How the Ghost of Peak Oil has come to haunt us.
If the relationship between the rate of production and that of depletion peaked in 2006, why do we have a new peak in oil production and ironically a collapse in oil prices?
Pretty confusing? You bet! Anyway this is what it all looks like on a useful graph by Euan Mearns http://euanmearns.com/broken-energy-markets-and-the-downside-of-hubberts-peak/
So we have a sort of twin peak, depending on your definition of Peak Oil, with the peak of “cheap oil” in 2006 and now a new production peak with all those syncrude and shale oils giving us that extra energy for the economy.
What a growth economy needs most of all is surplus energy, but now, suddenly, that surplus looks like it’s too expensive to produce as the Fed’s QE 3 risk-free funding has stopped (it had too, sometime) and OPEC haven’t cut back (trouble at home?). This is when the reality of EROeI hits hard.
Hang on! Why surplus energy? Well, do you remember there was a financial crisis in 2007, of considerable proportions, with a bursting of the global debt bubble. That’s what the surplus energy is for – to keep the lid on the bubble and service the debt a la Ponzi. It’s why we need a growth economy rather than a just and equitable one.
So, it’s a scary old Ghost of Peak Oil that’s come to Christmas! Will the price crash go far enough to provide the panacea of cheap fuel that’ll keep Business As Usual? Is this what Gail Tverberg advocates http://ourfiniteworld.com/2015/12/21/we-are-at-peak-oil-now-we-need-very-low-cost-energy-to-fix-it/ ?
How can we lay the old Ghost to rest? Steve Keen may have some good ideas, if we’re ready to debunk economics. Anyway, why not take a peek at https://youtu.be/-f0ndVNbDO8 or go further and read the review of his book on http://www.zedbooks.co.uk/node/20942
For some good analysis on all the background to this Christmas Ghost Story try http://www.theautomaticearth.com and consider debt deflation.