Peak Oil News: 01/01/2009 - 02/01/2009

Friday, January 30, 2009

The Peak Oil Crisis: The Stimulus

Falls Church News-Press

By Tom Whipple

As the economy spirals deeper and deeper into an economic morass, Washington's attention this week is focused on the $900 billion economic stimulus package that is making its way through the Congress.

Opinions as to the efficacy of this effort are all over the map. The President, his allies and advisors knowing they cannot just sit by hoping for better times, have put together a package that is intended to do something for nearly everybody - tax cuts for the middle class, aid to state and local governments to sustain essential services, and above all, funding for projects that it is hoped will create or at least save jobs. They firmly believe that to do anything else would be irresponsible governance.

Critics of the stimulus plan abound. Republicans, who are no longer in charge of much, but can still filibuster the Senate, are calling the stimulus a big Democratic giveaway of borrowed dollars that will bankrupt the government. They, as usual, favor more and bigger tax cuts to deal with the problem. Others, who believe the era of economic growth and prosperity is over, see the plan as a futile effort to revive an un-revivable way of life. They see this plan as a holding action that will spend what may be the last money America can borrow on trying to turn back the clock.

So where does peak oil fit into all this? Let's start with the words of our new President earlier this week. "At a time of such great challenge for America, no single issue is as fundamental to our future as energy. America's dependence on oil is one of the most serious threats that our nation has faced. It bankrolls dictators, pays for nuclear proliferation and funds both sides of our struggle against terrorism. It puts the American people at the mercy of shifting gas prices, stifles innovation, and sets back our ability to compete. These urgent dangers to our national and economic security are compounded by the long-term threat of climate change, which, if left unchecked, could result in violent conflict, terrible storms, shrinking coastlines, and irreversible catastrophe."

This would seem to leave little doubt that the President understands what could turn out to be the two biggest problems of coming decades - dependence on oil and global warming. There is much in the current stimulus plan and other administration initiatives that seem to make sense - increasing renewable fuels, $31 billion towards improving the electric grid, $37 billion to weatherize government buildings and low-income homes, $10 billion to improve public transit and railroads. All this of course is only a small fraction of the $900 billion proposal. The rest seems to be directed towards offsetting the effects of the economic down turn, helping the unemployed and hopefully stimulating what some believe will be an economic rebound. Some parts of the bill, however, such as the $31 billion for repairing and building roads seem downright wasteful given that vehicular traffic has no place to go but down.

We are back to the old conundrum of the urgent and the important. While it is clear that oil depletion will overwhelm our economies and global warming may overwhelm much more, for people who are newly unemployed, impoverished, homeless and don't have enough to eat, the President and Congress must hold out the promise of near-term help. A great irony in all this is that the Congressional Budget office is saying only about $25 billion of the $900 billion is likely to be spent in this fiscal year and only $110 billion by the end of 2010. If these numbers are close to reality, it is clear that we are going to have to endure the trials of the next two years with very little aid from the proposed stimulus. If the stimulus passes, at least Congress and the President will be given credit for having tried to do all they can.

It is unfortunate, but a fact of life that the economic downturn of the last two years sent oil prices tumbling by an unexpectedly large amount. If we have learned nothing else in the last six months, it is that prices are highly susceptible to what seem to be relatively small changes in demand. Although prices seem to be clawing their way higher, there is still a race going on between OPEC production cuts and the sagging global economy. Just at the time when all attention should be focused on preparing for a future with less oil - while there is still time and resources left -- the markets are sending signals all is well for now on the energy front and that "drastic" measures such as higher gas taxes and speed limits are not needed as yet, if ever.

A prime example of this occurred this week when President Obama took action to reverse President Bush's decision and directed the EPA to look into the implications of coordinating California and federal emission standards which would markedly speed up fuel efficiency standards for automakers. If gas prices were still at $4 or $5 a gallon higher fuel efficiency would likely be embraced by all sides, but at a $1.86 a gallon it seems as if we are going to back to rehash the same old arguments about more efficient cars hurting autoworkers and forcing up car prices to unaffordable levels.

Until there are clearer signals, likely in the form of much higher gasoline prices, the American public and their elected representatives are not likely to accept any really painful measures for dealing with peak oil, energy independence, global warming or the like. Such is the nature of democracy and politics will remain the art of the possible.

Sunday, January 25, 2009

The Peak Oil Crisis: What of 2009?

Falls Church News-Press

By Tom Whipple

Our wish has been granted for we are indeed living in interesting times. The world's economy is either collapsing or is putting on a very good imitation of doing so.

Production of cheap, abundant fossil fuels is peaking and will soon be withering away, yet gasoline for our cars has almost never been inflation-adjusted cheaper. Around the world, numerous sovereign governments are close to becoming dysfunctional -- likely with very bad consequences. We are pumping so much of the wrong kinds of gases into the atmosphere that the poles are melting, the seas are rising, the land is drying out and some day soon this planet is going to be very tough to live on. On top of all this, the world seems to be acquiring a fair number of people who are convinced that only they understand God properly and that the rest of us deserve to be done in. The only good news is that, so far as we know, there are no large meteors heading towards earth that would render the foregoing problems irrelevant.

The purpose of reciting a list of woes is to remind ourselves that we are living on one big interrelated, interconnected earth. Attempting to solve one problem will either mitigate or perhaps exacerbate the others for nothing much remains static these days. Economic growth has come to a halt in most countries and even China's meteoric growth is subsiding towards half what it was a couple of years ago.

How long this will last is anybody's guess. While Wall Street babbles on about rebounds in six or maybe nine months, others are convinced that the damage done to the world's financial systems in recent years is so great that, despite the trillions in bailouts and stimuli, there is no hope for recovery in the foreseeable future. Those of us who worry about such things are concerned that low oil prices have stifled new investment to such an extent that in a few years the oil industry will find it impossible to stem declining production from natural depletion.

In recent weeks, the idea of a short recession that will be over in a quarter or two seems to have been replaced by near-universal pessimism. If part of your job is to be eternally optimistic in order to sell things, then you will say that the economic situation will start to get better next year. If you are allowed the freedom to expound on realities, you will say we are in for an unknown, likely lengthy, period of unknown hardships.

In the last six months, oil prices have fallen by an unprecedented amount and are currently bouncing around $40 a barrel depending on the news of the day. This decline clearly is because supply began outpacing demand last summer and there is a widely held belief that as the world economy contracts, the demand for oil will contract faster. While it is true that the demand for oil is no longer growing, the available numbers do not suggest that, as yet, it is exactly "collapsing" either.

This week the U.S. demand for oil is officially reported to be down about 4 percent as compared to last year. Gasoline consumption is down only 2.1 percent, which does not seem to be much for a country that is laying off people by the millions and where all but the poorest of the poor drive cars as part of their daily existence. A fair guess is that the consumption of gasoline is so deeply imbedded in the American way of life that the economy is going to have to get a whole lot worse, and prices are going to have to get a whole lot higher, before we see more impressive declines in oil and gasoline consumption - say on the order of 10 or 20 percent.

Although the growth in China's demand for oil is slackening, it is still up, with December 2008 consumption 12 percent higher than December 2007. Actually Beijing knows a bargain when it sees one and is busily buying up crude to stash away in its new strategic reserve.

The International Energy Agency, which is sort of the official keeper of the world's oil statistics now acknowledges that a global recession is in progress but only sees world oil consumption for 2009 falling by 500,000 barrels a day (b/d) to 85.8 million. While these projections will be revised again and again during the year, at the minute they do not suggest anything that could be characterized as a "plunge" in the demand for oil. Despite rather impressive increases in U.S. stockpiles that have many convinced that demand is disappearing, the IEA reports that total stocks in the OECD countries, while above normal, actually went down by 2 million barrels in November and likely dropped another 8 million in December.

As prices plunged this fall, OPEC met, and met, and met again, each time announcing production cuts which they all swear they will implement. Considering that the unprecedented drop in oil prices has shattered their leaders' plans for power, prestige, glory, and economic development, they appear to be so desperate that they are likely to make a substantial portion of the announced 4.2 million barrel production cut. Some OPEC members are becoming so desperate that they are already calling for another cut that would bring the total to 5 or 6 million b/d.

Thus, the big unknowns for 2009 are just how far and how fast the world's GDPs are going to fall and just how fast the demand for oil will fall with them. It is obvious that if demand falls by only the officially projected 500,000 b/d, or anything close to that number, and production actually goes down 4 or more million b/d, then by every known law of economics oil is not going to stay at $40 a barrel, but is going to rise, perhaps even soar. For now we can only wait and watch.

Wednesday, January 21, 2009

Gap Oil


By Prof. Chris Rhodes

It is Gap Oil not Peak Oil that is the problem. Rising demand for oil will exceed the quantity of it that can be withdrawn from the earth, resulting in a supply-demand gap. Once production does peak the gap will be enlarged from both sides, drawing down the supply side against rising demand. This I suggest should be termed "Gap Oil". Energy efficiency and a reduction in our demand for oil is paramount and a growing dependence on what can be grown, to create a sustainable "bioeconomy".

You heard it here first: GAP OIL. I am coining this term since I haven't seen it used before but it succinctly sums-up the prevailing situation regarding the provision and price of oil. We hear much about peak oil, and often this is misunderstood to mean that the world will imminently run out of oil. However, this is neither the case nor the definition of peak oil. Dr Richard Pike, the CEO of the Royal Society of Chemistry and a former oil-man, has made convincing arguments that there is more oil - about twice as much - to be recovered than the 1.2 trillion barrels worth that is generally accepted. That may well be true, but it does not impact on the rate of recovery of oil per se, which is the crux of the issue.

The world gets through around 84 million barrels of oil on a daily basis, which adds-up to just over 30 billion barrels a year; a staggering quantity which underpins the modern industrialised global mechanism and a relentless global population of 6.7 billion souls. Only time will tell history what extent that number will ascend to, but if the WHO is to be believed it will be over 9 billion by 2050 and rising perhaps to 12 billion in the subsequent century, all fed by oil. I have noted on previous occasions a Hubbert analysis, similar to that made for oil, that predicts instead that world population will rather peak at 7.1 billion by 2024 and then fall to around 2.5 billion by 2100. As I say, only time will tell us which manner of estimate is correct.

Demand for oil appears equally inexorable, and there are estimates made that in two decades China will be using more oil than the U.S., and that the world in total will demand another 50% by then. It is obvious that no matter how much recoverable oil there is in the ground, if it cannot be recovered at a sufficient rate to match the prevailing demand for it, then a gap will ensue between demand and supply, as happened last summer with the effect of driving-up the price of oil to almost $150 a barrel. This state of "gap-oil" will maintain a similar consequence: namely that the price of oil will soar from its present low value and the impact on the world economy will be severe, with oscillations of unparalleled amplitude to the global markets. There will be actual shortages of oil too, with supplies going to the highest bidder, and a shift of economic and political power being placed in those hands that hold the oil.

This will happen irrespective of whether we are at the peak of world oil production. The concept of world peak oil is misleading in any case, since all oil wells are at different phases of their relative depletion and so Russia will still be producing oil long after the North Sea, for example, and Saudi Arabia long after that. Hence some countries will be dependent on others. World peak oil can be thought of as the peaking of the largest fields, and once e.g. the giant Ghawar field peaks we can begin to kiss our lifestyles goodbye. This should auger-in a new age of energy efficiency and a growing reliance on sustainable economies, necessarily localised and so less dependent on transportation, and based around the bioeconomy, i.e. on what can be grown.

Technological solutions, e.g. the hydrogen economy will not be with us for decades if at all, and at the very least we need some interstitial solutions. The future of humankind will depend most viably on sustainable photosynthesis, rather than on the fossil fuel products of photosynthesis that were laid-down millions of years past. Once peak oil does strike it will enlarge the gap further by drawing-down the supply side, which will fall ever consummately against demand. It is gap-oil we need to fear, the state when supply fails demand and which is both inevitable and imminent.

Era of cheap oil is over

By Nick Ferguson

Forget about cheap gasoline, today's low oil price masks a looming energy crisis that could dwarf the current economic problems.

If you thought things couldn't get any worse than a collapse of the global financial markets, think again. The economic meltdown is a good reason to be gloomy, for sure, but an under-reported study by the world's leading energy agency recently raised the spectre of a collapse in the global energy market too.

The steep fall in oil prices during the last few months of 2008 prompted many people to think that the run-up to $147 a barrel was an aberration – driven by speculators or another artefact of the credit bubble. But some industry analysts say that today's prices are the real aberration and, in fact, oil production is dangerously close to going into a permanent and unstoppable decline.

Indeed, the collapse in oil prices is accelerating this trend. Non-traditional projects that were profitable when prices were high, such as Canada's oil sands and fields that are deep underwater, are now being postponed or even scrapped. At the same time, the Organisation of Petroleum Exporting Countries (Opec) cut production targets in December in a desperate bid to reverse the decline. That move seems to have had some effect, but there is now a fear that supply in the oil market will be dangerously out of sync with demand when the economy starts to recover.

"We will work our way through these financial problems, but what would be really unfortunate is that once things bounce back, oil prices will bounce back too," said Matt Simmons, chairman of Simmons & Company International, at a roundtable held in mid-December. He says that supply shortages could help oil prices soar through $147 as unhindered as a hot knife cuts through butter.

It is no longer just conspiracy theorists that are worrying about a looming energy crisis. Today, even the International Energy Agency (IEA) is sounding the alarm bells. The agency, which has very close ties to the big oil companies, quietly dropped a bombshell in its World Energy Outlook 2008 when it revealed that its first ever real-world survey of existing oil fields shows production falling at a much faster rate than its earlier guesses.

At the current rate of decline, says the IEA, oil production from existing fields will fall to just 30 million barrels a day by 2030 – or roughly 73 million barrels short of the expected level of demand. New sources will make up some of the difference, but to fully meet future demand, the world's energy companies will need to discover the equivalent of six new Saudi Arabias during the next 20 years. Simply maintaining today's levels means discovering four new Saudi Arabias.

Not even the IEA expects this to happen. Its 2008 report represents the most optimistic outlook, but is nevertheless dire. Its executive summary starts with a quiet, but very important statement: "Current global trends in energy supply and consumption are patently unsustainable." And concludes with a similarly potent call to arms: "Time is running out and the time to act is now."

Put simply, there is no quick fix to meeting the world's future energy needs. "There is no fix actually," says Simmons. "The only fix is making a sprinting retreat from our use of oil today. If you get smart people looking at the data it doesn't take more than a couple of minutes for them to say, 'This is awful.'"

It may be too late already. Forecasts for production declines are based on the depletion rates of large oilfields, but almost half of the world's oil supply comes from tiny fields that produce fewer than 400 barrels a day – and these small fields are known to decline much quicker than big fields.

"Oilfields aren't like emptying a bucket or taking boxes out of inventory," says Robert Hirsch, a senior energy adviser at Management Information Services, speaking at the same roundtable as Simmons. "You can't keep pulling oil out of the ground at the rate that you did in the past because of the basic geological processes."

In the midst of a global recession, much of the explanation for falling prices has focused on the supposed collapse in demand for oil, particularly from Asia's rising economic powerhouses, but talk of China's falling oil imports is misleading. It is only growth that is falling – from 28% in October to 17% in November.

According to Simmons, the story of supply destruction is a more immediate problem. "We're unwinding supply right now just as fast as we've ever done and it's like a bulldog chewing on somebody's behind," he says.

As the IEA says in its report, the era of cheap oil is over. And, unless drastic measures are taken to reduce energy consumption and speed up the development of new energy sources, the world could be headed for a serious energy crisis as soon as 2015. If that happens, our current economic woes will hardly merit a mention in tomorrow's history books.

Saturday, January 17, 2009

The Peak Oil Crisis: Renovating Suburbia

Falls Church News-Press

By Tom Whipple

There has been a lot written lately about the coming demise of America's suburbs. The general thesis is that without cheap fuels for cars, lawnmowers and heating, suburban living will become untenable.

People will be forced to abandon their homes and make their way to cities, small towns or rural communities where they can survive without gasoline. There is, of course, another side to this coin.

I will be the among the first to grant that suburbia is a creature of cheap energy, particularly gasoline, and unless there are some radical changes in the way we power our homes, feed and clothe ourselves and move about, there will be great difficulties ahead. There are two major problems that need to be solved in order to keep the widely scattered housing of suburbia habitable without cheap energy -- transportation and excessive residential consumption of energy.

Not everything about the suburbs will be a downside when the era of cheap fossil fuel comes to an end. Nearly all suburban dwellings have broad roofs and yards that are suitable for collecting some form of solar or in some places wind energy. In many cases, suburban yards are suitable for growing food or perhaps even raising poultry or other small livestock. Most have yards allowing for easy access to subsurface geothermal energy. They are clean and have adequate sources of water and a means to handle sewage. These are not inconsequential assets when trying to maintain large numbers of people in some form of civilization in the face of dwindling supplies of energy. There are already places in Asia that are facing life-threatening water and sanitation problems due to the lack of electricity to run the pumps.

For the immediate future, an unappreciated aspect of suburban homes is easy access to a source of electricity for recharging electric vehicles. Wiring of urban streets and parking areas for recharging plug-in electric cars will cost billions and likely take decades. This week's Detroit automobile show stands as a monument to the closing era of the internal combustion engine. Nearly every automobile manufacturer is showing some form of electric powered vehicle that should be available, for those that can still afford them, in three or four years.

Some, with good reason, doubt that there will be enough resources, energy, and money to replace the 250 million passenger cars and trucks that we have in America so that we can continue motoring with electricity rather than gasoline. These skeptics are probably right if one assumes that the motor vehicles of the future will be electric clones of the of the 3-6,000 pound behemoths that are clogging the roads today.

Transportation to, from and around suburbia ten or 20 years from now will have to be markedly different than today. While some will have plug-in electric cars, it is unlikely that electricity will continue to be cheap in an era of dwindling fossil fuel supplies, carbon caps and emission taxes. Wasting energy will become a thing of the past. Driving to work or the store in a 4,000 pound electric car will simply become too expensive for most. In place of today's ubiquitous automobile will be a variety of light electric vehicles, ranging from electric bicycles, tricycles, and scooters, to very small cars that will be inexpensive to produce, use minimal amounts of electric energy and provide much of the mobility that will be required for everyday life.

An important part of suburbia's future will be far more efficient systems for distributing goods and services than driving many miles to stores and shopping centers in 6,000 pound vehicles to pick up a few pounds of whatever is required. Suburbs need to be modified with the addition of numerous small neighborhood commercial centers so that people can walk, bicycle, or at most take a short light vehicle trip to obtain whatever goods and services they need. Existing housing could be converted into neighborhood centers so that neighborhood centers would not even have to look like stores. Neighborhood centers which would be transfer places for mail, packages, food orders could provide very efficient ways to move essential goods to and from suburban residences without requiring lengthy energy consuming trips.

To maximize efficiency, the concept of a "store" that contains a large inventory could be replaced by warehouses for goods ordered over the internet and delivered to neighborhood centers. These centers could serve as starting points for public transit vehicles that could provide frequent service to move people as well goods to and from the neighborhood centers. They could even supply personal services such as haircuts and dentists. By combining the movement of mail, people and goods on one frequent-service, efficient electric vehicle great energy efficiencies could be achieved.

Renovating the suburban housing stock for optimum energy efficiency will be a long and difficult process taking many decades. With cheap energy, most houses in America were built to very low efficiency standards in order to save on capital costs. It will soon be recognized that using natural gas and oil for residential heating is a massive waste of a valuable resource that should be used for making things and essential vehicles. Residences will have to be modified to all-electricity and renovated to consume the minimum amount of energy for lighting, appliances, heating and cooling that is possible and affordable.

Doing this on a nationwide scale will likely take some form of government intervention. This could be in the form of considerably higher building standards including retrofits of existing buildings, higher energy taxes and even renovation loans to jump start the process. For nearly every existing building there are a variety of steps that need to taken from better insulation and more efficient lighting to replacing windows and heating systems. All of this will be expensive but there is no other choice because staying on in suburbia with greatly reduced sources of energy renovation will be the only option.

Wednesday, January 14, 2009

Choosing What Our Cities Will Look Like in a World Without Oil


By Sarah Kuck

As we draw nearer to reaching the point of Peak Oil, it benefits us to imagine what our cities will look like in a world without oil. Does this conjure up images of cities turned into urban farms just to produce enough food for us all? Do we devote all our energy to growing, bartering and trading the food we grow? Or will the city become divided, with the wealthy moving to the center while higher costs of living force lower-income families to the outer-ring suburbs, where access to goods, services and transport will be limited?

If we start now, we can choose what we want our cities to look like in the future. We can make them the resilient, sustainable centers of culture, justice, art and creativity that we hope they will become.

Author and Professor Peter Newman is asking us to imagine and then get to work building these urban centers. His book and talk, both titled Resilient Cities: Responding to Peak Oil and Climate Change, ask audiences to honestly look at what will happen to our cities when we reach Peak Oil. During his 90 minute presentation last night at Seattle's City Hall, Newman explained to the full house how peak oil will soon change reality as we know it; and how if we choose to make it so, we can take this challenge as our opportunity to create a functional, just and sustainable world.

Picturing a future where we do nothing resulted in some frightening scenarios: ones where we are barely getting by and injustice is running rampant. But, as Newman explained, picturing a future in which we respond to the challenge by building resilient cities results in images of a flexible and supportive, flourishing society.
So, in 2001, under the direction of Seoul's Mayor Lee Myung-bak, a plan was developed to tear down the freeway and to restore the river. The project was completed in 2005 after.jpg
In order to build the new resilient city of the future, Newman said that “we need to stop building extra urban road capacity and urban scatter; we need to start building electric renewable cities with much greater localism in the economy and infrastructure.”

“We need both at the same time," Newman said. "Or they will undermine what we need to do together.”

Here are a few exceptional points, summarized from Newman's worldchanging presentation:

End Agglomeration Diseconomies
The freeway is a failed technology. Freeways don’t actually ultimately help people get where they want to go any faster; they simply scatter people and economies. Freeways fail as public spaces; as infrastructure, they are dinosaurs. Their impact on cities is not good for economics or people. So we should stop building them. We should instead organize and advocate for rail systems so we can reclaim and rehabilitate our open spaces. Car-dependent cities can begin to reclaim freeways by investing in rail transit and building up local economies around station hubs.

Density, Walkability and Affordable Housing
High quality, high rise developments in the city will increase walkability, and decrease the number of trips taken by car. These developments will function best if developers work in partnership with land use planners. To end the division and disagreements that high density development creates, we have to require all developments to allot 15 percent of space to social housing, and require 5 percent of the value of a development to go toward social infrastructure, like landscaped open-to-the-public space, public art, community centers, schools, arts facilities.

Complete Streets, Smart Grids
Cars won’t go away completely, even though the oil we currently use to power them will. The cars of the future will run on alternatively produced electricity. We can link the extra energy produced from solar and wind production systems to the batteries in our cars with Smart Grids. These energy linking systems help buildings and transportation power each other. (Read more about Smart Grids on Worldchanging here and here.)

Eco-villages colonizing the fringe
Build eco-villages on the outskirts of the urban ring. Built with their own water, power and sewage systems, we can turn the crumbling suburbs into self sustaining eco-communities of the future.

What We Need to do Now
Newman gave vibrant examples of each of these ideas happening in cities all over the world, from Seoul to London, Copenhagen to Vancouver, B.C., these cities are proving that this is possible. All we need now, said Newman, is imagination, post oil strategies, partnerships and demonstrations, and above all HOPE!

Let’s get to work.

Sunday, January 11, 2009

Oil drying up as world remains unaware

By William Marsden

For more than a century it has been cheaper than coffee and as constant as ocean waves.

Getting it is simple. You select the grade, insert the nozzle, squeeze the handle and gasoline comes out. There seems no end to it.

Until now.

On top of the other problems plaguing the world, such as global warming and the current financial meltdown, there's a third pressing issue that threatens to bring the good life to an end: The world is fast running out of oil.

Given that crude oil makes up 36.4 per cent of the world's energy consumption, the seriousness of shortages cannot be underplayed. Our reliance on oil is almost total. It fuels 100 per cent of air and sea transport and most of our land transport. Without oil there is no petrochemical industry.

Agriculture, manufacturing, building materials, the clothes we wear, the food we eat and the medicines we take depend on oil.

Running out of oil is a question of when - not if.

Normand Mousseau, a physics professor at Universite de Montreal who has written a book on the end of oil, says the beginning of the end struck last summer. "This is why the prices jumped to $147 a barrel," he said. "As soon as the economy comes back, they will be right back up."

However, others say the crunch will come in three to 10 years depending on our rate of consumption.

"I hate being an alarmist about it, but our entire lifestyle is dependent on cheap oil and there just isn't very much left in the ground," Andrew Miall, professor of geology at the University of Toronto, said in an interview.

Most petroleum geology experts contend that we have already discovered the world's giant fields and what's left over will not keep the age of oil alive much longer.

"It's safe to say we have pinpricked the Earth thoroughly enough that it is very unlikely we have missed any Middle Easts," Miall said. "There may be another North Sea or two, but nothing that is going to really change the energy scene."

Matt Simmons, chairman and CEO of Simmons and Company International, which is a private energy investment banker based in Texas, said he believes the world's oil reserves have already peaked and we are on the downward slide.

"I think basically we are now in the early days of a very serious pending scarcity of oil and natural gas," he said. "Because we don't know we are, we are not putting any clamps on demand."

Simmons has been studying world oil production and reserves for decades. His company helps finance exploration and production.

He predicted - accurately as it turned out - that the North Sea fields would peak between 1998 and 2000.

Now he has turned his attention to Mexico, Kuwait and Saudi Arabia, warning that their fields also have hit the downward slide.

"All the major oilfields of the world have peaked and we are going to see soon some precipitous collapses," he said.

Because production flows can still keep pace with demand, the price has remained deceptively low, giving the impression there's still lots of oil out there. Even at its record high of $147 a barrel, crude oil was still only 22 cents a cup, which is a fraction of the cost of a regular coffee.

Simmons called the price of oil absurdly low: "Let's say you and five fat friends run out of gas and you see a guy coming down the street riding a donkey and pulling an old messy cart and you say, ‘Hey pull over here. Can you take me and my five fat friends a couple of miles for 22 cents,' which is what that much gas will get you. And the guy's going to flip you the bird: ‘Are you stupid?'"

Our recent consumption rates are the most voracious in history. By the end of 2007, the world had consumed about 1.1 trillion barrels of oil. Half of this was consumed over the last 25 years alone. So far, we have consumed about 50 per cent of the total recoverable oil, according to the World Energy Council.

Chris Skrebowski, a London-based member of the Energy Institute in Britain and consultant editor of the Petroleum Review, which is considered the oil industry bible, said he believes world oil reserves will peak "no later than 2012."

He paints a doomsday scenario of a world blithely unaware that in a few years its oil-based lifestyle will begin to end.

"Peak oil is when delivery flows can't meet the demand," Skrebowski said. Demand will outstrip production primarily because of a lack of sufficient reserves. Once that happens, we are on an unbroken downward slide.

For Skrebowski, signs of the approaching peak are clear. High oil prices as well as the enormous price fluctuations we're seeing are ultimately the result of emerging bidding wars over oil by oil-deficit countries.

Despite dwindling reserves, demand for oil is expected to continue to rise in China, India and other Asian countries. This will only hasten the moment of peak oil.

And new important discoveries are doubtful.

Canada's conventional oil production peaked in about 1995. U.S. production peaked in the 1970s. North Sea wells peaked in 2000. Mexico peaked in 1997 and Venezuelan production is peaking.

In all, Skrebowski said, about 28 significant producers are in decline. This represents about 35 per cent of global production. Once that figure reaches 51 per cent, "we reach global peak oil," he said.

The only place where production continues to hold up is in the Persian Gulf.

But the elephant wells of Saudi Arabia are showing signs of exhaustion and the Saudis are indicating that they want to begin preserving their oil for their children.

Yet politicians have not addressed the issue.

"They are terrified of it," Skrebowski said. "They don't know what to do. There are no pat solutions."

Montreal Gazette

Oil 2009

Be Careful What You Wish For

By Michael T. Klare

    Only yesterday, it seems, we were bemoaning the high price of oil. Under the headline "Oil's Rapid Rise Stirs Talk of $200 a Barrel This Year," the July 7 issue of the Wall Street Journal warned that prices that high would put "extreme strains on large sectors of the U.S. economy." Today, oil, at over $40 a barrel, costs less than one-third what it did in July, and some economists have predicted that it could fall as low as $25 a barrel in 2009.

    Prices that low -- and their equivalents at the gas pump -- will no doubt be viewed as a godsend by many hard-hit American consumers, even if they ensure severe economic hardship in oil-producing countries like Nigeria, Russia, Iran, Kuwait, and Venezuela that depend on energy exports for a large share of their national income. Here, however, is a simple but crucial reality to keep in mind: No matter how much it costs, whether it's rising or falling, oil has a profound impact on the world we inhabit -- and this will be no less true in 2009 than in 2008.

    The main reason? In good times and bad, oil will continue to supply the largest share of the world's energy supply. For all the talk of alternatives, petroleum will remain the number one source of energy for at least the next several decades. According to December 2008 projections from the U.S. Department of Energy (DoE), petroleum products will still make up 38% of America's total energy supply in 2015; natural gas and coal only 23% each. Oil's overall share is expected to decline slightly as biofuels (and other alternatives) take on a larger percentage of the total, but even in 2030 -- the furthest the DoE is currently willing to project -- it will still remain the dominant fuel.

    A similar pattern holds for the planet as a whole: Although biofuels and other renewable sources of energy are expected to play a growing role in the global energy equation, don't expect oil to be anything but the world's leading source of fuel for decades to come.

    Keep your eye on the politics of oil and you'll always know a lot about what's actually happening on this planet. Low prices, as at present, are bad for producers, and so will hurt a number of countries that the U.S. government considers hostile, including Venezuela, Iran, and even that natural-gas-and-oil giant Russia. All of them have, in recent years, used their soaring oil income to finance political endeavors considered inimical to U.S. interests. However, dwindling prices could also shake the very foundations of oil allies like Mexico, Nigeria, and Saudi Arabia, which could experience internal unrest as oil revenues, and so state expenditures, decline.

    No less important, diminished oil prices discourage investment in complex oil ventures like deep-offshore drilling, as well as investment in the development of alternatives to oil like advanced (non-food) biofuels. Perhaps most disastrously, in a cheap oil moment, investment in non-polluting, non-climate-altering alternatives like solar, wind, and tidal energy is also likely to dwindle. In the longer term, what this means is that, once a global economic recovery begins, we can expect a fresh oil price shock as future energy options prove painfully limited.

    Clearly, there is no escaping oil's influence. Yet it's hard to know just what forms this influence will take in the year. Nevertheless, here are three provisional observations on oil's fate -- and so ours -- in the year ahead.

    1. The Price of Oil Will Remain Low Until It Begins to Rise Again: I know, I know: this sounds totally inane. It's just that there's no other way to put it. The price of oil has essentially dropped through the floor because, in the past four months, demand collapsed due to the onset of a staggering global recession. It is not likely to approach the record levels of spring and summer 2008 again until demand picks up and/or the global oil supply is curbed dramatically. At this point, unfortunately, no crystal ball can predict just when either of those events will occur.

    The contraction in international demand has indeed been stunning. After rising for much of last summer, demand plunged in the early fall by several hundred thousand barrels per day, producing a net decline for 2008 of 50,000 barrels per day. This year, the Department of Energy projects global demand to fall by a far more impressive 450,000 barrels per day -- "the first time in three decades that world consumption would decline in two consecutive years."

    Needless to say, these declines were unexpected. Believing that international demand would continue to grow -- as had been the case in almost every year since the last big recession of 1980 -- the global oil industry steadily added to production capacity and was gearing up for more of the same in 2009 and beyond. Indeed, under intense pressure from the Bush administration, the Saudis had indicated last June that they would gradually add to their capacity until they reached an extra 2.5 million barrels per day.

    Today, the industry is burdened with excess output and insufficient demand -- a surefire recipe for plunging oil prices. Even the December 17 decision by members of the Organization of the Petroleum Exporting Countries (OPEC) to reduce their collective output by 2.2 million barrels per day has failed to lead to a significant increase in prices. (Saudi Arabia's King Abdullah said recently that he considers $75 a barrel a "fair price" for oil.)

    How long will the imbalance between demand and supply last? Until the middle of 2009, if not the end of the year, most analysts believe. Others suspect that a true global recovery will not even get under way until 2010, or later. It all depends on how deep and prolonged you expect the recession – or any coming depression -- to be.

    A critical factor will be China's ability to absorb oil. After all, between 2002 and 2007, that country accounted for 35% of the total increase in world oil consumption -- and, according to the DoE, it is expected to claim at least another 24% of any global increase in the coming decade. The upsurge in Chinese consumption, combined with unremitting demand from older industrialized nations and significant price speculation on oil futures, largely explained the astronomical way prices were driven up until last summer. But with the Chinese economy visibly faltering, such projections no longer seem valid. Many analysts now predict that a sharp drop-off in Chinese demand will only accelerate the downward journey of global energy prices. Under these conditions, an early price turnaround appears increasingly unlikely.

    2. When Prices Do Rise Again, They Will Rise Sharply: At present, the world enjoys the (relatively) unfamiliar prospect of a global oil-production surplus, but there's a problematic aspect to this. As long as prices remain low, oil companies have no incentive to invest in costly new production ventures, which means no new capacity is being added to global inventories, while available capacity continues to be drained. Simply put, what this means is that, when demand begins to surge again, global output is likely to prove inadequate. As Ed Crooks of the Financial Times has suggested, "The plunging oil price is like a dangerously addictive painkiller: short-term relief is being provided at a cost of serious long-term harm."

    Signs of a slowdown in oil-output investment are already multiplying fast. Saudi Arabia, for example, has announced delays in four major energy projects in what appears to be a broad retreat from its promise to increase future output. Among the projects being delayed are a $1.2 billion venture to restart the historic Damman oil field, development of the 900,000 barrel per day Manifa oil field, and construction of new refineries at Yanbu and Jubail. In each case, the delays are being attributed to reduced international demand. "We are going back to our partners and discussing with them the new economic circumstances," explained Kaled al-Buraik, an official of Saudi Aramco.

    In addition, most "easy oil" reservoirs have now been exhausted, which means that virtually all remaining global reserves are going to be of the "tough oil" variety. These require extraction technology far too costly to be profitable at a moment when the per barrel price remains under $50. Principal among these are exploitation of the tar sands of Canada and of deep offshore fields in the Gulf of Mexico, the Gulf of Guinea, and waters off Brazil. While such potential reserves undoubtedly harbor significant supplies of petroleum, they won't return a profit until the price of oil reaches $80 or more per barrel -- nearly twice what it is fetching today. Under these circumstances, it is hardly surprising that the oil majors are canceling or postponing plans for new projects in Canada and these offshore locations.

    "Low oil prices are very dangerous for the world economy," commented Mohamed Bin Dhaen Al Hamli, the United Arab Emirates' energy minister, at a London oil-industry conference in October. With prices dropping, he noted, "a lot of projects that are in the pipeline are going to be reassessed."

    With industry cutting back on investment, there will be less capacity to meet rising demand when the world economy does rebound. At that time, expect the present situation to change with predictably startling rapidity, as rising demand suddenly finds itself chasing inadequate supply in an energy-deficit world.

    When this will occur and how high oil prices will then climb cannot, of course, be known, but expect gas-pump shock. It's possible that the energy shock to come will be no less fierce than the present global recession and energy price collapse. The Department of Energy, in its most recent projections, predicts that oil will reach an average of $78 per barrel in 2010, $110 in 2015, and $116 in 2020. Other analysts suggest that prices could go much higher much faster, especially if demand picks up quickly and the oil companies are slow to restart projects now being put on hold.

    3. Low Oil Prices Like High Ones Will Have Significant Worldwide Political Implications: The steady run up in oil prices between 2003 and 2008 was the result of a sharp increase in global demand as well as a perception that the international energy industry was having difficulty bringing sufficient new sources of supply on line. Many analysts spoke of the imminent arrival of "peak oil," the moment at which global output would commence an irreversible decline. All this fueled fierce efforts by major consuming nations to secure control over as many foreign sources of petroleum as they could, including frenzied attempts by U.S., European, and Chinese firms to gobble up oil concessions in Africa and the Caspian Sea basin -- the theme of my latest book, Rising Powers, Shrinking Planet.

    With the plunge in oil prices and a growing sense (however temporary) of oil plenty, this dog-eat-dog competition is likely to abate. The current absence of intense competition does not, however, mean that oil prices will cease to have an impact on global politics. Far from it. In fact, low prices are just as likely to roil the international landscape, only in new ways. While competition among consuming states may lessen, negative political conditions within producing nations are sure to be magnified.

    Many of these nations, including Angola, Iran, Iraq, Mexico, Nigeria, Russia, Saudi Arabia, and Venezuela, among others, rely on income from oil exports for a large part of their government expenditures, using this money to finance health and education, infrastructure improvements, food and energy subsidies, and social welfare programs. Soaring energy prices, for instance, allowed many producer countries to reduce high youth unemployment -- and so potential unrest. As prices come crashing down, governments are already being forced to cut back on programs that aid the poor, the middle class, and the unemployed, which is already producing waves of instability in many parts of the world.

    Russia's state budget, for example, remains balanced only when oil prices stay at or above $70 per barrel. With government income dwindling, the Kremlin has been forced to dig into accumulated reserves in order to meet its obligations and prop up sinking companies as well as the sinking ruble. The nation hailed as an energy giant is running out of money quickly. Unemployment is on the rise, and many firms are reducing work hours to save cash. Although Prime Minister Vladimir Putin remains popular, the first signs of public discontent have begun to appear, including scattered protests against increased tariffs on imported goods, rising public transit fees, and other such measures.

    The decline in oil prices has been particularly damaging to natural gas behemoth Gazprom, Russia's biggest company and the source (in good times) of approximately one quarter of government tax income. Because the price of natural gas is usually pegged to that of oil, declining oil prices have hit the company hard: last summer, CEO Alexei Miller estimated its market value at $360 billion; today, it's $85 billion.

    In the past, the Russians have used gas shut-offs to neighboring states to extend their political clout. Given the steep drop in gas prices, however, Gazprom's January 1st decision to sever gas supplies to Ukraine (for failure to pay for $1.5 billion in past deliveries) is, at least in part, finance-based. Though the decision has triggered energy shortages in Europe -- 25% of its natural gas arrives via Gazprom-fueled pipelines that traverse Ukraine -- Moscow shows no sign of backing down in the price dispute. "They do need the money," observed Chris Weafer of UralSib Bank in Moscow. "That is the bottom line."

    Plunging oil prices are also expected to place severe strains on the governments of Iran, Saudi Arabia, and Venezuela, all of which benefited from the record prices of the past few years to finance public works, subsidize basic necessities, and generate employment. Like Russia, these countries adopted expansive budgets on the assumption that a world of $70 or more per barrel gas prices would continue indefinitely. Now, like other affected producers, they must dip into accumulated reserves, borrow at a premium, and cut back on social spending -- all of which risk a rise in political opposition and unrest at home.

    The government of Iran, for example, has announced plans to eliminate subsidies on energy (gasoline now costs 36 cents per gallon) -- a move expected to spark widespread protests in a country where unemployment rates and living costs are rising precipitously. The Saudi government has promised to avoid budget cuts for the time being by drawing on accumulated reserves, but unemployment is growing there as well.

    Diminished spending in oil-producing states like Kuwait, Saudi Arabia, and the United Arab Emirates will also affect non-producing countries like Egypt, Jordan, and Yemen because young men from these countries migrate to the oil kingdoms when times are flush in search of higher-paying jobs. When times are rough, however, they are the first to be laid off and are often sent back to their homelands where few jobs await them.

    All this is occurring against the backdrop of an upsurge in the popularity of Islam, including its more militant forms that reject the "collaborationist" politics of pro-U.S. regimes like those of Hosni Mubarak of Egypt and King Abdullah II of Jordan. Combine this with the recent devastating Israeli air attacks on, and ground invasion of, Gaza as well as the seemingly lukewarm response of moderate Arab regimes to the plight of the 1.5 million Palestinians trapped in that tiny strip of land, and the stage may be set for a major upsurge in anti-government unrest and violence. If so, no one will see this as oil-related, and yet that, in part, is what it will be.

    In the context of a planet caught in the grip of a fierce economic downturn, other stormy energy scenarios involving key oil-producing countries are easy enough to imagine. When and where they will arise cannot be foreseen, but such eruptions are only likely to make any future era of rising energy prices all that much more difficult. And, indeed, prices will eventually rise again, perhaps some year soon, swiftly and to new record heights. At that point, we will be confronted with the sort of problems we faced in the spring and summer of 2008, when raging demand and inadequate supply drove petroleum costs ever skyward. In the meantime, it's important to remember that, even with prices as low as they are, we cannot escape the consequences of our addiction to oil.

    Michael T. Klare is the Five College Professor of Peace and World Security Studies at Hampshire College in Amherst, Massachusetts. He is the author, most recently, of Rising Powers, Shrinking Planet: The New Geopolitics of Oil (Metropolitan Books). A documentary version of his previous book, Blood and Oil, is available at To listen to a TomDispatch audio interview in which Klare discusses the future of oil in 2009 and beyond, click here.

Thursday, January 08, 2009

The Peak Oil Crisis: Cars - Redux

Falls Church News-Press

By Wayne Besen

I hate to keep coming back to cars, but in the last hundred years they have come to be one of the most significant facets of civilization - yet their future is in doubt.

Here in America they are clearly the fundamental implement of life for most of us. Their manufacture, financing, care and feeding provides employment for millions. They bring us to work, food, entertainment, shopping, education, love, friendship. In short. nearly all of American life is intimately involved in unrestricted access to our cars. This, of course, is why we have some 250 million of them running around our country and some 900 million running around the world.

Cars have been much in the news lately. New ones have not been selling too well in recent months and their manufacturers, at least in the U.S., are bankrupt. For the next few weeks, the companies will live off government handouts until the new President and Congress decide just how to let them die. GM just announced that for the first quarter of 2009 it plans to produce 420,000 vehicles. This is 180,000 fewer vehicles than it planned to produce just two weeks ago and is down 53 percent from the first quarter of 2007. With numbers like these, it is clear that the end is coming soon.

Unless you are employed in the automobile industry or indirectly make a living from the manufacture or sale of motor vehicles, the demise of Detroit-as-we-know-it will probably not make too much difference to our mobility. Our inventory of about 250 million registered passenger vehicles is about 50 million more vehicles than we have licensed drivers. We can obviously stop adding to the fleet, jack up vehicle maintenance a bit, cut annual mileage, and get along for decades without seriously impairing the important aspects of the nation's mobility.

Shortly, the problem, of course, will not be the cars, but the gasoline and diesel to power them. At the minute, gasoline prices are hovering around an all-time inflation adjusted low; however, this situation is reversing again. OPEC is in the midst of cutting its production by 4.2 million barrels a day (b/d) and U.S. gasoline consumption seems to be inching up again despite increasingly severe economic problems. Within a year or two we could be back over $100 a barrel again and given the likely condition of the economy by then, demand for motor fuel will fall.

The future of the car has become the subject of much debate. It seems likely that most large gas-guzzlers will be out of production within a year or so. Nearly all automobile manufacturers around the world are working on all-electric or plug-in hybrid electric cars that are due to start coming on the market in two or three years. If it were possible to replace the world's light vehicle fleet quickly with cars that ran at least partially on electricity or got over 100 miles per gallon, then there is a chance that the demand for liquid fuels would fall faster than depletion and the problem could be put off for several decades.

For many observers, the notion of replacing our current fleet of cars with some form of electric ones is absurd. Their argument is that there will simply not be enough resources to make the transition. There will not be enough lithium for the batteries; global warming carbon caps will limit industrial production; and consumers impoverished by the continuing financial meltdown will not be able to afford what are likely to be expensive replacements for our current cars. If as seems likely, much of the world's capacity to produce automobiles is going to be shut down in the next couple of years, the likelihood of gearing up and replacing hundreds of millions of cars before sizeable declines in the world's oil production sets in is remote.

Plug-in electric cars of various stripes, of course, will come onto the market and it is likely that millions will be produced and sold in coming decades, but this will only make a minor dent in the U.S. fleet of 250 million passenger vehicles, not to mention the 900 million or more that will be running around the world. So what is likely to happen?

With increasing gasoline prices and falling family incomes, unlimited use of private cars that nearly all in America now enjoy will start moving back up the socio-economic tree. The fortunate, who can afford the new generations of ultra high-mileage plug-in cars, will not have to worry about increasing gasoline prices, shortages or rationing. For the rest, use of the aging fleet of our current car inventory will gradually be reduced. Car pools and public transit are likely to become far more prevalent. Efficient cars will become more desirable as gasoline approaches unaffordable prices.

The very nature of the car will likely evolve to a smaller more utilitarian device to compensate for declining incomes and high gas prices. Consumer perceptions about what constitutes a desirable car that grew up in last 50 years will no longer matter. Various forms of government intervention into the automobile and oil industries - ranging from tax policies to ownership -- will have a major influence in the evolution of cars during the coming decades. In Europe, 30 years of high liquid fuel taxes have resulted in a civilization that uses about half the oil per capita that we use in America. There are already calls in the U.S. for much higher, possibly varying, gasoline taxes to stem roller coaster gasoline prices.

This situation cries out for Presidential leadership if the mobility and freedom and economic benefits of the ubiquitous personal car are going to last much longer. With the U.S. automobile industry in a death spiral and with neither the America's consumer nor the industry leadership basing decisions on much more than wishful thinking, the new President will have to set a new sustainable course and soon. The objective of course would be to start producing a passenger car fleet that will run on a fraction of the current energy and be affordable in the troubled times ahead.

Monday, January 05, 2009

Peak Oil And The Century Of Famine

By Peter Goodchild

Around the beginning of the twenty-first century, there began a clash of two gigantic forces: overpopulation and oil depletion. The event went unnoticed by all but a few people, but it was quite real. As a result of that clash, the number of human beings on Earth must one day decline in order to match the decline in oil production.

Unfortunately, there seems to be no way to get those two giant forces into equilibrium in any gentle fashion, because in every year that has gone by for the last few thousand years — and every year that will arrive — the human population of Earth is automatically adjusted so that it is roughly equal to the planet’s carrying capacity. Like so many other animals, human beings always push themselves to the limits of that carrying capacity. The Age of Petroleum made us no wiser in that respect, and in fact dependence on fossil fuels has led us to a crisis far greater than any in the past.

For the average human being, life has always been a matter of bare survival, and the same is true now. Population growth is soaring, whereas oil production is declining. If, at the start of any year, the world’s population is greater than its carrying capacity, only basic arithmetic is needed to see that the difference between the two numbers means that mortality will be above the normal by the end of that year. In fact, a simple calculation shows that before the year 2050 there will be about 3 billion deaths above normal, with a grand total of about 4 billion by the end of the century. Whether there are any partial solutions to that crisis is something to be considered at the end of this argument.

Depletion of oil and other fossil fuels will greatly affect food production. In terms of its effects on daily human life, in fact, the most significant aspect of oil depletion will be the lack of food. “Peak oil” is basically “peak food.” There will be severe problems with transportation (e.g., shortages of diesel fuel and asphalt) and communication (e.g., sources of electrical power), as well as with more immediate aspects of getting crops to grow (e.g., the use of fertilizer and pesticides, and the availability of irrigation). Crop yield-per-hectare is far lower in societies that do not have fossil fuels or modern machinery. Maize production, for example, declines by about 80 percent in the absence of modern technology, as David Pimentel notes in “Food and Energy Resources.” We should have no illusions that several billion humans can be fed by “organic gardening” or anything else of that nature.

Over the next few decades, therefore, there will be famine on a scale several times larger than ever before in human history. Let us refer to those above-normal deaths as “famine deaths.” There will, of course, be famines for other reasons during those years. It is also true that warfare and plague will take their toll to a large extent before famine claims those same humans as its victims.

The increase in the world’s population has followed a simple curve: from about 1.6 billion in 1900 to about 6.1 billion in 2000 A quick glance at a chart of world population growth, on a broader time scale, shows a line that runs almost horizontally for thousands of years, and then makes an almost vertical ascent as it approaches the year 2000. Of all the humans who have ever lived on the Earth, most were born in the last 50 years. That is not just an amusing curiosity. It is a shocking fact that should have awakened humanity to the realization that something is dreadfully wrong.

Mankind is always prey to its own “exuberance,” to use William R. Catton’s term in “Overshoot.” That has certainly been true of population growth. “Do you have any children?” or, “How many children do you have?” is a form of greeting or civility almost equivalent to “How do you do?” or, “Nice to meet you.” World population growth, nevertheless, has always been ecologically hazardous. The destruction of the environment reaches back into the invisible past, and the ruination of land, sea, and sky has been well described if not well heeded. But what is even less frequently noted is that with every increase in human numbers we are only barely able to keep up with the demand: providing all those people with food and water has not been easy. We are always pushing ourselves to the limits of Earth’s carrying capacity.

Even that is an understatement. In the late twentieth century it could be said that we actually went beyond the carrying capacity. No matter how much environmental degradation we created, there was always the sense that we could somehow “get by.” But in the late twentieth century we stopped getting by. It is important to differentiate between production in an “absolute” sense and production “per person.” Although oil production, in “absolute” numbers, kept climbing — only to decline around 2000 or 2010 — what was ignored was that although that “absolute” production was climbing, the production “per person” was not. In the year 1990 there were 4.5 barrels of oil per person per year. By the year 2000 there were only about 4.3. As the FAO has discovered, the same sort of problem was occurring with world grain supplies: although government sources cheerfully tell us that grain production in absolute terms is still increasing every year, what they are not telling us is that because of overpopulation the amount of grain per person is actually declining. There is more grain, but there are more mouths to feed. The same problem of resources “per person” can be seen in the world’s fish catches. We were always scraping the edges of the earth’s carrying capacity, but we are now entering a far more dangerous era. The main point to keep in mind, however, is that, throughout the twentieth century, oil production and human population were so closely integrated that every barrel of oil had an effect on human numbers.

While population has been going up, so has oil production: from about 0.1 billion barrels in 1900 to about 4.2 in 1950, to about 27.0 in 2000. (The data are readily available in many publications, such as BP’s annual “Global Statistical Review of World Energy,” and John Gever et al., “Beyond Oil,” is still valuable.) According to most estimates, the peak was (or will be) around the year 2010. The rest is a steep drop: 20 billion barrels in 2020, 15 in 2030, 9 in 2040, 5 in 2050.

The relation between population and oil production is one of cause and effect. The skyrocketing of population is not merely coincident with the skyrocketing of oil production. It is the latter that actually causes the former: that is to say, oil is the main source of energy within industrial society. With abundant oil, a large population is possible — ignoring, of course, the many other things that might wipe out human numbers anyway. Without that abundant oil, on the other hand, a large population is not possible. It was industrialization, improved agriculture, improved medicine, the expansion of humanity into the Americas, and so on, that began the upward climb, but it was oil that allowed human numbers to triple in less than 100 years. Yes, there are other sources of energy, but these range from the inefficient to the irrational.

Incidentally, carrying capacity does not increase in direct proportion to the number of barrels of oil per person, because as the population goes up there is more strain on the environment. As a result, we were comfortable enough with 1 barrel per person in 1940, but less comfortable with 4 barrels per person in 1990.

Because oil production is the determining factor in population growth, we now have a useful set of numbers: the “existing population” for any given year in the past is roughly the same thing as the “carrying capacity” for that year. We can thereby deduce another useful set of numbers: the “existing population” at the start of any given year in the future must decrease to become the “carrying capacity” for that year. “For any industrial society, fossil-fuel production determines carrying capacity”: that is an immutable law.

Human population will collapse in any year in which there is a difference between the initial population and the carrying capacity. The equation is not complex: (A) the previous year’s population (in billions) can be subtracted from (B) the carrying capacity (in billions) to give us (C) the number of deaths (in billions) by famine. The data for the carrying capacity of any future year can be inserted by looking at similar data for oil production and population in the years 1900 to 2000. Some samples of future years are as follows.

2031 (oil 13.8G bbl): (A) 3.5000 minus (B) 3.4465 equals (C) 0.0535

2032 (oil 13.2G bbl): (A) 3.4465 minus (B) 3.3937 equals (C) 0.0527

2033 (oil 12.6G bbl): (A) 3.3937 minus (B) 3.3418 equals (C) 0.0519

The “normal,” non-famine-related, birth and death rates are not included in those 50 million annual deaths, since for most of pre-industrial human history the sum of the two — i.e. the “growth rate” — has been nearly zero. And there is no question that the future will mean a return to the “pre-industrial.”

Of course, it will often be hard to separate “famine deaths” from “normal deaths.” War, disease, global warming, topsoil deterioration, and other factors will have unforeseeable effects of their own. It is probably safe to say, however, that an unusually large decline in the population of a country will be the most significant indicator of famine.

These equations obliterate all previous estimates of future population growth. Instead of a steady rise over the course of this century (as generally predicted), there will be a clash of the two giant forces of overpopulation and oil depletion, followed by a precipitous ride into the unknown future.

The term “carrying capacity,” as used here, incidentally, is not entirely synonymous with the term as used by William R. Catton. A more-appropriate but lengthier and clumsier term might be something like “temporary feeding capacity.” For the last 50 years or so, human population has always expanded to press against the very limits of what is possible for the oil-production level of any particular year — although in recent years even that tight correspondence has started to collapse.

The figures in the above list can only be approximate, of course, and even the most elaborate mathematics will not entirely help us to deal with the great number of interacting factors. We need to swing toward a more pessimistic figure for humanity’s future if we include the effects of war, disease, and so on.

The most serious pessimistic factor will be largely sociological: To what extent can the oil industry maintain the advanced technology required for drilling ever-deeper wells in ever-more-remote places, when that industry will be struggling to survive in a milieu of social chaos? The future will be anarchy. Intricate division of labor, large-scale government, and high-level education will no longer exist.

If the above figures are correct, we are ill-prepared for the next few years. The problem of oil depletion turns out to be something other than a bit of macabre speculation for people of the distant future to deal with, but rather a sudden catastrophe that will only be studied dispassionately long after the event itself has occurred. Doomsday will probably be upon us before we have time to look at it carefully.

The world has certainly known some terrible famines in the past, of course. In recent centuries, one of the worst was that of North China in 1876-79, when between 9 and 13 million died, but India had a famine at the same time, with perhaps 5 million deaths. The Soviet Union had famine deaths of about 5 million in 1932-34, purely because of misguided political policies. The worst famine in history was that of China’s Great Leap Forward, 1958-61, when at least 20 million died, but probably far more than that.

A closer analogy to “petroleum famine” may be Ireland’s potato famine of the 1840s, since — like petroleum — it was a single commodity that caused such devastation. Cecil Woodham-Smith describes the Irish tragedy in “The Great Hunger.” The response of the British government at the time can be summarized as a jumble of incompetence, frustration, and indecision.

On the other hand, there are elements of optimism that may need to be plugged in. For one thing, there is what might be called the “inertia factor”: the planet Earth is so big that even the most catastrophic events take time for their ripples to finish spreading. An asteroid fragment 10 kilometers wide hit eastern Mexico 65 million years ago, but we are alive today to tell the story.

Somewhat related, among optimistic factors, is the sheer tenacity of the human species: we are intelligent social creatures living at the top of the food chain, in the manner of wolves, yet we outnumber wolves worldwide by about a million to one; we are as populous as rats or mice. We can outrace a horse over long distances. Even with Stone-Age technology, we can inhabit almost every environment on Earth, although most of the required survival skills have been forgotten.

Specifically, we must consider the fact that neither geography nor population is homogeneous. All over the world, there are forgotten pockets of habitable land, much of it abandoned for the ironic reason that urbanites regarded rural life as too difficult, as they traded their peasant smocks for factory overalls. There are still areas of the planet’s surface that are sparsely occupied although they are habitable or could be made so, to the extent that some rural areas have had a decline in population that is absolute, i.e. not merely relative to another place or time. By careful calculation, therefore, there will be survivors. Over the next few years, human ingenuity must be devoted to refining our understanding of these geographic and demographic matters, so that at least a few can escape the tribulation. Neither the present nor future generations should have to say, “We were never warned.”

Peter Goodchild is writing a book called “Surviving the Oil Crash.” His previous work includes “Survival Skills of the North American Indians,” “Raven Tales,” and “The Spark in the Stone.” He is temporarily living in the Sultanate of Oman. His email address is