Peak oil, keeping reality in mind

Biking

Biking, one of many ways life can be better, healthier, more sustainable with peak oil. Photo: Loop_oh via Flickr.

Ponder what it means that half of all the oil ever burned has been burned over the past 22 years and ask yourself where the supplies will come from to fund the next 22 years.

Thanks to Adam Smith and those who followed him, especially the current neoclassical economic theologians, we’ve seen such an increase in the world’s wealth and population that it’s hard to imagine life before the industrial revolution. Then the world moved slowly, mostly by human and animal muscle power. But with the industrial shift, human life and economy relied on energy-dense fossil fuels—coal, oil, and natural gas.

It’s also hard to imagine that humanity could someday slide back into another age of scarcer and more expensive energy. But that’s a possibility that can’t be excluded from our thinking.

Well here’s the obligatory disclaimer: We’re not running out of oil; at least not for many decades to come. If that were the only issue peak oil focused on, further discussions would be pointless.

But it’s not the only issue….

The bigger picture

As difficult as it is to accept, life as we’ve known it, with the creature comforts imparted by industrial production and infrastructure, will all too soon no longer be the same. Why?

Industrial civilization’s entire economy is based on a finite resource that we treat as infinite. Our current global economy is based on continual growth, and that growth depends on cheap, abundant energy.

Oil which was previously too expensive to exploit, such as deepwater oil, tar sands and oil shale becomes  economic in the short term with a rising oil price. With this at play, too the uncritical observer, it might seem as if there’s nothing to worry about in the oil market.

Unfortunately, there is something to worry about, at least if we want a healthy economy.

The new oil reserves we’re now exploiting are not only more expensive to develop across the board, but they also take much longer between the time the first well is drilled and the when the first oil is extracted and refined. That means it takes longer for oil supply to respond to changes in price.

If what we care about are the effects on the economy, it doesn’t matter how much oil is in the ground. Over the last ten years, we’ve see a structural change in the oil market which will continue to have far-reaching effects on the economy even if we manage to increase the amount of oil extracted.

Worldwide, the average EROI (Energy Returned On Energy Invested) of oil is down to 20:1 from its original value of 100:1 eighty years ago. This means that our oil-fueled economy has less capacity to generate wealth because an increasing share of the energy that used to be dedicated to producing goods and services is being plowed back into securing energy.

When it doesn’t add up

Even more troubling than oil’s 20:1 global average is the figure for unconventional oil sources — just 5 to 1.

It takes a lot of energy to drill five miles under the ocean and pump crude back to a refinery, or to cook tar sands to extract a usable fuel. The energy wellspring at the heart of our economy no longer gushes a torrent of wealth; it’s a smaller, much-diminished stream.

EROEI matters. As Market Oracle writer Jim Quinn observes,

EROEI is the ratio of the amount of usable energy acquired from a particular energy resource to the amount of energy expended to obtain that energy resource. When the EROEI of a resource is less than or equal to one, that energy source becomes an ‘energy sink’, and can no longer be used as a primary source of energy. Once it requires 1.1 barrels of oil to obtain a barrel of oil, the gig is up.

In other words, more effort, more costs, more time, more difficulties in general, less inclination for countries to give up all they have left, increasing demand, less supply day-by-day simply because we’re taking out something that isn’t being replenished — all those factors add up to investing more to get less.

That’s not good math.

For all the optimism in a magic technology fairy riding to the rescue as a result of the wonder of human ingenuity, and for all the hope in the purportedly vast stores of unconventional fossil fuel seemingly ready for extraction, we cannot and will not go back to the means and methods of growth and prosperity we’ve long enjoyed.

No one is falling off the cliff tomorrow or even soon, but the downhill path has been carved out for us.

As Dahr Jamail also noted (from one of the articles referenced above),

Oil touches nearly every single aspect of the lives of those in the industrialised world. Most of our food, clothing, electronics, hygiene products and transportation simply would not exist without this resource.

This potentially unpleasant recognition of our dependence on these finite resources and the undertakings necessary to adapt don’t have to mean failure, serious lifestyle decline, or defeat unless that’s what we choose by neglect or fear or passivity.

We have choices.

Everyone’s a stakeholder

It’s not just about political and other leaders. Each of us with concerns about our future prospects, to say nothing for those in generations to follow, must start asking and answering some fundamental questions. To state but one: Where and what are the best opportunities for growth and prosperity, and health and safety, going forward, given the eventual displacement of abundant fossil fuel resources?

Sacrifice, in some measure, is the only way to move forward and sustain ourselves. Insistence on the business-as-usual models will eventually doom us.

In many cases, we’re going to have to create industrial, commercial, cultural, and transportation systems entirely anew (or at the very least re-build extensively). Relying on current conditions, false hopes, practices and customs of the past, or just tinkering along the edges simply won’t work. Just because we won’t necessarily be confronting these realities next month or next year or in three years is not an excuse to postpone the thinking and planning needed.

Eric Zencey adds this sobering thought,

Everything our economy accomplishes, including health care, government, schools, roads, defense, repairing our aging infrastructure and re-engineering our built environment to handle the changed weather that oil use has given us, is going to have to be financed from a much-diminished EROI.

Also not good math.

But we do have choices. Everything depends on whether we approach this as crisis, or opportunity.

–Rich Turcotte, Transition Voice

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Comments

  1. Amoeba says

    ‘Once it requires 1.1 barrels of oil to obtain a barrel of oil, the gig is up.l, the gig is up.': That is just plain stupid and wrong.
    The reality is that once it requires 1 barrel of oil to obtain a barrel of oil, there’s no net energy benefit and no possibility of profit. It seems likely, that in practice that oil will cease being worthwhile some time before EROEI reaches 1:1. When precisely this occurs will depend upon the availability of other energy sources such as nuclear and renewables. Clearly, investment in oil production will likely decline as investors consider the implications of the Hubbert curve and likely future returns as users abandon increasingly pricey oil for renewables and nuclear. Hopefully, the smart money will move into renewables. Let’s hope that the smart money factors in the damage to the climate system.

    • Rich Turcotte says

      Thanks for the commentary. You’re on target with your observation about renewables … smart and even not-so-smart will be needed. The sooner investors and leaders of industry stop waiting for miracles and recognize/accept the energy supply challenges we’ll all be facing, the sooner we can (I hope) begin taking concrete measures to transition ourselves away from fossil fuels. (That’s a big hope!)

  2. says

    Excellent article Rich…
    …except for one point, your fundamental question near the end:
    “Where and what are the best opportunities for growth and prosperity, and health and safety, going forward, given the eventual displacement of abundant fossil fuel resources?”
    Until we recognise that prosperity does not come from growth, that growth does not equal prosperity and that in fact growth is the problem, then we cannot address the fundamental issues you ask us to address.
    We will cease to need other energy sources only when we live more in harmony with the natural world around us and work to enhance that environment so that it can provide the energy and other resources that we need.
    The fundamental issue with oil and all other resources is that we take more from the environment than we put back… its the circle of life… never take more than you give.

    • Rich Turcotte says

      Steve

      You raise important points … lots of educating ahead of us! There’s a whole world out there that doesn’t “get it” yet, and the race is on to make sure they do before the inevitable consequences of Peak Oil (& climate change) make whatever options we might still have that much more challenging to implement. Thanks for writing

  3. simon says

    thank you for great article.
    this one has a chance of getting parsed out of the choir since it can be referred to the most laymen of doubters starting to question the status quo.
    also great that it doesn’t come off as doomist for the same question noticed by Liaros, “Where and what are the best opportunities for growth and prosperity, and health and safety, going forward, given the eventual displacement of abundant fossil fuel resources?”

    maybe THAT one question should be part of every article seeking to inform on resource depletion.
    even if stated at the end of an article, is enough to get the reader thinking on alternatives to lifestyles.

    • Rich Turcotte says

      Simon,
      Thanks for taking the time to write; I appreciate the kind words. It is a challenge to study & write about Peak Oil without loading up on doom and gloom. I’m an optimist and believe in the inherent capabilities of most citizens, but I also agree with your premise: we need to get the many who still have no idea about Peak Oil’s impact to start thinking about alternatives and what life will be like when “fill ‘er up” is no longer quite so easy….The education process won’t be easy or quick, but every little bit helps

      Rich

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