Oil is a Finite Resource
Crude oil—the source of plastics, most commercial fertilizers, around 37% of world energy production and 95% of the energy used for transportation in the U.S.—is a finite resource. For the past 25 years we have been using oil faster than we have been discovering it. At some point, the world will have to learn to live without it. But giving up oil will not be easy.
Oil will not just run out. Rather, there will come a point (if it hasn’t arrived already) when production of oil will peak and—slowly at first, and then more quickly—begin to decline, causing massive social and economic upheavals that few of us can imagine. Barring a rapid shift to alternatives, the decline of world oil production implies the collapse of industrial civilization within 20 to 30 years.
There are good reasons to believe that oil is peaking now. Late petroleum geologist M. King Hubbert showed in the 1950s that a regional peak in oil production usually follows the peak in discoveries by 30 to 40 years. In the United States, for example, oil discoveries peaked in about 1930; US production peaked in 1970. (Oil production recovered somewhat when Alaska’s Prudhoe Bay was brought on line in the late 1970s, but never approached its former peak).
World discoveries of oil peaked around 45 years ago. Because it is impossible to know the exact peak of production until a few years have passed (there are always variations in production from year-to-year, though long-term trends are clear), it is possible that we have already passed the moment of greatest world oil production (in 2003). Numerous experts have used variations on Hubbert’s methods to predict the timing of peak oil, and while they have come up with varying results, their projections have tended to put the date within this decade.
Recent news is ominous. Prices have been climbing dramatically for several years now; excess production capacity is gone. The world supply of oil is increasingly vulnerable to short-term disruptions—political upheavals, or natural disasters like hurricanes Katrina and Rita. What the effect of these disasters tell us is that there is no more slack in the system.
Natural Gas
The situation with natural gas is, if anything, more dire than that of oil. This resource—which was once so abundant that it was routinely burned off oil wells—is now in decline in the United States.
While there may still be abundant stores of natural gas in the world, the biggest reserves are located far from major populations. Unlike oil, natural gas is not easily transported overseas; to do so, one must liquefy it at very cold temperatures, and only specialized ports can unload it. Currently, LNG ( liquefied natural gas) accounts for a very small percentage of gas used in the United States. Fifteen to twenty percent of U.S. gas is imported, mostly from Canada. But Canada’s supplies are also stretched.
Given that natural gas is used to heat 57% of homes in this country (with fuel oil at 8.6% and electricity at 31.3%), and that gas is the source of 16% of U.S. electricity generation, it is easy to see how we could soon be facing serious problems. In August of 2003 a major blackout covered the northeastern United States and Canada—including New York, Cleveland, Ohio, Detroit, Toronto and Ottowa. The official cause was a single downed power line, but as energy expert Matthew Simmons has pointed out, the real issue was that the grid was so near peak capacity that a small event triggered a system-wide shutdown. It seems likely that there will be more blackouts in the next few years, as natural gas resources deplete. High prices and possible spot shortages will also mean that many (especially lower-income) people will have difficulty heating their homes in the coming winters.
Economic Implications
Industrial civilization as we know it is built on cheap energy. Our basic economic model assumes that economic activity will increase, year after year; this is called growth. When economic activity shrinks, it is called recession, or if the contraction is bad enough, depression.
It is hard to see how it will be possible to continue growing our economy without increasing energy consumption. Energy depletion, on the other hand, implies a more or less permanent recession.
The journey down the energy slope is not likely to be as smooth as the one up was. It’s easy to imagine, for example, a scenario in which price spikes trigger a recession which limits energy use to below the depletion rate (economists call this “demand destruction”). If curtailed enough, there might then be room for the economy to grow again—until it ran into another production limit and crashed once more. All along, naysayers would seize on every mirage of recovery to insist that we do nothing. The result would be experienced as a series of increasingly bad recessions—until we hit a depression that would simply never end. By the time we, as a society, finally realized that we must act collectively to save ourselves, it would be too late—there would be too little energy or economic capital left to make needed changes. Civilization itself would collapse.
Food Production
In the 1940s and 50s, world food production was radically transformed by what is now called “The Green Revolution”—a coupling of new agricultural techniques and mechanization with the massive use of natural gas-based nitrogen fertilizers and modern petroleum-based pesticides. The result was a tripling of food yields in many places, as food production for the first time outpaced population growth. In the United States, increased yields combined with subsidies to make food almost unimaginably cheap (especially corn, which is often fed to cattle and pigs on massive factory farms or made into huge amounts of high-fructose corn syrup for processed food) and probably contributed to our epidemic of obesity. On the other hand, undernourishment in developing countries decreased from about 37 percent in the 1970s to 18 percent in the late 90s, even as world population almost doubled. Conventional agricultural wisdom is that the Green Revolution saved millions, perhaps billions of people from starving.
But what will happen as fertilizers, pesticides and fuel for farm equipment becomes prohibitively expensive? What will happen when it is no longer cheap to ship large quantities of food across continents? Is the current population of the Earth is a gross anomaly, made possible only by the temporary availability of extraordinarily cheap fossil fuels? Are we about to face a massive “die-off” of the human population? The risks of catastrophe are very real, and serious enough to merit more urgent responses from our leaders. Just because we in America have difficulty imagining famine doesn’t mean that it can’t happen.
Alternatives
Energy Returned on Energy Invested (EROEI)
If we as a society are to survive the era of oil depletion, we must choose to allocate our remaining resources wisely. The first calculation of any investment into energy alternatives should be Energy Returned on Energy Invested.
The idea is simple: when evaluating the viability of a potential energy source, one must look at how much energy it takes to produce it. If the required energy investment is greater than the expected energy return, the proposed energy source is like a business whose expenses will always be greater than profits. But even for an energy source that produces net positive energy, the “margin” may be much, much lower than that of traditional fossil fuels. In other words, we may expect that energy will never again be as cheap as it has been for the last two hundred years. That fact alone will have significant, civilization-altering implications.
How will the world make up for the loss of oil and natural gas? Energy alternatives can be put into three general categories: other fossil fuels, renewables, and nuclear energy.
Other Fossil Fuels
Tar Sands
Often called “oil sands” for public relations purposes, tar sands are near-surface carbon solids, found in great quantities in Eastern Alberta, Canada and north of the Orinoco river in Venezuela. Proponents of tar sand mining say that while producing oil from the sands was not economical when conventional oil was cheaper, it has now become so. Within a few years, they argue, a vast amount of oil will be created from this resource.
What they neglect to mention, however, is that it takes a lot of energy and fresh water to produce the oil from sands. As energy costs go up, so do the costs of production. In Canada, natural gas is used to refine the sands into oil (which can then be sent through pipelines). But natural gas is itself becoming scarce, and thus much more expensive.
French oil producer Total has announced plans to build an $8 billion nuclear reactor in Alberta to refine the tar sands into oil; it estimates that it could someday produce about 200,000 barrels of a day, or about .2% of current world oil production. The Canadian Association of Petroleum Producers estimates that by 2015 Canada will produce about 2.7 million barrels of oil from a day total from tar sands or about 3% of current production. Given that post peak we may be facing a worldwide depletion rate of 5–10% a year, it is clear that oil sands alone will barely slow the process. Daily Kos blogger and energy banker Jerome a’ Paris views Total’s nuclear ambitions as a sign of desperation on the part of the oil industry.
Similar problems plague oil shale and other “unconventional” sources of oil.
Coal
Coal is currently one of the world’s major sources of electricity. Unlike natural gas or oil, the world seems, at present, to have adequate supplies of coal, thought that could quickly change if coal replaces oil for transportation use. Unfortunately, coal is the most polluting fossil fuel, responsible for poisoning our water supply with mercury (which we ingest when eating fish) and our air with particulate, asthma and cancer-causing smog and sulfur (the cause of acid rain). Of fossil fuels it produces the most greenhouse gasses. In his book Out of Gas, physicist David Goodstein argues that the worst case scenario of peak oil would be billions of desperate people burning coal for warmth and primitive industry, accelerating the greenhouse effect and making the earth’s climate unfit for life.
On the other hand, coal may have a positive role in an energy depletion era. It has been possible to make synthetic gasoline from coal for many decades now by something known as the Fischer-Tropsch process. Governor Brian Schweitzer of coal-rich Montana has been a recent strong advocate of such coal-based “synfuels”. Schweitzer argues that the current synfuel process is actually much cleaner than standard petroleum fuels. He recently sited a 1999 study which claimed to have reduced net carbon emissions from coal-based fuels of 45% over standard petroleum fuels, not counting the new push to “sequester” CO2 generated in the refining process. If Schweitzer is correct, coal may have place in cushioning our petroleum descent. Whether the various costs (environmental, monetary and other) are truly manageable is not clear at the moment.
Renewables
Hydroelectric
Hydroelectric power is currently the most used renewable energy by far. However, there is likely very little hydroelectric capacity left; almost all useable sites have been already put into production. Further, there is the risk that these sites are themselves becoming filled with silt. Hydroelectric power will no doubt continue to be a major source of energy for some time; but it is unlikely to grow, except on a small scale.
Biofuels
“Biofuel” refers broadly to any petroleum substitute—like ethanol, or biodeisel—which is man-made from crops (as opposed to the “fossil” fuels of oil, natural gas and coal, which were created by nature from organic matter over billions of years). Biofuels do produce carbon dioxide when burnt; however, the act of growing the plant to produce the fuel removes carbon dioxide from the air, so the net global warming effect is thought to be neutral.
That calculation, however, fails to take into account the amount of petroleum energy used to plant, fertilize and harvest the crops. There have been several studies in the past few years which show that biofuels are net energy losers—much worse than just burning petroleum itself. UC Berkeley geoengineering professor Tad W. Patzek recently published a study which argued that the energy used in corn farming for ethanol production is six times that which the end ethanol produces. In addition, there is the serious question of how much cropland it would take to fuel our current economy.
There has been enormous interest in biofuels lately. It remains to be seen if some more advanced method of production (from algae, for example) produces positive net energy. At this point, however, any attempt to convert to biofuels on a wide scale will only exacerbate the energy crisis.
Solar and Wind Power
Proponents of wind and solar energy talk optimistically about its recent growth. World solar photovoltaic installations have more than doubled in the last few years; installed wind capacity grew at an annual rate of 30% from 1992 to 2003. That seems like a lot, until one considers that according to the International Energy Association, in 2001 wind and solar energy together amounted to less than 1% of world energy consumption. Doubling or tripling current capacity will not be enough; wind and solar energy will have to grow on orders of magnitude in order to replace our current energy needs.
The European Wind Energy Association is optimistically hoping that wind will generate more than 12% of European electricity needs in 2020. While this level of growth would be remarkable, it doesn’t remotely match the expected depletion rate of oil and natural gas. Further, wind and solar power produce electricity, not liquid fuel.
Nonetheless, while it would be unrealistic to imagine that we will be able to run our current economies on wind and solar power alone, it is clear that both will play major roles in powering the world in coming years. Furthermore, in a post-peak era, the political and economic incentives to grow wind and solar energy will be much greater than today. It remains to be seen how much and how fast.
Nuclear Energy
Nuclear power is the fifth largest source of energy after oil, coal, natural gas and solid biomass (which includes the burning of wood), providing between 7 and 8% of the world’s energy.
But despite its widespread use, nuclear energy is perhaps the most hated form of energy production, associated with radioactive waste, accidents and nuclear weapons proliferation.
Environmentalist opposition to nuclear energy has deep roots—Greenpeace was founded as an anti-nuclear organization, and all of the major environmental groups have historically staked out strong opposition to it. Due at least in part to that opposition, no new nuclear power plants have been ordered in the United States since the 1970s. Depending on how rapidly natural gas and oil deplete, however, we as a society may be forced to reconsider our collective opposition to nuclear energy.
The objections to nuclear power are well-founded. No acceptable method of storing nuclear waste has been developed and nuclear proliferation is, if anything, an even greater concern today than it was 30 years ago. And all nuclear power plants pose a risk, however small, of a catastrophic accidents. For those reasons, wind and solar energy are almost certainly better choices, if they can be built quickly enough to meet our energy needs.
But what if they can’t? At this point the only direct competitor to nuclear power (for base-load electrical generation) is coal. But as mentioned previously, increasing our use of coal is the worst of all options. Even the cleanest burning synthetic coal, with carbon dioxide sequestered on processing, contributes to global warming. Given the choice between managing a relatively small amount of dangerous waste and accelerating global climate change with unpredictable results, the advantages of nuclear energy seem clear.
There are additional concerns about nuclear energy, however. One is that while the long term operating costs of nuclear plants are amazingly cheap, capital building costs are expensive. At a time when both energy and capital for construction is likely to be scarce, will we even be able to build more plants?
Finally, there is the question of how much usable uranium is left; with a massive expansion of nuclear power, we could find that uranium supplies would soon peak as well. We would then need to build “breeder” reactors—a kind of reactor which produces plutonium as a byproduct, generating more fuel than it consumes. But plutonium is a far more dangerous substance than uranium, and is easier to make into weapons, posing a greater risk of proliferation.
Nuclear Fusion
To date, nuclear fusion (the way the sun produces energy) has not proved viable as a energy source, despite decades of effort. While we have been able to create immense bursts of energy by using fission to trigger a fusion reaction in the hydrogen bomb (releasing thousands of times as much energy as was used to destroy Hiroshima) controlling the process for peaceful purposes remains out of reach, despite years of efforts.
The potential advantages of a viable fusion reactor would be great: In addition to producing much more energy than a fission reactor, a “pure” fusion reactor would produce little radioactive waste.
An international consortium will produce a test reactor in France over the next few years, but energy experts are skeptical that fusion power will be available for widespread use for many decades.
What Is To Be Done?
In the short run, there are obvious steps which would cushion the oil descent. Consumers are turning away from SUVs to smaller cars; some European diesels already have much higher gas mileage than gasoline cars used in the United States. Combined with the already existing hybrid technology seen in Japanese cars, new vehicles could do even better, drastically reducing petroleum needs for transportation, especially if they are modified to be plugged in to the grid to recharge their batteries during non-peak hours.
Similar, relatively painless modifications could be made to housing by greatly increasing insulation requirements and by ramping up production of solar energy for both heating and electricity. One New York company claims to be able to reduce energy bills by 50% and its not hard to imagine that further progress could be made.
Longer term, we will face more serious adjustments. It seems increasingly obvious that suburban society will be unsustainable; one of the first steps in making a transition to the depletion era needs to be a reversal of the numerous government incentives that encourage the building of sprawl. With denser, more walkable communities, we will also need added investment in public transportation.
Flight in the near future may soon become uneconomical as well, as will cross-country driving and trucking; rebuilding our passenger and freight rail services will, therefore, be urgent priorities as well. Shipping by waterway is even more efficient.
In general, as transportation costs go up, we will likely see an reversal of globalization as we know it, as it becomes more economical to pay higher wages than high transportation costs. Anything than can be done immediately to build networks of local and regional commerce will help mitigate the collapse of our global trading system.
Food production will have to become much more local, and less petroleum-intensive. Fortunately, organic farming has made large strides in recent years, but it needs support. The sooner farm subsidies can be shifted to give greater advantage to local, organic farms, the better off we will be.
As for energy sources, the return of nuclear energy—in combination with dramatic increases in solar and wind power—may be unavoidable, especially if we begin to replace petroleum with coal-based synthetic fuels. A logical sequence would be to replace coal electrical plants with nuclear, wind and solar energy so as not to greatly increase destructive coal mining or net greenhouse gas emissions.
Skeptics argue that we will not have enough money or energy to make needed changes and that alternative energy is not even viable without a fossil fuel “base” from which it is launched. Some advocate the building of “lifeboats”—small, self-sustaining communities which will be able to carry on after the collapse of the oil age.
In order to avoid desperate resource competition, some have argued for the development of international treaties in which countries would agree to decrease their oil consumption at a rate commensurate with the combined worldwide depletion rate. Such a “controlled powerdown” would hopefully help us avoid terrible resource wars and a “last man standing” approach which would, in both the short and long run, be worse for everyone.
Is our advanced, technological civilization finished? Many believers in peak oil argue that there is no combination of alternative energies that can come close to giving us as much power as we now use. The implication is that without that power, humanity will retreat to a pre-industrial or even stone-age state.
Maybe the real question though, should be: How much energy do we really need to run an advanced, “post-industrial” civilization, preserving most or a great many modern comforts and cultural benefits even as we abandon low-use wasteful energy consumption? Would 50% of our current use be enough? Five percent?
Once people become aware of what is happening, there is likely to be a collective shock, and a temptation to either deny reality or to retreat from society. But despite romantic notions of individualism, history shows that human beings tend to do better when they live and work together. Even if our cities contract, we must not abandon urban life—the life of civilization—entirely.
Thx for the excellant, tho depressing, summary of our current and projected future.
Appreciate all of the info.
Tho I'm sure there is plenty of discussion going on regarding the severity and timeframe of the energy collapse, it is clear to me that it is coming and we need leaders in the world (and esp. here in the US) willing to take this seriously.
I don't see that happening. Just makes me more depressed!
Appreciate your taking the time to gather the facts and write this article. I feel more imformed, but even angrier that those willing to listen and take this seriously do not have much power to force change.
I'm ready to vote a third party that will address these problems - but how many decades will pass before they can garner enough support to change direction.
Looking forward to more articles.
Posted by: Karen | October 24, 2005 at 04:05 PM
Thanks for the feedback, Karen.
The only good thing about the present moment is that more people are becoming aware of energy depletion and its ramifications. Two years ago, peak oil was a truly fringe idea; now it's being discussed in Time Magazine. Depending on what happens with natural gas an oil prices in the next year or two, we may yet see a big political shift.
Posted by: Lakis | October 26, 2005 at 09:52 AM
Just got my copy of Time - it is amazing to see such coverage. Too bad it didn't happen 30 years ago.
Still it gives me some hope that there will be political fallout and the direction will change.
Hoping for more hybrids to choose from.
Karen
Posted by: Karen | October 27, 2005 at 10:09 AM
Just got my copy of Time - it is amazing to see such coverage. Too bad it didn't happen 30 years ago.
Still it gives me some hope that there will be political fallout and the direction will change.
Hoping for more hybrids to choose from.
Karen
Posted by: Karen | October 27, 2005 at 10:09 AM
Lakis,
This is a great primer! Lots of good information. I like how you cover (although bleakly) all of the other alternatives.
I'm not sure that I'm convinced--demand has already started to change given money pressures (less SUVs, high demand for hybrids), and I know it's bigger than that, but it's still noteable. And more will be done to look at nuclear, solar, and alternatives we don't know about.
But I'm glad to know more about another theory and I'm equally glad to know good minds are thinking/arguing about it.
Amy
Posted by: Amy | May 28, 2006 at 11:49 AM
Hi Amy,
Thanks for the feedback.
No one can map the future exactly, of course, especially when it comes to individual and collective reactions to unfolding events.
I guess for me, the question is: Can we run our current society on alternatives to oil and natural gas? Or will we have to create something different? I believe the latter is the case, but the longer we collectively avoid having that conversation, the more painful the transition will be. Case in point: everyone is talking about the entirely unfeasible possibility of converting to corn-based ethanol, but there is no mention of the desperate need to rebuild our railroads and our public transit infrastructure.
Anyway, I’d be very interested to hear more of your comments on my posts!
Lakis
Posted by: Lakis | June 01, 2006 at 10:37 AM
Wonderful information gathered and wonderfully put together. I learned to be more eco friendly and got a clear image of what is happening.
Posted by: george | March 31, 2009 at 05:57 PM