Bigger Stick: Peak Oil
1. Economic Growth = Energy Growth time Efficiency Growth. Energy stopped growing in May 2005 and the economy started losing momentum. Shortly there after, gas prices started climbing. More and more people were forced to choose between paying for their commute and the home.
This DOE graph (not updated since 2004) is a great illustration of interaction between oil and paychecks. The dark blue line is steadily increasing Disposable Income. The red line is oil prices. The gap in the 1990's allowed people to risk their life's savings to buy a house. Since oil supplies stopped growing in May 2005, prices shot up to squeeze more and more people into foreclosure.
It is viatal to convert the base of our transportation economy from oil to ingenuity. Before the economy slows to far, it is critical to understand that Demand Destruction equates to Economic Destruction
2. Available Exports, Worse than 1973 Oil Embargo
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Most of the world's major economies are importers. World Oil Exports measure energy available to drive economies:
- 2005 were 46.342 mbpd
- 2006 were 45.838 mbpd, down 1.10%, 504 mbpd or 184 million barrels below 2005
- 2007 were 44.832 mbpd, down 2.24%, 1,509.7 mbpd or 551 million barrels below 2005
- 2008 looks like 43.8 mbpd, looking like a drop of at least 8% per year after 2010.
- 735 million barrels deficit in 2006-2007 and growing
- 604 million barrels deficit (about) was caused by the 1973 Oil Embargo
- Efficiency must gain at least 3x per year to counter oil price / supply decrease per year. Fortunately that is possible. PRT and Advanced Renewable Tariffs are a start in the process of changing the lifeblood of our economy from oil to ingenuity.
| Economy | Titanic | |
| 1956 Hubbert warned of Peak Oil. | Iceberg warning | |
| 1970 US domestic Peak Oil | Iceberg sighted | |
| 1973 Oil Embargo, fragile infrastructure | Impact and Hull breach | |
| 2002-2007, 5-fold increase in the price of oil. | Deck Tilt | |
| May 2005 Peak C&C's followed by 30 months of declining plateau. | Breach of water-tight inner compartments | |
| Oil hits $220 a barrel (guess) | Sink, lifeboat or swim |
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4. Matching the distributed need to power the transportation network with distributed natural power sources provides vast discretionary power. Please watch Chris Martenson's presentation on Net Energy. Click then scroll down to 17b. |
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5. Introduction to Peak Oil.
This is a very well presented documentary on Peak Oil. Note governments' complete denial of the need to prepare.
Yet, Peak Oil was May of 2005. Oil the lifeblood of our economy stopped growing.
- Crude oil - All time high crude oil production of 74.30 million b/d reached in May 2005 (EIA)
- Total liquids - All time maximum liquids production of 86.13 million b/d reached in July 2006 (EIA & IEA)
- Status of the production plateau - Plateau of production for over 2 years, since mid-2005.
7. Paradigm Shift:
Sadad Al-Husseini, former Saudi Aramco Exploration Minster warned of this shift: "There has been a paradigm shift in the energy world whereby oil producers are no longer inclined to rapidly exhaust their resource for the sake of accelerating the misuse of a precious and finite commodity. This sentiment prevails inside and outside of OPEC countries but has yet to be appreciated among the major energy consuming countries of the world."
This paradigm shift exhibited in Sept 2007 when the normally yearly cyclical pricing of gas and oil ruptured from normal and inventories plunged in an effort to compensate. The drop in stock will make the system more suspetable to price shocks. Gas prices lag oil but will likely catch-up at spring planting.
It has taken 37 years to build the Internet to current level of access. It will take at least as long to re-tool transportation away from oil. By the most optimistic estimate we have 26 years. Peak Oil presentation.
We are not going to run out of oil. We did not run out of oil in the last 6 years, but it did tripled in price. We are running out of oil that can make gas for less than $6 per gallon.
Pollution indicates poor use of a resource. Economic and environmental stress are synonyms
- Road rage, pot holes, air pollution, higher oil prices.
- There is a profit in preempting waste.
Existence depends on nature and the grace from which life struggles.
- We are responsible to not be the locus of our own demise.
- Stewarding the earth is like driving a barge with a 200 year turning radius
- What we do today may seem insignificant.
- Events accumulate.
- Consequences follow.
9. Background
GAO report from March 2007 confirms we are in the midst of Peak Oil or will be before we can completely re-tool transportation.
For current information on energy review Energy Information Agency, the Association for the Study of Peak Oil and The Oil Drum. Cost for planning and building the disaster.
The October edition of Oilwatch Monthly can be downloaded at this weblink (PDF, 1.48 MB, 21 pp).
- CNBC: Matt Simmons, Nov 2, 2007
- CNBC: T Boon Pickens, Oct 18, 2007
- Bloomberg: Matt Simmons, Feb 1, 2007
- GAO Peak Oil Report. See charts below, Peak Crude in May 2005 and Peak all liquids June 2006
- Peak Oil Survival
- Total's CEO, Financial Times, Oct 31, 2007 "The world’s capacity to produce oil will fall well short of official forecasts, the chief executive of Total warned on Wednesday. In an unusually stark prediction for the head of one of the world’s biggest oil companies, Christophe de Margerie, CEO of the French group, said it would be difficult to reach even 100m barrels a day."
- Connecticut Legislature
- Electrical Grid is vulnerable. Design life of transformers is 40 years, average age is 40 years. Lifeboats, Feed-in Tariffs are critally important.
- Brutal Facts
- Supply Chain Management
- ABC Peak Oil
- Peak Minerals
11. Food Distribution System is at Risk
With Peak Oil we are facing the catostrophic failure of the food distribution system.- Farmers are unprepared for unstable fuel prices.
- Ethanol is building a false and unstainable false farm economy.
- Most people do not know how to grow a substantial part of their food needs.
- Zoning laws prohibit food growth in suburbia.
- Grow 1/3rd of your own food. It will take 3-5 years to get 50% of people to be competent gardeners to reach that level. This will not save the world but it will
- lighten the logistical load
- provide a sense that we can save ourselves
- provide a sense of community and mutual protection of gardens
- provide starvation rations
- Feed-in Tariffs. Reliable electricity 5 hours a day provides hope.
- Personal Rapid Transit, PRT. Allow the success of Morgantown to propagate.
- Universal state militia service. Secure your community, individuals cannot survive by themselves. Peak Oil is going to be great for world peace and hell on local peace. Competition is the natural state; peace is the enforced absence of war.
- Government charge for non-commercial costs of carbon, other emissions, unclean water, etc....
She is wrong that there is nothing we can do. Build an economic lifeboat for your economic community. The solution to climate change and Peak Oil is self-reliance. Self-reliance may not save the world but but it might save the parts of humanity that exercise foresight.
Same message, but much prettier than Matt Simmons or T. Boon Pickens.