Monday, October 22, 2007

Oil Wars!

We can only plan the future of civilization in terms of energy resources other than cheap oil. The title of this article is is not a euphemism for the war in Iraq nor any potential strife elsewhere in the Middle East, in the cause of Western countries obtaining oil, but a reference to the concept that world oil production has already peaked and hence we cannot expect civilization to depend on it as a source of energy into the future. A new report by the German-based Energy Watch Group released its conclusions today that global oil production peaked in 2006. Furthermore, the group believes that global reserves of oil are only about two-thirds the 1,255 billion barrels the oil industry finds consensus on. This sounds to me that they do not believe the remarkable increase in estimates made of the reserves under Saudi, which houses the world's major oil wells.

There are many different figures as to precisely when "peak oil" will strike, but even if it is not already with us, it will come soon. My personal opinion is that production has been artificially maintained, meaning that rather than a smooth decline in the availability of oil, as is most simply indicated by the Hubbert Peak which roughly mirrors the rise in production over history, when present output can no longer be maintained, even by enhanced recovery methods, supply will plummet beyond our worst nightmares, if we dream about it at all.

I will write about the mathematics behind the Hubbert theory in subsequent postings here, but in essence Hubbert only had so many squares on the sheet of graph paper to count underneath his "curve" emphasising the simple fact that there is only so much "cheap" and relatively accessible oil in the ground. I do not dispute (and have explained its sources) that we will be able to conjure-up oil for decades to come, either by pulling it out of the ground, by cracking bitumen from Canadian or Venezuelan tar-sands or synthesising it from coal, gas or even algae, but the age of cheap oil is over. It would therefore be a criminal disservice to humanity to pretend otherwise. The fact of this matter is signified by a huge ramping-up of the price of oil: almost $90 compared with less than a quarter of than only 5 years ago, and the instability of the world financial markets which will now be up-and-down in perpetuity.

Yes, it is easy to blame the "sub-prime" markets and greedy and irresponsible lenders of cash to those who could never be expected to pay it back, but the real underpinning framework of financial instability is the availability and cost of that basic necessity upon which the modern industrialised world has been built - oil!

The days of cheap oil are over. The vampiric $100 dollar barrel in already in sight; and then we can expect $150, $200 or who knows how much? Since everything in our modern global village depends on oil, we can expect the price of everything to increase markedly. It is not only the cost of fuel, and of everything that is transported over colossal distances to supermarket shelves, hence increased costs to be borne by the consumer, but an increase in the basic costs of manufacture, from everything from food to plastics, since oil is the underpinning raw feedstock from which everything is made. It really is the proverbial double-whammy.

We can only therefore make realistic plans for the future in the absence of thoughts about cheap oil. I am speculative about what can really be provided in terms of renewable energy, or at least in time to head-off the dearth of oil that will hit us within a decade, and even nuclear power which the UK government has made a firm commitment to, will be hard pressed to substitute for fast depleting supplies of oil and gas. Jeremy Leggett (CEO of a major solar-energy company) and author of "The Carbon War" and "Half Gone" (a reference to the fact that according to Hubbert Peak theory, when the peak in oil production is reached half the oil there in the first place has been used-up) is of the opinion that both the UK government and the energy industry are in "institutionalised denial" and that action should have been taken sooner.

I have commented as much, and it is also my opinion that appropriate action should have been taken in the early 1970's when the OPEC artificially hiked-up the price of oil, leading to a political "oil crisis". Now the crisis is not a matter of politics but of geology and there is simply not enough of the stuff in the ground to be extracted at the low costs we have been used to. Furthermore, "half gone" is an optimistic delineation of the resource, the production of which is more likely to follow a skewed Hubbert curve, with a very rapid decline in supply beyond the putative peak, and a see-sawing ramp in its cost and thence of all goods.

Economic hardships and wars are the QED of this simple fact, as humanity in its various artificial nation states struggles to survive. But in accepting the reality of peak oil and all it implies, let's think ahead in the absence of "cheap" oil. Our lives will be less softened by cheap energy, and we need to be aware of this now, and not fool ourselves into false security of alternatives such as wind or wave power or the hydrogen or methanol economies. It is too late to introduce them anyway, and only the proverbial paradigm shift in thinking in terms of plentiful oil to those of oil dearth will preserve us from war and per se as a human civilization.

Related Reading.
"Steep decline in oil production brings risk of war and unrest, says study," By Ashley Seager, Guardian Monday October 22, 2007.,,331028371 - 110373.00.html

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