Re: [asa] Peak Oil day was July 11. 2008

 I've worked through the math and read some published papers in science journals and a few books, and I am convinced that we are indeed post-peak.  The exact moment of the peak is hard to define.  Some say it was in 2005, which indeed was the year of the highest level of oil production the world has ever known.  The US went post-peak in
1973 or 1974.  Most nations are also post-peak.  The same math model that
successfully predicted all these nations going past peak is what is now predicting the
world to be post-peak.  It would be foolishness to deny it without some
significant cause.

Here are the best arguments I can find to try to counter it, and I think they all fail.  While they may spin the results of going post-peak somewhat, in my judgement they are not enough to avert at least some level of disaster.

First, being post-peak globally has some differences than being post-peak within an individual nation.  When one nation like the US is post-peak, the oil production from other nations can take up the slack.  But when the entire world is post peak, there is no other world to take up the slack, and so there comes into play a new set of economic forces that do not arise when merely one nation is post-peak.  Hence, we cannot really know (IMO) how the world civilization will react nor what the outcome will be.  It may be that the economic forces are so strong that it will drive new scientific discoveries or oil production methods and=2
0thus disaster may be averted.  However, I would not bank on it, because that would be betting our lives on the unknown.  Averting disasters is not a birthright. It astounds me how deeply evangelicals seem to think that it is.

Second, we know that the world is far more heterogeneous in terms of how fully the oil has been exploited than any one country is.  Thus, when a country is post-peak, the entire country really is statistically post-peak.  The statistics of that entire country are "relaxed" to characteristic standard deviations and and other relationships.  But there are regions and countries in the world that for political reasons are far less exploited than other regions.  The statistics are not "equilibrium" or "relaxed" (if you will).  Iraq is a prime example of that.  That country has been exploited only up to 1950's levels of technology, from what I've read.  Antarctica is another example, since international treaty has prevented any discovery or exploitation there.  So we may have a bit of cushion as economic forces (and oil wars) drive all regions of the world into greater levels of discovery and production until they are caught up with the rest of the world, and thus we might have some enhancement of production to cushion the downside of the peak.  Again, however, I wouldn't bank on that being too significant.  When the largest oil fields go more deeply into decline, the rate of decline will be so huge that these other increases will probably be
overwhelmed.  The studies show that it would take something like 9 additional Norways just to hold off the peak for one month.  We have thousands upon thousands of non-productive or barely-productive wells in this world.  Merely hundreds of newly productive wells can't possibly offset the weight of that grand decline.

Third, the beginnings of the economic forces might reduce the demand for oil and thus gradually lower us down the post-peak side.  It's true that a national peak is symmetric
but a global peak will probably be asymmetric for economic reasons.  That is, for a single
nation the pre-peak increases in production rate are just about equal
and opposite to the post-peak declines in production rate for geological reasons.  For the
whole globe however, the  global economy will come into play.  It may be that instead of s smooth letdown, it might repeatedly crash and
restart because oil production both drives and is driven by the
economy, and because feedback loops with their inherent time
delays are inherently unstable.  Thus, you may see oil prices shoot
up, which strains the economy and causes a crash (very much like just
what happened in the past 2 years since we have been near the peak for several years), then oil
demand declines, then prices drop and the economy starts
recovering (just like we've been seeing), and so oil demand goes up
again with the economy and so do oil prices (since production can't increase), and thus
the economy crashes again, etc.  So wh
ile the global upside to the peak
is relatively smooth, the downside might consist of a series of
every-worsening economic crises spiking up and down but overall down,
down, down.

Fourth, the combination of new innovation driven by economic pressure WITH reductions in demand due to a slowing global economy may cushion the fall enough so that new energy sources can get put into place reasonably fast enough to avert the worst disaster.  I think this is the best hope.  What if tar sands and oil shale can be brought up to speed fast enough, with coal-to-liquid conversion powering cars in the meantime (ignoring the greenhouse gases of the coal in the short term), while slowing demand for about 10 to 20 years allows these technologies to get the infrastructure in place quickly?  The problem I see here is that we are not already doing anything about it.  Since we may have gone post peak as far back as 4 years ago, what have we done?  Since the recent economic crash that involved spiking oil prices, what have we done?  Every economic crash tends to cripple industry rather than propelling it to new innovation.  The crash in the economy shut down advances in tar sands, because they became unprofitable.  New drilling was cancelled when the oil prices crashed.  It would take tremendous political will, perhaps from dictators, to force the kinds of sweeping infrastructure changes that would be needed.  Maybe dictators will indeed arise by taking advantage of the the unhappiness of20a post-peak economy.  Maybe they will claim the need for power to avert global disaster.  That thought chills me as much as the peak itself.

There is some evidence we have already experienced the first effects of the peak.  Glenn Morton claims that the
recent housing bubble was popped by the force of post-peak oil, because
housing was the weakest thing in the economy and hence the most likely
think to be popped by the underlying economic strain of peaked-oil production.  The next weakest thing after housing will be the next thing
that gets popped by the same underlying strain.  And so if Glenn is
right (as I think he is) then maybe the post-peak decline of
civilization will consist of a series of different things failing in a never ending variety, possibly even masking the underlying source of the woes. 

Civilization, like biology, is driven by energy metabolism.  When the most abundant energy source that we have adapted to metabolizing, just like the food-energy that organisms are adapted to metabolizing, is suddenly ripped away, then an exinction event must necessarily take place.  Organisms (and societies?) cannot evolve quickly enough when their energy source suddenly vanishes.  After the extinction event, it takes significant time for the life forms (or civilizations) to adapt to metabolizing large quantities of the remaining energy sources.  In the meantime, biodiversity (and civilization?) will continue (if at all) in a declined state.  Some have estimated on the basi
s of these arguments that only 2 billion out of the existing 6 billion people can survive in a post oil-peak world, at least until dramatically new methods of energy metabolism are put in place.  For societies, "metabolism" includes not just energy production, but energy distribution, energy conversion (e.g., agricultural methods that convert oil energy into food energy for people to consume), transportation of food and other resources, production of materials that are used throughout the economy, and political structures that adapt to the new reality.

Phil

-----Original Message-----
From: John Burgeson (ASA member) <hossradbourne@gmail.com>
To: Dehler, Bernie <bernie.dehler@intel.com>
Cc: asa <asa@calvin.edu>
Sent: Fri, Jul 10, 2009 10:37 am
Subject: Re: [asa] Peak Oil day was July 11. 2008

Not prices. Production.

jb

On 7/9/09, Dehler, Bernie <bernie.dehler@intel.com> wrote:
> 'peak oil' or 'peak oil prices?' Same thing? If demand- what statistics,
> other than price, are you looking at?
>
> -----Original Message-----
> From: asa-owner@lists.calvin.edu [mailto:asa-owner@lists.calvin.edu] On
> Behalf Of John Burgeson (ASA member)
> Sent: Thursday, July 09, 2009 9:02 AM
> To: asa
> Subject: [asa] Peak Oil day was July 11. 2008
>
> Just for the record -- about 5 or 6 years ago Glenn Morton, and to a
> much less extent me, argued on this list that the day of "peak oil"
> was less than a decade away.
>
> The argument below is that it did happen -- on July 11, 2008. From now
>20on, the world will produce less each day than the day before!
>
> Burgy
>
> ---------- Forwarded message ----------
> From: Post Carbon Institute <newsletter@postcarbon.org>
> Date: Tue, 7 Jul 2009 18:22:12 -0400
> Subject: MuseLetter 207/July 2009
> To: hossradbourne@gmail.com
>
> [1]Read current MuseLetter online | [2]Subscribe | [3]Unsubscribe
> Links:
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>
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> Links:
> 5. http://richardheinberg.com
>
> _Greetings,_
>
> _Here is MuseLetter 207 for July 2009._
>
> _Best wishes,_
>
> _Richard_
>
> _1. Peak Oil Day_
>
> On July 11, 2008, the price of a barrel of oil hit a record $147.27 in daily
> trading. That same month, world crude oil production achieved a record 74.8
> million barrels per day.
>
> For years prior to this, a growing legion of analysts had been arguing that
> world oil production would max out around the year 2010 and begin to decline
> for reasons having to do with geology (we have found and picked the world's
> "low-hanging fruit" in terms of giant oilfields), as well as lack of
> drilling rigs and trained exploration geologists and engineers. "Peak Oil,"=0
A> they insisted, would mark the end of the growth phase of industrial
> civilization, because economic expansion requires increasing amounts of
> high-quality energy.
>
> During the period from 2005 to 2008, as oil's price steadily rose,
> production remained stagnant. Though new sources of oil were coming on line,
> they barely made up for production declines in existing fields due to
> depletion. By mid-2008, as oil prices wafted to the stratosphere, every
> petroleum producer responded to the obvious incentive to pump every possible
> barrel. Production rates nudged upward for a couple of months, but then both
> prices and production fell as demand for oil collapsed.
>
> Since then, with oil prices much lower, and with credit tight to
> unavailable, up to $150 billion of investments in the development of future
> petroleum production capacity have evaporated. This means that if a new
> record production level is to be achieved, further declines in production
> from existing fields have to be overcome, meaning that all of those canceled
> production projects, and many more in addition, will have to be quickly
> brought on-stream. It may not be physically possible to turn the tide at
> this point, given the fact that the new "plays" are technically demanding
> and therefore expensive to develop, and have limited productive potential.
>
> On May 4 of this year, Raymond James Associates, a prominent brokerage
> specializing in energy investments, issued a report stating, "With OPEC oil
> production apparentl
y having peaked in 1Q08, and non-OPEC even earlier in
> 2007, peak oil on a worldwide basis seems to have taken place in early
> 2008." This conclusion is being echoed by a cadre of other analysts.
>
> Maybe it's a stretch to say that the production peak occurred at one
> identifiable moment, but attributing it to the day oil prices reached their
> high-water mark may be a useful way of fixing the event in our minds. So I
> suggest that we remember July 11, 2008 as Peak Oil Day.
>
> We are now approaching the first-year anniversary of Peak Oil Day. Where are
> we now? The global economy is in tatters, yet oil prices have recovered
> somewhat (they're now about half what they were in July 2008). World energy
> consumption is down, world trade is down, the airline industry is shrinking,
> and most of the world's automakers are on life support.
>
> It is too late to prepare for Peak Oil-a year too late, in fact. Now the
> name of the game is adaptation. We are in an entirely new economic
> environment, in which old assumptions about the inevitability of perpetual
> growth, and the usefulness of leveraging investments based on expectations
> of future growth, are crashing in flames. Even if economic activity picks up
> somewhat, this will occur in the context of an economy significantly smaller
> than the one that existed in July 2008, and energy scarcity will quickly
> cause most green shoots to wither.
>
> It is impossible to say what will happen in the future with reg
ard to oil
> prices. Clearly, very high prices kill demand by undercutting economic
> activity. Thus it is possible that the barrel price of petroleum may never
> break last year's record. On the other hand, if the value of the dollar were
> to collapse, then the sky's the limit for prices in dollars per barrel.
>
> It is easier to forecast the oil supply trend: though we'll see
> level-to-rising production temporarily from time to time, in general it's
> down, down, downhill from now on.
>
> Even though Peak Oil is now in the past, its annual commemoration on Peak
> Oil Day may serve an important purpose by reminding us why our economy is
> shrinking, and by focusing our thoughts on ways to facilitate the transition
> to a post-petroleum world.
>
> What are some appropriate ways to commemorate Peak Oil Day? I'd suggest
> spending time in nature, engaging in a 24-hour oil fast, or organizing a
> neighborhood bicycle parade and solar-cooker bakeoff.
>
> Mark your calendar. What will _you_ be doing on July 11?
>
> _Help us "celebrate" Peak Oil Day by signing [6]our petition._
> Links:
> 6. http://www.thepetitionsite.com/1/peak-oil-day
>
> _2. Interview with Hervé Duval_ ([7]www.voltairenet.org)
> Links:
> 7. http://www.voltairenet.org
>
> HD: We were told by most media that the origin of the financial crisis is to
> be found within the financial system. Is that satisfactory to you or, as you
> hinted with foresight in _The Party's Over_, could the lack of conf
idence in
> future growth due to cheap oil production peaking also be a major factor?
>
> RH: In 2008 we saw the biggest energy price spike ever. Historically, energy
> price spikes have always led to recessions. Therefore it would have been
> reasonable to expect a serious recession beginning around the first quarter
> of 2008. In fact, the recession began somewhat earlier and has proven to be
> deeper and more persistent than any other in recent decades. This is because
> a financial collapse had also become more or less inevitable due to the
> existence of multiple bubbles in the housing and finance sectors.
>
> The impacts on the airline, trucking, and automotive industries are largely
> from energy prices; the fall in real estate values and rise in foreclosures
> is not so directly related to oil.
>
> However, at the deepest level, our societal expectation of perpetual
> economic growth is based on the assumption that we will always have
> increasing amounts of cheap energy with which to power the engines of
> production and distribution. This expectation of growth became
> institutionalized in ever-increasing levels of debt and in increased
> financial leveraging. Thus when the amount of energy available started to
> level off or decline, the entire financial house of cards came tumbling
> down.
>
> Unfortunately, world leaders have largely misunderstood the crisis. They
> assume it to be entirely financial in origin, and they also assume it to be
> transient; they believe that if we can
prop up the banks sufficiently, the
> economy will begin to grow again and all will be well. In fact, our current
> financial system cannot be made to function in an era of declining energy
> supplies. We need an economy that can supply basic human needs without
> increasing the rate at which we consume resources. That will require the
> creation of monetary systems and financial institutions that are not based
> on debt, interest, and leveraging.
>
> HD: Do you think speculation on energy markets is going to gather pace again
> in spite of last year's episode? If so, according to you what is the best
> solution for the snake to stop eating its own tail?
>
> RH: Speculation in energy futures is not helpful in our collective process
> of adjusting to the winding down of the era of cheap fuel. Without some
> controls on the futures market, we are likely to see more big swings in
> fossil fuel prices, as we witnessed over the past 18 months. When fuel
> prices skyrocket, the economy takes an enormous hit-again, as we have just
> seen. When the price collapses, that discourages investment in future energy
> production.
>
> OPEC has actually helped somewhat to moderate these price swings by
> increasing or decreasing production to keep the oil price steadier than it
> would otherwise be. But OPEC is losing its already limited ability to do
> this, because most member nations are seeing declining production and have
> little or no spare production capacity. Saudi Arabia is the only ma
jor swing
> producer left, and one nation really cannot balance production rates for the
> whole world much longer.
>
> The only real solution is some sort of international agreement to ration
> production and consumption, as I suggest in my book _The Oil Depletion
> Protocol_.
>
> HD: What do you think of the growing number of scientists casting doubt on
> the human origin of climate change? Within the peak oil movement, people
> like Jean Laherrère are also very skeptical...
>
> RH: I'm not aware that the number of scientists casting doubt on the human
> origin of current climate change is growing; my perception is the opposite.
> Yes, I know that Jean Laherrère, whom I respect enormously, has raised
> questions on this score. As a geologist, he is accustomed to thinking in
> terms of millions of years, and the Earth's climate is indeed quite variable
> on such long time-scales. And so I can understand why he might wonder
> whether what we are seeing now is due to climate processes involving changes
> in solar radiation, eccentricities in the Earth's orbit-the well-known
> Milankovitch effect-and changes in ocean circulation patterns. However,
> climate scientists have thoroughly investigated the likely role of factors
> other than carbon emissions and found that they are insufficient to explain
> the warming that is currently occurring.
>
> Essentially, I concur with the conclusion of most climate scientists: that
> we humans are taking an inherently unstable system-the atmosphere and
> clim
ate-and forcing it to its breaking point by adding enormous quantities
> of greenhouse gases.
>
> HD: What do you think about this hypothesis: the international carbon trade
> project is but a way for the financial elite to keep afloat and for the
> financially rich/resource poor countries to obtain the right to burn the
> last fossil fuel reserves in exchange for money and thus deprive financially
> poor/resource rich countries of the right to develop? To put it another way,
> the heart of the matter is not really "Are we going to burn the last fossil
> fuel reserves?" (we surely are, lest we give up on economical growth), but
> "Who is going to burn them?".
>
> RH: I am skeptical of international carbon trading schemes for many reasons,
> including the fact that they will result in the creation of an enormous
> derivatives market that will require tight regulation if huge financial
> bubbles and crashes are to be avoided. Carbon caps are necessary, but there
> are probably better ways of enforcing those caps than the creation of a new
> class of derivatives; for example, a rationing system that engages the
> entire citizenry, such as Tradeable Energy Quotas (TEQs), could work.
>
> In the end, fossil fuels will be used by those who can pay for them.
> Sometimes this occurs indirectly: China burns coal on behalf of North
> America and Europe so that it can produce cheap goods for export.
>
> In any case, however, development based on consumption of fossil fuels is no
> longer a20path to wealth and security, as it was in the early 20^th century.
> Today it is a trap. It merely creates dependence upon energy sources that
> are becoming more scarce and expensive. Poor nations will now be much better
> off avoiding that trap altogether.
>
> I realize that this is much easier for a mere a journalist to say than for a
> leader of some nation whose people have been denied the benefits of the
> modern era. However, this is one of the stark realities of this still-new
> century.
>
> HD: What should be the priority in terms of public decision-making?
> Preparing for the energy crisis or climate change?
>
> RH: In many respects, the solutions to both problems are similar: reduce
> fossil fuel dependency, and increase renewable energy production.
>
> However some proposed solutions to the climate crisis make no sense in light
> of fossil fuel supply limits. An example is the capture and storage of
> carbon from coal-fired power plants. This is a project that will require
> enormous investment and decades for deployment; but meanwhile, coal prices
> will be escalating, and this fact is seldom included in the cost estimates
> for "clean coal." The peak of world coal production is probably less than
> two decades away, as I discuss in my new book [8]Blackout: Coal, Climate and
> the Last Energy Crisis. It therefore makes more sense to use scarce
> investment capital to build renewable energy production capacity rather than
> to build a vast, costly infrastructure to suppo
rt continued use of a
> depleting, increasingly expensive, carbon-intensive fuel.
> Links:
> 8. http://www.richardheinberg.com/Blackout.html
>
> HD: Do you see an increasing trend toward resource conflicts? If so, how do
> you explain it?
>
> RH: This is to be expected. Humans have always fought over essential
> resources. Now that the energy resources that fuel modern society are poised
> to become more scarce and valuable, it is foreseeable that conflict over
> control of those resources will increase. Given this, it is incumbent upon
> policy makers at the national level to anticipate where such conflicts are
> likely to erupt, and to seek to prevent them. Ultimately the only way to do
> so is to reduce competition for those resources by reducing dependence upon
> them where possible (some resources, such as water, we simply cannot do
> without), and by forging agreements to limit production and consumption of
> fossil fuels via depletion protocols.
>
> But of course this will require an enormous shift in attitude on the part of
> world leaders. Currently their thinking revolves entirely around gaining
> competitive advantage-in essence, they are more interested in knowing how to
> win resource conflicts than in how to avoid them. And that is an
> increasingly dangerous way of thinking as the world becomes more populous
> and resource-constrained.
>
> HD: According to you, how big is the part played by the increase in
> fuel/fertilizer/pesticides costs in the developing food crisis?
>
> RH
: There are some aspects of the food crisis that do not immediately seem
> to be related to fossil fuel dependency. For example, there are increasing
> shortages of fresh water for irrigation-but many times this is due to
> climate change, which is in turn due to carbon emissions from the burning of
> fossil fuels. Then there is soil erosion-but this is often caused by modern
> industrial production methods involving the use of tractors and other
> fuel-fed farm machinery. Another factor is the genetic uniformity of modern
> crops, which makes them more susceptible to evolving pests, and hence
> requires the use of more petroleum-based pesticides. As one follows out the
> causal chains leading to these disparate threats to our food system, nearly
> all of them tend to lead back to one source.
>
> Altogether, our modern fuel-based food system is critically vulnerable on
> many levels, and most of that vulnerability is traceable to our reliance on
> fossil fuels. The inevitable reduction in the supply of tractor fuel will
> hurt farmers, and agricultural chemicals will become increasingly
> unaffordable. High petroleum prices will make the long-distance distribution
> of food more costly. Climate change and drought will shrink crop yields.
>
> We face a global food crisis that is entirely foreseeable, and whose causes
> are obvious. The needed policies are also obvious: we must reform our entire
> food system so as to reduce its reliance on fuel.
>
> HD: Can you tell us briefly about the goals and20impact so far of the work
> you are doing with your colleagues at Post Carbon Institute?
>
> RH: Currently we are assembling a stellar group of Fellows who share a
> similar understanding of the global crisis, and who are interested in
> collaborating with regard to public education. We see this as a critical
> historical moment for rethinking our culture's basic assumptions about
> economic growth, energy consumption, food systems, climate change, and
> population-issues that are closely intertwined, but rarely addressed
> systemically by policy makers.
>
> At the same time, Post Carbon Institute is working closely with the
> [9]Transition Initiatives, which is a grass-roots network of communities
> seeking to promote a post-fossil fuel economy. Unless needed policy changes
> are being adopted, modeled, experimented with, and promoted by individuals
> and communities, national leaders will continue to drag their feet.
> Links:
> 9. http://transitionus.org
>
> We see the current economic crisis as a fundamental and historic turning
> point. The global economy has reached non-negotiable limits to growth. Now
> everything depends upon our willingness to cooperatively adapt to those
> limits.
>
> We believe that life can in fact be better without fossil fuels, and without
> continual growth in population and consumption. But the transition from our
> current fuel-fed growth paradigm to a steady-state, renewable-energy future
> will likely be very difficult. Humanity will get there one way or another:
> resource=2
0limits ensure that. We simply want to make the transition easier,
> fairer, and more survivable for all concerned.
>
> [10]Back to top
> Links:
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>
> [11]Remove me from this list
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>
>
> --
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>
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>
>
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