Peak Oil

Wikipedia describes peak oil as “the point in time when the maximum rate of global petroleum extraction is reached, after which the rate of production enters terminal decline.”

Google has more than 12 million references to peak oil, and YouTube more than 3,000 so we all we can do here is give a brief introduction. Here’s a brief piece from the ITN news in 2007, and below a short summary of what we have learned.

A brief summary of peak oil:

The first oil well was drilled in the USA in 1859, and after that we kept discovering more and The Growing Gap between oil Discovery and Production -- source ASPOmore oil each year. This is shown by the bars in the diagram to the right. We then pretty much carried on discovering more and more oil each year until some time in the mid-1960s. Then we we started discovering less and less new oil each year.

But that was OK because there was still lots of oil left in the ground. So we kept pumping more and more oil out of the ground as our economies grew. That is shown by the solid black line of ‘Production’.

But there’s only so much oil in the ground. And once we’ve pumped out the ‘sweet light’ oil that is easy to get at, the oil that is left becomes harder and harder to extract, and more and more expensive to refine.

There comes a point where the oil is so hard to get at that production starts to decline… That is ‘Peak Oil’. And that is what is shown by the solid black line in the diagram above, and in more detail in the diagram below.

800px-Hubbert_world_2004Meanwhile, world demand for oil has kept growing – because almost everything in our Western economies depends on oil. And because of new demand from India, China and the other emerging economies.

So, just as ‘Peak Oil’ supply is starting to fall, so demand keeps going up.

And so the price sky-rockets.

That  is where we are now. At the tipping point. And that is why petrol and food prices rose so much in 2008. The credit crunch reduced demand for oil and so prices fell back. But now (in early 2009) prices are creeping back up again, although the recession shows no sign of ending.

Oil is a huge part of all our lives: not just for commuting and holiday travel, but also for fertilisers, pesticides, and the tractors that grow our food; for making the cement that goes into the concrete we use for pretty much everything we build; and for making plastic containers, plastic bags, glue, medicines, CDs, DVDs, uPVC windows, bicycle pumps, lipstick, candles, loft insulation, paints, varnish, carpets, and much, much more. And then of course oil is used to transport all those things to us.

So when the oil price goes up, then pretty much everything in our lives is affected.

That might sound pretty scary. But the Transition Movement has been formed so that we can come together to minimise the bad effects, and maximise the good ones. You can read more about this on the next page.

How long have we got?

On the one hand there will still be oil in the ground in 200 years time. But the reason it will still be there is because it will be so difficult to get at that it will take more than one barrel of energy to extract and refine each  barrel of oil.

On the other hand, the effects can be with us very soon. The fuel price rises we saw this year (2008) had real and immediate effects on supermarkets and transport companies: XL, the UK’s third largest package holiday group, collapsed in September 2008 because of “volatile fuel prices, [and] the economic downturn“. That has a knock-on effect on all its customers and suppliers. And so the effects ripple out through the economy. Because oil is used by so much of our economy (try to think of a business that doesn’t use oil, petrol or diesel) we might find that the ‘tipping point’ is very sudden.

So, nobody knows quite what is going to happen. If we increase the efficiency of our cars and lorries, insulate our homes and offices, then we can make each barrel of oil go further, last longer.

If the government decides to ration fuel (as it did in wartime) then the effects can be cushioned. Everybody can have a weekly allocation. Without rationing, the price will be decided by the market and a small drop in production can lead to a big price rise. In that case some people will still have all the oil they want, and others will have none.

This short video by Richard Branson from February 2010 says he thinks it will hit “within five years” — in other words by 2015.

The point is that the sooner we act, the easier it will be. The age of cheap oil is already over. We need to leave oil before it leaves us.

This blog from Australia [November 2010], reporting the sixth ASPO Peak Oil conference in Washington (October 2010) summarises the ‘current’ situation. “We face a liquid fuel crisis in two to five years… Last time [1970s] the crises resolved themselves as oil production and trade were resumed. This time, there will not be enough oil to resume business as usual. Despite a decrease in demand from OECD countries, overall demand continues to rise as global population climbs inexorably from 6.8 towards 9.2 billion and newly emerging economies expect their share of the global resource pie. Come 2015, however, we can anticipate a significant increase in the price of oil as global production starts its inevitable decline. Production of regular or conventional oil has already peaked while supplies of unconventional oil – heavy, deepwater and Arctic oil – will peak within a few years.”

It is no longer a question of “If” peak oil is real, or even of “When?” — but instead “What can we do to prepare?”

Other Links:

A BBC report in 2004 talks about peak oil  here. (Quote: “How will we pay for plastics, metals, rubber, cheap flights, Simpson’s DVDs, 3G phones and everlasting economic growth? The basic answer is, we won’t.”)

A Transition Towns article explaining peak oil in more detail is here.

In October 2008 eight leading UK companies launched a report ‘The Oil Crunch’ warning of peak oil “sooner than expected”. The companies are Arup, FirstGroup, Foster + Partners, Scottish and Southern Energy, Solarcentury, Stagecoach Group, Virgin Group, Yahoo. You can read the report here and a Guardian review of it here. The ‘best case’ scenario predicts that demand will exceed supply after about 2011-12.

George Monbiot describes here how the government has spent millions of pounds writing contingency plans to deal with an outbreak of smallpox — a threat the government itself believes is “No credible threat”. While at the same time the same government holds “no contingency plans” for the eventuality of crude oil supplies peaking between now and 2020. And this despite the fact that the International Energy Agency last year measured the annual rate of decline in output from the world’s existing oilfields as 6.7%.

Here’s a better than average YouTube video that we found:

You can listen to BBC Radio 4 ‘You and Yours’ magazine items here:

You can also read an interview with the Chief Economist of the International Energy Agency here.

There is a blog explaining why the current ‘temporary downturn’ in the economy will not be temporary at all, here.

And you can read an article from a financial investment website here. Titled “Life After Crude Oil“, it begins with the words: “Civilization as we know it is coming to an end soon. This is not the wacky proclamation of a doomsday cult, apocalypse bible prophecy sect, or conspiracy theory society. Rather, it is the scientific conclusion of the best paid, most widely-respected geologists, physicists, and investment bankers in the world. These are rational, professional, conservative individuals who are absolutely terrified by a phenomenon known as global “Peak Oil.””

Here is a selection of articles written in The Times, Telegraph, Guardian (authored by a member of the Institution of Gas Engineers), Independent, and Financial Times. And the BBC.

And here’s a Bloomberg interview from 2007, before the first oil peak of 2008:

The Guardian has a rather excellent section on Oil here: http://www.guardian.co.uk/business/oil

And of course you can use Google or your own favourite search engine to search for the words “Peak Oil” and see what you turn up.

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