peak oil: the end of the world as we know it?

8/8/2019 Peak Oil: the end of the world as we know it?

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Daniel Duma3rd Essay Final Draft

Peak oil: the end of the world as we know it?

That the whole worlds economic and social models completely depend on the consumption of

fossil fuels is perhaps a well-known fact. Amongst these, petroleum has been called the lifebloodof modern civilization (Hirsch:2009). Beyond its use as a raw material for the manufacture of such

products as plastics and medicines, it provides 99% of the energy used in transportation: cars,

trucks, ships and planes all move on oil (IPTOES:2009, p.5). As modern economy can be argued to

be heavily dependent on cheap transportation of goods and people, cheap oil is essential for its

continued working. However, fossil fuels are by nature finite resources and there are those who say

that a shortage of petroleum is imminent, a crisis the size of which the world has never seen. Many

of these proponents of what is known as peak oil theory go as far as saying this would be the end

of the world as we know it. The aim of this essay is to examine the validity of these claims and

explore their implications should these predictions turn out to be correct.

Before delving into a discussion of this issue, it seems essential to first present a crucial piece of

background. It is necessary to note that all peak oil theories are based on the Hubbert peak theory,

which posits that mineral resources are not extracted at a constant rate, but rather follow a

production curve. This theory is based on several assumptions: firstly, that the resources which are

easiest to extract and thus more profitable are extracted first; secondly, that the likelihood of finding

new deposits of a resource depends on the total amount of the resource available; and thirdly, that

resources are exploited with maximum efficiency. Given these postulates, the production curve

predicted by Hubbert's theory is a symmetrical bell-shaped graph, according to which production

will grow exponentially until reaching a peak, and then it will dramatically drop in symmetry with

the increase. In simple terms, this means that after reaching its peak, the production of oil will

inevitably and irreversibly plunge.

So, the questions are now how valid this theory is and whether it can be applied to the world

production of oil. Those who believe so point out that it has been used to successfully predict yearly

oil production of specific countries and areas in a plethora of cases. Most memorably, it is very

often pointed out that Marion King Hubbert successfully predicted in a 1956 paper that

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conventional oil production would peak in the USA in 1970. (Hubbert peak theory, 2009) (Figure

1) The Hubbert model has also been applied to past figures and proved to be the model providing

the best fit to the data, by testing it using data from 139 oil producing regions (Brandt:2007)

(Figure 2).

Figure 1. US oil production Figure 2. Norway oil production

The economic and social implications of this seemingly innocent graph are huge: it has been

suggested that a shortage of oil and the associated surge in prices would trigger a world economic

crisis. Moreover, it has been pointed out that modern agriculture is heavily dependent on fossil fuels

(pesticides and fertilizers are made from fossil fuels, and machinery runs on oil) (Peak Oil, 2009),

and that with a shortage of petroleum supply food production would be hard-hit, leading to high

food prices and eventually famine.

Others, however, question the validity of this theory in a world-wide scenario, by pointing out that

it only applies to conventional oil resources, i.e. to the easy-to-extract, free-flowing kind, or in other

words, cheap oil. Unconventional oil resources, which are more difficult to extract and need

heavier processing to be of any use (and are thus more expensive), are forecast to continue growing

and developing as oil prices go up. For instance, such is the case of the Alberta tar sands in Canada,

where production is expected to continue growing until 2030 (Sderbergh:2007). From this it

follows that firstly the graph need not adjust to such a curve and secondly that if it does, the post-

peak decline need not be symmetrical (i.e. a sharp descent). In other words, reaching the peak in

production would not necessarily trigger an energy crisis.

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It seems to me that the previous success of the Hubbert model in predicting oil production does

make it a valid guiding principle for predicting future trends in production. Even taking into account

unconventional sources, it seems to me that the basic assumptions are still valid. Furthermore, those

unconventional sources pose other problems, and they cannot really be equated to conventional

ones in terms of monetary cost and net energy, as I will discuss presently. So in my view the crucialquestion is not if but rather when the world oil production will peak.

The figures on the timing of the peak of conventional oil range widely. The most pessimistic

analyses suggest that it has in fact already happened, some say as early as 2005 (EWG:2007).

Others, like the Cambridge Energy Research Associates (CERA) propose that we have at least a

decade till peaking (Hirsch:2005), and UK oil giant Shell estimates it no sooner than 2025. By then,

however, world demand is forecast to have grown by 50% (Hirsch:2005). These discrepancies

appear to be caused by a great uncertainty about the reliability of all figures on oil reserves. I

believe this stems from the complexities of international political and economic maneuvering and

the interests of all parties involved. It has been suggested that governments of exporting countries

and oil companies 80% of world reserves are controlled by state-owned companies, such as Saudi

Aramco (IPTOES:2009, p.3) might be interested in overstating the immediacy of peak oil in order

to drive up prices and so increase their benefits, while on the other hand governments of importing

countries might want to understate the urgency of the issue in order to avoid a panic that would

inflate oil prices and affect the economy. It has frequently been suggested, for instance, that atleast 300 billion barrels out of the 1.2 trillion barrels of supposed global proved reserves may be

overstated by members of the Organization of Petroleum Exporting Countries, because their

quotas of production are fixed based on the size of their reserves. (IPTOES:2009, p.4)

Many reports can be found suggesting the peak is rather imminent. A February 2004 report from

US oil company ExxonMobil, one of the 4 biggest oil companies, dramatically shows a growing

gap between world production and world demand starting 2005. (ExxonMobil:2004). While one

could downplay this on the basis that an increase in oil prices would be in their interest, I see proof

that the oil situation is reaching a tipping point in the very recent scandal on the International

Energy Agencys 2009 World Energy Outlook report. The Guardian reported that a whistleblower

at the International Energy Agency claimed that [the IEA] has been deliberately underplaying a

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looming shortage [of oil] for fear of triggering panic buying and that the US has played an

influential role in this. (Macalister:2009) Furthermore, the UK Industry Taskforce on Peak Oil &

Energy Security (ITPOES), a group of British companies whose operation arguably depends on

steady supply of oil, such as the Stagecoach Group and Scottish and Southern Energy, recently

published a report alerting of the imminent threat of an oil crunch to the UK economy, timing it by 2012. (IPTOES:2009)

In my view, all these reports hint that we are indeed reaching the tipping point. When even the

most optimistic reports estimate that less than two decades of cheap oil remain, I am positive the

situation is clearly critical and urgent action must be taken. Whether we have already reached

the oil peak or whether that will happen in 10 or 15 years, one thing remains clear to me:

something must be done as soon as possible. Quoting Robert Hirsch, the actual date of the oil

peak is now almost irrelevant as mitigation will take much longer than a decade to become

effective. (Hirsch:2005)

Thus it appears crucial to find alternative energy sources as soon as possible. Once again, here a bit

of background is needed. When examining a potential energy source, the most crucial consideration

about it is its Energy Returned On Energy Invested, or EROEI (also known as EROI, Energy Return

On Investment). This value, also called net energy, is the proportion of the amount of energy

obtained from that source to the amount originally invested in its extraction and use. Thus, itfollows that in order for a source of energy to be profitable to exploit in energy terms, its EROEI or

net energy needs to be higher than 1:1.

Yet the question is how much higher. Considerations on EROEI have even more important social

and economic implications than those on purely monetary cost. It has in fact been claimed that there

is a threshold, a minimum EROEI that a society must attain from its energy exploitation to support

continued economic activity and social function (Hall:2009). Furthermore, it has been suggested

that there is a direct link between the EROEI of societys energy systems and the complexity of the

society that can be sustained by it and the collapse of complex societies, such as the fall of the

Roman Empire, has been linked to diminishing EROEIs (Dadeby:2009) According to these claims,

modern society cannot exist without energy sources providing a minimum net energy. What this

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minimum EROEI actually is varies depending on the study. While it has been suggested that hunter-

gatherer societies require a mean EROEI of 10:1 (Heinberg:2009, p. 25), in a 2008 study Charles

Hall proposes that the minimum EROEI for any energy source to be able to sustain modern society

must be of at least 3:1 (Hall:2009). This, however, is only the minimum for sustaining life, and

would leave little discretionary surplus for all the things we value about civilization: art, medicine,education and so on; i.e. things that use energy but do not contribute directly to getting more energy

or other resources (Hall: 2009), so it follows that the EROEI needed is much greater.

So, while finding alternative energy sources is essential, few of the ones currently available are able

to deliver the EROEI of fossil fuels. For instance, though the EROEI of petroleum has been

decreasing since its estimated 100:1 at the beginning of the 20 th century (Heinberg:2009) to to 32:1

in 1999, and 19:1 in 2005. (Gagnon:2009), that of coal is still 50:1 to 85:1 (Heinberg:2009). In

comparison, that of the biofuel ethanol is in the best of possible conditions of 10:1, while average

rates are much lower (Heinberg:2009, p. 49). In an influential and widely-quoted report, Searching

for a miracle, Richard Heinberg analyzes a large number of alternative energy sources to replace

fossil fuels. Several criteria are applied to every energy source in this analysis, such as direct

monetary cost (the initial monetary investment plus maintenance costs), dependence on additional

resources, environmental impact, renewability, scalability, reliability, energy density (amount of

energy per unit of mass and per unit of volume), and crucially, net energy. While he admits that

research on EROEI continues to suffer from lack of standard measurement practices, he offers best estimates on the net energy obtained from different sources. Heinberg's conclusion is that there

is no technology that could replace petroleum while perpetuating a modern society with high

mobility, large population, and high economic growth rates (Heinberg:2009, p. 8). In other words,

he claims that the end of petroleum would spell the end of modern society as we know it.

Heinberg's report is, I believe, representative of most of the literature published by proponents of

the oil peak theory in being highly catastrophistic. For instance, while Heinberg's own report clearly

states that the EROEI of nuclear power with current technology is somewhere between 5:1 and 8:1

and, assuming an increase in the use nuclear power, the production of uranium fuel is forecast to

peak somewhere between 2040 and 2050 (EWG:2006), nuclear energy is at no point suggested to

possibly be of help in the transition to a different model. Perhaps more surprisingly, the same

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happens with wind power, with stated EROEI rates between 18:1 and 24:1, and a huge potential for

growth worldwide (Kubisewski:2009), which is still downplayed as a partial solution because of its

intermittence. An extensive discussion of alternative energy sources unfortunately exceeds the

scope of this essay, but I believe the crucial point to make is that there are real alternatives, mature

technologies with a huge potential for growth and exploitation, but a significant push to adopt thesetechnologies is required.

It seems frequent for proponents of peak oil theories to claim that any solution to the looming

energy crisis will require important social changes. A point frequently made is that, as the huge

EROEI conferred by fossil fuels that fueled the industrial revolution cannot be currently matched by

any alternative energy source and fossil fuels are essential for agriculture (i.e. food production), the

current levels of human population cannot be sustained. This implies that any solution to this

problem that would emphasize sustainability involves some method of population control, at

present quite politically incorrect. Furthermore, another frequent proposals include a major shift

toward re-ruralization, the abandonment of economic growth as the standard for measuring

economic progress, and, perhaps summing it all up, a planned reduction in overall economic

activity (Heinberg:2009, p. 67)

It seems to me the solutions they propose are akin to the abolishment of industrial society

altogether, and a return to a traditional agrarian society, making the human experience in the last200 years little more than a failed experiment. While it is not unthinkable that this might eventually

happen, I choose instead to think that there is a way out and that if we act now, coordinately and

decisively, a transition to renewable and sustainable energy sources is possible that would prevent

the collapse of our civilization. Furthermore, I think such a society as one geared towards

technological and scientific progress is still possible on renewable energy sources of lower energy

yield. However, I do recognize the need for planning for this to be feasible. Energy efficiency

seems crucial and population control, I believe, is a necessity, not an option. Moreover, in order to

implement all this, international protocols are essential, which, in my view, cannot work unless

enforced by a world government that would transcend the interests of individual countries.

However, beyond these long-term aims, in more concrete and immediate terms, it seems to me that

the most important first step to take is to try and achieve independence from oil in land

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transportation. The current maturity of electricity storage technology leads me to believe that

electric vehicles should become the norm in the mid-term. And finally, while this is a different

debate altogether, I think it worthy to note that all these measures would also work towards

mitigating the effects of global warming.

In conclusion, it appears likely that the end of cheap oil is getting nearer. At the same time world

demand of oil is soaring, world production seems to be at or nearing its limit. While the exact

timing and long-term effects of peak oil are much disputed, an average of a wide range of

opinions makes it clear that, due to the proximity of the crisis, the time required to switch to new

energy sources, and the lower net energy of these sources, this is an issue requiring urgent action.

While some propose that an energy crisis due to the peaking of world oil production will spell the

end of our civilization, I remain convinced that this can be avoided provided we act now to push a

rapid switch to renewable and sustainable energy sources. If, as it has been suggested, our

civilization collapses after depleting the worlds resources of cheap fossil fuels, these will not be

there to fuel another civilizations rise. This might then be our last chance. Let us not waste it.

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