necessarily know when you've reached the peak. It's only when you look back after years of trying to increase production that it's realized the peak is passed.

This is especially true of the world situation now because oil reserve figures are considered by all producers to be state secrets.

Back in the 80's, OPEC handed out production quota's based on a member countries stated reserves. Overnight the reserve figures for most Gulf states doubled and in some cases tripled.

Another factor is how fast the oil can be removed from the ground. There may be huge reserves, but if you can only get so much a day, that is effectively the peak. There is very little above ground storage of oil, mostly in the pipelines themselves, and some countries have underground 'strategic' reserves. Apparently the US keeps roughly 600 million barrels in reserve.

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Originally posted by maestro:
To those could be added recent weakness in the U.S. dollar, the currency in which oil is priced; since the 2001 low, oil priced in dollars is up about 160%, but to buyers with euros, it’s up just half as much. And add to that a flow of speculative money into the oil market, which can take prices beyond any “rational” level.

So they are saying that strong growth in demand, and tight supplies are major contributors to the price increases. That's what I said...

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Um, where did you say this? I've been looking at your last post and can't find the spot.

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Gee, did they forget to tell the world they planned to steal the oil supply in that PNAC document? That musta been an bit of a slip-up on their part.

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Maybe, but don't you think it would've been worded differently, had that been the answer? Or that they would've simply attacked without any justification? Just out of the blue?

It's not like there has to be a little cubby in the Whitehouse or Pentagon labelled, "True Secret Plans Which They'll Never Find". Sometimes the answer can be right out there in the open.

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What do you think 'strategic considerations' are, worries about democracy in Iraq?

Worries that a country with a military budget roughly 1/100th of the US is a security concern?

The only thing that concerns the US in the middle east is oil. It is also the only thing that concerns British, and a few countries with smaller connections like Japan, France and Germany.

The country that controls the oil supply has a chokehold on the world economy. That's the impetus behind the US spending $450 billion a year on the military. Half of the world's yearly expenditure.

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That's exactly what I meant, smartass. A chokehold on world oil supply isn't the same thing as theft, which is what you seem to indicate here:

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Another indicator is the amount of money the US is willing to spend to secure Iraqi oil. Believe me, without the oil at the end of the rainbow, they would have never even considered an invasion

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I have a few ideas:

1. We still have oil here in Canada, and stand to make a bundle from it. While I'd like to think that climate change concerns would hold us back, no government (not even a Green government) would stand in the way of $200/bbl. So we will be making a pile of money from it, if Klein and others don't keep giving it away in huge subsidies and shrinking royalty payments. We will have little choice but to sell the oil though, or we may suddenly be found to be harbouring terrorists/WMD.

2. We can say goodbye to the BC offshore moratorium (see above). Sooner or later, they will drill. Knowing that, we need to ensure a few things in advance.
a. Onus on the producer to prove there won't be environmental damage. Put laws in place the make all assets of an oil company forfeit if they screw it up. (If oil is that profitable, they will sign it).

b. NO SUBSIDIES TO HELP THEM DO WHAT THEY WOULD DO ANYWAY

3. We need to take that money, and pour it into ensuring that Canada's economy is able to adapt to a world without oil. It's not that hard - we have much of the technology, and could develop more. It would also be very beneficial to have new energy producing technologies when the old one runs out.

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Originally posted by Contrarian:
Just heard a fellow on the radio [John? Gray] talking about his new book on the history of the oil patch; sounds elderly, not rabidly right-wing sounding but wants government regulation limited to safety concerns etc. One point he made is quite relevant here; he said technically we could use coal to do anything we do now with oil, so he thinks oil [or the oil-based economy?] is not going to run out soon. Any technologists out there who might know if he is talking through his hat? I'm afraid if he is right the environment is going to be abused even more by coal-mining of all sorts.

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If the West, in desperation, turns to coal, all of the peak oil experts agree, it would an absolute disaster for the ecosystem. From strip mining to the damage to the atmosphere, we would hasten our own demise considerably.

It will probably happen. At this rate there's no other alternative energy source to replace oil.

As a continuing service of this reader, here's the latest article by the no-bullshit James Howard Kunstler in Rolling Stone.

People are starting to wake up to the nightmare unfolding.

The Long Emergency

On coal:

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No combination of alternative fuels will allow us to run American life the way we have been used to running it, or even a substantial fraction of it. The wonders of steady technological progress achieved through the reign of cheap oil have lulled us into a kind of Jiminy Cricket syndrome, leading many Americans to believe that anything we wish for hard enough will come true. These days, even people who ought to know better are wishing ardently for a seamless transition from fossil fuels to their putative replacements.

The widely touted "hydrogen economy" is a particularly cruel hoax. We are not going to replace the U.S. automobile and truck fleet with vehicles run on fuel cells. For one thing, the current generation of fuel cells is largely designed to run on hydrogen obtained from natural gas. The other way to get hydrogen in the quantities wished for would be electrolysis of water using power from hundreds of nuclear plants. Apart from the dim prospect of our building that many nuclear plants soon enough, there are also numerous severe problems with hydrogen's nature as an element that present forbidding obstacles to its use as a replacement for oil and gas, especially in storage and transport.

Wishful notions about rescuing our way of life with "renewables" are also unrealistic. Solar-electric systems and wind turbines face not only the enormous problem of scale but the fact that the components require substantial amounts of energy to manufacture and the probability that they can't be manufactured at all without the underlying support platform of a fossil-fuel economy. We will surely use solar and wind technology to generate some electricity for a period ahead but probably at a very local and small scale.

Virtually all "biomass" schemes for using plants to create liquid fuels cannot be scaled up to even a fraction of the level at which things are currently run. What's more, these schemes are predicated on using oil and gas "inputs" (fertilizers, weed-killers) to grow the biomass crops that would be converted into ethanol or bio-diesel fuels. This is a net energy loser -- you might as well just burn the inputs and not bother with the biomass products. Proposals to distill trash and waste into oil by means of thermal depolymerization depend on the huge waste stream produced by a cheap oil and gas economy in the first place.

Coal is far less versatile than oil and gas, extant in less abundant supplies than many people assume and fraught with huge ecological drawbacks -- as a contributor to greenhouse "global warming" gases and many health and toxicity issues ranging from widespread mercury poisoning to acid rain. You can make synthetic oil from coal, but the only time this was tried on a large scale was by the Nazis under wartime conditions, using impressive amounts of slave labor.

If we wish to keep the lights on in America after 2020, we may indeed have to resort to nuclear power, with all its practical problems and eco-conundrums. Under optimal conditions, it could take ten years to get a new generation of nuclear power plants into operation, and the price may be beyond our means. Uranium is also a resource in finite supply. We are no closer to the more difficult project of atomic fusion, by the way, than we were in the 1970s.

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Um, where did you say this? I've been looking at your last post and can't find the spot.

It was quoted in your own post:

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A real indication of how close we are to the peak of production is the news today that even promises from OPEC to increase supply has not had an effect on the price. That means that oil traders don't believe production can be increased by enough to make a difference.

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That's exactly what I meant, smartass. A chokehold on world oil supply isn't the same thing as theft, which is what you seem to indicate here:

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I'll try being a bit clearer:

If a country uses its huge military to maintain control of a resource that does not belong to them, that's theft. The US currently spends half of the world's military expenditure, and the bulk of spent outside the US goes into the Middle East.

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Originally posted by arborman:
We still have oil here in Canada, and stand to make a bundle from it. While I'd like to think that climate change concerns would hold us back, no government (not even a Green government) would stand in the way of $200/bbl. So we will be making a pile of money from it, if Klein and others don't keep giving it away in huge subsidies and shrinking royalty payments.

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The International Energy Agency is to propose drastic cutbacks in car use to halt continuing oil-supply problems. Those cutbacks include anything from car-pooling to outright police-enforced driving bans for citizens.

Fuel "emergency supply disruptions and price shocks" - in other words, shortages - could be met by governments. Not only can governments save fuel by implementing some of the measures suggested, but in doing so they can also shortcut market economics.

An advance briefing of the report, titled Saving Oil in a Hurry: Measures for Rapid Demand Restraint in Transport, states this succinctly.

"Why should governments intervene to cut oil demand during a supply disruption or price surge? One obvious reason is to conserve fuel that might be in short supply.

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And yes, the US is a part of the IEA.

They know this will take a police state to enforce.

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In forming its conclusions the IEA tacitly admits that extra police would be needed in these circumstances to stop citizens breaking the bans. Even the cost of those extra patrols are part of the IEA's study.

"Policing costs are more substantial and may consist of overtime payments for existing police or traffic officers or increases in policing staff. We assume this cost at one officer per 100 000 employed people."

As an example that means that the US workforce, currently around 138 million people, would need an extra 1380 officers to help enforce the bans. It may seem an optimistic figure. But even if this were so, the IEA is not put off.

"If our policing cost estimates are relatively low ... results clearly show that even a doubling of our estimate would make (bans) a cost-effective policy. The more stringent odd/even (day) policy is also more cost-effective than a one-day-in-ten ban, as the costs are the same ... maintaining enforcement is critical."

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When the Labor backbencher Andrew McNamara rose from his seat in the Queensland Parliament in February to state a few home truths about falling world oil supplies, he expected, at most, a few catcalls from the Opposition benches.

Instead, the speech by the provincial solicitor from Hervey Bay "bounced around the world".

Although his words were little reported elsewhere in Australia, McNamara was inundated with emails from around the globe congratulating him for addressing an issue that might have seen him labelled a flat-earther.

The issue is Peak Oil, the theory that the world will face a sudden, cataclysmic decline in supplies after global production peaks in the next 20 years.

According to McNamara, who believes it will happen sooner rather than later, the direct impact on our lives will be greater than terrorism, global warming or bird flu.

"The challenges we face after Peak Oil will require localised food production and industry in a way not seen for 100 years," he says. "Local rail lines and fishing fleets will be vital to regional communities. Self-contained communities living close to work, farms, services and schools will not be merely desirable; they will be essential."

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The issue is Peak Oil, the theory that the world will face a sudden, cataclysmic decline in supplies after global production peaks in the next 20 years.

According to McNamara, who believes it will happen sooner rather than later, the direct impact on our lives will be greater than terrorism, global warming or bird flu.

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From what I can see, the biggest threat is the political instability, turmoil and violence that will very likely result from the end of our collective free ride.

Ask Iraqis about the devestating effect Peak Oil can have on ordinary people's lives. Iraq could be just the first of an extended era of Energy Wars.

We might well have all killed each other off by the time global warming finishes its job.

That having been said, I've heard of predictions that the international price of oil could spike to $105 a barrel. In that case, the inflationary effect would be immediate and drastic. Basically, imagine everything eventually costing twice as much.

After all, if you can't trust The Bank of Montreal, who can you trust?

Bank says Saudi's top field in decline

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Speculation over the actual size of Saudi Arabia's oil reserves is reaching fever pitch as a major bank says the kingdom's - and the world's - biggest field, Gharwar, is in irreversible decline.

The Bank of Montreal's analyst Don Coxe, working from their Chicago office, is the first mainstream number-cruncher to say that Gharwar's days are fated.

Coxe uses the phrase 'Hubbert's Peak' to describe the situation. This refers to the seminal geologist M King Hubbert, who predicted the unavoidable decline of oilfields back in the 1950s.

"The combination of the news that there's no new Saudi Light coming on stream for the next seven years plus the 27% projected decline from existing fields means Hubbert's Peak has arrived in Saudi Arabia," says Coxe, referring to data compiled by the International Energy Association's (IEA) August 2004 monthly report.

snip

If Gharwar, the world's biggest field, is seen to be "in decline", as Coxe says, the effects could be problematic. Markets could panic, forcing prices up, creating shortages and profoundly affecting the world economy.

"The kingdom's decline rate will be among the world's fastest as this decade wanes," predicts Coxe. "Most importantly, Hubbert's Peak must have arrived for Gharwar, the world's biggest oilfield."

Coxe dismisses Saudi claims that the country can produce extra capacity to satisfy surging demand. He notes that Saudi promises to increase production last year failed to materialise. Aramco had pledged an extra 500,000 barrels of oil immediately and an extra 5 million bpd by 2012.

He says the markets had "assumed this first flow would be a half million barrels daily of the benchmark Saudi Light, the high-end product that any oil refinery can process. Instead ... the new oil was heavy, sulphurous oil that only a few refineries had the spare capacity to use".

Continuing, he asks: "What about those 5mbpd of new production by 2012? It turned out that only 2.5 million barrels would be net additions to Saudi output: Declines from existing fields will slash production by 2.5 million bpd."

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Originally posted by Voltaire:

Peak or otherwise, what makes you think that a barrel of crude would ever rise to $200?

IOW, do you know the meaning of the word "incentive"?

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It is currently over $50, with current demand and supply. Demand is rising, supply is level and set to start falling.

There are no workable alternatives to many of the things we currently do with oil. That means we won't be willing to stop using it as supply falls. Given stable demand, prices will rise as supply falls. This is basic economics.

Of course, as prices rise, demand will be reduced somewhat. However, like I said above, many of the things we do with oil we can't do with anything else, and so demand won't drop. This is not a choice between mousetraps, oil is oil is oil. Higher prices will make some currently uneconomical sources more economical, yes, but they will also price most of us out of the market for a lot of stuff, cars first of all.

$200 was a theoretical figure, but if we combine the ongoing precipitous drop in value of the $USD, which shows no signs of reversing, with the supply and demand curves outlined above, I don't think it's out of the question.

As for your smug comment about the meaning of 'incentive', I can only deduce that you have no rational or logical contribution, and so chose to make a snarky comment. That's your prerogative, but why even bother typing it in the first place? Life is way too short to have pissing matches on the internet with strangers.

Edited for typos.

[ 12 April 2005: Message edited by: arborman ]

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...Because Iran occupies a strategic location on the north side of the Persian Gulf, it is in a position to threaten oil fields in Saudi Arabia, Kuwait, Iraq, and the United Arab Emirates, which together possess more than half of the world's known oil reserves. Iran also sits athwart the Strait of Hormuz, the narrow waterway through which, daily, 40% of the world's oil exports pass. In addition, Iran is becoming a major supplier of oil and natural gas to China, India, and Japan, thereby giving Tehran additional clout in world affairs. It is these geopolitical dimensions of energy, as much as Iran's potential to export significant quantities of oil to the United States, that undoubtedly govern the administration's strategic calculations...

...It is not, however, just sheer quantity that matters in Iran's case; no less important is its future productive capacity. Although Saudi Arabia possesses larger reserves, it is now producing oil at close to its maximum sustainable rate (about 10 million barrels per day). It will probably be unable to raise its output significantly over the next 20 years while global demand, pushed by significantly higher consumption in the United States, China, and India, is expected to rise by 50%. Iran, on the other hand, has considerable growth potential: it is now producing about 4 million barrels per day, but is thought to be capable of boosting its output by another 3 million barrels or so. Few, if any, other countries possess this potential, so Iran's importance as a producer, already significant, is bound to grow in the years ahead...

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Originally posted by arborman:
For people buying property - buy close to work, in town.

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Originally posted by Contrarian:

Might also be a good idea to be close to market gardens, farmers' markets, etc; the cost of transporting food should rise; and other goods.

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...America is in a special predicament due to a set of unfortunate choices we made as a society in the twentieth century. Perhaps the worst was to let our towns and cities rot away and to replace them with suburbia, which had the additional side effect of trashing a lot of the best farmland in America. Suburbia will come to be regarded as the greatest misallocation of resources in the history of the world. It has a tragic destiny. The psychology of previous investment suggests that we will defend our drive-in utopia long after it has become a terrible liability.

Before long, the suburbs will fail us in practical terms. We made the ongoing development of housing subdivisions, highway strips, fried-food shacks and shopping malls the basis of our economy, and when we have to stop making more of those things, the bottom will fall out.

The circumstances of the Long Emergency will require us to downscale and re-scale virtually everything we do and how we do it, from the kind of communities we physically inhabit to the way we grow our food to the way we work and trade the products of our work. Our lives will become profoundly and intensely local. Daily life will be far less about mobility and much more about staying where you are. Anything organized on the large scale, whether it is government or a corporate business enterprise such as Wal-Mart, will wither as the cheap energy props that support bigness fall away. The turbulence of the Long Emergency will produce a lot of economic losers, and many of these will be members of an angry and aggrieved former middle class...

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...America today has a railroad system that the Bulgarians would be ashamed of. Neither of the two major presidential candidates in 2004 mentioned railroads, but if we don't refurbish our rail system, then there may be no long-range travel or transport of goods at all a few decades from now. The commercial aviation industry, already on its knees financially, is likely to vanish. The sheer cost of maintaining gigantic airports may not justify the operation of a much-reduced air-travel fleet. Railroads are far more energy efficient than cars, trucks or airplanes, and they can be run on anything from wood to electricity. The rail-bed infrastructure is also far more economical to maintain than our highway network...

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...The survivors will have to cultivate a religion of hope -- that is, a deep and comprehensive belief that humanity is worth carrying on. If there is any positive side to stark changes coming our way, it may be in the benefits of close communal relations, of having to really work intimately (and physically) with our neighbors, to be part of an enterprise that really matters and to be fully engaged in meaningful social enactments instead of being merely entertained to avoid boredom. Years from now, when we hear singing at all, we will hear ourselves, and we will sing with our whole hearts.

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The one thing that international bankers don't want to hear is that the second Great Depression may be round the corner. But last week, a group of ultra-conservative Swiss financiers asked a retired English petroleum geologist living in Ireland to tell them about the beginning of the end of the oil age.

They called Colin Campbell, who helped to found the London-based Oil Depletion Analysis Centre because he is an industry man through and through, has no financial agenda and has spent most of a lifetime on the front line of oil exploration on three continents. He was chief geologist for Amoco, a vice-president of Fina, and has worked for BP, Texaco, Shell, ChevronTexaco and Exxon in a dozen different countries.

"Don't worry about oil running out; it won't for very many years," the Oxford PhD told the bankers in a message that he will repeat to businessmen, academics and investment analysts at a conference in Edinburgh next week. "The issue is the long downward slope that opens on the other side of peak production. Oil and gas dominate our lives, and their decline will change the world in radical and unpredictable ways," he says...

..."The first half of the oil age now closes," says Campbell. "It lasted 150 years and saw the rapid expansion of industry, transport, trade, agriculture and financial capital, allowing the population to expand six-fold. The second half now dawns, and will be marked by the decline of oil and all that depends on it, including financial capital."

So did the Swiss bankers comprehend the seriousness of the situation when he talked to them? "There is no company on the stock exchange that doesn't make a tacit assumption about the availability of energy," says Campbell. "It is almost impossible for bankers to accept it. It is so out of their mindset."...

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Post Carbon Institute is an Initiative and operating unit of MetaFoundation, a non-profit organization chartered in Portland, Oregon, United States. Post Carbon Institute is an educational institution and think tank that explores in theory and practice what cultures, civilisation, governance & economies might look like without the use of (non-renewable) hydrocarbons as energy and chemical feedstocks.

We have operations in Vancouver Canada and Northern California, and are working with community groups in North America to prepare for the Post Carbon Age...

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...and thus i will move to a farm.

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Bring a hoe. Diesel for your tractor is going to get expensive.

People aren't getting how huge an impact this is going to have. It isn't just about fuel. Look around you right now and see all of the things make with plastics, vinyl, nylon, polyester or other synthetics. Your furniture would have been much more expensive if it weren't for the cheap fuel used to harvest the timber, manufacture the furniture and haul it to the store.

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Peak or otherwise, what makes you think that a barrel of crude would ever rise to $200?

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And food. The green revolution was engineered on the back of cheap fuel. Oil is a prime constituent of fertilizer, it's used to run farm machinery and it's used to haul the produce to market.

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I was thinking we'd also have hypermodern carbon-fibre stuff, but that generally is tough only when embedded in an epoxy. A petroleum-based epoxy, I suspect.

Jim Hamilton - an economics prof at UC-San Diego - has recently started a blog. He's particularly interested in oil prices, and he has a series of threads in which he tries to bridge the gap between economists and non-economists in dealing with issues like Peak Oil.

How to talk to economists about peak oil.

Further discussion about economists and peak oil.

Discussions with economists about peak oil: Chapter 3.

[ 23 July 2005: Message edited by: Stephen Gordon ]

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Originally posted by arborman:

It is currently over $50, with current demand and supply. Demand is rising, supply is level and set to start falling.

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...The survivors will have to cultivate a religion of hope -- that is, a deep and comprehensive belief that humanity is worth carrying on. If there is any positive side to stark changes coming our way, it may be in the benefits of close communal relations, of having to really work intimately (and physically) with our neighbors, to be part of an enterprise that really matters and to be fully engaged in meaningful social enactments instead of being merely entertained to avoid boredom. Years from now, when we hear singing at all, we will hear ourselves, and we will sing with our whole hearts.

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I'm afraid this is all too representative of "peak oil" sermonizing; the idea becomes, for progressives, a fantasy in which all the changes we've tried unsuccessfully to create in the world are forced upon a repenting civilization in the wake of this revolutionary change.

The idea of peak oil is based upon a misunderstanding of capitialist economics, of geology, and of sociology. Consider three points:

1. We have the means to make or find a lot more oil or oil subsitutes, at a higher cost.

2. We have the means to use a lot less oil, at a moderate cost.

3. People are stubborn.

I hope everyone agrees with these premises. What they suggest to me in that Joe Everyman of 2030 will still be driving 30 miles to work in a grossly oversized SUV, but it will be a gas/electric hybrid running on an 85/15 ethanol/petroleum mixture made from tar sands and running off batteries for the first 30 miles.

I don't disagree with the desirability of many of the social changes confidently forecasted here. But I disagree with their likelihood. Oil shortages could trigger a depression, it's possible. If it comes, the response from the public is likely to be the intensification of the rape of the enviroment, and increased violence and repression, not sensible progressive policies.

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...The nasty part of all this is that oil prices are showing hysteresis effects; that is, a persistent tendency to stay stuck at a higher level instead of falling back to a historical "norm".

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I don't know what you mean by 'historical norm' Dr Conway but staying stuck? I remember (nominal) prices of 14 dollars a barrel not long ago.

[ 24 July 2005: Message edited by: VanLuke ]

Check out this graph (if it doesn't display well, or if you want to check out the neat Flash presentation in the original click on the url below)

http://www.forbes.com/static_html/oil/2004/oil.shtml

[ 24 July 2005: Message edited by: VanLuke ]

Clearly, the economists do recognize that the price goes up, and surely the logical conclusion is that as the price of a fundamental commodity like oil goes up, so does the price of everything else, although not at an even rate. Inelasticity of money is not going to happen here. (That is, my wage should double if the oil price doubles and all else being equal I can buy the same stuff as before. Labor market policies in place are biased towards the inflationary erosion of wages in preference to the swelling pockets of the owners of capital.)

[ 24 July 2005: Message edited by: DrConway ]

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Originally posted by Stephen Gordon:
It looks as though you're confusing absolute prices with relative prices. Unless there are new discoveries, then we can expect oil prices to go up relative to the prices of all other goods. And prices of goods produced by oil-intensive sectors will increase relative to those that don't use oil. That's not necessarily inflationary - you could have prices in the non-oil sectors declining, while oil sector prices rise. The effect on total inflation would be - that is, if the monetary authorities decide it should be - a wash.

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And as the price goes up, so does the pressure for alternatives to purchasing the expensive thing; conservation, alternative energy sources, research directed at extracting more oil more cheaply all become relatively more attractive as the price goes up. As such measures are brought to bear, demand falls and with it the price of the commodity.

At the end of the day, oil is just hydrocarbons -- carbon and hydrogen. With enough energy -- which we can get from any number of renewable sources -- we can build oil from scratch.

One economist offered the following thought about resource scarcity; the loss of species and the like notwithstanding, can you think of any non-renewable resource that has in fact run out, or become and remained prohibitively expensive?

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Originally posted by rsfarrell:

At the end of the day, oil is just hydrocarbons -- carbon and hydrogen. With enough energy -- which we can get from any number of renewable sources -- we can build oil from scratch.

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Um, no we can't, at least not yet and time to do so is running perilously short. If we could, we would have already. There is no plan B alternative that will produce a readily available energy source as cheap and easy to convert as oil. And demand for this energy continues to soar.

I take it you are familiar with the works of Colin Campbell, Kjell Aleklett, James Kunstler and the like?

ASPO

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Originally posted by Américain Égalitaire:
[QB]

Um, no we can't, at least not yet

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Um, yes, we can, it's just not cost effective when so much of it is lying around.

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and time to do so is running perilously short.

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Have you been reading the thread? The notion that oil production will hit a wall and there will be a terrible crisis is highly improbable.

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There is no plan B alternative that will produce a readily available energy source as cheap and easy to convert as oil. And demand for this energy continues to soar.

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Sure there is; coal. There's loads and loads of coal. There is also the option of using energy more efficiently, of nuclear power, wind power, solar power, geothemal power, etc. All those technologies exist -- putting them to use in a question of incentives, which will strengthen as oil prices rise.

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I take it you are familiar with the works of Colin Campbell, Kjell Aleklett, James Kunstler and the like?

ASPO

Not that this will change your mind or anything. Optimism is its own reward, I guess.

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Go ahead and burn that coal. Watch what happens to the environment. Also, find a way to run motor vehicles on coal.

Have YOU looked at any of the sources I've cited on this thread? Did you read the whole thread?

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...Coal liquefaction is one of the backstop technologies that limit escalation of oil prices. Estimates of the cost of producing liquid fuels from coal suggest that domestic US production of fuel from coal becomes cost-competitive with oil priced at around 35 USD per barrel [2], (break-even cost), which is well above historical averages - but is now viable due to the spike in oil prices in 2004-2005

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I think that problem is that a lot of economically-minded people believe that the price going up is in itself the solution to the problem, if the increase is gradual, and perhaps even if it isn't.

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lol lol lol lol lol lol lol lol lol lol

Energy input figures are difficult to come by, but we already know that close to a bcf/day of natural gas is required to make about 250,000 bbls/day of oil from the oil sands. There is also a large input of water.

I can't imagine how it would require less energy to make oil from coal than it does from oil sands.

At some point, when energy input equals energy output, you're not doing anything, and money cost is meaningless.

As far as oil production hitting the wall, we may be there already. Mathew Simmons, energy advisor to the Bush administration has written recently that he thinks the Saudi fields are not capable of increasing production.

It's also true that some of the older Saudi fields may 'turn' any time. No one knows when that may happen.

Because of the natural variation in production of oil from year to year, production may have already peaked. We won't likely know when the peak was until a few years after the fact.

There may also be some short term increase in production as occurred in the US in the 80's, brought on by a huge effort at exploration and drilling. However, it lasted only a few years, and has not recurred. Production has fallen steadily since.

It's worthwhile to remember that all of the alternatives to oil have a higher input energy cost. There may be lots of coal, but it will get used at a much faster rate than oil simply because it takes more coal to make an equivalent amount of oil.

Also remember that other alternatives such as nuclear, windmill, geothermal, etc, require a pre-existing industrial infrastructure. To a large extent, that infrastructure depends on oil.

The reason we are using oil instead of the alternatives is that oil is the cheapest, easiest, and most efficient energy source we have. All of the alternatives are of lesser quality.

Once the peak of world oil production has been reached and recognized, there will be a mad scramble for a share of the resource. We are seeing that already in the US invasion of Iraq.

A good indication of how much they need the oil, is the cost of the venture to secure it. They wouldn't be spending that kind of money if they felt there were cheaper alternatives.

Recently China, Russia, and four central Asian states have told the US it's time for their military to leave the area, which again, is probably a move to secure the oil supplies there.

By the way, the US has the most known reserves of coal in the world, and they're still spending hundreds of billions to secure a portion of the Mideast oil supply.

"in a world of decreasing energy, permaculture provides, I believe, the best available framework for redesigning the whole way we think, the way we act, and the way we design new strategies. It doesn't mean to say that everyone's going to have a vegetable garden or some other permaculture technique. But the thinking behind permaculture is really based on this idea of reducing that energy availability and how you work with that in a creative way. That requires a complete overturning of a lot of our inherited culture."

for the interview:

Did you not read both lines of my post?

"I have no idea how much energy is required to obtain gasoline from coal or what the environmental effects are."

Isnt' it obvious that I'm aware of the points you're making although I have no idea what the oil equivalent of a bcf of nat gas is.

All I said was it is possible since EA had asserted oil cannot be made, only extracted from the ground.

Besides, when there isn't any more oil to waste on transportation it would still be good if some was available for other purposes.

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Originally posted by CMOT Dibbler:
[QB] Mother earth will not save us from ourselves by conveniently running out of hydro carbons.[QB]

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At some point, when energy input equals energy output, you're not doing anything, and money cost is meaningless.

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What you have to understand is that we use oil for many, many things other than producing energy. Even if we had an infinite supply of clean, low-cost energy, we'd still need millions upon millions of barrels of oil for chemical synthesis, plastics, fertilizers, etc.

Energy equivalent of oil versus natural gas is approximately 1000/1 in cubic feet.

Thus, a cubic ft. of oil is roughly 1 million BTU, while a cubic ft. of natural gas is about 1000 BTU.

Eric Reguly made note of this in a recent column in Report On Business when asked why we were using so much 'clean' energy natural gas to make 'dirty' energy oil sands oil.

However, as one can see by the relative energy per unit, you can't get a jetliner off the ground with natural gas, you need oil.

It's also true you can't lubricate with natural gas (or nuclear, windmill, geothermal, etc.).

from rsfarrell:

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What you have to understand is that we use oil for many, many things other than producing energy. Even if we had an infinite supply of clean, low-cost energy, we'd still need millions upon millions of barrels of oil for chemical synthesis, plastics, fertilizers, etc.

There are many ways to make energy. Burning oil is not necessary to meet our energy needs, although the alternatives have their own shortcomings.

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In fact I do understand quite well that not all oil is used as a heat generator. A large portion of it is used as a lubricant, as well as the plastics etc., you mention. I'm not sure what point you were addressing there.

By the way, we can't 'make' energy. We can use energy to transform energy sources from one form to another.

The transformation requires energy input, and the greater the energy input, the less efficient the process, and the less energy results.

The cheapest, most efficient energy available is that energy we don't use. It seems pretty simple - cut back energy consumption.

Yet in a capitalist state there can be no prior restraint, and all resources get used until they're gone.

It's not just oil that is headed for dodo bird status. Platinum, nickel, fish, natural gas, uranium - you name it. It's all being used at a rate that denies future generations.

P.S. I should have also indicated clearly that the link was only posted for info purposes (as it is obviously to a coal producers organisation and I have my doubts about the cost figure they claim as break-even point)

Having recently been given totally undeserved flak (for something I really didn't do) my reaction might be understandable.

shalom

edited to add:

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Energy equivalent of oil versus natural gas is approximately 1000/1 in cubic feet.

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Does that mean 1 barrel of oil <=> 1000 cf of natural gas?

[ 25 July 2005: Message edited by: VanLuke ]

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In fact I do understand quite well that not all oil is used as a heat generator. A large portion of it is used as a lubricant, as well as the plastics etc., you mention. I'm not sure what point you were addressing there.

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I was addressing the claim that "At some point, when energy input equals energy output, you're not doing anything, and money cost is meaningless." In fact, you are doing something as long as we use only for things other than making energy, and on that subject:

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By the way, we can't 'make' energy. We can use energy to transform energy sources from one form to another.

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. . . I am quite aware of the laws of physics. If you want to be really picky, we can and do make energy, in nuclear reactors, by converting matter into energy.

Also, very little oil is used to delibrately "make heat." Much more is used to make electrical and mechanical energy. Now maybe we could stop nitpicking and get back to the point.

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Yet in a capitalist state there can be no prior restraint, and all resources get used until they're gone.

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Wrong on several levels. A) Pricing is a form of prior restraint; B) Resources needs and supplies are not fixed, but change as technology changes; capitalist societies are perfectly capable on enacting laws to conserve resources. It is the will that is lacking.

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It's not just oil that is headed for dodo bird status. Platinum, nickel, fish, natural gas, uranium - you name it. It's all being used at a rate that denies future generations.

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Fish are in a category on their own. I'm still waiting for anyone to name a single non-renewable resource that has ever, in the history of human civilization, "gone the way of the dodo bird." The idea that we're bound to run out of these things someday is intuitive, but may be entirely wrong.

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Is it possible in a capitalist economy to voluntarily reduce use of non-renewables? Certainly not so far.

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Anyway, if a collapse brings me my freedom and liberates all the other life forms out there bring it on. Though insurection and the collapsing times should go hand in hand.

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RSferell:
Ever heard of recycling?

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Even that takes petrolium. Face it dude we're fucked. Modernity and hopefully civilization is on borrowed time.

[ 25 July 2005: Message edited by: Vigilante ]

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Originally posted by Vigilante:
[QB] Face it dude we're fucked. Modernity and hopefully civilization is on borrowed time.

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Possible but not necessarily what will happen.

In the last book I read by Chomsky (can't remember which one right now) he mentionned periodic mass extinctions throughout the history of Mother Earth and more than hinted that maybe humanity is headed that way.

On the other hand our "beloved corporations" (as in Dear Leader) have already placed chips on alternatives.

Look at how BP is trying to cultivate a green image. They are far from green however and want to sueeze every bit of profit they can extract from oil. Their actions in many places are terribly hostile to the environment. But they have put a foot into the door with solar and are trying to change their image to an energy, not oil, company. (I have to see if I can dig up that website where I read a lot about it)

So even if the final revolution never arrives, the capitalists might save the day for a long time.

Economic dislocation following a change from an oil based economy would be enormous but capitalism is incredibly flexible in how its owners make a profit. I had a professor of economics from whom I've learned a lot used to call it a chameleon.

I am not writing this because I would like to see the capitalists succeed. Just to mention a possible scenario.

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Originally posted by VanLuke:
The first law of thermodynamics:

http://staff.jccc.net/pdecell/metabolism/thermodyn.html#firstlawTD

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"The First Law of Thermodynamics says that energy under normal conditionscannot be created or destroyed, simply transformed from one type of energy to another."

There are roughly 6 cubic ft. of oil per barrel, so a barrel of oil is roughly 6000 times the BTU's of a cubic ft. of natural gas.

Now then, on to rsfarrell:

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Wrong on several levels. A) Pricing is a form of prior restraint; B) Resources needs and supplies are not fixed, but change as technology changes; capitalist societies are perfectly capable on enacting laws to conserve resources.

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If that's the case, why is oil so much cheaper now than it was in the 80's? The supply was just as big, and the consumption was a lot less. Obviously there's something else at work than 'market forces'.

From 'In The The National Interest', a joint publication of The National Interest, adn the Nixon Centre - an artivle by Charles Kohlhaas, circa 2003.

http://tinyurl.com/axy5z

Charles A. Kohlhaas is a former Professor of Petroleum Engineering at the Colorado School of Mines and has worked for, founded, managed, and consulted for major and independent companies in the international oil and gas industry.

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To put this in perspective, we should consider that at the time of the Arab oil embargo and the so-called "energy crisis" of the mid-1970s, the world’s surplus production capacity was approximately 15percent of worldwide production.

By the end of the 1970s, a high level of development activity had increased that surplus to about 25 percent.

Those surpluses are now gone. Non-OPEC producers are producing at capacity and our estimates for OPEC’s surplus are in the range of 2 percent to 4 percent of worldwide production based on OPEC official figures and may be as little as 1 percent to 1.5 percent based on the amount of suspected cheating.

Those surpluses may also be difficult to replace. 75 percent of OPEC’s production is from 22 fields, the newest of which was discovered in 1965.

In the last 20 years, the oil industry has operated at approximately 20 percent of the activity level of the 1970s. The above analysis indicates OPEC’s capacity has declined from the 32 to 34 million bopd range to 26 to 28 million in two years.

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Yet today's price is roughly the same as the 1975 price in constant dollars (and considerably less than the price of the 80's).

That doesn't make any kind of sense if one believes the market rules.

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Also, very little oil is used to delibrately "make heat." Much more is used to make electrical and mechanical energy. Now maybe we could stop nitpicking and get back to the point.

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And how does one make electrical energy out of oil? Do you hook a couple of wires up to the barrel? That might just work, after all, a barrel looks a bit like a large battery.

By the way, nuclear fission does not 'make' energy. It harnesses the energy that exists within the atom.

To say nothing of the energy input required to make a nuclear power station. Those nuclear reactors don't last forever either, and need replacement from time to time.

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Originally posted by rsfarrell:

A fission reaction is not considered "normal conditions."

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quite rightly ... (Donovan)...

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Originally posted by maestro:
Try building and operating a nuclear plant without using oil.

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Demand rises, spare capacity declines, price goes down.

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I thought it was exactly the opposite. I figured that once a commodity becomes rare, it becomes more expensive.

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Look at how BP is trying to cultivate a green image. They are far from green however and want to sueeze every bit of profit they can extract from oil. Their actions in many places are terribly hostile to the environment. But they have put a foot into the door with solar and are trying to change their image to an energy, not oil, company. (I have to see if I can dig up that website where I read a lot about it)

So even if the final revolution never arrives, the capitalists might save the day for a long time.

Economic dislocation following a change from an oil based economy would be enormous but capitalism is incredibly flexible in how its owners make a profit. I had a professor of economics from whom I've learned a lot used to call it a chameleon.

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You make the the market seem quite adaptable. If that is truly the case, why do we on the left so eager to support government intervention in the marketplace, and why are some of the babblers who have posted here so cynical about the market's ability to handle an oil shortage?

[ 25 July 2005: Message edited by: CMOT Dibbler ]

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Originally posted by maestro:

And how does one make electrical energy out of oil? Do you hook a couple of wires up to the barrel? That might just work, after all, a barrel looks a bit like a large battery.

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Now you're just being idiotic. I'm sorry you're so insecure in your science knowledge that you are coming up with these meaningless quips. You implied that oil was used primarily to produce heat. You were wrong. Buck up.

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By the way, nuclear fission does not 'make' energy. It harnesses the energy that exists within the atom.

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Wrong again. It converts matter into energy. But all this quibbling and negativity just pulls the thread down. If you have an argument, please state it.

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To say nothing of the energy input required to make a nuclear power station. Those nuclear reactors don't last forever either, and need replacement from time to time.

All of which presumes a pre-existing industrial infrastructure, with a pre-exisitng high level of technology. Try building and operating a nuclear plant without using oil.

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Once again, we aren't going to run out of oil. With the energy you get from a nuclear power plant, you can manufacture a lot of oil -- cracking coal, synthesizing it out of ethanol, etc. -- many millions of times more than would be used would use in building and maintaining it, I would imagine. Or do you suppose that a nuclear power plant is a zero-sum enterprise -- that it takes as much energy to build it as you can extract from it? That's not even remotely true.

Our industrial base is not going to cease to exist because oil gets more expensive (which it probably, though not inevitable, will, at least for the immediate future.) We'll use less and extract or manufacture more.

[ 25 July 2005: Message edited by: rsfarrell ]

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Originally posted by CMOT Dibbler:
rsfarrell
How long do you believe our post industrial afluence will last?

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It's hard to say. I think we're going to see a series of intensifying enviromental crisises, with unpredictable results, over the next 10 to 50 years. Once these are raging, I think there are good odds that the preeminiant global powers will come together to protect what is left of the enviroment, but prior to staring extinction in the face, I don't like our odds of confronting the problem. By the time the global community gets serious, it may be too late to prevent mass casualities.

America's current economic policies are completely unsustainable, and when the bubble bursts we may be looking at a global depression. That depression, like the others before it, will not permanently lower living standards.

I don't think capitialism per se is going to collapse -- ever. But the overall enviromental catastrophe could consume the affluent western societies and set them back decades in terms of living standards. A severe enough shock could leave us with seriously disfunctional governments akin to the kleptocracies of Africa -- which could prevent western nations from recovering for a long time.

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I thought it was exactly the opposite. I figured that once a commodity becomes rare, it becomes more expensive.

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Yet today's price is roughly the same as the 1975 price in constant dollars (and considerably less than the price of the 80's).

That doesn't make any kind of sense if one believes the market rules.

Demand rises, spare capacity declines, price goes down.

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Prices are primarily a function of supply and demand, not spare capacity.

The prices in the 70s and 80s with the OPEC embargo are probably a little atypical. In any case prices change for any of a large number of reasons. I agree that a large spare capacity might tend to depress prices a little bit, but it is far from the only thing in play.

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Also, very little oil is used to delibrately "make heat." Much more is used to make electrical and mechanical energy. Now maybe we could stop nitpicking and get back to the point.

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Later, after I asked how electricity got out of the oil barrel

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Now you're just being idiotic. I'm sorry you're so insecure in your science knowledge that you are coming up with these meaningless quips. You implied that oil was used primarily to produce heat. You were wrong. Buck up.

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Electricity is generated by steam driven turbines, where the steam is generated by burning oil. This simple concept seems to have escaped rsfarrell.

further from this paragon of enlightenment - re: nuclear reactors

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Wrong again. It converts matter into energy. But all this quibbling and negativity just pulls the thread down. If you have an argument, please state it.

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I suppose one could say that fire converts matter into energy as well. It must, I've actually seen it happen. You put a piece of wood on a fire, and it burns leaving not much but a handful of ash behind.

However, that is not 'making' energy any more than nuclear fission is.

If you want to be taken seriously (which I doubt), you should pick up an elementary physics text and read it.

Of course, in the end it doesn't matter. Nuclear energy still requires a pre-existing industrial infrastructure, and fuel. That infrastructure needs oil, and the fuel is a finite resource.

Nuclear energy may be able to delay the end of oil, but it can't prevent it from happening. Oh yeah, and then there's the spent fuel that needs disposing of.

Fusion is a different matter (no pun intended). With only a tiny amount of fuel, a great deal of energy can be released.

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For example, 10 grams of Deuterium which can be extracted from 500 litres of water and 15g of Tritium produced from 30g of Lithium would produce enough fuel for the lifetime electricity needs of an average person in an industrialised country.

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Only problem so far is the energy input is higher than the energy output. That may change, in which case we may actually have something.

In the meantime the best strategy is still to reduce the use of oil as much as possible.

That is not happening. All projections point toward increased use of oil as former agrarian economies industrialize.

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Originally posted by rsfarrell:
"The First Law of Thermodynamics says that energy under normal conditionscannot be created or destroyed, simply transformed from one type of energy to another."

A fission reaction is not considered "normal conditions."

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Nitpick.

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I suppose one could say that fire converts matter into energy as well. It must, I've actually seen it happen. You put a piece of wood on a fire, and it burns leaving not much but a handful of ash behind.

However, that is not 'making' energy any more than nuclear fission is.

If you want to be taken seriously (which I doubt), you should pick up an elementary physics text and read it.

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So you don't know the difference between chemical energy and nuclear energy, and you think they are the same thing, and you're telling me to pick up a science textbook.

Fission converts matter into energy. Combustion converts potential energy stored in chemical bonds into kinetic energy with no change in mass.

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Originally posted by DrConway:
[QB]

Nitpick.

The First Law of Thermodynamics can be extended with ease to cover mass-energy equivalence, and so too can the Second Law. QB]

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Continued here.

[ 25 July 2005: Message edited by: DrConway ]