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The Ethics of Eating (LR52)
Alice Waters

Published February 1995

Published in The Land Report, Number 52, Spring 1995, a publication of The Land Institute. Alice Waters is a former Land Institute board member. This article is adapted from a talk she gave at Prairie Festival 1994.

I was an average kid — a middle-class American — who grew up in an average family. One of my earliest memories is of my mother in our back yard pointing out and naming the flowers to me, encouraging me to smell the forsythia, the lilies of the valley, and the lilacs. My father had planted a victory garden in our yard. During World War II the government encouraged families to grow food for their own tables as part of the war effort. One Fourth of July, for a costume contest, my mother dressed me as the Queen of the Garden. I couldn't have been more than 3 or 4 years old at the time, but I have a vivid memory of my outfit: a skirt made of big lacy stalks of asparagus that had gone to seed, a lettuce leaf top, bracelets and necklaces made out of peppers and radishes, and a wreath of strawberries for my head.

It was much later before I really started to pay attention to eating with all my senses. I spent my junior year in college in Paris. I hardly ever attended classes that year — my friend Sarah and I were too busy eating. We started out in the self-service cafeteria, where there were things I had never tasted before: yogurt, oysters, warm baguettes. I started hanging out with French friends who took a critical approach to food as a matter of course. For the first time, I was seeing how people live who think of good food as an indispensable part of their lives. Every day was punctuated by food-related decisions. Naturally, one spent an hour or so in the afternoon at the cafe with one's friends. But most revealing to me, we ate food only when it was in season, because that was when it was the least expensive and the best tasting. Eating together was a ritual that filled life with meaning, a sacred moment of the day, when flavors and smells intermingled with ideas and feelings.

I had never thought about food so seriously before. I had never thought of pleasure so seriously before. I wasn't I making an intellectual effort to understand all this; I was absorbing these lessons by osmosis. I had begun to feel that there is an intimate connection between food and the quality of people's lives.

I think many French women and men have preserved a healthier, more natural way of eating. The last time I was in France with my family, we were fed by a friend of mine, a woman in her twenties who lives by herself, but who didn't hesitate at all to invite us to dinner at her tiny apartment. It was very simple and not the least bit extravagant: There was salad, some roast lamb, cheese, and fruit, and the house was full of the good smells of garlic and rosemary.

What was so healthy and natural about this was the spirit with which she did it. She had cared enough to find good, local food — the best, not necessarily the most expensive — and to cook and serve it very simply, in such a way that it tasted like the essence of what it was. To paraphrase Wendell Berry, such a meal honors the materials from which it is made; it honors the art by which it is made; it honors the person who makes it, and those who share it.

After I graduated from college, I traveled all over Turkey and experienced the kind of hospitality you usually only read about — the no-questions-asked, totally accepting and generous sharing that only people who live close to the land seem to be able to offer to total strangers. Once we were camping out in the countryside, not far from some goatherds, and when we woke up in the morning we found that they had silently slipped a bowl of goat's milk under our tent flap while we slept. They simply shared the best they had. This is how we were treated everywhere we went. I didn't know then that the things I was learning about food and hospitality would profoundly alter the course my life would take.

From Turkey we went to Corfu where I lived for awhile on practically nothing, very simply, watching the sun and moon rising and setting over the sea. We ate fish just caught from the same sea, and picked fruit from the trees. There was a sense of immediacy and aliveness to the food. I was unmistakably part of the natural rhythm of the place. Everything seemed comprehensible. Looking back, I see now that I was learning that eating in this way can keep you in harmony with the earth. Not too long after I moved back to Berkeley I started Chez Panisse Restaurant with a small band of friends and ten thousand borrowed dollars. I was 27 years old. I was unbelievably naive, but obsessed with the desire to replicate the experience of eating I had loved over in Europe. I didn't appreciate how out of the ordinary it would be to think about food this way in an American restaurant.

Cooking food in season, for example, seemed like a foreign concept when we were starting out. In this country we were used to frozen food, and produce shipped from far away, available the year round. We had come so far from enjoying fruit right off the tree and only served right then, at its very best and ripest, that when we did serve fruit like that, a single perfect peach could be a revelation.

The more we got involved in trying to make our fantasies come true, the more we realized it wasn't simply a matter of going to the market and getting, say, tiny green beans at the peak of their season, because nobody was picking them that small or getting them to market that fast. More often than not, the fish we had to buy wasn't right out of the water that morning. That simple recipe for roasted chicken that had been so delicious in France never tasted right, because the chickens we could get had all the flavor bred out of them.

We had to start looking for all these products, and it has taken years to find them. The process began when a neighbor offered us radishes and sorrel from her backyard garden, 22 years ago. Now we have a network of over 75 purveyors in California and Oregon who supply us with foodstuffs — including a farm in Sonoma that takes our compost and a little money in exchange for vegetables.

We discovered a pattern: When we looked for the freshest and best-tasting ingredients, we found that the people who produced them were frequently the most environmentally responsible. When we tried to find the products that were certified organic, we found that if they were fresh and ripe, they usually tasted the best.

I believed then, and I believe now, that actions have consequences, and that people acting responsibly can make a difference. I believe that how you eat, and how you choose your food is an act that combines the political — your place in the world of other people — with the most intensely personal — the way you use your mind and your senses, together, for the gratification of your soul.

Use eating to educate your senses. If you let your senses be deadened, and settle for food that's processed and wrapped and refrigerated, you're depriving yourself of the wealth of information that comes from sensual stimulation. Eating food is the best way to open up these pathways; it's something you do every day. So pay attention to what you are eating. If you choose food that is aromatic, with rich colors and varied flavors, your senses will be stimulated in ways that will enhance your consciousness, and that will improve your ability to communicate, not just about food, but about everything.

In many ways, the world we face is a sinister and dangerous place. We are beginning to see the frightening results of the damage we have already done to our environment. Last year, the Environmental Protection Agency issued a report estimating that out of every five rivers, lakes, and streams in the country, three are so seriously polluted that we cannot safely eat the fish in them. And yet we go on with no adequate plan to conserve our resources and, apparently, without sufficient political will to slow down the pace of destruction.

However, you can make your own decisions about food without needing anyone's permission and without anyone else's help. If you choose to eat mass-produced fast food you are supporting a network of supply and demand that is destroying local communities and traditional ways of life all over the world — a system that replaces self-sufficiency with dependence. And you are supporting a method of agriculture that is ecologically unsound — that depletes the soil and leaves harmful chemical residues in our food.

But if you decide to eat fresh food in season — and only in season — that is locally grown by farmers who take care of the earth, then you are contributing to the health and stability of local agriculture and local communities. When I buy food from farmers markets, the food is alive, and it is irresistible. If we demand fresh, nourishing food, we help erase the stigma of elitism that is attached to good food in this country. Wholesome, honest food should be an entitlement of all Americans, not just the rich.

Part of the problem with our national attitudes toward food is that we are brought up to believe that food just isn't that important. Children aren't even taught to be curious about what they eat. Many of us have been taught that eating quickly is a good thing, and that no fuss, no mess, and no preparation time are good things. But we're missing the point when we try to save time by not shopping and cooking for ourselves. If we rush to eat quickly so we can get the so-called "worthwhile" leisure-time stuff, we are cheating ourselves. One of the truly worthwhile pleasures in life, it seems to me, is not in getting away from work, but in doing good work that means something. Food can be transformative in everyone's life. One of the most powerful demonstrations of this truth is at the San Francisco County Jail. About twelve years ago, a woman named Cathrine Sneed started a program called the Garden Project to teach organic gardening to inmates. The inmates in the program — Cathrine calls them her students — grow fruits and vegetables that are taken to homeless centers in San Francisco.

The effect of this experience on some of the gardeners has been so overwhelming that when they are freed they want to go back to jail in order to continue working in the garden. So Cathrine started another garden on the outside for her alumni to cultivate. Restaurants like mine buy its high-quality produce, which helps support this remarkable community project.

This Garden Project incorporates all that I think is important about food: The gardeners are not only growing and harvesting food, but they are cooking and serving it, and sitting down and eating together with a renewed sense of self-esteem, and with flowers from the garden on their table. All of us, in or out of jail, need to learn this lesson. All of us must acknowledge that feeding one another is a fundamental part of healthy and moral living. Offering people things that help them to grow, physically and spiritually, is an act of the greatest love and respect for humanity. Supporting an economy that cares for the land is an act of the greatest love and respect for the planet that nourishes us.

This is the path we should follow throughout our lives. Remember, eating is an agricultural and political act, as well as a way to educate our senses. May we always enjoy it — intensely, I hope! It can change the way we treat each other, and it can change the world.

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Soil Loss and the Search for a Permanent Agriculture (LR4)
Wes Jackson

Some of the soil swept by an inch and a half rain from a sorghum field near The Land Institute buried young plants at the edge.
Published February 1978

Published in The Land Report, Number 4, February 1978, a publication of The Land Institute.

The Human-Nature Split
Nowhere is the human-nature split more dramatic than the manner in which land is covered by vegetation. To maintain the "ever-normal" granary, agricultural man's pull historically has been toward the monoculture of annuals. Nature's pull is toward a polyculture of perennials. This is not to say that we humans exclude perennials from our agricultural endeavors, just as nature does not exclude the annual plant as part of her strategy to keep vegetation on the ground. Certainly the numerous nut and citrus trees, grapes and berries (be they blue, black, rasp or straw), along with other perennial plants, are important to this agricultural species of ours. As for nature, no naturalist need remind us that her annuals are widely dispersed in natural ecosystems.

The main purpose of this paper is to consider the implications of these opposite tendencies on our earth with an eye to the serious work involved in healing the split. Nature is at once uncompromising and forgiving, but we do not precisely know the degree of her compromise and the extent of her forgiveness. I frankly doubt that we ever will. But we can say with a rather high degree of certainty that if we are to heal the split, it is the human agricultural system which must grow more toward the ways of nature rather than the other way around. [1]

Bills Must Be Paid
Nature rewards enterprise on a limited scale. A weedy annual is enterprising. Not only will it cover bare ground quickly, but it will yield an excess of potential energy besides. The main reason our most important crops originated as weedy annuals becomes immediately obvious when we examine the natural history of an annual plant. An annual, by definition, must complete a life cycle within a year. In contrast to most perennials, the annual carries more genes for fitness than for flexibility. A small amount of annual vegetative biomass promotes the production and survival of a rather large number of seeds during a growing season. This is usually assured by one of three ways or even a combination of all three: (1) the storage of plenty of food in the seed, (2) the set on of many seeds and (3) the ability to colonize a disturbed area. Many perennials may have these three characteristics, but it is less critical for them to come through in a particular season, for there is always another year. For that matter, there is always another year for many annuals too, as their seed will remain viable for more than one year. But overall the colonizing annual has had to rely on enterprise. The ancestors of our current crops may well have been camp followers, that is, colonizers of the disturbed ground around the campsite. They were obvious candidates for selection by humans because of their availability and their inherent ability to produce an excess of potential energy. They are the enterprisers of the higher plants.

We don't know whether the early agriculturists were faced with famine or not. But when they began t plant annuals in fields, they were beginning to reward enterprise. The monoculture of annuals, the enslavement of enterprising species, was a big new thing in the history of the earth. The face of the earth was changed. Is it possible that enterprising plant species taught humans enterprise?

By and large, the patient earth was rewarded patient ecosystems, but it would seem that enterprise has probably always been rewarded too, though on a very limited scale. It would seem to be a good strategy for an ecosystem to have enterprising species present, for these quick colonizers could rapidly cover the ground made naked by a migrating buffalo which had wallowed and dusted himself, or an excessive flood or an insistent wind. The ecological capital which had been sucked from parent rock material or stolen from the air could be retained to promote more life for future generations of all species in the system.

The selection of enterprising plant species has rewarded all humans bent on enterprise in food production. But there is a second consideration. Humanity also has long been armed with a psyche to take without thinking. After all, life and sustenance itself have forever been gifts of nature. It was the juxtaposition of these two psychological characteristics, however, enterprise and the taking without thought, which resulted in a rub which is yet to be reckoned with in the four hundred generations since humanity started seed time and harvest. The problem is this: to maintain any system, agricultural or natural, bills must be paid eventually. In nature's prairie, the bills are paid automatically and with amazing regularity. The wild forms have evolved methods for dispersing seed, recycling minerals, building soil, maintaining chemical diversity, promoting new varieties and even controlling weeds, e.g., through a shading system. The prairie has been successful because close attention has been paid to seeing that these jobs get done. Most biologists believe that natural selection alone was up to these tasks, and that purpose was not necessary.

This "no-free-lunch law" applies just as much to man's culture as it does to the biotic cultures of nature. For when agricultural man substitutes his annual monoculture on this prairie land, be it corn, wheat, milo sorghum, rye, oats or barley, the same bills have to be paid or failure is inevitable. Mechanical and commercial preparation of the seed and planting, the application of fertilizer, chemical and power weeding, mechanical soil preparation, pesticides and fungicides and plant breeding are all the clumsy inventions we have devised for paying the same bills nature pays.

In contrast to the system of nature which relies solely on the daily allocation of solar energy, in the industrialized world our inventions for the successful monoculture of the annuals require the stored light of the Carbonierous. Efficiency in energy use is the way of nature, not of industrialized man.

I mentioned at the beginning that the human-nature split was the most dramatic in the manner in which land is covered with vegetation. Aside from nuclear war, there is no greater environmental problem than the loss of our soils. If soil loss were not such a reality, it would be much more difficult to argue that the way of nature is inherently better than the way of agricultural man in the developed world. Energy use is not the major consideration.[2]

We are back again to an examination of the consequences of the human-nature split. I have mentioned that the monoculture of annuals leads to soil erosion. The methods almost inherent in the monoculture of annuals require that ground be devoid of vegetation for too long a time, often during critical periods of the year. The forces of wind and rain can now rapidly move soil seaward. Even during the growing season, especially for the row crops, the loss is substantial. Crops such as corn, cotton and soybeans have much of their holding power destroyed between the rows as the farmer loosens the earth to cultivate. For this reason, J. Russell Smith called corn, "the killer of continents ... and one of the worst enemies of the human future."[3]

The polyculture of perennials is another matter, however. The more elaborate root system is an excellent soil binder. It has been estimated that before the white man, fires were sufficiently common and any given area became burned at least once in a decade. Though the top organic matter may have been absent for brief periods, the roots at least were alive and binding the soil.

What Will Nature Require of Us?
It seems doubtful that nature will uncompromisingly insist that the polyculture of perennials is the only way humans can peacefully co-exist with her. As I mentioned earlier, she employs some annuals in her own strategy. One might begin a limited systematic inquiry into the nature of a high-yielding and permanent agriculture by asking whether it is the annual versus perennial condition of the plant or monoculture versus polyculture we need to investigate first.


Click on image for full size figure.
In a more thorough-going systematic system, we may have to contrast, not just annual versus perennial, or monoculture versus polyculture, but the woody versus the herbaceous condition and whether the human interest is in the fruit/seed product or the vegetative part of the plant. When we consider these four contrasting considerations, in all possible combinations, we have sixteen categories for assessment.

We can eliminate four of these sixteen categories listed in Table I for they involve woody annuals, a rare phenomenon in nature. This leaves us with twelve categories for consideration. Eleven of these remaining combinations are currently employed in the human enterprise. But there is one, category seven, which involves the polyculture of the herbaceous perennials for seed/fruit production. This category is almost opposite of our current high-yielding monoculture of annual cereals and legumes.

Fruit/seed material is the most important plant food humans ingest. This is so because of the readily storable, easily handled, highly nutritious nature of the seeds we call grains. Unfortunately, none of our important grains are perennial. If a few of them had been, we might not have so thoroughly plowed from the edge of the eastern deciduous forest to the Rockies. Where we did not plow or where we did plant back nature's herbaceous perennials in polyculture, our livestock have become fat on the leaf and seed products. Throughout this entire expanse, the mixed herbaceous perennials have not been cultured for the purpose of harvesting the seed except for the rare times when collections were made to plant more mixed pasture.

In the eastern tall grass region, the white settler substituted the domestic tall grass—corn. In the middle or mixed grass region, he substituted a domestic middle-sized grass—wheat. Part of the problem of the dust bowl is that we tried to substitute the middle-sized grass wheat in what was short grass prairie.

The Dust Bowl followed the great plowing of the teens and twenties. When the dry winds blew in the thirties, the bad reputation for the region became firmly implanted on the American mind. We have had other severe droughts in the area since, and the wind has blown just as strong. All the work done by the Soil Conservation Service and others to prevent this major loss of our ecological capital should be applauded. It is truly the work of thousands of diligent and dedicated people who have spent most of their productive lives thinking and working on the problem, but a most sober fact can not be ignored. The soil is going fast. On some flat land there may be very little loss, but on rolling land the loss can be as high as sixty tons per acre per year. According to the Soil Conservation Service, the average yearly loss is nine tons per acre. Based on a random sample conducted by the General Accounting Office, eighty-five percent of the farms are losing more than five tons of soil per acre each year.[4] Furthermore, there is little difference between farms participating in USDA programs and those which do not.

Unless the pattern of agriculture is changed, our cities of this region will stand as mute as those near the Great Wall of China, along the fertile crescent or the region of Egypt which once hosted grain fields that supplied the empire of ancient Rome.

If we are serious in our intentions to negotiate with nature while there is still time for the American to heal the split, are we not being forced to ask if nature will uncompromisingly require us to put vegetation back on the ground with a promise that we are never to plow again? If that is nature's answer from the corn belt to the Rockies, will it require that we develop an agriculture based on the polyculture of herbaceous perennials which will yield us seeds not too unlike our cereals or legumes? This category, so glaringly blank in our table, needs filling desperately; and yet to contemplate the research, breeding, establishment of the crops, the harvest and separation of seeds is mind boggling. All this effort must go hand in hand with the transportation, milling and ultimately, the eating of this "instant granola in the field."

Is it too much to expect plant scientists to come up with such perennials, either through some inter-generic crossing of our high-producing annuals with some perennial relatives, or by selecting some wild perennial relatives which show promise of a high yield of a product that is at once abundant and tasty? Any scenario surrounding such an agriculture does seem to be truly in a fantasy world. For mechanized agriculture it would mean either a minimum amount or a complete absence of plowing, disking, chiseling and mechanical power weeding. There would be only harvest, fertilizing, pest control, genetic selection and the occasional replanting.

Where Do We Begin?
As the result of this analysis, I can see four lines of investigation which we might pursue, though not in equal intensity. I will present them here beginning with the most difficult and ranging to the easiest to implement. It turns out that the first two of these lines mostly involve our agriculture. The third is more relevant for the gardener, and the fourth would be shared by both gardener and agriculturist. For the first two, we begin with the assumption that for the Prairie-Plains Region, the seed/fruit producing, herbaceous, perennial grasses and legumes are the very best plants for saving our soils and giving us food directly.

(1) One line of research would involve the conversion of the current high-producing annual cereals and legumes into perennials through some inter-generic crosses with close, wild relatives. This will be discouraging work, for in most cases it will involve tedious manipulations such as embryo culture and the breakdown of cytogenetic and biochemical fertility barriers. Nevertheless, some of these techniques have been developed.

(2) We have the technical and scientific know-how necessary to begin an ambitious breeding program to increase the size and nutritional quality of the seeds or fruits of many of the herbaceous legume and grass perennials. Some of the legume candidates which come to mind include the large-podded, ground plum milk vetch, the scurf pea and some species of Baptisia. Of the grasses, we might try "improving" switch grass, Indian grass, eastern gama and some of the Panicums. But like our first consideration, the results will be a long time in the making.

There is another haunting consideration. The late Dr. Edgar Anderson, geneticist at the Missouri Botanical Garden, once posed the generalization that crops tend to be the highest producers outside the region in which they had their evolution. Large seed production in one region of the globe is the result of the centuries of pressure from its pests in the region of its evolution. For example, our sunflowers will thrive locally, in the place they evolved, but to obtain a crop with almost one hundred percent of the achenes fully inflated, a massive spraying of pesticides will be necessary. Sunflowers will probably do better with less spraying in the Soviet Union where they are, incidentally, a more important crop than in the U.S.

Anderson's axiom can not be dismissed lightly. We may be forced to consider the adoption of some European, but mostly Asiatic species, perhaps of the same genera as our prairie grass and legume perennials. These relatives, which were once somewhat contiguous through a circumboreal connection on a warmer earth, have evolved separate gene pools since the beginning of the Ice Age, well over two million years ago.

(3) Patches of native prairie have become few and far between, but their importance has increased. One of the most practical activities of professional and amateur alike would be to preserve the existing native prairie and work to re-establish, wherever possible, these prairie patches throughout the region. We desperately need them now so that we might have a standard against which to judge our agricultural and garden practices. The efforts of the organization, Save The Tallgrass Prairie, are justified on these practical grounds alone.

We live in a time when the conscientious organic gardener has developed an interest in companion planting. The native prairie had companion planting and still does where it exists. While diseases and pests do take their toll, the chemical diversity prevents the epidemic from ravaging the entire system.[5]

Many maps of the spatial relationships of the wild prairie species are needed. Once mapped, we can then select the domestic annual relatives to plant in the garden in the same spatial relationship we found the wild relatives in the field. These domestic analogs would collectively form a "domestic prairie" of edible annuals. We could then conduct some controlled experiments to investigate whether this type of "companion planting" has any previously undiscovered inherent virtue for reducing the impact of pathogens and other pests, including weeds which these individual garden crops experience in monoculture.

On the left in Table II are some of the wild plants whose ecology we might study. For example, around some clusters of wild onion we might discover a relationship with some species that is unique to these "onion patches" on the prairie. Near the buffalo gourd may be another ensemble of plants which affords a measure of protection for this cucurbit. Perhaps squash bugs or cucumber beetles would be less of a garden problem if the buffalo gourd has a secret and we were to learn it.

Here I can not resist developing a scenario. Imagine a garden in the future in which a winter wheat and/or rye has been sown in the fall. This has provided ground cover through the winter and early spring. The cereal grains are not planted for harvest. They are mere substitutes for their perennial relatives, the wild perennial grasses. The rest of the garden is planted in this grain field, but in spatial relationships which generally resemble a vegetation map of their wild relatives of the prairie.

Any naturalist, amateur or professional, looking for a chance to do some meaningful research could begin this micro-mapping of the native prairie vegetation. The number one problems in our garden at The Land are the cucumber beetle and squash bug. How well do the wild cucurbits fare on the prairie, and if they do better than their garden relatives, what plants are surrounding them and in what type of soil? The cabbage moth is another pest most exasperating to many an organic gardener who likes cauliflower, cabbage and broccoli. What happens to the wild species of the Brassicaceae in the prairie? We need to make this information more widespread.

(4) When we inspect Table I to find the closest reasonable category to our ideal (number 7), we have to make some decisions. It seems reasonable to favor polyculture over monoculture, perennial over annual, and probably fruit/seed over vegetative since what we seek are substitutes for annual grain crops. All of this assumed, we are left to select woody over herbaceous. Result: the mixed orchard.

Two questions now come to mind. What kind of food value do the various nuts and fruits have and how does their production compare to one of our major crops, such as wheat? A more thorough-going literature review and analysis of data pertaining to these questions will begin in February, 1978 at The Land, and I expect the results to be reported in the next issue of The Land Report.

On the question of comparative production, a cursory survey and analysis suggest that both the economics and the biological feasibility are there to support an agricultural shift. I have not looked at the alternative machinery for harvest, storage, milling, etc.

The advantages of tree culture have been enthusiastically spelled out by the late J. Russell Smith in his splendid book, Tree Crops.

For experiments in breeding, the tree has one great advantage over most of the annuals. We propagate trees by twig or bud, by grafting or budding. Therefore, any wild, unstable (though useful) freak, any helpless malformation like the navel orange which cannot reproduce itself, can be made into a million trees by the nurseryman. The parent tree of the Red Delicious variety of apple grew, by chance, in an Iowa fence row. A representative of the Stark Nursery Company saw the apple at a fair and raced with all speed to the tree, bought it, and reproduced it by the million, an easy process if you really need a million trees. With corn, oats, or alfalfa, the breeder must produce a type true to seed before the farmer can use it.

Not only is the tree the great engine of production, but its present triumphant agricultural rivals, the grains, are really weaklings.

All plants require heat, light moisture, and fertility. Give these things and the tree raises its head triumphantly and grows. But in addition to these requirements the weakling grains must have the plow. A given area may have rich soil and good climatic conditions, but be unsuitable for grain if the land happens to be rocky. Nor are steep lands good farm lands for grains. Trees are the natural crop plants for all such places.

Moreover the grains are annual plants. They must build themselves anew for each harvest. They may, therefore, become victims of the climatic peculiarities of a certain short season. It is rain in July that is so vital to the American corn crop. The rains of June cannot bring a good crop through. Also, if most of the rain due to fall in July happens to come in August, it comes too late. The corn has shot its bolt; it cannot be revived. Trees are much better able than the cereals to use rain when it comes. They can store moisture much better than the annuals can store it, because they thrust their roots deep into the earth, seeking moisture far below the surface. They are able to survive drought better than the annual crops that grow beside them. For example, a drought that blasts corn or hay or potatoes may have little influence on the adjacent apple orchard. Trees living from year to year are a permanent institution, a going concern, ready to produce when their producing time comes.

Therefore, the crop-yielding tree offers the best medium for extending agriculture to hills, to steep places, to rocky places, and to the lands where rainfall is deficient. New trees yielding annual crops need to be created for use on these four types of land.

When E.F. Schumacher spoke on tree planting, he spoke from an intuitive understanding of the tree as "soft" technology, as a source of food, as a holder of soil, as a way of dealing with the global food and energy problems all at once. Though he spoke from his religious "center," he was also aware of the historical record of the devastation caused by man due to the neglect of trees in the Mediterranean, all of Asia Minor, much of India and in many parts of Asia. I doubt that Schumacher constructed anything like Table I of this paper, nor did he need to in order to see that the closest category to our ideal for the great prairies and plains agriculture which is blank on the table is the mixed orchard. Happily, Schumacher believed we can all do something about these problems by reminding us that,

We can better prepare by taking seriously the possibility of growing a lot of food on trees of various kinds, including carob, honey locust, and all sorts of extremely useful trees. It takes some time if you embark on a long journey, and the only advice that one can give is that you should get up early. We have all been sitting under trees planted by our ancestors, so let us plant trees so that our children and grandchildren can sit under them and possibly get the harvest. The interesting thing about this which now becomes more understandable is that the tree is a three-dimensional solar collector and is of such miraculous powers that only people that have done the grafting and breeding work fully realize. The first thing to do is for people to really get busy in a popular democratic movement everywhere to establish a tree that is potentially useful, a tree that can produce food, not only timber. Once we have the stock established, then there will be sufficient interest to do the work of selection and even plant breeding to make the best of it.

The shelter belt program, started in 1934 by President Franklin D. Roosevelt, by 1943 consisted of 19,000 miles on approximately 33,000 farms.[7] Many large and beautiful shelter belts still march east-west across our countryside. Though these trees were not planted for their fruit/seed bearing qualities, these local survivors tell us something about the potential of trees in the area. The late botanist, W.H. Horr of the University of Kansas, watched and studied these shelters for more than thirty years, always comparing them to the surrounding vegetation. Several years ago he told me that during certain periods of extreme drought, he had observed numerous deciduous trees in western Kansas cutting their leaves as early as July. In the spring, these trees would leaf out again, thus demonstrating that the leaf loss was a remarkable mechanism for reducing transpiration and additional drought stress.

We need to caution ourselves about completely relying on survival and productivity information gained from studies of shelter belt trees. The shelter belt really stands as an island in a field. For more than thirty-five years now, top soil has been trapped by the dense growth, thus affording a rich supply of nutrients. Furthermore, they serve as snow fences accumulating large drifts and therefore a disproportionate amount of moisture available for plant growth compared to the surrounding fields. Nevertheless, because of the planting records and the new follow-up studies which were done, these trees may provide the best base-line information available for exploring the feasibility of woody perennial polyculture in the Great Plains.


Click on image for full size figure.
In the next Land Report I hope we can present a list of the more promising trees for the Great Plains area, along with an assessment of their use, likelihood of success, most promising varieties and how they might be integrated with herbaceous vegetation on the ground. I suspect we will be advocating honey locust grown for sugar, and perhaps persimmon, acorns and mulberry for livestock, and several other tree products for direct human consumption. Those who wish to get started this spring, however, could plant the honey locust, Gleditsia triancanthos. I suggest this tree, because in a 1944 survey of the plantings in the shelter belts, the highest percentage of survival was with the honey locust at seventy-nine percent. In 1942 some five year old trees of the Milwood variety produced an average of 58.3 pounds of pods per tree. At forty-eight trees per acre, this would equal 2,798 pounds of pods. [8] Furthermore, this Milwood variety has produced as much as thirty-six percent sugar.[3]

In Conclusion
The depth of the human-nature split, symbolized by the depth of the hillside gullies, as far away as the Great Wall of China, or maybe as near as our closest field at home, is not highly visible in modern agriculture. The chemotherapy treatments to the land promote a temporary vigor more impressive than these fields have ever known. Thought the physician may rejoice with his cancer patient that he is feeling better in response to the treatment, he is also careful to monitor the telltale systems of the body. Similarly, those interested in the long-term health of the land need only stand on the edge of a stream after a rain and watch its plasma boil and turn in the powerful current below and then realize that the vigorous production of our fields is, unfortunately, temporary. Since we initiated the split with nature some 10,000 years ago by embracing enterprise in food production, we have yet to develop an agriculture as permanent as the nature we destroy.

References and Notes

1. This discussion on the human-nature split about the ways of humanity versus the ways of nature is merely a convenient mode for discussing one of the earth's problems. Of course we are all aware that Homo sapiens is a product of nature and that it can be argued that anything which is, is natural, etc. Philosophers have fun with this type of discussion. I do too, sometimes, but I have not chosen to spin it out here for I think most readers would be weary long before we reached our main point of the discussion.

2. On the basis of a paper, "Energy Use in the U.S. Food System" by John and Carol Steinhart from Food: Politics, Economics, Nutrition and Research edited by Philip H. Abelson, 1975, I have estimated that from four to eight percent of the U.S. energy is spent in agriculture at what we might call the "production level." Given this low percentage, it would seem that in a decade or less we could convert to fuels made out of several forms of now-wasted biomass to yield such products as alcohol and methane.

3. Tree Crops by J. Russell smith, The Devin-Adair Company, New York, 1953.

4. National Wildlife, February-March 1978, page 28.

5. I personally believe that most of the gain from companion planting methods is due less to some chemical exuded by a neighboring plant than to presenting the pests with the mathematical problem which could best be understood through vector analysis (no pun intended). If a different species is growing next to one which an insect has an enzyme system to handle, then respiratory energy must be spent to find another plant. Less of the pest's energy budget is available for reproduction. Exponential growth is more likely where the food supply is contiguous, as on a Petri dish, than when it is not.

6. Intermediate Technology Report 4/5, Summer, 1977.

7. The Journal of Forestry, April, 1946, pages 237-257.

8. 53rd Annual Report (1942) Alabama Agricultural Experiment Station, page 54.

9. I thank O.S. Fent for his helpful critique of this paper.

10. I thank Ted Landers of the New Life Farm, Drury, Missouri, for first calling to my attention the numerous merits of the honey locust.

[reveille91]

DRY DIPSTICK LAUNCHES "BEYOND PEAK" - New Website is Guide to Self-Sufficiency – Living Sustainably with Peak Oil and Economic Collapse

DryDipstick.com, a web guide to Peak Oil, launches BeyondPeak.com, a guide to self-sufficiency and preparing for, and dealing with, Peak Oil and economic collapse.

Napa Valley, California (PRWEB) November 5, 2005 -- DryDipstick.com, a popular Peak Oil metadirectory of information on the impending decrease in oil production, today launches a sister website "Beyond Peak," located at www.beyondpeak.com.

The new website focuses on preparation for, and dealing with, the effects of Peak Oil, economic collapse, and a host of other looming disruptions, any one of which could cause serious problems in our society.

Mick Winter, founder of both Dry Dipstick and Beyond Peak, says: "Many visitors to Dry Dipstick have told us, 'Okay, we get Peak Oil. Now what can we do about it?'"

We've created "Beyond Peak" to give hundreds of answers to that single question. The website provides access to the information, resources and tools that people need to move their families, neighborhoods and communities closer to sustainable, self-sufficient living."

While few of us can have real effects on national and state policies, all of us can affect what happens at home and in our communities, so Beyond Peak provides information for use at the home and local level.

Everyday citizens can do many things, on their own and working with friends and neighbors, to provide for essential needs. Beyond Peak offers information on such topics as food, health, money, power, shelter, transportation and water, as well as barter, drugs, relocation and the recurring collapse of societies.

No single website or method is a cure-all, but armed with the information offered by Beyond Peak, individuals can know that they are doing everything they can to prepare for, and deal with, whatever the future may bring.

For complete information on preparing for, and dealing with, Peak Oil and economic collapse, visit Beyond Peak at www.beyondpeak.com.
###

[reveille91]

[ Note: The most frightening article FTW has ever published is now a free story for all to read. Our paid subscribers read it last October. As Peak Oil and its effects become a raging national controversy it's time everyone reads the story that puts the most serious implications of Peak Oil and Gas into perspective. Your biggest problem is not that your SUV might go hungry, it's that you and your children might go hungry. What has been documented here is no secret to US and foreign policy makers as China experiences grain shortages this year and, as CNN's Lou Dobbs recently reported, the US and Canada will soon no longer be the world's breadbasket. - MCR ]

Eating Fossil Fuels

by Dale Allen Pfeiffer
http://www.fromthewilderness.com/free/ww3/...eating_oil.html

© Copyright 2004, From The Wilderness Publications, www.copvcia.com. All Rights Reserved. May be reprinted, distributed or posted on an Internet web site for non-profit purposes only.


[Some months ago, concerned by a Paris statement made by Professor Kenneth Deffeyes of Princeton regarding his concern about the impact of Peak Oil and Gas on fertilizer production, I tasked FTW's Contributing Editor for Energy, Dale Allen Pfeiffer to start looking into what natural gas shortages would do to fertilizer production costs. His investigation led him to look at the totality of food production in the US. Because the US and Canada feed much of the world, the answers have global implications.

What follows is most certainly the single most frightening article I have ever read and certainly the most alarming piece that FTW has ever published. Even as we have seen CNN, Britain's Independent and Jane's Defence Weekly acknowledge the reality of Peak Oil and Gas within the last week, acknowledging that world oil and gas reserves are as much as 80% less than predicted, we are also seeing how little real thinking has been devoted to the host of crises certain to follow; at least in terms of publicly accessible thinking.

The following article is so serious in its implications that I have taken the unusual step of underlining some of its key findings. I did that with the intent that the reader treat each underlined passage as a separate and incredibly important fact. Each one of these facts should be read and digested separately to assimilate its importance. I found myself reading one fact and then getting up and walking away until I could come back and (un)comfortably read to the next.

All told, Dale Allen Pfeiffer's research and reporting confirms the worst of FTW's suspicions about the consequences of Peak Oil, and it poses serious questions about what to do next. Not the least of these is why, in a presidential election year, none of the candidates has even acknowledged the problem. Thus far, it is clear that solutions for these questions, perhaps the most important ones facing mankind, will by necessity be found by private individuals and communities, independently of outside or governmental help. Whether the real search for answers comes now, or as the crisis becomes unavoidable, depends solely on us. – MCR]

October 3 , 2003, 1200 PDT, (FTW) -- Human beings (like all other animals) draw their energy from the food they eat. Until the last century, all of the food energy available on this planet was derived from the sun through photosynthesis. Either you ate plants or you ate animals that fed on plants, but the energy in your food was ultimately derived from the sun.

It would have been absurd to think that we would one day run out of sunshine. No, sunshine was an abundant, renewable resource, and the process of photosynthesis fed all life on this planet. It also set a limit on the amount of food that could be generated at any one time, and therefore placed a limit upon population growth. Solar energy has a limited rate of flow into this planet. To increase your food production, you had to increase the acreage under cultivation, and displace your competitors. There was no other way to increase the amount of energy available for food production. Human population grew by displacing everything else and appropriating more and more of the available solar energy.

The need to expand agricultural production was one of the motive causes behind most of the wars in recorded history, along with expansion of the energy base (and agricultural production is truly an essential portion of the energy base). And when Europeans could no longer expand cultivation, they began the task of conquering the world. Explorers were followed by conquistadors and traders and settlers. The declared reasons for expansion may have been trade, avarice, empire or simply curiosity, but at its base, it was all about the expansion of agricultural productivity. Wherever explorers and conquistadors traveled, they may have carried off loot, but they left plantations. And settlers toiled to clear land and establish their own homestead. This conquest and expansion went on until there was no place left for further expansion. Certainly, to this day, landowners and farmers fight to claim still more land for agricultural productivity, but they are fighting over crumbs. Today, virtually all of the productive land on this planet is being exploited by agriculture. What remains unused is too steep, too wet, too dry or lacking in soil nutrients.1

Just when agricultural output could expand no more by increasing acreage, new innovations made possible a more thorough exploitation of the acreage already available. The process of “pest” displacement and appropriation for agriculture accelerated with the industrial revolution as the mechanization of agriculture hastened the clearing and tilling of land and augmented the amount of farmland which could be tended by one person. With every increase in food production, the human population grew apace.

At present, nearly 40% of all land-based photosynthetic capability has been appropriated by human beings.2 In the United States we divert more than half of the energy captured by photosynthesis.3 We have taken over all the prime real estate on this planet. The rest of nature is forced to make due with what is left. Plainly, this is one of the major factors in species extinctions and in ecosystem stress.

The Green Revolution

In the 1950s and 1960s, agriculture underwent a drastic transformation commonly referred to as the Green Revolution. The Green Revolution resulted in the industrialization of agriculture. Part of the advance resulted from new hybrid food plants, leading to more productive food crops. Between 1950 and 1984, as the Green Revolution transformed agriculture around the globe, world grain production increased by 250%.4 That is a tremendous increase in the amount of food energy available for human consumption. This additional energy did not come from an increase in incipient sunlight, nor did it result from introducing agriculture to new vistas of land. The energy for the Green Revolution was provided by fossil fuels in the form of fertilizers (natural gas), pesticides (oil), and hydrocarbon fueled irrigation.

The Green Revolution increased the energy flow to agriculture by an average of 50 times the energy input of traditional agriculture.5 In the most extreme cases, energy consumption by agriculture has increased 100 fold or more.6

In the United States, 400 gallons of oil equivalents are expended annually to feed each American (as of data provided in 1994).7 Agricultural energy consumption is broken down as follows:

· 31% for the manufacture of inorganic fertilizer

· 19% for the operation of field machinery

· 16% for transportation

· 13% for irrigation

· 08% for raising livestock (not including livestock feed)

· 05% for crop drying

· 05% for pesticide production

· 08% miscellaneous8

Energy costs for packaging, refrigeration, transportation to retail outlets, and household cooking are not considered in these figures.

To give the reader an idea of the energy intensiveness of modern agriculture, production of one kilogram of nitrogen for fertilizer requires the energy equivalent of from 1.4 to 1.8 liters of diesel fuel. This is not considering the natural gas feedstock.9 According to The Fertilizer Institute (http://www.tfi.org), in the year from June 30 2001 until June 30 2002 the United States used 12,009,300 short tons of nitrogen fertilizer.10 Using the low figure of 1.4 liters diesel equivalent per kilogram of nitrogen, this equates to the energy content of 15.3 billion liters of diesel fuel, or 96.2 million barrels.

Of course, this is only a rough comparison to aid comprehension of the energy requirements for modern agriculture.

In a very real sense, we are literally eating fossil fuels. However, due to the laws of thermodynamics, there is not a direct correspondence between energy inflow and outflow in agriculture. Along the way, there is a marked energy loss. Between 1945 and 1994, energy input to agriculture increased 4-fold while crop yields only increased 3-fold.11 Since then, energy input has continued to increase without a corresponding increase in crop yield. We have reached the point of marginal returns. Yet, due to soil degradation, increased demands of pest management and increasing energy costs for irrigation (all of which is examined below), modern agriculture must continue increasing its energy expenditures simply to maintain current crop yields. The Green Revolution is becoming bankrupt.

Fossil Fuel Costs

Solar energy is a renewable resource limited only by the inflow rate from the sun to the earth. Fossil fuels, on the other hand, are a stock-type resource that can be exploited at a nearly limitless rate. However, on a human timescale, fossil fuels are nonrenewable. They represent a planetary energy deposit which we can draw from at any rate we wish, but which will eventually be exhausted without renewal. The Green Revolution tapped into this energy deposit and used it to increase agricultural production.

Total fossil fuel use in the United States has increased 20-fold in the last 4 decades. In the US, we consume 20 to 30 times more fossil fuel energy per capita than people in developing nations. Agriculture directly accounts for 17% of all the energy used in this country.12 As of 1990, we were using approximately 1,000 liters (6.41 barrels) of oil to produce food of one hectare of land.13

In 1994, David Pimentel and Mario Giampietro estimated the output/input ratio of agriculture to be around 1.4.14 For 0.7 Kilogram-Calories (kcal) of fossil energy consumed, U.S. agriculture produced 1 kcal of food. The input figure for this ratio was based on FAO (Food and Agriculture Organization of the UN) statistics, which consider only fertilizers (without including fertilizer feedstock), irrigation, pesticides (without including pesticide feedstock), and machinery and fuel for field operations. Other agricultural energy inputs not considered were energy and machinery for drying crops, transportation for inputs and outputs to and from the farm, electricity, and construction and maintenance of farm buildings and infrastructures. Adding in estimates for these energy costs brought the input/output energy ratio down to 1.15 Yet this does not include the energy expense of packaging, delivery to retail outlets, refrigeration or household cooking.

In a subsequent study completed later that same year (1994), Giampietro and Pimentel managed to derive a more accurate ratio of the net fossil fuel energy ratio of agriculture.16 In this study, the authors defined two separate forms of energy input: Endosomatic energy and Exosomatic energy. Endosomatic energy is generated through the metabolic transformation of food energy into muscle energy in the human body. Exosomatic energy is generated by transforming energy outside of the human body, such as burning gasoline in a tractor. This assessment allowed the authors to look at fossil fuel input alone and in ratio to other inputs.

Prior to the industrial revolution, virtually 100% of both endosomatic and exosomatic energy was solar driven. Fossil fuels now represent 90% of the exosomatic energy used in the United States and other developed countries.17 The typical exo/endo ratio of pre-industrial, solar powered societies is about 4 to 1. The ratio has changed tenfold in developed countries, climbing to 40 to 1. And in the United States it is more than 90 to 1.18 The nature of the way we use endosomatic energy has changed as well.

The vast majority of endosomatic energy is no longer expended to deliver power for direct economic processes. Now the majority of endosomatic energy is utilized to generate the flow of information directing the flow of exosomatic energy driving machines. Considering the 90/1 exo/endo ratio in the United States, each endosomatic kcal of energy expended in the US induces the circulation of 90 kcal of exosomatic energy. As an example, a small gasoline engine can convert the 38,000 kcal in one gallon of gasoline into 8.8 KWh (Kilowatt hours), which equates to about 3 weeks of work for one human being.19

In their refined study, Giampietro and Pimentel found that 10 kcal of exosomatic energy are required to produce 1 kcal of food delivered to the consumer in the U.S. food system. This includes packaging and all delivery expenses, but excludes household cooking).20 The U.S. food system consumes ten times more energy than it produces in food energy. This disparity is made possible by nonrenewable fossil fuel stocks.

Assuming a figure of 2,500 kcal per capita for the daily diet in the United States, the 10/1 ratio translates into a cost of 35,000 kcal of exosomatic energy per capita each day. However, considering that the average return on one hour of endosomatic labor in the U.S. is about 100,000 kcal of exosomatic energy, the flow of exosomatic energy required to supply the daily diet is achieved in only 20 minutes of labor in our current system. Unfortunately, if you remove fossil fuels from the equation, the daily diet will require 111 hours of endosomatic labor per capita; that is, the current U.S. daily diet would require nearly three weeks of labor per capita to produce.

Quite plainly, as fossil fuel production begins to decline within the next decade, there will be less energy available for the production of food.

Soil, Cropland and Water

Modern intensive agriculture is unsustainable. Technologically-enhanced agriculture has augmented soil erosion, polluted and overdrawn groundwater and surface water, and even (largely due to increased pesticide use) caused serious public health and environmental problems. Soil erosion, overtaxed cropland and water resource overdraft in turn lead to even greater use of fossil fuels and hydrocarbon products. More hydrocarbon-based fertilizers must be applied, along with more pesticides; irrigation water requires more energy to pump; and fossil fuels are used to process polluted water.

It takes 500 years to replace 1 inch of topsoil.21 In a natural environment, topsoil is built up by decaying plant matter and weathering rock, and it is protected from erosion by growing plants. In soil made susceptible by agriculture, erosion is reducing productivity up to 65% each year.22 Former prairie lands, which constitute the bread basket of the United States, have lost one half of their topsoil after farming for about 100 years. This soil is eroding 30 times faster than the natural formation rate.23 Food crops are much hungrier than the natural grasses that once covered the Great Plains. As a result, the remaining topsoil is increasingly depleted of nutrients. Soil erosion and mineral depletion removes about $20 billion worth of plant nutrients from U.S. agricultural soils every year.24 Much of the soil in the Great Plains is little more than a sponge into which we must pour hydrocarbon-based fertilizers in order to produce crops.

Every year in the U.S., more than 2 million acres of cropland are lost to erosion, salinization and water logging. On top of this, urbanization, road building, and industry claim another 1 million acres annually from farmland.24 Approximately three-quarters of the land area in the United States is devoted to agriculture and commercial forestry.25 The expanding human population is putting increasing pressure on land availability. Incidentally, only a small portion of U.S. land area remains available for the solar energy technologies necessary to support a solar energy-based economy. The land area for harvesting biomass is likewise limited. For this reason, the development of solar energy or biomass must be at the expense of agriculture.

Modern agriculture also places a strain on our water resources. Agriculture consumes fully 85% of all U.S. freshwater resources.26 Overdraft is occurring from many surface water resources, especially in the west and south. The typical example is the Colorado River, which is diverted to a trickle by the time it reaches the Pacific. Yet surface water only supplies 60% of the water used in irrigation. The remainder, and in some places the majority of water for irrigation, comes from ground water aquifers. Ground water is recharged slowly by the percolation of rainwater through the earth's crust. Less than 0.1% of the stored ground water mined annually is replaced by rainfall.27 The great Ogallala aquifer that supplies agriculture, industry and home use in much of the southern and central plains states has an annual overdraft up to 160% above its recharge rate. The Ogallala aquifer will become unproductive in a matter of decades.28

We can illustrate the demand that modern agriculture places on water resources by looking at a farmland producing corn. A corn crop that produces 118 bushels/acre/year requires more than 500,000 gallons/acre of water during the growing season. The production of 1 pound of maize requires 1,400 pounds (or 175 gallons) of water.29 Unless something is done to lower these consumption rates, modern agriculture will help to propel the United States into a water crisis.

In the last two decades, the use of hydrocarbon-based pesticides in the U.S. has increased 33-fold, yet each year we lose more crops to pests.30 This is the result of the abandonment of traditional crop rotation practices. Nearly 50% of U.S. corn land is grown continuously as a monoculture.31 This results in an increase in corn pests, which in turn requires the use of more pesticides. Pesticide use on corn crops had increased 1,000-fold even before the introduction of genetically engineered, pesticide resistant corn. However, corn losses have still risen 4-fold.32

Modern intensive agriculture is unsustainable. It is damaging the land, draining water supplies and polluting the environment. And all of this requires more and more fossil fuel input to pump irrigation water, to replace nutrients, to provide pest protection, to remediate the environment and simply to hold crop production at a constant. Yet this necessary fossil fuel input is going to crash headlong into declining fossil fuel production.

US Consumption

In the United States, each person consumes an average of 2,175 pounds of food per person per year. This provides the U.S. consumer with an average daily energy intake of 3,600 Calories. The world average is 2,700 Calories per day.33 Fully 19% of the U.S. caloric intake comes from fast food. Fast food accounts for 34% of the total food consumption for the average U.S. citizen. The average citizen dines out for one meal out of four.34

One third of the caloric intake of the average American comes from animal sources (including dairy products), totaling 800 pounds per person per year. This diet means that U.S. citizens derive 40% of their calories from fat-nearly half of their diet. 35

Americans are also grand consumers of water. As of one decade ago, Americans were consuming 1,450 gallons/day/capita (g/d/c), with the largest amount expended on agriculture. Allowing for projected population increase, consumption by 2050 is projected at 700 g/d/c, which hydrologists consider to be minimal for human needs.36 This is without taking into consideration declining fossil fuel production.

To provide all of this food requires the application of 0.6 million metric tons of pesticides in North America per year. This is over one fifth of the total annual world pesticide use, estimated at 2.5 million tons.37 Worldwide, more nitrogen fertilizer is used per year than can be supplied through natural sources. Likewise, water is pumped out of underground aquifers at a much higher rate than it is recharged. And stocks of important minerals, such as phosphorus and potassium, are quickly approaching exhaustion.38

Total U.S. energy consumption is more than three times the amount of solar energy harvested as crop and forest products. The United States consumes 40% more energy annually than the total amount of solar energy captured yearly by all U.S. plant biomass. Per capita use of fossil energy in North America is five times the world average.39

Our prosperity is built on the principal of exhausting the world's resources as quickly as possible, without any thought to our neighbors, all the other life on this planet, or our children.

Population & Sustainability

Considering a growth rate of 1.1% per year, the U.S. population is projected to double by 2050. As the population expands, an estimated one acre of land will be lost for every person added to the U.S. population. Currently, there are 1.8 acres of farmland available to grow food for each U.S. citizen. By 2050, this will decrease to 0.6 acres. 1.2 acres per person is required in order to maintain current dietary standards.40

Presently, only two nations on the planet are major exporters of grain: the United States and Canada.41 By 2025, it is expected that the U.S. will cease to be a food exporter due to domestic demand. The impact on the U.S. economy could be devastating, as food exports earn $40 billion for the U.S. annually. More importantly, millions of people around the world could starve to death without U.S. food exports.42

Domestically, 34.6 million people are living in poverty as of 2002 census data.43 And this number is continuing to grow at an alarming rate. Too many of these people do not have a sufficient diet. As the situation worsens, this number will increase and the United States will witness growing numbers of starvation fatalities.

There are some things that we can do to at least alleviate this tragedy. It is suggested that streamlining agriculture to get rid of losses, waste and mismanagement might cut the energy inputs for food production by up to one-half.35 In place of fossil fuel-based fertilizers, we could utilize livestock manures that are now wasted. It is estimated that livestock manures contain 5 times the amount of fertilizer currently used each year.36 Perhaps most effective would be to eliminate meat from our diet altogether.37

Mario Giampietro and David Pimentel postulate that a sustainable food system is possible only if four conditions are met:

1. Environmentally sound agricultural technologies must be implemented.

2. Renewable energy technologies must be put into place.

3. Major increases in energy efficiency must reduce exosomatic energy consumption per capita.

4. Population size and consumption must be compatible with maintaining the stability of environmental processes.38

Providing that the first three conditions are met, with a reduction to less than half of the exosomatic energy consumption per capita, the authors place the maximum population for a sustainable economy at 200 million.39 Several other studies have produced figures within this ballpark (Energy and Population, Werbos, Paul J. http://www.dieoff.com/page63.htm; Impact of Population Growth on Food Supplies and Environment, Pimentel, David, et al. http://www.dieoff.com/page57.htm).

Given that the current U.S. population is in excess of 292 million, 40 that would mean a reduction of 92 million. To achieve a sustainable economy and avert disaster, the United States must reduce its population by at least one-third. The black plague during the 14th Century claimed approximately one-third of the European population (and more than half of the Asian and Indian populations), plunging the continent into a darkness from which it took them nearly two centuries to emerge.41

None of this research considers the impact of declining fossil fuel production. The authors of all of these studies believe that the mentioned agricultural crisis will only begin to impact us after 2020, and will not become critical until 2050. The current peaking of global oil production (and subsequent decline of production), along with the peak of North American natural gas production will very likely precipitate this agricultural crisis much sooner than expected. Quite possibly, a U.S. population reduction of one-third will not be effective for sustainability; the necessary reduction might be in excess of one-half. And, for sustainability, global population will have to be reduced from the current 6.32 billion people42 to 2 billion-a reduction of 68% or over two-thirds. The end of this decade could see spiraling food prices without relief. And the coming decade could see massive starvation on a global level such as never experienced before by the human race.

Three Choices

Considering the utter necessity of population reduction, there are three obvious choices awaiting us.

We can-as a society-become aware of our dilemma and consciously make the choice not to add more people to our population. This would be the most welcome of our three options, to choose consciously and with free will to responsibly lower our population. However, this flies in the face of our biological imperative to procreate. It is further complicated by the ability of modern medicine to extend our longevity, and by the refusal of the Religious Right to consider issues of population management. And then, there is a strong business lobby to maintain a high immigration rate in order to hold down the cost of labor. Though this is probably our best choice, it is the option least likely to be chosen.

Failing to responsibly lower our population, we can force population cuts through government regulations. Is there any need to mention how distasteful this option would be? How many of us would choose to live in a world of forced sterilization and population quotas enforced under penalty of law? How easily might this lead to a culling of the population utilizing principles of eugenics?

This leaves the third choice, which itself presents an unspeakable picture of suffering and death. Should we fail to acknowledge this coming crisis and determine to deal with it, we will be faced with a die-off from which civilization may very possibly never revive. We will very likely lose more than the numbers necessary for sustainability. Under a die-off scenario, conditions will deteriorate so badly that the surviving human population would be a negligible fraction of the present population. And those survivors would suffer from the trauma of living through the death of their civilization, their neighbors, their friends and their families. Those survivors will have seen their world crushed into nothing.

The questions we must ask ourselves now are, how can we allow this to happen, and what can we do to prevent it? Does our present lifestyle mean so much to us that we would subject ourselves and our children to this fast approaching tragedy simply for a few more years of conspicuous consumption?

Author's Note

This is possibly the most important article I have written to date. It is certainly the most frightening, and the conclusion is the bleakest I have ever penned. This article is likely to greatly disturb the reader; it has certainly disturbed me. However, it is important for our future that this paper should be read, acknowledged and discussed.

I am by nature positive and optimistic. In spite of this article, I continue to believe that we can find a positive solution to the multiple crises bearing down upon us. Though this article may provoke a flood of hate mail, it is simply a factual report of data and the obvious conclusions that follow from it.

-----

ENDNOTES

1 Availability of agricultural land for crop and livestock production, Buringh, P. Food and Natural Resources, Pimentel. D. and Hall. C.W. (eds), Academic Press, 1989.

2 Human appropriation of the products of photosynthesis, Vitousek, P.M. et al. Bioscience 36, 1986. http://www.science.duq.edu/esm/unit2-3

3 Land, Energy and Water: the constraints governing Ideal US Population Size, Pimental, David and Pimentel, Marcia. Focus, Spring 1991. NPG Forum, 1990. http://www.dieoff.com/page136.htm

4 Constraints on the Expansion of Global Food Supply, Kindell, Henry H. and Pimentel, David. Ambio Vol. 23 No. 3, May 1994. The Royal Swedish Academy of Sciences. http://www.dieoff.com/page36htm

5 The Tightening Conflict: Population, Energy Use, and the Ecology of Agriculture, Giampietro, Mario and Pimentel, David, 1994. http://www.dieoff.com/page69.htm

6 Op. Cit. See note 4.

7 Food, Land, Population and the U.S. Economy, Pimentel, David and Giampietro, Mario. Carrying Capacity Network, 11/21/1994. http://www.dieoff.com/page55.htm

8 Comparison of energy inputs for inorganic fertilizer and manure based corn production, McLaughlin, N.B., et al. Canadian Agricultural Engineering, Vol. 42, No. 1, 2000.

9 Ibid.

10 US Fertilizer Use Statistics. http://www.tfi.org/Statistics/USfertuse2.asp

11 Food, Land, Population and the U.S. Economy, Executive Summary, Pimentel, David and Giampietro, Mario. Carrying Capacity Network, 11/21/1994. http://www.dieoff.com/page40.htm

12 Ibid.

13 Op. Cit. See note 3.

14 Op. Cit. See note 7.

15 Ibid.

16 Op. Cit. See note 5.

17 Ibid.

18 Ibid.

19 Ibid.

20 Ibid.

21 Op. Cit. See note 11.

22 Ibid.

23 Ibid.

24 Ibid.

24 Ibid.

25 Op Cit. See note 3.

26 Op Cit. See note 11.

27 Ibid.

28 Ibid.

29 Ibid.

30 Op. Cit. See note 3.

31 Op. Cit. See note 5.

32 Op. Cit. See note 3.

33 Op. Cit. See note 11.

34 Food Consumption and Access, Lynn Brantley, et al. Capital Area Food Bank, 6/1/2001. http://www.clagettfarm.org/purchasing.html

35 Op. Cit. See note 11.

36 Ibid.

37 Op. Cit. See note 5.

38 Ibid.

39 Ibid.

40 Op. Cit. See note 11.

41 Op. Cit. See note 4.

42 Op. Cit. See note 11.

43 Poverty 2002. The U.S. Census Bureau. http://www.census.gov/hhes/poverty/poverty02/pov02hi.html

35 Op. Cit. See note 3.

36 Ibid.

37 Diet for a Small Planet, Lappé, Frances Moore. Ballantine Books, 1971-revised 1991. http://www.dietforasmallplanet.com/

38 Op. Cit. See note 5.

39 Ibid.

40 U.S. and World Population Clocks. U.S. Census Bureau. http://www.census.gov/main/www/popclock.html

41 A Distant Mirror, Tuckman Barbara. Ballantine Books, 1978.

42 Op. Cit. See note 40.

[papabear]

http://www.worldoil.com/Magazine/MAGAZINE_...H_YEAR=Oct-2005

October 2005
Vol. 226 No. 10
Supply and Demand

Shaping the peak of world oil production

The bell curve has a sharp crest, and you can't see it coming.

Robert L. Hirsch, SAIC

To gain insight into the potential time-varying shape of world oil production peaking, this author examined regions that have already peaked. Unencumbered regions and countries were considered. All had significant peak production and all are past their peak. Their experience shows that the onset of peaking can occur quite suddenly and is not obvious, even a year prior to the event. The peaking of world conventional oil production may or may not follow previous trends, but these observations may be valuable for planning.

World production of conventional oil will reach a maximum - a peak - and then decline. The timing is uncertain; some think it could occur within a matter of years, others in a decade or two. 1 - 11 Without a major effort to mitigate related oil shortages starting well before the onset of peaking, the economic consequences worldwide will be dire. 12

By conventional oil, we mean oils of higher gravity that make up over 95% of current world production. The likely world oil production profile before, during and after world conventional oil peaking is almost certainly not predictable, because it will be a function of an array of unknowable factors:

World economic development prior to peaking
Oil prices a decade or more prior to peaking
The application of advanced technology in the world's largest oil fields
Damage and past mismanagement of large oil fields
Oil supply-demand expectations a decade or more before peaking
Concession and contract policies affecting outside investment
Political stability in regions with the largest production before peaking
Geology of major oil producing regions.
A scenario analysis involving these and other variables might be possible, but it is likely to be so complex as to be of questionable value.

BELL CURVE

Modeling of oil production peaking is often based on a bell curve (also known as a normal or logistic curve) an approximation of oil production as a function of time. This approach was utilized by M. King Hubbert in 1956 in his forecast of US oil production peaking. 13 Fig. 1 shows the 30-yr interval near the apex of a bell-curve that was fitted to US Lower 48 states conventional oil production by Deffeyes. 14 Production data follow the curve closely from 1910 - 1960 and from 1980 - 2003 (not shown here). The curve indicates a peak in 1976, while the actual peak occurred in 1970, as Hubbert predicted.


Fig. 1. The top of the bell curve is relatively flat over a 10-year period.



The top of the bell curve in the figure is relatively broad. The period from 98% of maximum on the upslope to the 98% point on the decline side is about 10 years long. If world oil production peaking were to be characterized by such a relatively broad maximum, the task of mitigation would be easier than if the peak were sharp. In addition, a bell curve production profile would provide a degree of forewarning of the approaching peak.

REGIONAL OIL PRODUCTION

Consider what happens in the development of an economically viable oil field. After a confirmed discovery, development proceeds, production rises to a maximum after which it goes into decline. Along the way, oilfield operators apply various technologies to increase production beyond what nature would otherwise provide, e.g., water flooding, fracturing, artificial lift, etc. Nevertheless, the geology of each oil reservoir will ultimately set an upper limit on the amount of oil that can be practically produced. In addition, the time-varying production profile for an oil field can be strongly influenced by management decisions and politics, that can affect oilfield dynamics.

Geographically, large oil production regions contain reservoirs of different sizes and types. Regional output is the sum of all its producing oil fields, which varies over time. An example of regional oil peaking is the US Lower 48 states, Fig. 2. 15 This region is of particular interest because it was the world's most prolific conventional oil production region for much of the 20th century.


Fig. 2. Oil production in the US Lower 48 states 1945 - 2000 shows a triangular profile, not a bell curve shape.



The dashed lines provide a reasonable fit to the data for the 55-yr period and show a triangular pattern, not the bell curve described earlier. The approximate slope of both dotted lines is 2%. Accordingly, a 2% decline after peaking is a useful benchmark for judging the decline profiles of other regions. A decline of less than 2% could be considered gradual, while a decline of more than 2% could be considered steep.

Some forecasters believe that higher oil prices and new technology will have a dramatic impact on oil production. The Lower 48 experience indicates otherwise. Oil prices increased dramatically in 1973 and 1979, but those price escalations did not alter the general oil production decline in the Lower 48 region, Fig. 3. In addition, the period 1975 - 2000 was characterized by large improvements in oilfield technology, including affordable 3D seismic imaging, low-cost directional and horizontal drilling, greatly enhanced geochemical understanding, dramatically improved geological modeling, etc. Nevertheless, the decline in Lower 48 production continued, essentially unabated. This long-term, real-world experience provides strong evidence to challenge the thesis that high oil prices and advanced technology can mitigate oil production decline.


Fig. 3. Neither oil price nor advanced technology had a major impact on production.



No production data set is without numerous complications. In the case of the US Lower 48 states experience, a number of factors beyond price and technology impacted, for example:

Over the period 1945 - 1970, the Texas Railroad Commission set allowable production in the state, which represented a significant fraction of total Lower 48 production

After peaking in 1970, low-priced oil from the Middle East entered the US market in increasing volumes, almost certainly affecting domestic oil decision-making

During the period 1970 - 2000, the US experienced four recessions.

It would be extremely difficult, if not impossible to isolate these and other influences in an effort to develop a clear picture of what production might have otherwise been. In fact, every oil-producing region of the world has been and will be influenced by complex forces that defy definitive isolation and evaluation.

THE LIKELY SHAPE

Not all regional production histories are useful because of easily identified distortions. To avoid the obvious pitfalls, certain criteria were adopted:

A relevant region (often a country) must represent a large, geologically varied province and be clearly past its maximum likely oil production. While the cases cited here all appear to be past their likely maximum production, there is the possibility of a major new discovery. For some of the regions and countries cited, such a trend reversal is essentially impossible. For others that have recently peaked, a major reversal is unlikely because of extensive exploration with the latest technology
Production at peaking must have been significant, greater than 1 one million barrels of oil per day at peak
Production data must be available several years before and after peaking
The region had to have been generally managed for maximum oil production prior to and after oil peaking. Accordingly, we did not consider regions whose production was constrained by cartel considerations or extraordinary political events. As part of this analysis, we took note of production one year before and one year after peaking in an effort to identify related short-term trends.
The regions that fit our criteria were: Texas, North America, United Kingdom, and Norway. Each is certainly or almost certainly years past its peak production, so major new discoveries are unlikely to change their peaking profiles. In each case, management, market and political factors influenced oil production in ways that we considered second-order. None were subjected to extreme political influences of the types experienced in Russia and Venezuela, for example, and none were part of OPEC.

Many countries with large oil production were not useful for this analysis. First are the OPEC countries - Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, UAE and Venezuela. Over the past three decades, OPEC limited member production to less than their maximum productive capacity in an effort to control world oil prices, so from time to time their production histories were strongly manipulated. Oil production in Russia was dominated by significant mismanagement prior to the fall of the Soviet Union. Most recently, political turmoil and transportation constraints have had a major impact on Russian oil production. Venezuela is a member of OPEC and thus limited its oil production over past decades. In addition, recent political turmoil and oilfield mismanagement have distorted their production in complex ways.

PAST PEAK PRODUCTION DATA

Figs. 4 - 7 show annualized daily production data for a 10-yr period around peak production for the selected regions and countries. Yearly data were considered appropriate for identification of major changes, because monthly data can fluctuate dramatically and obscure longer-term trends. While heavy oil was produced in some of the regions of interest, it was fractionally small enough to be neglected for our purposes.


Fig. 4. Texas oil production peaked in mid-1972.




Fig. 5. North American oil production peaked in 1985.




Fig. 6. United Kingdom oil production peaked in 1999.




Fig. 7. Norwegian oil production peaked in 2001.



Table 1 is a summary of the data, including the fraction of maximum production one year before peaking and one year after for Texas, 16 North America, 17 the UK 15 and Norway. 17 In addition, peak production data are shown for three countries that are also past peak production, but whose maximum production was less than one million barrels of oil per day - Argentina, 17 Colombia, 17 and Egypt. 15 Examination of the data leads to the following observations:




In all cases, it was not obvious that production was about to peak a year prior to the event
The peaks were sharp, not gently varying bell curves and not flat topped, as some forecasters have hoped
Post-peak production declines were much greater than our 2% benchmark in some cases
Pre-peaks occurred in three cases.

SUMMARY

To understand the possible character of the peaking of world conventional oil production, oil peaking in a number of relatively unencumbered regions and countries was considered. All had significant production, and all were certainly or almost certainly past their peak. The data shows that the onset of peaking can occur quite suddenly, peaks can be very sharp, and post-peak production declines can be comparatively steep (3 - 13%). Thus, if historical patterns are appropriate indicators, the task of planning for and managing world conventional oil peaking will indeed be very challenging.

ACKNOWLEDGEMENTS

The author thanks Dr. Roger Bezdek, MISI, Robert Wendling, MISI, Lawrence Kummer, UBS, David Morehouse, EIA, Maria Vargas, NETL, and Jean Laherrere, TOTAL, retired, who all provided very helpful comments on drafts of this study. The final report is solely the responsibility of the author.

This work was sponsored by the National Energy Technology Laboratory of the Department of Energy, under Contract No. DE-AM26-99FT40575, Task 21006W. The author is indebted to NETL management for encouragement and support.

LITERATURE CITED

1 Bakhtiari, A.M.S., "World Oil Production Capacity Model Suggests Output Peak by 2006 - 07,"Oil & Gas Journal, April 26, 2004.

2 Simmons, M.R., Twighlight in the Desert, Wiley, 2005.

3 Skrebowski, C., "Oil Field Mega Projects - 2004,"Petroleum Review, January 2004.

4 Deffeyes, K.S., Hubbert's Peak - The Impending World Oil Shortage, Princeton University Press, 2003.

5 Goodstein, D., Out of Gas - The End of the Age of Oil, W.W. Norton, 2004

6 Campbell, C.J., "Industry Urged to Watch for Regular Oil Production Peaks, Depletion Signals,"Oil & Gas Journal, July 14, 2003.

7 "Drivers of the Energy Scene," World Energy Council, 2003.

8 Laherrere, J., Seminar Center of Energy Conversion, Zurich, May 7, 2003.

9 DOE EIA, "Long Term World Oil Supply," April 18, 2000.

10 Jackson, P. et al., "Triple Witching Hour for Oil Arrives Early in 2004 - But, As Yet, No Real Witches," CERA Alert, April 7, 2004.

11 Davis, G., "Meeting Future Energy Needs,"The Bridge, National Academies Press, Summer 2003.

12 Hirsch, R.L., Bezedk, R., Wendling, R., "Peaking of World Oil Production: Impacts, Mitigation, & Risk Management," DOE NETL, February 2005.

13 Hubbert, M.K., "Nuclear Energy and the Fossil Fuels," American Petroleum Institute Drilling and Production Practice, Proceedings Spring Meeting, San Antonio, 1956.

14 Deffeyes, K.S., Beyond Oil: The View From Hubbert's Peak, Hill and Wang, 2005.

15 US Department of Energy, Energy Information Administration, "Long Term World Oil Supply," April 18, 2000.

16 Railroad Commission of Texas, Oil Production and Well Counts (1935 - 2003), www.state.tx.us

17 Statistical Review of World Energy 2004, BP, June 15, 2004.


--------------------------------------------------------------------------------
THE AUTHOR

Robert L. Hirsch is a senior energy program advisor for SAIC. Previous employment includes senior positions at the Energy Research and Development Administration, ARCO, Exxon, EPRI, APTI and Rand. He is a past chairman of the Board on Energy and Environmental Systems at the National Academies. He has a PhD in engineering and physics from the University of Illinois.

[papabear]

http://www.livejournal.com/users/dpodbori/3005.html

On The Prospects Of Using AAA Type Batteries As a Peak Oil Mitigation Device, and Other Observations

Joseph Tainter in his groundbreaking book The Collapse Of Complex Societies makes the following trivial, but nonetheless tantalizing observation: "The number of challenges with which the Universe can confront a society is, for practical purposes, infinite".

It will probably be noncontroversial to formulate a follow-up to the Tainter's observation thus: "The range of possible responses of a society confronted with the Universe's challenges is also, for all practical intents and purposes, infinite". We know from history that past societies have used (with a mixed success) a whole range of responses to their problems -- from sacrificing vestal virgins to invading and enslaving their neighbors, and from institutionalizing infanticide as a population control mechanism to reorganizing their industry and food production systems.

If the responses of our political and economic mainstream to the challenges presented to our particular society, in that very special slice of space-time that we happen to inhabit, truly represent our best shot, we are virtually guaranteed to enter a very interesting period in history (interesting as in the well-known ancient Chinese curse, May you live in interesting times). A dispassionate observer from outer space may watch with amazement how an incredibly complex and resourceful society of Homo economicus, armed with the most advanced technology and all of the knowledge amassed through their entire history, that voluntarily, with determination, even enthusiastically is painting itself into a corner and reduces its future options to what in the game of chess is termed zugzwang (compulsed move) -- by deferring the recognition of the Universe's challenge until the crisis that is currently clearly visible on the horizon becomes detectible through economic and monetary mechanisms, signals from which in this particular peculiar civilization apparently take precedence over the other six senses.

[I follow the modern philosophical tradition and count rational reasoning, which clearly distinguishes our kind from the rest of flora and fauna, as a sixth sense. However, it appears as if it almost doesn't matter whether we possess that prized and unique sixth sense or not, as we choose to ignore what it tells us, unless, of course, the message also becomes recognizable as a signal from the free market.]

This unique form of behavior -- idealization and absolutization of the free market -- is especially puzzling considering that inability of the market signals to reliably serve as a long term indicator of anything at all has been established beyond any controversy, as lakes of ink have been spilled over documenting the minutia of phenomena such as Enron and LTCM collapses, the hazards of the current real estate bubble and other market phenomena, and as the same breed of analysts who in 1999 were seen busily convincing the public that, say, the common stock of Intel Corp. had been a bargain back then at the price of $80 a share, were spotted in 2000 spreading the message that the same Intel stock had a long way to fall at a price of about $25 a share.

Exhibit A is the argument I have seen being used all the time, starting from the Vice President Dick Cheney in televized interviews to TV personalities characterized by Nassim Taleb as "financial entertainers of the excessively commentating variety" on the CNN's The Money Line with Lou Dobbs. This same argument is utilized explicitly and implicitly in a range of documents from pronouncements by Chief Economists to publications by IEA.

The argument goes like this (I generalize it from all these multiple sources):

Because our economy requires a lot less oil circa 2005 for each dollar of GDP that it generates than circa 1973, therefore it is much less vulnerable to oil supply disruptions and oil price spikes than 30 years ago.

It is just incredible to me to hear this argument again and again in our enlightened age from such a diverse group of seemingly intelligent people (although I suspect that, say, Dick Cheney may have much more insight into the nature of our energy predicament than he is letting on). If our economy, for the sake of the argument, doubled in terms of dollars of GDP since 1973 (let's measure everything in constant dollars, adjusting for inflation), and (again, for the sake of the argument) our annual oil consumption did not change from back then, we have twice as many dollars of GDP riding on the same barrel of oil we consume, do we not? Doesn't it make the economy twice as vulnerable to the same amount of oil shortage (as expressed in barrels), instead of less vulnerable?

Let me use this example. Let's say, thirty years ago I started a business leasing out a circa 1973 Buick as a taxi. By 2005, my business has doubled in size and revenue, and currently I lease out two super energy efficient Toyota Priuses as taxis, which together consume the same amount of fuel as the old Buick, but produce double the revenue (again, in constant dollars). Say, an oil supply disruption grounds my taxi fleet. What will have a bigger impact on the economy in terms of lost revenue -- one stalled taxi or two stalled taxis? Which economy has more capacity to optimize its energy usage and find reserves for growth, instead of shrinking its GDP -- an energy inefficient economy or an energy efficient economy? Which economy is more likely to contract in the face of shortages?

[Important disclosure: I will be the last one to claim that the US economy as currently observed has utilized all possible reserves for energy efficiency. I only attempted to demonstrate the inherent speciousness of this surprisingly popular argument for "reduced vulnerability", which seems to have engulfed the crème de la crème of the political and the economic world]

The next exhibit is a small, sloppily written but highly opinionated, borderline arrogant article by an energy economist and author Peter Huber (who is also a senior fellow of the Manhattan Institute) that asserts such a sweepingly generalized new economic principle that it reads almost like a manifesto of the "New Age" energy economics. The article, titled Thermodynamics and Money, was published by the Forbes magazine and can be viewed here.

Huber starts with an unfortunate personal attack on the late oil geologist M. King Hubbert, stating:

"In his day M. King Hubbert was a great geologist who spent his life studying the planet's deposits of oil and gas. But as he got older, he simply lost it. His "peak oil" theory--which many people are citing these days--is a case study in junk economics."

Obviously, Mr. Huber is perfectly entitled to express his criticisms of the late M. King Hubbert or anybody else, as there are no "sacred cows" in this world. Marcus Tulius Cicero, for example, was known to have had famously described the hellenized Egyptian queen Cleopatra as a boring woman, in radical disagreement with both Gaius Julius Caesar and Marc Anthony. Thus, obviously, Peter Huber also has the right to state whatever opinion he wants on Mr. Hubbert. However, as someone who is to a degree familiar with the subject, I will humbly suggest that maybe there was more to M. King Hubbert's life work and impact than meets the eye of Peter Huber.

Nevertheless, the main idea that Huber communicates in his article is that EROEI is a false measure of energy efficiency and thus should stop being used, as it confuses things rather than adds value. Per Huber, it doesn't matter how much energy was spent to acquire a unit of energy; what matters only how much that final form of energy is sold for per unit. Huber formulates it thus:

"Eroei calculations now litter the energy policy debate. Time and again they're wheeled out to explain why one form of energy just can't win--tar sands, shale, corn, wood, wind, you name it. Even quite serious journals--Science, for example--have published pieces along these lines. Energy-based books of account have just got to show a profit. In the real world, however, investors don't care a fig whether they earn positive Eroei. What they care about is dollar return on dollar invested. And the two aren't the same--nowhere close--because different forms of energy command wildly different prices. Invest ten units of 10-cent energy to capture one unit of $10 energy and you lose energy but gain dollars, and Wall Street will fund you from here to Alberta."

I believe that this may be a very happy day for Jim Kunstler, as his message about the coming Long Emergency has finally reached such a high degree of market penetration that it is being broadcast (in a slightly veiled, but clearly recognizable form) from the pages of the Forbes magazine, by a senior fellow of the Manhattan institute, no less.

What is Kunstler basically all but shouting from the rooftops? That in historically very near future the energy in such forms that can be utilized by our society and our infrastructure will become scarse and expensive. Everything else is a corollary, a quite obvious corollary, but a corollary nonetheless (for example, that systems such as transportation, food production and distribution, government services, living arrangements, et alia will have to either adjust to this permanent condition of scarse and expensive energy, or they will stop functioning, with pronounced effects on all interrelated systems and the society as a whole).

What is Huber stating in his article? Essentially, the same basic message: that (in Huber's scenario above) energy will become so expensive that, after investing ten units of cheap energy to produce one unit of the "final form", consumable energy, that consumable energy will still sell at a handsome profit (why else otherwise Wall Street would care to fund such a business from here to Alberta, as Huber puts it?) In short, selling very expensive energy will be a very profitable business, but no cheaper forms of energy in a consumable form will be available. Obviously, energy production in a society thus described by Huber will be at the very center of the economy, and will remain among one of the few profitable activities, as many other formerly profitable businesses and entire industries will be killed off by the skyrocketing energy prices. In other words, an economic shrinkage of societal scale in the scenario formulated by Huber is unavoidable.

Moreover, who is to say that the so-called cheap energy will remain cheap, as there will be so much more of it needed -- to produce the expensive energy? Won't the increased demand cause the dearth of the formerly cheap forms of "cheap energy"? (I deliberately pose this question in a form that may be more familiar to the energy economist). Surely Mr. Huber will not be arguing that the capacity to produce the cheap energy can be increased indefinitely at a whim, without any effect on the price and availability of that energy -- otherwise he risks to be laughed out from the Manhattan institute.

Also, it is obvious that in the Huber's scenario a lot more energy overall will be required, as much of it will be burned for the needs of and within the energy industry itself and will not be usable by the rest of the society -- except, quite likely, that it will manifest itself through increased C02 emission. That is what EROEI considerations that Huber ridicules, perhaps unwittingly, are all about -- that as more and more energy will be consumed by the energy industry itself, less and less will become available for the rest of the economy.

Furthermore, I would like to point out to all of the esteemed energy economists out there that even today, during the time of the relatively cheap energy, with the economy merrily humming along and consumer holiday shopping season being in full swing, we already have exactly the type of an energy form that fits Peter Huber's criteria: alkaline batteries. I use one of those, an AAA type, manufactured by Energizer, in my MP3 player right now as I write these lines. Sinse EROEI doesn't matter in the Huber's world, but only the price that the consumable form of energy commands in the market, we probably could use AAA batteries as a decent alternative to other energy types in the post-Peak Oil scenarios; after all this is a successful commercial technology we are already accustomed to and have a solid understanding of, unlike other, more experimental forms of alternative energy. We already have a huge profitable market for alkaline batteries (as evidenced by some very savvy investors and conglomerates such as Gillette and Warren Buffet's Berkshire Hathaway who invested huge amounts of capital into corporations like Energizer and Duracell). If we simply keep on increasing our manufacturing capacity for AAA batteries at the rate of 50% per year (which is the growth rate comparable with the one achieved during the early years of the Internet industry), in 20 years we will increase the overall AAA battery production by a factor of over 3,000 (obviously, Duracell and friends will be happy to oblige). In such huberian world, where physical constraints play no role, the surplus AAA battery capacity, unutilized by MP3 players, vibrators and other consumer electronics, could be used in transportation systems and such, thereby mitigating or even completely eliminating the effects of peak oil.

However, the epitome of cluelessness in this little survey for me is the exibit C, the article published in The Wall Street Journal titled The War Against the Car, by Stephen Moore, a member of this newspaper's editorial board (WSJ online requires subscription, but the article can be viewed here). It is really worth reading in its entirety (quoting a paragraph or two will not do it justice), if one wants to appreciate the degree to which we as a society have cut ourselves loose from the realities of the world. However, I still would like to comment on the two closing paragraphs of the article:

"The good news is that environmental groups and politicians aren't likely to break Americans from their love affair with cars -- big, convenient, safe cars -- no matter how guilty they try to make us feel for driving them. Instead they are using more subtle forms of coercion. The left is now pining for a $1-a-gallon gas tax to make driving unaffordable. Washington has also wasted over $60 billion of federal gas tax money on mass transit systems, yet fewer Americans ride them now than before the deluge of subsidies began. When the voters in car-crazed Los Angeles opted to fund an ill-fated subway system, most drivers who voted "yes" said they did so because they hoped it would compel other people off the crowded highways.

To be sure, if the entire membership of the Sierra Club and Greenpeace surrendered their cars, the world and the highways might very well be a better place. But for the rest of us the car is indispensable -- it is our exoskeleton. There's a perfectly good reason that the roads are crammed with tens of millions of cars and that Americans drive eight billion miles a year while spurning buses, trains, bicycles and subways. Americans are rugged individualists who don't want to cram aboard buses and subways. We want more open roads and highways, and we want energy policies that will make gas cheaper, not more expensive. We want to travel down the road from serfdom and the car is what will take us there."

It is quite clear that we, Americans, are suffering from an acute form of hystorical Alzheimer's desease, for which we may have to pay extremely dearly. We forget that "the end of history" as proclaimed by Francis Fukuyama, turned out a dangerous fantasy in the early XXI century. Apparently, many of us feel that we can always get what we want, if only our governing bodies develop the right policies. We have no appreciation for the specialness and uniqueness of our current transitory historical period, when we still have options, and we mindlessly let this period lapse and thereby foreclose those options forever. We don't understand that ruthless competition for resources is much more common and much more fundamental as a driving force of history than, say, our cherished notions of human rights and public welfare. We don't realize that investing into the infrastructure alternative to "big, convenient, safe cars" that we have such a strong love affair with today is what may save our economy from total paralysis in historically very near future, give it a chance to regroup, and thereby give our civilization a chance to fight another day. We think that our political and business leaders will solve this for us -- well, our political and business leaders read Forbes and Wall Street Journal and make public pronouncements in the spirit of the above argument by Dick Cheney. We are an infantile civilization that may be foreclosing its chance to grow up.

For those who want a lighter end to this particular commentary I recommend the following debate (MP3 file is available here; approx. 52 minutes long) between Jim Kunstler and Michael Lynch on the issue of oil, hosted by Christopher Lydon from National Public Radio. At the end of the debate, while summarizing the show, the host makes the following remark (at 50:04 on the audio file) followed by this reply:

CL: "Walkable cities, denser living, I mean -- these are all good things, but my verdict would be, just on the hour, Mr. Kunstler, that you haven't shown us that they will be absolutely required"

JHK: "Well, I mean -- I don't know what I have to do -- jump up and down and go 'woo, woo, woo'?!"

[papabear]

http://www.ires.ubc.ca/

The Institute for Resources, Environment and Sustainability (IRES) was established in September 2002 to bring together the knowledge, insight and vision of the Institute for Resources and Environment and the Sustainable Development Research Institute. This partnership is addressing the challenge of the new realities both global and domestic in the areas of Energy, Water and Health faced by communities, urban and rural, in the 21st Century. Over the coming decades, society faces a profound challenge and responsibility to transition toward sustainable living and to ensure a liveable world for future generations. The IRES has a diverse research program and is the home to the renowned Resource Management and Environmental Studies graduate program. The scholars and students of the IRES strive for excellence in education and research in a wide range of resource and environmental issues -- from resource management, sustainable development, corporate greening, land and water management, risk assessment, ecosystem health, urbanization, climate change, renewable energy, policy and regulation innovations. An important part of the mandate is to contribute communications and awareness of, and build relationships with, people and institutions, both on-campus and around the world. Resource management and sustainable development must occur at all levels: global, regional, national and local; and must involve business and industry. IRES pioneers work at all of these levels, 1)global scenario modelling, 2)regional, national and international strategies, 3)creative approaches in community adaptation and sustainability, and 4)promotes concepts and practices that place industrial and business activities within an ecosystem (holistic) framework . The Institute brings to its activities a keen awareness of the linkages that cut across spatial levels, and across environmental, social, and economic dimensions.

To achieve this goal, the IRES focuses on the generation of new knowledge, development of leading-edge approaches, promotion of creative innovations, application of appropriate technology and novel applications of knowledge to current, real and emerging environmental and resource issues. Building upon disciplinary foundations the IRES/RMES is a leader in interdisciplinary and transdisciplinary initiatives that are essential to address the complex issues of a rapidly changing world. This challenge is accepted with enthusiasm, excitement and with commitment.

[papabear]

http://www.energybulletin.net/11406.html

Published on 2 Dec 2005 by International Herald Tribune. Archived on 4 Dec 2005.

A world without easy oil: What now?
by Erika Kinetz

The era of easy oil is over. What that means for car companies, policy makers, investors, consumers and the future of U.S.-China relations, however, is far from clear. The International Herald Tribune gathered a round table of experts in the board room of The New York Times on Nov. 15 to discuss these ponderables, along with Ford Expeditions, prairie dogs and the odd possibility that gas may, in fact, be too cheap.

Participants in the discussion, which was moderated by Erika Kinetz, were:

Herman Franssen, senior fellow at the Center for Strategic and International Studies and president of International Energy Associates, an energy consulting company in Chevy Chase, Maryland;

Roger Diwan, managing director of PFC Energy, a consulting firm based in Washington;

Irving Mintzer, member of the Global Business Network, a consulting and research firm, and executive editor of Global Change magazine, and

Adam Sieminski, chief energy economist for Deutsche Bank.

Is the era of cheap oil over?

Herman Franssen: In our business you can make a case for anything you want to prove. If you want me to prove that nuclear is the only option for the future, I can prove it. If you want me to prove we don't need the Middle East, I can prove that. All these forecasts are made on assumption upon assumption. What really counts is what's behind the assumptions. There are a lot of things going on in the world today that suggest that, indeed, the era of cheap oil, as expressed by below $35 a barrel, in today's terms, is probably over.

Roger Diwan: The question is, What's cheap? Is oil expensive, really, right now? Has it had a big economic impact at $60? We had $70 oil three months ago and we're still smiling.

Irving Mintzer: We're going to see a period of extended volatility where price swings, even between $40 and $70 a barrel, become not uncommon. And we may see spikes periodically caused not so much by changes in resource availability or technology, but that relate to supply cutoffs or political difficulty. We're going to be living with a period in which it is increasingly difficult to make reliable long-term investment choices on the presumption that you know what the price of oil is going to be.

Adam Sieminski: I think the era of cheap oil is over. But I'm more certain that the era of easy oil is over. The industry is faced with rising costs. The world is going to be increasingly dependent on places like Iran, Iraq, Venezuela, Nigeria, Russia and Saudi Arabia. That points toward prices staying higher. It certainly means that both private and state-owned oil companies are going to have to work harder to meet global demand.

Are we in for a protracted period of strong demand and tight supply?

Diwan: What you have here is an industry which has not invested over the last 20 years, and it's facing the cyclical uptrend in demand and it finds itself structurally now short of capacity, of people, and of places to go.

Franssen: To get the Chinese to the level of per-capita consumption that Taiwan is today, Chinese consumption would be 49 million barrels a day. The whole world is consuming only about 85 million a day. That is physically impossible.

Mintzer: I think the solution is a change in the perception here in the United States, and to a lesser extent in Europe, about how much car we need and for what. If cars are going to continue to be the crutch upon which we rest the sex life of American males and the sense of security of American females, then we need a lot of steel and a lot of glass and a lot of oil.

Franssen: That perception is not going to change at $3 per gallon of gasoline.

Mintzer: I'm pretty sure it'll change at $5. It seems to me that if, and only if, that perceptual change can take place at the front end of building this infrastructure for transportation and a vehicle fleet in China, is there likely to be room in the world market to allow for growth without dramatically increasing the likelihood of conflict over access to resources.

Sieminski: In the 1970s, most economists were convinced that if energy and oil consumption didn't grow at the same rate as gross domestic product, we would have dire economic consequences. With the price increases of the 1970s, followed by shifts in policies, the developed countries moved toward a much greater efficiency of all forms of energy consumption relative to economic output. So although I absolutely agree that China will be consuming a lot more oil, it's very possible that China will find ways to improve patterns of use. Otherwise we'll face higher prices because there won't be enough supply to go around.

Diwan: All four of us assume that there will be a shift in policy in China to adapt its energy. And I think all four of us are having trouble understanding how the United States will shift its policies. There is the belief that the market will do it. Well, in the '70s the market didn't do it. The French didn't go nuclear because the market told them to. The Chinese are not going to become more efficient because the market is telling them to.

Mintzer: Even if the Chinese implement the efficiency and emissions standards they've recently legislated, the middle class will continue to increase their demand for oil and they will have to continue to increase their imports. One provocation for rethinking U.S. energy policy will be when Chinese investment in Canadian tar sands and Venezuelan oil development make it increasingly difficult for us to get access to the resources. The problem with the Chinese is that they don't know that the Canadian oil is ours. And neither do the Canadians.

Diwan: You hear things like that at the U.S. Department of Energy: "What are the Chinese doing in Canada and Venezuela taking our oil?"

There has been a fair amount of talk lately about the end of oil. Are we running out of oil?

Franssen: We're going to run up against a plateau of non-OPEC oil, perhaps sometime after the turn of the decade. That perception has become generally accepted by the industry. The "peak" oil people will say once we reach that peak, it will start coming down. The "plateau" people believe technology and price will keep a plateau for a much longer period of time. That's the debate.

The ministers of the Middle East give us a beautiful case not to do anything: Don't worry, whatever you need, we will produce it. I've lived in the Middle East. They never like to say "no" to the foreigner. They will tell the foreigner, "Inshallah, Inshallah." Can you produce? "Inshallah." To the foreigner it mean yes, yes, yes. But he doesn't say he can do it. And none of their detailed assessments tell you that they can do it. So are we going to build our future on the perception that they can double production over the next 20 years?

Sieminski: The world has been running out of oil since the first barrel was produced. About every decade for the last hundred years, stories have circulated suggesting that we're running out of oil. At the end of the decade, it turns out that we end up having more than we thought. I suspect that this is still going to be true for the next two, three or four decades. Oil might get more expensive, but then recovery rates improve. We're not running out.

Clearly the transparency issue has everybody worried because they're trying to get a feel for how long we have before we have to really start to worry about it. The serious worry is still, I think, well ahead of us.

Mintzer: I think the place to start the serious worry is now because the length of time you have to put the alternative in place is going to be considerable.

I see advertisements from, for example, BP, Chevron and Ford touting energy efficiency and investment in alternative technologies. Even President George W. Bush has encouraged conservation. Is their money going where their mouths are?

Franssen: I think at the majors it's largely a public relations game.

Sieminski: It might not make sense for companies to be investing in alternatives to something that the market is pricing at very low levels.

Why have oil companies had such a hard time investing in production? They've got a ton of money right now.

Franssen: They're not finding enough from exploration. One of my Houston friends put it very clearly. He said, "We're no longer finding the elephants; we're finding the prairie dogs." It is much easier for a company to pick up a small company with brilliant engineers and geologists than to go out and explore. And they no longer have the talent pool.

What kind of opportunity does this create for other players?

Franssen: A lot of opportunity. The biggest prospects now are actually for medium-size and smaller companies.

You mentioned increasing dependence on OPEC oil. What are the members of the Organization of Petroleum Exporting Countries prepared to do to increase production? Can they do it without foreign investment?

Diwan: Nigeria, no; Saudi Arabia, yes.

Mintzer: Iraq, no. The question for me is only partly, How many more straws could they stick in the sand and suck out more oil? It's the geopolitical environment of the Persian Gulf.

Franssen: If you believe the U.S. administration, we're going to have perfect democracies all over the region in the next 10 years.

Mintzer: I think we're going to live in an increasingly turbulent world where what we face is not just shocks in terms of price and supply with respect to energy, but interactions between unexpected extreme weather events and energy - whether it's ice on an Ohio electricity line or a series of hurricanes in the Gulf, political turmoil in the Middle East or a decision by Hugo Chávez that he'd rather learn Chinese than English.

Diwan: In the Middle East, the last 20 years have been pretty rocky. It's always pretty turbulent.

Sieminski: Roger, I absolutely agree with you. I think that the fall of the House of Saud has been predicted almost as often as the peaking of the oil age. Neither one has come true yet.

Diwan: I'm more confident in the House of Saud than in the oil.

Sieminski: Oil is expected to grow. The International Energy Agency now thinks that we may end up with a plateau at 100 million barrels a day of oil production in 2030, rather than the 120 million that many people looked at before. Natural gas will probably grow faster in supply and demand than oil over the next 25 years. The fastest-growing fuels will be alternative sources: solar, wind, others. Unfortunately, even over the next 25 years the market share of alternative fuels is going to stay relatively small. The world in 25 years in energy seems to look very much as it does now: more natural gas, probably more coal and more nuclear and a little bit less oil growth.

How has the war in Iraq affected global oil markets and security?

Sieminski: The Iraq war was not fought for oil, at least not from a financial standpoint. It has cost us a lot more to have American troops over there than we would have paid just to buy the equivalent amount of oil produced in Iraq. Before the war, Iraq was producing about three million barrels a day. They're producing about two million barrels a day now. The instability in the country has prevented a rapid move of foreign capital and even Iraq's own money into the oil sector that might help them grow their production and help their economy and help meet world demand growth. So the potential of Iraq, looking out over the next 10 or 20 years, is significant. There are many geologists who believe that Iraq might have as much oil as Saudi Arabia.

Franssen: The result of the war has been that Saudi oil has become more important than ever.

Mintzer: There's another dimension to the Iraq picture, and that is by our going into Iraq, we displaced a $1 billion investment by the Chinese to develop Iraqi fields. That has motivated the Chinese to do things like buy into the Canadian oil sands and to look into buying Unocal. And it has encouraged them to invest in highly volatile oil provinces that are in opposition to the United States, including the Sudan.

Diwan: Who owned the oil is immaterial. It's a global market and the Chinese could be in Canada and if oil prices go to $150, it doesn't matter if they're in Canada or they're nowhere, they still have to pay $150. The fundamental issue is supply security. And the problem is that most politicians believe that supply security is to control the oil, which is totally irrelevant.

How well equipped is our system to manage the risks of world oil markets?

Diwan: Much less than it was five years ago, when the United States was actively managing the world economy and the conflicts through international institutions.

Franssen: Another important issue is the predicament in developing countries. After World War II we built suburbia on $1-a-barrel oil. Europe recovered after the war on $1-a-barrel oil; Japan recovered on $1-a-barrel oil. The Asian tigers built up their economies on less-than-$20-a-barrel oil. If the world is now in a mode of $40-plus oil, can developing countries build up a lifestyle that we have been taking for granted for the past 50 years? And once they know they're left out, will they say, "You can have your Ford Expeditions, while we live our miserable life"?

Are there any major misperceptions out there you would like to correct?

Sieminski: There are way too many conspiracy theories that involve oil.

Diwan: Between conspiracy and incompetence, I'll always choose incompetence as an explanation.

Thank you all so much for coming.

[papabear]

http://www.energybulletin.net/2544.html

Published on 15 Oct 2004 by EnergyBulletin.net / EnergieKrise.de.

The Countdown for the Peak of Oil Production has Begun – but what are the Views of the Most Important International Energy Agencies
by W. Zittel, J. Schindler, L-B-Systemtechn

1.Preface

Conditions of the world's oil supply have entered into a new phase: increasing demand pressure, worries about the security of supply in important oil producing countries, speculative factors, but particularly, clear indications that limitations on the supply side have caused unexpected and high price increases. In view of the fact that an increase of oil production is obviously becoming more and more difficult, it is now almost irrelevant, whether the peak of oil production has already been reached or whether growth of production “only” can't keep pace anymore with rising demand.

With accumulating evidence we will soon be able to decide between the conflicting views held by “optimists” and “pessimists”. According to the doctrine of the “optimists” (mostly pronounced by economists), rising prices will induce a fast increase of oil exploration and production, which in turn will lead to a relaxation in the oil market in the near future. In contrast, the “pessimists” (mostly influenced by geological considerations) expect that it will become increasingly difficult to balance the increase in demand by a sufficient rise in supply. As a consequence production will not be able to follow demand and, after a short phase of stagnation, will decline inescapably.

Many indications during the last four years vindicate the theses of the “pessimists” and not of the “optimists”. But it would be much more appropriate to leave these misleading categories behind and to speak in future only about “realistic” and “unrealistic” views. This topic is not a matter of belief anymore.

At first the present state of the world's oil supply will be outlined. Then follows a detailed discussion of the arguments of the “optimists”. We attach particular importance to this, as in most publications there is a reference to the main original papers which are often quoted with their central messages, but this is rarely accompanied by a critical analysis. In most cases the conclusiveness of the cited arguments is not questioned since they originate from institutions to which a high authority is attributed.


2.The present state of oil supply



2.1.Fundamental aspects

The different phases of oil production can be described schematically by the following pattern: In the early phase of the search for oil, the easily accessible oil fields are found and developed. With increasing experience the locations of new oil fields are detected in a more systematic way. This leads to a boom in which more and more new fields are developed, initially in the primary regions, later on all over the world. Those regions which are more difficult to access, are explored and developed only when sufficient new oil can't be found anymore in the easily accessible regions. As nobody will look for oil without also wanting to produce it, in general shortly after the finding of new fields their development will follow.

With increasing production the pressure of an oil field diminishes and the water levels rise, and after some time the production rate begins to decline. This trend can be controlled to a certain extent so that the decline in production rate is delayed or reduced: by injecting gas or water into the reservoir in order to increase the pressure, by heating the oil or by injecting chemicals in order to reduce the viscosity of the oil.

In every oil province the big fields will be developed first and only afterwards the smaller ones. As soon as the first big fields of a region have passed their production peak, an increasing number of new and generally smaller fields have to be developed in order to compensate the decline of the production base. From there on, it becomes increasingly difficult to sustain the rate of the production growth. A race begins which can be described as follows: More and more large oil fields show declining production rates. The resulting gap has to be filled by bringing into production a larger number of smaller fields. However, these smaller fields reach their peak much faster and then contribute to the overall production decline. As a consequence, the region's production profile which results from the aggregation of the production profiles of the individual fields, becomes more and more “skewed”, the aggregate decline of the producing fields becomes steeper and steeper. This decline has to be compensated for by the ever faster connection of more and more ever smaller fields.

So, the production pattern over time of an oil province can be characterised as follows: To increase the supply of oil will become more and more difficult, the growth rate will slow down and costs will increase until the point is reached where industry is not anymore able to bring into production a sufficient number of new fields quick enough. At that point, production will stagnate temporarily and then eventually start to decline.

This pattern can be observed very well in many oil provinces. However, sometimes this general pattern was not followed: either because the timely development of a “favourable” region was not possible for political reasons, or because of the existence of huge surplus capacities so that production was held back for a longer period of time. However, the more existing surplus capacities were reduced, the closer the production profile follows the described pattern.

In the history of oil production, which is now extending over more than 150 years, we can identify some fundamental trends:
The world's largest oil fields were all discovered more than 50 years ago.
Since the 1960’s, annual oil discoveries have decreased tendentially.
Since 1980, annual consumption has exceeded annual new discoveries.
Till this day more than 42,000 oil fields have been found, but the 400 largest oil fields (1 per cent) contain more than 75 per cent of all oil ever discovered.
The historical maximum of oil discoveries has to be followed after some time by a maximum of oil production (the “peak”).
How close have we already got to the peak? This is the only exciting question remaining.


2.2. Countries outside OPEC and Former Soviet Union (FSU)

On the global level, the development of different oil regions took place at different times and at varying speeds. Therefore, today we are able to identify production regions being in different development stages and with this empirical evidence we can validate with many examples the simple considerations which were described in the previous chapter.

Looking at the countries outside of the Former Soviet Union and OPEC, it can be noticed that their total production increased until about the year 2000, but since then total production has been declining. A detailed analysis of the individual countries within this group shows that most of them have already reached their production peaks and that only a very limited number of countries will still be able to expand production, particularly Brazil and Angola.

Critical for the stagnation of oil production in this group of countries was the peaking of oil production in the North Sea which occurred in 2000 (1999 in Great Britain, 2001 in Norway [1]). Oil production onshore stagnated much earlier and has been declining since the mid 90's. This decline could be balanced by the quick development of offshore fields which now account for almost 50% of the production of all countries in this group. The North Sea alone has a share of almost 40% of the total offshore production within this group. For this reason the peaking of the the North Sea was decisive. This production decline couldn't be overcompensated anymore by the quicker connection of new fields in the remaining regions – it could only be balanced for a few years [2].

Decisive for the further development will be, when the production of Cantarell in Mexico, the world's biggest offshore field, will start to decline. This field, discovered in1978, even today contributes half to the Mexican oil production. It has reached a plateau for some years now. The present production rate can only be maintained by the massive injection of nitrogen. The yearly amount of nitrogen injected into the field has doubled the world's annual consumption of nitrogen. Optimistic observers assume that this field will continue to produce at current levels up to the year 2010, others expect the decline to start much earlier. Just recently, PEMEX itself has warned that it expects Cantarell to start decline in 2006 at an annual rate of 14% per year [3]. Apart from that, the quality of the oil produced in Mexico has degraded steadily. Today, the share of light oil has halved since 1997 [4].

This steady degradation of the quality of the oil produced can be observed in almost all regions having passed the peak and poses an additional challenge for the existing downstream infrastructures: refineries have to be run with oil of increasingly lower quality. The supply share of lesser oil qualities is steadily increasing – this causes additional pressure on the price for the remaining good oil grades.

Particularly interesting is the example of Indonesia, which is the only OPEC member state which is included in this group of countries as it will probably soon leave the OPEC – because in march 2004 for the first time more oil was imported than exported [5].

Oil production in regions having passed their peak can be forecasted with some certainty for the next 10 years. If it is assumed that the remaining regions with growth potential (Angola, Brazil and the Gulf of Mexico) will considerably expand their production by the year 2010 (in accordance with the optimistic forecasts of the companies operating in these regions), total oil production of this group of countries, however, will decline by 7-8 Mb/day (Mb = million barrels) by 2010. Not accounted for in this forecast is the fact that (contrary to the assumptions made above) in Brazil production has been declining for 8 month in series and is now back to the level of 2002, as the connection of new fields was delayed for economic and technological reasons [6].

As the production of conventional oil is declining, this group of countries will be able to supply additional amounts only from non-conventional sources. Non-conventional oil sands in Canada and Venezuela will contribute 1-1.5 Mb/day, provided that the already announced expansion plans will be realised without any further delay.



Figure: Oil production of countries outside OPEC and FSU


2.3.Former Soviet Union (FSU)

The oil production of the Former Soviet Union peaked reaching a production rate of more than 12 Mb/day at the end of the 80's. Soon afterwards production collapsed by almost 50% within 5 years. The production peak at the end of the 80's had been forecasted by western geologists based on the depletion patterns of the largest oil fields [7]. However, the following production collapse during the economic break down turned out to be much steeper than expected. For this reason, Russian companies were able to stop this decline after the liberalisation of the oil market and to increase production levels again – in some years at double-digit rates during the last 5 years - with the help of international cooperations and investments. However, this fast recovery now comes to an end as the easily accessible fields have been developed and the financial and technological backlog is widely closed.

Recently the director of the Russian energy agency, Sergej Oganesyan, conceded for the first time that the growth rates of the past few years can't be repeated anymore and that in 2005 production will probably stagnate or even decline [8].

But despite this strong revival of Russian production, the oil price has remained under pressure and has been rising slowly but continuously and even exceeded the $40 line, a fourfold increase compared with 1999. The double-digit growth rates in Russia contributed to compensate for the inescapable production decline in other regions of the world, and to counter the rising demand pressure.

The two other important oil regions of the Former Soviet Union are Azerbaijan and Kazakhstan.

At world level, Azerbaijan is the oldest modern oil region. Its highest production rates were reached already fourty years ago. Today, we can expect production expansions only in the offshore areas. In this context, especially the field complex Azeri-Chirag-Guneshli has to be mentioned. Once fully developed, Azeri-Chirag-Guneshliy probably will reach its maximum in 2008 or 2009 at a production rate of 1 Mb/day. Soon thereafter the production rate will decline very fast to almost negligible amounts within 10-15 years. The total production of this region, however, will increase by a much smaller amount as 150.000 b/day are already produced from Azeri-Chirag-Guneshli today and as in future the production from other fields will drop noticeably [9].

For some years Kazakhstan was considered to be a potential counterbalance for Saudi Arabia. Today we know that these hopes were exaggerated. They were nurtured by speculations of the US federal authority “EIA” which expected oil and gas reserves in the region around the Caspian Sea amounting up to 300 Gb of oil equivalent. Realistically, only about 45 Gb of oil are likely to be recoverable, about half of this amount is located in already developed fields [10].

High expectations regarding future production potentials concentrate on three fields: Tengiz, Kamchagarak and Kashagan. All three fields contain oil with a high sulphur content the development of which jeopardises the environment and is very expensive. Tengiz and Kamchagarak produce oil since some years; in Tengiz alone, more than 4,500 tons of sulphur are separated from the produced oil each day and stored in the surrounding area polluting the environment [11]. Plans for a production extension are delayed due to high development costs and difficult geological conditions. In 2000, the third big oil field, Kashagan, was found. It is supposed that production can be increased considerably from 2006 on. But there are big doubts whether this will be possible. High sulphur content, high deposit pressure of more than 1000 bar and an unfavourable geographical location far away from any infrastructure make it expensive and difficult to develop. It is certainly no coincidence that two of the big companies being involved in the discovery of the field (BP and Statoil) have withdrawn from the group of companies developing the field. After an analysis of the first exploration drilling, it was communicated that the companies' internal criteria for a development weren't fulfilled [12]. British Gas already has announced its withdrawal.

Azerbaijan and Kazakhstan will probably be able to double their production rate by 2010 – from 1.3 million barrels to 2.5-2.6 Mb/day – but to hope for more seems unrealistic.

According to this assessment, the whole region may be able to increase its production in the coming years, but the very big expansion expected by many people will not occur. A total production increase of 2-3 million barrels/day is probably already on the high side.


2.4.OPEC member countries

The conclusion of the previous analyses is: the expected production decline in the group of countries described initially is partly offset by a possible expansion in Russia and in the Caspian Sea. But there still remains a gap of 3-5 Mb/day to keep world oil production constant until 2010. This gap has to be filled by the OPEC member countries. If the world demands additional oil, this amount would have to come from the OPEC member countries as well.

Conventional wisdom has it that this will be possible for OPEC without any problems. However, a production growth of 3-5 Mb/day within a few years does constitute a problem. Particularly as it is widely accepted that – apart from Iraq which can't be considered to be a reliable oil producer for the time being – only Saudi Arabia is supposed to be able to increase its oil production significantly. This would require an expansion of almost 40% of the Saudi Arabian oil production within very few years. This is a very ambitious goal, even for a country with an abundance of oil.

Moreover, in recent years the suspicion has grown that the conditions for oil production in Saudi Arabia are not as favourable anymore as is commonly assumed, but are becoming more and more difficult. In assessing the future production potential of Saudi Arabia, Ghawar, the world’s biggest oil field, plays a key role. This field was discovered in 1948 and has now been producing oil for more than 50 years. It is a fact that meanwhile more water is pumped into the field than oil is extracted, and it seems quite possible that the production rate will decline soon. Anyway, it is certain that Ghawar can not anymore contribute to an expansion of Saudi Arabian production [13].

There is now a debate going on about the wider question, whether Saudi Arabia will at all be able to increase its production significantly. This debate was initiated early in 2004 by Matthew Simmons, an American investment banker. His doubts are based on a comprehensive in-depth analysis of technical papers in the public domain addressing the problems of oil production in Saudi Arabia, and on a great number of interviews with engineers working on site and also a visit of the oil fields in Saudi Arabia.

Simmons has provoked comments by senior executives of the state-owned company Saudi Aramco. But their comments have rather fueled existing fears instead of assuring the world. First, it was admitted by Saudi Aramco that the big old oil fields show decline rates, and that by now Abqaiq is depleted by 73%, and Ghawar by 48% [14]. Moreover it was indirectly confirmed by Abdul-Baqi and Nansen Saleri, that proven reserves do not amount to 262 Gb - as is commonly assumed - but are only 130 Gb and that another 130 Gb had already been counted as reserves because it is regarded probable that they can be developed eventually [14]. If one would apply the same criteria which are common practice in western companies, then Saudi Aramco’s allegation for proven reserves should be devalued by 50%. This devaluation is confirmed indirectly by another Saudi Aramco executive [15].

Furthermore, Saudi Aramco executives tried to counter the fears of Simmons by stating that a production of 10 Mb/day could be upheld until 2042. In doing this they had to assume that the above mentioned reserves of 260 Gb are proved reserves (which they are definitely not). Saudi Aramco went on to state that in case of a more aggressive development of remaining reserves, production could be increased to 12 Mb/day by 2016 and then could be maintained constant until 2033 [14]. But even this scenario put forward by the Saudis is hardly assuring in view of the projections of the International Energy Agency (IEA) which assume that in the long term additionally more than 20 Mb/day are supposed to come from those regions.

The analyses of Simmons [16] and others (e.g. Bakhtiari [17]) make the point that Saudi Arabia’s potential to increase production will soon reach its limits.


3.4.The world is nearing the moment of truth

The recent rise of crude prices to more than $40 per barrel could for a short while be slightly reversed by the announcement of OPEC member states to increase their production. This shows that in the short term prices can be influenced by rhetoric - but eventually everybody wants to see OPEC delivering. However, it will soon turn out whether the “pessimistic pessimists” are right who believe that also OPEC has no more spare capacity left or whether the world will sit back for a few more years.

In case world oil production can be increased again, this will be taken by many as a refutation of the claims of the “Cassandras” and as evidence that oil production can therefore be increased for many more years to come. More appropriate would be the perception (1) that the remaining oil will be consumed this much faster and (2) that an increase of production in the short term will in effect further increase the level of oil dependency - until from this higher level a steeper decline than otherwise necessary will be enforced.

Recent developments are in obvious contrast to the assertions of the optimists which don’t foresee any problems in the availability of oil for the next 20-30 years. But they now acknowledge that price increases might be possible.


3.Critique of forecasts by USGS, US-EIA and IEA

The analyses and forecasts of the US Geological Survey (USGS), of the Energy Information Administration (EIA) being the statistical arm of the US Department of Energy, but particularly also of the International Energy Agency (IEA) in Paris, are frequently quoted because they enjoy high credibility and are considered to be a reliable orientation regarding future developments.

From time to time the US Geological Survey, an American federal authority, publishes assessments about the global availability of hydrocarbons. It has to be noted that these studies don’t provide any explicit information about future production potentials.

Often these studies are quoted in a very abbreviated form, while all references to uncertainties and boundary conditions contained in the studies are omitted. The energy agencies EIA and IEA proceed in a similar way and use selected statements of the USGS studies as basis for their optimistic assessments of future production potentials.

Common to all these analyses is a confident perspective which is in stark contrast to the analyses described in the previous chapters of this paper. Therefore recent influential publications of these institutions will be analysed in greater detail at this stage.


3.1.US Geological Survey (USGS)

The latest survey of resources is the “US Geological Survey World Petroleum Assessment 2000” and was published in june 2000 [18]. Apart from the content of the study, also the way the results of the study were published is of interest. Main results were released to the press at the end of march 2000, before the publication of the full report, delivering the message that up to now the potential for future oil discoveries had been grossly underestimated and that there was still much oil left to be found [19]. By coincidence this press release appeared on the eve of a critical OPEC meeting at which an expansion of production quotas was to be negotiated at a time when oil prices started rising dramatically for the first time since Gulf War I.

Also unusual and coinciding with the publication of the survey, one of the authors - Les Magoon - published a poster on the USGS web page (using the official logo) which warns of the imminent big “rollover”. This is the moment when the oil market changes from a buyers’ market – in which oil price is governed by consumer demand with no supply restrictions - to a sellers’ market in which supply constraints determine prices [20]. This moment will be reached when global oil production can’t be expanded anymore and begins to decline. According to Magoon, the examination of many analyses leads to the conclusion that the exact moment can’t be determined with certainty by anyone, but production peak will be reached in all probability somewhere between 2003 and 2020: “Nobody is sure, but those willing to forecast say somewhere between 2003 and 2020. Most everybody seems to agree that it will most likely be within our lifetime, and possibly quite soon!”

For the illustration of this statement the production curve published by the “pessimists” Colin Campbell and Jean Laherrere in Scientific American [21] showing a maximum in 2003 is used and by doing this he gave prominent support to their view. Only after protests of the oil industry, a small annotation was added that this does not present the official opinion of the USGS. But albeit, this illustration has been visible until today on the USGS web page with the logo of the federal authority. Therefore, a certain identification with the content can’t be denied.

In the executive summary of the resource survey 2000 the following phrases deserve attention: purpose of the study is “... to assess resources ... which have the potential to be added to reserves within a 30-year timeframe (1995-2025)...” [18]. It is stated explicitly that those oil findings can be expected in the time between 1995 and 2025. Until today almost one third of this period of time has elapsed, so that already now we are able to compare the estimates of the study with reality.

Moreover the wording “to assess resources... which have the potential to be added to reserves” is so vague that its exact interpretation is left to the reader.

In brief the results of the survey can be summed up as follows:
Outside of the USA up to 334 Gb of oil can be found between 1995 and 2025 at a probability of 95%, and 1107 Gb at a probability of 5%. By using extensive Monte-Carlo simulations a “mean” value of 649 Gb is calculated.
Furthermore between 95 Gb (5% probability) and 378 Gb (95% probability) of natural gas liquids (NGLs) can be found.
In contrast to previous analyses a new factor - called “reserve growth” - is introduced. The factor for the reserve growth is calculated from the experience in the USA during the last decades, extrapolated for the next 30 years and then applied on the rest of the world.
This method of adjusting reserves by a growth factor must be criticised in two respects:

The upward revision of reserves in the past is caused in most cases by an initial underestimation of the content of the old and large fields. These fields were so large that it wasn’t necessary for their efficient development to determine their exact size. And some of these fields are so old (up to 100 years and more) so that the methods of reserve estimation at the time of discovery were very simple and unprecise.

Today the growth of reserves tends to be much smaller, partly because newly found fields are so small that a precise estimate is needed, but also because modern exploration methods are much more precise than in the past. Nowadays it happens quite often that reserves also have to be adjusted downwards instead of upwards (as lately the example of Shell has shown).

The second point of critique refers to the fact that – as is known to all experts - the growth of reserves in the USA in the past was much higher than elsewhere. This is a direct consequence of the regulations by the Securities Exchange Commission (SEC), which for financial reasons call for very conservative evaluations at the beginning of the development of an oil field. This American practice leads to systematic underestimations.

For these reasons this marked reserve growth in the past was only observed in the USA and can not be extrapolated into the next 30 years, nor even less can this pattern be applied to the whole world.

But apart from this important aspect, it seems very strange that a scientific geological institute makes estimates of the geological potential of oil findings and then additionally applies a growth factor which only reflects the economic rules of “reserve reporting”. It is obvious that the reporting of reserves can only extend within the boundaries of the geologically possible. The USGS study mixes different categories of reserve evaluation which are not compatible. The results can not be regarded as scientifically sound and are all but reliable.

To arrive at a global picture, US data have to be added to the world’s oil resources outside the US. For this purpose the USGS draws on its own analysis of the US from 1996 [22]. The total results of the USGS study are shown in the following table.

Table: USGS estimate of potential oil findings between 1995 and 2025 and reserve growth in already found fields [18].
Discoveries 5% Probability „ Mean“ 95% Probability
crude oil (outside USA) 1107 649 334
NGL (outside USA) 378 207 95
crude+NGL (USA) 104 83 66
total 1589 939 495

Reserve growth
crude oil (outside USA) 1031 612 192
NGL (outside USA) 71 42 13
crude+NGL (USA) k.A. (76) k.A. (76) 76
total 1178 730 281


Moreover, the study quotes figures of proven reserves and cumulative production from other statistics. It is particularly interesting that the USGS takes the values for non-US countries from the industry database (formerly Petroconsultants, today IHS-Energy). This very database, however, is used by Campbell and others for their analyses.

Table: Cumulative production by 01/01/1996 and proved reserves, as quoted in the USGS study [18].
Crude+NGL (USA) Crude (outside USA) NGL (outside USA) Total
Cum. production 171 Gb 539 Gb 7 Gb 717 Gb
Reserves 32 Gb 859 Gb 68 Gb 959 Gb


Using these figures the USGS calculates the total potential of past and future world oil production (Estimated Ultimate Recovery – EUR): 3,012 Gb being the mean value, 2,269 Gb with a probability of 95% and 3,919 Gb with a probability of 5%. In addition the total amount of liquified natural gas outside of the US is estimated to be in the range of 183 to 324 Gb. For the US the NGLs are already accounted for in the table above.

To give an insight into the methodology of the analysis, two regions will be examined in greater detail: the Falkland Islands and the basin of the Greenlandic Sea.

The USGS study identifies as the region with the largest potential of oil discovery the sea area east of Greenland which is estimated to contain as much oil as the North Sea. In this region certain geological analogies exist to the shelf ridge off Middle Norway, but only certain analogies... With a probability of 95% no oil at all will be found, according to the USGS, with a probability of 5% 117 Gb will be found. Based on these estimates, it is calculated via complex mathematical models that probably 47 Gb of oil could be found in the region. (Incidentally in the shelf off Middle Norway 10 Gb have yet been found after many years of intensive exploration – with the significant contribution of Colin Campbell.)

Until today there hasn't been any single exploration drilling in the Greenlandic Sea. It will be interesting to see which oil company will take the risk to drill in an area where oil is expected to be found with a probability of 5%.

For to the Falkland Islands, the potential for “undiscovered” oil is estimated to be 5,8 Gb. This number was calculated as the mean value assuming that at 95% probability no oil at all will be found and with a probability of 5% about 17 Gb will be found.

In contrast to this estimate, the sobering reality is described in the following quotation of Marshall DeLuca in OFFSHORE, one year before the completion of the USGS study [23]:

“The most recent frontier project was the offshore Falkland Islands area. This exploration project has turned out to be a disappointment – thus far. The operators have tried six wells in the area ... and have encountered some oil shows, but did not strike anything close to commercial levels. It has been estimated that the group will need a discovery with at least 140 Mb of oil to justify development of the Falklands. With the harsh environment of the Falklands, well costs are currently estimated at between $25 and $30 million per well. The FOSA drilling program is now complete, and the operators are evaluating well data. No plans for the future have been announced.”

So far no single oil field containing approximately 140 million barrels has been found. Where to look for the 5,800 million barrels of which the USGS assumes that they can be found?

As the study indicates the time frame 1995 to 2025 for the new discoveries of oil, one can easily calculate how much oil per year on average should be found.

Table: Calculation of average discoveries per year until 2025 based on USGS assumptions.
Probability Discoveries (crude+NGL) Reserve growth Total
1995-2025 Gb/yr 1995-2025 Gb/yr Gb/yr
95% 495 Gb 16,5 281 Gb 9,4 25,9
Mean 939 Gb 31,3 730 Gb 24,3 55,6
5% 1589 Gb 53 1178 Gb 39,3 92,3


Just taking this table, the lack of realism of the study becomes apparent. If we take seriously the values indicated as “mean”, this would mean that every year 55 Gb of new oil would have to be added to the reserves, originating either from new discoveries or from reassessments of existing fields. In fact, however, reported reserves have been staying roughly constant. Currently discoveries and reassessments correspond approximately with annual consumption - which amounted to about 27 Gb in 2002. Hence, the USGS study assumes that in future on average this value will be at least twice as high than in the past.

As a matter of fact, between 1995 and 2002 in total only 107 Gb were discovered and 110 Gb were added by reassessing existing fields [24]. According to the USGS projections (“mean”), however, in this period 219 Gb should have been found and 170 Gb should have been added due to reassessments, whereas the amounts to be expected with a probability of 95% did materialize. After one quarter of the forecasting period has now passed, the real development lags far behind the USGS projections. In order to achieve the “mean” projections even roughly, in future much more oil than ever before has to be found. This seems to be the most unlikely of all possible future developments! There is not a single indication that the USGS estimates, apart from the 95% probability values, have anything to do with reality.

From these comments it is evident that the USGS deals with resource assessments in a rather liberal manner. Nevertheless, one can draw some benefits from the USGS projections by “calibrating” them appropriately. As an example we can take the oil production in the US which is a rather mature region now.

Hubbert predicted that the peak of US oil production would be reached in 1969 and 1970 [25]. In fact the production maximum occurred in 1971 [26]. Hubbert based his forecast in 1956 on the fact that the maximum of new discoveries had already passed, therefore he could estimate the remaining amount of oil to be found with some accuracy. Combining this with an extrapolation of the oil production, he was able to predict the production peak. After about half of the recoverable oil had been produced, the maximum had been reached.

With a similar method, even though in detail more sophisticated, the study “Global 2000” (commissioned by the US President) predicted in 1980 the date for the global production peak to be somewhere near the end of the 20th century [27]. The biggest uncertainty was predicting oil consumption - not forecasting how much oil still can be found. In fact this study has assessed the total existing reserves amazingly precise (as we now know with much greater certainty) - just the development of demand was greatly overestimated.

Most scenarios trying to forecast the production peak see it at the time when about half of the recoverable oil has been produced.

This will be different when using USGS data because of their more generous reserve assessments. For the USA the USGS predicts a EUR (Estimated Ultimate Recovery) of 362 Gb (mean) [22]. At the time of production peak 106 Gb had already been produced [28]. If we calibrate the production peak with these values, we see that we reach the production peak at 30% depletion of EUR as estimated by USGS.

Assuming 3,345 Gb for the global estimated EUR according to USGS 2000 (“mean” for oil + NGL, the value for oil is 3012 Gb), the global production peak would be reached at a consumption of about 1,000 to 1,100 Gb. As until the end of 2003 about 920 Gb have been produced [28], the production peak may be expected in the coming years. This seems to be the only valuable information that can be extracted from the USGS figures.


3.2. The US “Energy Information Administration” (EIA)

The Energy Information Administration, which belongs to the US Department of Energy, publishes many energy statistics and analyses which draw worldwide attention.

The quality of some of their publications, however, gives cause to serious criticism. When one analyzes the statistics of the administration over many years then one will observe that figures for inventories and consumption initially nearly always are overstated and then after months and years - sometimes 10 years back - are adjusted, often quite significantly. This is especially noticable in the last two years. E.g. the US natural gas production figures were always overstated and were corrected only after many months. It is difficult not to suspect any purpose behind this practice (corrections were carried out only after public attention had moved to other topics). Even until today the EIA isn’t prepared to concede that US natural gas production has peaked and is in decline now - in contrast to most industry observers who see a definite decline of production for some time now according to their databases ([29], [30]).

Particularly revealing was an episode in the winter of 2003, when the US Secretary of Energy replied to the question of a journalist asking for the reason for rising natural gas prices with a reference to the statistics of Raymond&James [31]. He didn’t refer to data of his own administration but he quoted industry analyses which were totally contrary. So much (or so little) regard has the Secretary of Energy for the analyses of his own administration.

Even in its latest “US Annual Energy Outlook 2004” the administration forecasts a significant growth in natural gas consumption in the US for the coming 20 years for which, according to many industry observers, the resource base is completely lacking [32].

The publication of the USGS resource study discussed above was used as a basis by the EIA to forecast the world's oil production. As an example for many analyses of EIA the study “Long Term World Energy Supply” will be examined in greater detail [33].

Based on the resource data of the USGS study different supply scenarios until 2010 and beyond are outlined. In the summary it is pointed out that all 12 analyzed scenarios see the production peak, depending on different assumptions, between 2021 and 2112. Also included, but not mentioned in the text of the summary is the chart “Annual Production Scenarios with 2 Percent Growth Rates and Different Decline Methods” which shows the peak in the year 2016 based on 2% decline after peak and an EUR of 3003 Gb.

Moreover, the only realistic - from our point of view - scenario is not mentioned. This is a scenario based on the USGS resource figures at 95% probability (2,248 Gb) and assuming a production increase of 2% per year until the peak is reached and thereafter a production decline of 2% per year. In this scenario the peak would already be reached before 2010, consistent with the claim of the “pessimists”. Instead of this the pessimistic scenario formulated in the EIA presentation is based on the USGS “mean” with a total oil production potential of 3,003 Gb.


Figure: “Published Estimates of World Oil Ultimate Recovery” [33]

The chart “Published Estimates of World Oil Ultimate Recovery” tells only half the truth again. The different underlying definitions of the individual authors are not pointed out. E.g. USGS includes in its analysis crude oil at a density higher than 15° API, as well as deep-water oil up to a depth of 4,000 metres. Campbell 1995 only includes crude oil at a density higher than 17.5° API and offshore regions with water depth up to 500 metres. Also polar oil in regions north of 66° latitude is not considered (Alaska, Siberia). These categories are not conventional oil according to the common definitions among explorers, but are shown separately by Campbell. If we add these categories of oil to the results published by Campbell in 1995 and compare them with the figures of USGS 2000 at 95% probability then the figures are practically identical and differ only by a few per cent [34].

However, it is much more important to note that the USGS survey is totally in line with other studies once the figures at 95% probability are taken as reference. But the figures for the “mean” case and even more so the values at 5% probability are far higher than other estimates. As a consequence, the chart can rather be read as a confirmation of the fact that the oil endowment of the world most likely amounts to 2,000 or 2,300 Gb and not to 3,000 Gb or even 4,000 Gb.



Figure: “Different Interpretations of a Hypothetical 6,000 Billion World Original Oil-in-Place Resource Base” [33]

The chart “Different Interpretations of a Hypothetical 6,000 Billion World Original Oil-in-Place Resource Base” is misleading. Campbell and Laherrere analyzed the 200 largest oil fields (which cover the bulk of the total amount of oil) with regard to their oil recovery factors. These oil fields have already reached an average recovery factor of more than 40% (and not 30%, as it is suggested in the chart). This is already documented in the IEA World Energy Outlook 1998 [35]. If we extrapolate this value to a recovery factor of 50%, this would amount to 1,800 Gb/0.4*0.5 = 2,250 Gb instead of the 3,000 Gb stated by the USGS! This number would be consistent with the USGS value at 95% probability. Therefore this chart by the EIA is a deliberate deception.

Moreover the small amount of “undiscovered” oil in the analysis of Campbell and Laherrere is explicitely based on their different methodology: Campbell and Laherrere extrapolate the discovery rate based on the historical trends of the past 70 years and show that this extrapolation approaches an asymptotic limit at about 1,800 Gb of crude oil. In their “Mean” case the USGS completely ignore these historical trends: instead of declining further, the USGS analysis assumes that the trend of annual discoveries will reverse. Present and past discoveries, however, do not support such a view.



Figure: “Annual Production Scenarios for the Mean Resource Estimate and the Different Growth Rates (Decline R/P = 10)” [33]

The methodological approach for the construction of the “Annual Production Scenarios for the Mean Resource Estimate and the Different Growth Rates (Decline R/P = 10)” is strange. First of all: Why is there a production curve based on the “Mean” case of the USGS study and not also one for the “Low” case (with a probability of 95 %)? Later in the study for the most part only graphs are shown which are based on the USGS “High” values with a probability of 5%. However, as already mentioned, if we calculate the production profile with a growth rate of 2% before and a decline rate of 2% after the maximum based on the “Low” case, then production would peak before 2010 – fully consistent with the estimates of the “Pessimists”.

Assuming the peak of production takes place very late in time obviously leads to very unrealistic “catastrophic scenarios”: a long period of growth is necessarily followed by a steep decline, i.e. a total break down of oil production within a few years after the peak.

This steep production decline is generated by assuming a constant reserve/production ratio of 10 years (R/P = 10). It is argued that such a constant R/P–ratio was observed empirically in the US after production peaked in 1971.

In fact, production each year declined at an average rate of 2%, but reserves were also adjusted each year in such a way that the R/P-ratio was almost unchanged. (This is a consequence of the concept of “reserve growth”: Even though reserves were adjusted downwards each year, they were adjusted by less than the actual production of the year in question.)

A consistent calculation would have to be in line with the observed 2% decline rate of the production. EIA, however, uses the constant R/P=10 ratio based on the final EUR as basis which results in a 10% annual decline rate. But the real praxis was to arrive at R/P=10 by annually upward revising EUR.

However, much more important is another criticism. How realistic are the future production scenarios as described by EIA? These scenarios are quite implausible as already today most of the regions in the world have either reached or passed their production peak (see chapter 1). Once more and more regions experience a shift from growing to declining production it is getting increasingly difficult for the ever fewer remaining countries to compensate for this decline, let alone to add to total production. For instance, if we take the scenario with the peak in 2030 (based on a yearly production growth of 3%), this curve tells us the following: In the last 50 years the world has managed to increase global production per year from about 5 Gb by about 20 Gb to 25 Gb; in little more than half of this period it is thought to be possible to increase yearly production by about twice that amount from 25 Gb to 65 Gb – by another 40 Gb! This is incredible.

In view of the remaining production potentials it is much more likely that global oil production will never be able to exceed the 30 Gb level significantly, and not for longer than a few years.


3.3.The International Energy Agency (IEA)

The IEA was founded by the OECD nations after the oil shocks in the 70's as a counterweight to OPEC. Since that time the IEA is regarded as the “energy watchdog” of the western world and is supposed to help to avoid future crises. Every two years the IEA publishes the “IEA World Energy Outlook” which forecasts the development of the coming two decades. These reports are considered by many people to be something like a “bible”. The IEA also publishes monthly reports covering the current situation of the oil markets.

The “IEA World Energy Outlook 1998” did forecast that world oil demand will increase by 50% to 120 million barrels/day by 2020. It was correctly seen that production outside of OPEC would reach its maximum in the year 2000 and soon after would start to decline. Almost 20% or 17 million barrels/day of the total consumption in 2020 was explicitly defined as “not yet identified unconventional oil” – a hidden warning which could be translated to “the IEA has no idea of where this oil is going to come from”. This study did also discuss the different views on the future production potential by dedicating 5 pages to a review of the “Pessimists'” position.

The following report „IEA World Energy Outlook 2000“ was already influenced by the USGS Resource Assessment 2000. This influence can also be seen in the latest report „IEA World Energy Outlook 2002“ [37]. While the 1998 report still discussed the different views later reports simply ignored differing views.

The “IEA World Energy Outlook 2000” and “IEA World Energy Outlook 2002” have an almost opposite message compared with the report of 1998. According to the latest report world oil demand will reach the level of 120 million barrels/day by 2030 instead of 2020. But the hint at “yet unidentified sources” in the 1998 report has been dropped. Quite the reverse, based on the USGS study, now almost any production rate is considered to be possible. Even the production of non-OPEC states, which according to the 1998 report was supposed to decline to 27 million barrels/day by 2020, is expected to grow from 43 million barrels/day in 2000 to 46 million barrels/day in 2020.

Key statements of the study regarding future world oil supply will be discussed in more detail ([38]).

Table: Aggregate figures of table 3.5 in “IEA World Energy Outlook 2002” [38]

Amount of Oil IEA Comment
Remaining reserves 959 Gb reserves are effective 1/1/96

Undiscovered resources 939 Gb resources effective 1/1/2000 are mean estimates

Total production to date 718 Gb

2001 Production 75,8 mb/day


The stated sources are USGS (2000) and IEA databases.

In fact all figures except those for the current production are derived from the USGS (2000) study. However, in the USGS study all data refer to January 1st 1996 including still undiscovered resources and total production to date. This is a first methodical error. It would have been correct to adjust all figures in the IEA table to the new base year 2000, i.e. to extrapolate the remaining reserves to 2000, to reduce the findings still to be obtained and to adjust the historic production (after all 132 Gb have to be added in the period from 1996 to 2000).

Moreover, the figures are not consistent as the following examples show.

Table: Daily production in 2000 and 2030 as well as reserves and undiscovered in selected countries, according to the report “IEA World Energy Outlook 2002” [38], cumulative production between 1996 and 2030 calculated from these figures, and real discoveries between 1996 and 2002

Production (mb/d) Cum. Production 1996-2030 (Gb) Reserves 1995 (Gb) Undiscovered 1996-2025 (Gb) Discoveries 1996-2002

(Gb)
2000 2030
Indonesia 1,4 1,7 19,5 10 10 2,3
China 3,2 2,1 35 25 17 7
Brasil 1,3 3,9 29 9 55 6,2
UK 3,3 1,1 27 13 7 1,3
Norway 3,4 1,4 32 16 23 2,2
Mexico 3,5 2,7 44 22 23 0,8



The first two columns show the daily production in 2000 and 2030 according to the assumptions in IEA [38]. The study gives also intermediate values which allow to calculate the total production over the period 1996 to 2030 (column “Cum. production 1996 – 2030”). In this calculation the year 1995 has to be taken as the base since the assumed reserve data in this study (column “Reserves 1995”) and expected discoveries (column “Undiscovered 1995-2025”) refer to this year. For comparison, the real discoveries made in these countries between 1996 and 2002 are listed in the last column “Discoveries 1996-2002”. These are the discoveries after almost a quarter of the forecasting period.

It is obvious that the production forecast by the IEA cannot be attained by Indonesia, UK and Mexico, even if we accept the optimistic assumptions regarding discoveries, since the assumed reserves are not sufficient.

When we compare the real discoveries between 1996 and 2002 with the expected discoveries between 1996 and 2025, the rate of expected discoveries for all these states except for Indonesia and China is in total contrast to the observed development. Particularly striking are the discrepancies for Brazil, Norway and Mexico – there after all more than 100 Gb were expected to be found until 2025, but in fact only 9 Gb were discovered between 1996 and 2002. These figures would have been available also for the authors of the IEA study.

If we assume that the present discovery rates can be held constant over the remaining forecasting period (which is very optimistic, because according to past experience discoveries decrease with time), then in every country (maybe except for China) production would be down to zero in 2030.

Also in Germany the Bundesanstalt für Geowissenschaften und Rohstoffe (i.e. the German federal agency for earth sciences and raw materials) has dealt critically with the scenarios of the IEA and comes to the conclusion [39]: “The forecasts of EIA and IEA assume a continuous growth in oil consumption, without assessing sufficiently the real supply of oil and the production potential.”

Lately, for the first time we hear more cautious statements from the IEA. To increase production until 2020 will be very very expensive, the IEA says, and the new director, Claude Mandil, warned that “a new oil shock is possible” [40].


4. Final remark

The projections presented by USGS, EIA and IEA regarding the future availability of oil give reason to grave concerns because the comforting messages of these studies unfortunately are not based on valid arguments. These studies ignore future limitations in the supply of oil which are meanwhile apparent, and by doing this they send misleading political signals.

This article describes how, as it were, a “building” has been erected by well-known institutions:
The supporting ground floor has been built by the USGS 2000 study: it describes, how much oil the world has at its disposal - it just needs to be found.
On this the EIA has built a first floor which describes the future production potential. The result is that in fact any conceivable future growth of production will be possible - with growth rates exceeding everything that could be observed in the past.
On top of this the IEA constructs a second floor: the predicted growth in oil demand for the next decades will not be restricted by any limits of supply.
However, if only one brick is removed from the ground floor, the whole edifice collapses like a card house.

Bibliography:

[1] W. Zittel, Analysis of UK Oil Production, February 2001, (www.peakoil.net, www.energiekrise.de)

[2] Basis for this analysis was the database PEPS from IHS-Energy, edition 2003

[3] Mexico detects huge new deep-sea oil finds, by Catherine Bremer, Reuters, 31 August 2004

[4 This data can be extracted from the production statistics of PEMEX (www.pemex.com)

[5 Indonesia should quit OPEC, ex oil minister says, Associated Press, Jakarta, May 28th, 2004

[6] Petrobras production statistics, http://www2.petrobras.com.br/portal/ingles/...

[7] C.D. Masters, D.H. Root, E.D. Attanasi, World Oil and Gas Resources – Future Production Realities, US Geological Survey, in Ann. Rev. Energy 1990, vol. 15, p. 23-51

[8] Russia: Oil production to be flat in 2005, Associated Press, Moscow, June 4th, 2004

[9] AIOC needs to increase investment in Azeri-Chirag-Guneshli oilfields, Alexander’s Oil & Gas Connections, Company News: Central Asia, August 28th, 2002

[10] own extrapolation on the basis of PEPS, 2003

[11] Kazakhstan accused of sacrificing health, environment to boost oil earnings, Bruce Stanley, Associated Press, December 10th 2001

[12] according to press release, details under www.energiekrise.de - news March 20th, 2001

[13] look for details under ASPO newsletter No. 40, April 2004 (www.energiekrise.de)

[14] „Fifty year crude oil supply scenarios: Saudi Aramco’s perspective“, February 24th 2004, Mahmoud Abdul-Baqi, vice president, exploration, and Nansen Saleri, manager, reservoir management February 24th, 2004 at the CSIS in Washington on the occasion of a discussion with M. Simmons

[15] Sadad al-Husseini, Saudi Aramco: “ At the current depletion rate of 3 billion bbl/y, which represents 2,3% of the remaining 130 billion bbl of proven developed reserves, …..” quoted in K. Aleklett, “From Paris to Berlin – steps towards the final countdown to peak oil & gas”, presentation at 3rd International Workshop on Oil and Gas Depletion, Berlin, May 25th/26th, 2004

[16] The Saudi Arabian Oil Miracle, M. Simmons am February 24th, 2004 at the CSIS, Washington

[17] „World oil production capacity model suggest output peak by 2006-07“, Samsam Bakhtiari. Oil & Gas Journal. April 26th, 2004

[18] USGS World Petroleum Assessment 2000; (www.usgs.gov)

[19] „USGS Reassesses the Potential World Petroleum Resources: Oil estimates up, gas down“, USGS press release and US-DoE from March 22nd, 2000

[20] Less Magoon: The big rollover poster for the forthcoming peak oil (http://geopubs.wr.usgs.gov/open-file/of00-320/)

[21] C.Campbell, J. Laherrere, The imminent Peak of World Oil Supply, Scientific American March 1998

[22] D.L. Gautier, G.L. Dolton, K.I. Takahashi, K.L. Varnes, eds. 1996, „National assessment of United States oil and gas resources---Results, methodology , and supporting data: U.S. Gelogical Survey Digital Data Series DDS-30, Release 2

[23] Marshall De Lucia, Offshore, April 1999, p. 40-42

[24] Discoveries are taken from Industry data base of IHS Energy. These provide data of crude oil and NGL/condensates; The upgradings were calculated from reserve figures shown by the BP Statistical Review of World Energy, by accounting cumulative production in this period and the IHS designated findings

[25] „Nuclear Energy and the Fossil Fuels“, American Petroleum Institute Drilling and Production Practice, Proceedings of Spring Meeting, San Antonio, 1956, page 7-25; Shell Development Company Publication 95, June 1956

[26] See historical statistics of US-EIA, BP Statistical Review of World Energy or IHS Energy

[27] The Global 2000 Report to the President, Released by The Council on Environmental Quality and the U.S. State Department U.S. Government Printing Office, 1980; German Edition: Global 2000 – Der Bericht an den Präsidenten, Zweitausendundeins, Frankfurt, 1980

[28] This reference was taken from the data of IHS Energy. Similar figures can be obtained, when we add the historical time series of the US production with the figures of the resource report of BGR.

[29] Raymond & James, Energy Stat of the Week, May 10th, 2004, (http://beacon1.rjf.com/researchpdf/iOil051004b_0808.pdf)

[30] BP Statistical Review of World Energy 2004, (www.bp.com)

[31] US‘ Abraham: Cold Temperatures Behind Strong Gas Demand" in Dow Jones Newswire, December 17th, 2003, (www.energiekrise.de) news from December 19th, 2003

[32] US Annual Energy Outlook 2004, Energy Information Administration, (http://www.eia.doe.gov/oiaf/aeo/index.html)

[33] US-EIA Presentation : Long Term World Oil Supply, (http://www.eia.doe.gov/pub/oil_gas/petrole...upply/index.htm)

~~~~~~~~~~~~~~~ Editorial Notes ~~~~~~~~~~~~~~~~~~~

Further references (pasted here as database max'ed out):

[34] Fossile Energiereserven und mögliche Versorgungsengpässe aus Europäischer Perspektive, Bericht an das Büro für Technikfolgenabschätzung des Deutschen Bundestages, W. Zittel, J. Schindler, Ottobrunn, July 22nd, 2000, www.energiekrise.de/news/forum/haupt.html

[35] IEA World Energy Outlook 1998, Fig. 7.10, p. 107,

[36] IEA World Energy Outlook 1998, International Energy Agency, Paris, 1998

[37] IEA World Energy Outlook 2002, International Energy Agency, Paris, 2002

[38] Table 3.4, p. 96: World Oil Supply; Table 3.5, p. 97: Oil Reserves, Resources and Production by Country in ref [37]

[39] Reserven, Ressourcen und Verfügbarkeit von Energierohstoffen 2002, Bundesanstalt für Geowissenschaften und Rohstoffe, Hannover 2003, p. 104.

[40] Press release by AFP May 9th, 2004

www.energiekrise.de

PDF version available here:
www.odac-info.org/links/documents/LBST_Countdown_2004-10-12.pdf

[papabear]

http://www.energybulletin.net/11621.html

Published on 10 Dec 2005 by US House of Representatives. Archived on 10 Dec 2005.
Aleklett: Testimony on Peak Oil to US Congress

by Kjell Aleklett, President of ASPO
RELATED NEWS:

The following testimony was given on the 7th December 2005 to the Committee on Energy and Commerce in a hearing entitled Understanding the Peak Oil Theory in the US House of Representatives:

Mr. Chairman, ladies and gentlemen on the committee:

I thank the Committee for this opportunity to discuss Peak Oil and the work of Uppsala Hydrocarbon Depletion Study Group, Uppsala University, Sweden. We are also members in the network of ASPO, the Association for the Study of Peak Oil and Gas, and I’m since 2003 president of ASPO. Members of ASPO, including the ASPO-USA affiliate, have an interest in determining the date and impact of the peak and decline of the world's production of oil and gas, due to resource constraints (www.peakoil.net).
The mission is to:
1. Define and evaluate the world's endowment of oil and gas.
2. Model depletion, taking due account of demand, economics, technology and politics.
3. Raise awareness of the serious consequences for Mankind.

I like to summarize the global situation for Peak Oil the following way: When I was born in 1945, none of the four small farms in my little Swedish village used oil for anything. Ten years later, the oil age had arrived: we had replaced coal with oil for heating, my father had bought a motorcycle, and tractors were seen in the fields. From 1945 to 1970, Sweden increased its use of energy by a factor of five, or nearly 7 percent per year for 25 years. This journey into the oil age transformed Sweden from a rather poor country into the third wealthiest country (per capita) in the world. Ninety percent of the energy increase came from oil. Cheap oil made Sweden rich.

Now consider China, a developing country with 21 percent of the global population. It consumes 8 percent of the global oil supply, and thinks it is fair to claim 21 percent of daily global consumption, or 17.6 million barrels per day (mbpd). During the last five years the average annual GDP growth in China has been 8.2 percent and the average increase in oil consumption 8.4 percent per year. We can now see the same correlation between increase in GDP and use of oil in China as in Sweden 50 years ago. If China’s economy grows 8 percent per year over the coming five years, we can expect that it will need an increase in the consumption of oil of 3 million barrels per day by 2010. According to Professor Pang Xiongqi at the China University of Petroleum in Beijing, China's production will plateau in 2009 and then start to decline. This means that the total increase in consumption must be imported. As China is already importing 3 million barrels per day, it will have to increase imports 100 percent during the next five years. Where will it come from?

Since 2001, when ASPO was founded, we have tried to tell the world that there will soon be a problem supplying the world with crude oil while demand continues to rise. The estimated peak-production year at the first depletion workshop in Uppsala in 2002 was 2010. Two years later at our Berlin meeting it had moved to 2008, and now it looks like we are back to 2010, because production from deepwater oil fields will yield more than we expected. The exact year for peak oil depends very much on future demand and we will not know when we have peaked until we have crossed the threshold. It will certainly happen before 2020.

Unfortunately, few have heeded our alerts, even though the signs have been so obvious that a blind hen could see them. Fifty years ago the world was consuming 4 billion barrels of oil per year and the average discovery rate (the rate of finding undiscovered oil fields) was around 30 billion barrels per year. Today we consume 30 billion barrels per year and the discovery rate is dropping toward 4 billion barrels per year (see figure 1). This is significant; Chevron is even running an ad saying, "The world consumes two barrels of oil for every barrel discovered." (By discovery, I mean only new oil fields. Some analysts include reserve growth—newly accessible oil in old fields—as new discoveries, but we are using the same approach as in World Energy Outlook 2004, IEA, International Energy Agency)

If we extrapolate the downward discovery slope from the last 30 years in figure 1, we can estimate that about 135 billion "new" barrels of oil will be found over the next 30 years. The latest large oil field system to be found was the North Sea (in 1969), which contains about 60 billion barrels. In 1999 the North Sea field production peaked at 6 mbpd. Our extrapolation suggests that over the next 30 years we will discover new oil fields equal to twice the size of the North Sea—a very pessimistic prediction, according to our opponents. But I think the oil industry would be ecstatic to find two new North-Sea-size oil provinces.

The World Energy Outlook 2005 base-case scenario projects that by 2030 global oil demand will be 115 million barrels per day, which will require increasing production by 31 million barrels per day over the next 25 years, of which 25 mbpd is predicted to come from fields that have yet to be discovered. That is, we'll have to find four petroleum systems of the size of the North Sea. Is this reality?

Every oilfield reaches a point of maximum production. When production falls advanced technologies can reduce but not eliminate the decline. The oil industry and the IEA accept the fact that the total production from existing oil fields is declining. ExxonMobil informed shareholders that the average production decline rate for the global oil fields are between 4 and 6 percent per year (The Lamp, 2003, Vol85, No1). Current global production is 84 million barrels per day, so next year at this time current fields may produce a total of roughly 80 million barrels per day. Given the expected increase in global GDP, one year from now total oil demand will be 85.5 mbpd—so new capacity might have to make up for 1.5 mbpd plus 4 mbpd, or 5.5 mbpd. Two years from now the needed new production will be 11 mbpd and in 2010 at least 25 mbpd. Can the industry deliver this amount? If we extend the decline in existing fields through 2030, and accept the 2004 scenario by the Energy Information Administration (global demand of 122 mbpd), then "we need new production that is of the order of 10 new Saudi Arabias." Some might call this a doomsday scenario, but if so I'm not the doomsayer—it's Sadad Al Husseini, until recently vice-director of Saudi Aramco, the largest oil company in the world.

Excluding deepwater oilfields, output from 54 of the 65 largest oil-producing countries in the world is in decline. Indonesia, a member of the Organization of Petroleum Exporting Countries (OPEC), not only can't produce enough oil to meet its production quota, it can't even produce enough for domestic consumption. Indonesia is now an oil importing country. Within six years, five more countries will peak. Only a few countries—Saudi Arabia, Iraq, Kuwait, United Arab Emirates, Kazakhstan, and Bolivia—have the potential to produce more oil than before. By 2010, production from these countries and from deepwater fields will have to offset the decline in 59 countries and the increased demand from the rest of the world.

Can they do it? Let's look at Saudi Arabia, which in the early 1980s produced 9.6 million barrels per day. According to the IEA and the EIA Saudi Arabia must produce 22 mbpd by 2030. But Sadad Al Husseini claims that "the American government's forecasts for future oil supplies are a dangerous over-estimate." The Saudi Ghawar oil field, the largest in the world, may be in decline (see for example the book “Twilight in the dessert” by Mathew Simmons). Saudi Aramco says that production can be increased to 12.5 mbpd in 2015. They plan a new pipeline with a capacity of 2.5 mbpd, so it looks like they are willing to increase production to 12.5 mbpd, but so far there are no signs of reaching 22 mbpd.

Now consider Iraq, which in 1979 produced 3.4 mbpd. Iraq officially claims reserves of 112 billion barrels of crude oil, but ASPO (and other analysts) think that one-third of the reported reserves are fictitious "political barrels." At a recent meeting in London, I was told (privately, by a person who is in a position to know) that Iraqi reserves available today for production total 46 billion barrels. If this is the case, it will be hard for Iraq to reach its former peak production level in a short time.

And so on. It's time to ask, can the Middle East ever again produce at the peak rates of the 1970s?

Many countries in the world are very poor. It may be necessary to double global GDP to achieve any kind of decent life for people in these countries. The examples of Sweden and China suggest that, if past economic development patterns are followed, doubling GDP will require doubling global oil production. Can this even be done?

The United States, the wealthiest country in the world, has 5 percent of the global population and uses 25 percent of the oil. It is time to discuss what the United States should do to cut consumption—and rapidly. In February 2005 a report for the U.S. Department of Energy, DoE, (Peaking of World Oil Production: Impacts, Mitigation, & Risk Management) argued that "world oil peaking represents a problem like none other. The political, economic, and social stakes are enormous. Prudent risk management demands urgent attention and early action." Any serious program launched today will take 20 years to complete.

What about oil sands? The enormous reserves of oil sands in Canada are often mentioned as a lifesaver for the world. The report to DoE in February inspired us to undertake a “Crash Program Scenario Study for the Canadian Oil Sand Industry” (B. Söderbergh, F. Robelius, and K. Aleklett, to be published). In the study we found that Canada must very soon decide if its natural gas should be exported to USA or instead used for the oil sands industry. In a short-term crash program the maximum production from oil sands will be 3.6 million barrels per day in 2018. This production cannot offset even the combined decline of just the Canadian and North Sea provinces (see Fig.2). A long-term crash program would give 6 million barrels by 2040, but then new nuclear power plants would be needed to generate steam for the in-situ production.

In view of the importance of the world's future energy supply, The Royal Swedish Academy of Sciences (the Academy that awards the Nobel Prizes in physics, chemistry, and The Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel) has recently established an Energy Committee. The Academy is an independent non-governmental organization, with expertise in most of the sciences as well as economic, social, and humanistic fields. The Energy Committee has selected a number of subjects to be studied in some depth and one of these deals with oil and related carbon-based fuels. The Academy organized hearings and a seminar before subsequently (on October 14, 2005) issuing a statement about oil (the full statement can be found at the end of this text). I'll note just one excerpt from the general remarks: "It is very likely that the world is now entering a challenging period for energy supply, due to the limited resources and production problems now facing conventional (easily accessible) oil.”

From figure 1 we can conclude that the peak of global discovery of oil was around 1960. In figure 3 we have a well-defined discovery peak for US Lower 48. This peak defines how much can be produced and Peak Oil for the region was 35 years later in 1971. Based on the assumption that we only can consume the oil we have already found and expect to find, we have predicted oil production in the future for the world till 2050 (figure 4). Deep water is the latest oil-production frontier. During the coming years a number of large fields will come into production, and we believe that the peak production from these fields will define the upper time limit for peak oil. Based on the data available today, we can expect global Peak Oil in 2010, with a few years uncertainty.

Animals that face food shortages have a hard time adjusting and usually their populations decline. Some believe that we as human beings will face a similar situation. I can't accept that. As human beings we can think and come up with ideas, and I believe we can find solutions. The road will be bumpy and many people will be hurt, but when we arrive at the end of this road, it must be as a sustainable society. It will not be possible to travel this road without using part of the existing stocks of fossil fuels and, for industrial countries, nuclear energy as well, but we can do it in a manner that will have minimal impact on the planet. The problem is that we should have started at least 10 years ago. We must act now, as otherwise the bumps and holes in the road might be devastating.

Kjell Aleklett, Professor in Physics
Uppsala University, Box 535
SE-751 21 Uppsala, Sweden
E-mail: Aleklett@tsl.uu.se
Tel: +46 70425 0604

Association for the Study of Peak Oil and Gas: www.peakoil.net
Association for the Study of Peak Oil and Gas - USA: www.aspo-usa.com



Figures:



Figure 1: Discovery of conventional oil and extrapolation of future discoveries and consumption of conventional oil and predicted consumption according to IEA. The number for year 2000 is the average number for the years 1995 to 2004, etc. (K. Aleklett, www.peakoil.net)




Fig 2. Canadian Conventional + The North Sea + Canadian Oil Sands Crash Program Crude Oil Production 2005 – 2018 (B. Söderbergh, F. Robelius, and K. Aleklett, to be published)




Figure 3: Annual discovery and production of oil in US lower 48 states. (Jean Laherrère, January 2003.)




Figure 4: Oil and gas liquids scenario (updated from K. Aleklett and C.J. Campbell, Minerals & Energy, 2003; 18:5-20)



Statements on Oil - 14 Oct 2005


by the Energy Committee at
the Royal Swedish Academy of Sciences.

Introduction

The Royal Swedish Academy of Sciences is an independent non-governmental organization,
with expertise in most of the sciences as well as economical, social and humanistic fields. The
Academy has recently established a committee to consider today’s important energy issues that
need our full, unbiased attention. The Energy Committee has a national as well as a global
perspective and will summarize scientific knowledge on the supply and use of energy as well as the predicted impacts on society over the coming 50 years. Sustainability and environmental
considerations are essential for any future energy system. Readily available, inexpensive and
environment-friendly energy provides the foundation for economic growth and prosperity.

The Energy Committee has selected a number of subjects to be studied in some depth.
One of these deals with oil and related carbon-based fuels. Therefore, the Committee,
organized, together with the Committee of Energy and Environment of the Royal Academy of
Engineering Sciences, a seminar with the title “Running out of oil – scientific perspectives on
fossil fuels” held at the Academy on 26 May 2005. Prior to the Seminar, the Energy Committee
conducted a hearing with the seminar participants. More information about this seminar can
be found on the Academy’s web page www.kva.se. The Committee also arranged a hearing
with speakers in an Uppsala seminar on “Global oil reserves” on 23 May 23 2005 together with
the Graduate School of Instrumentation and Measurements (AIM). Members of the Committee
participated in the Uppsala seminar. Some essential points brought up at the hearings and
seminars are highlighted below. It should be pointed out that the perspective given here is
not purely scientific, since there are important social, political and technical factors that need
consideration.

General remarks

It is very likely that the world is now entering a challenging period for energy supply, due to the limited resources and production problems now facing conventional (easily accessible) oil.

Nearly 40 % of the world’s energy is provided by oil, and over 50% of the latter is used in the
transport sector. An increasing demand for oil from emerging economies, such as China and
India, is likely to further accentuate the need for new solutions. In addition, it is important
that the poorer countries have access to oil at reasonable prices to meet their development
goals. This places an additional burden on responsible, matured economies. Compared to
many developing countries, the same percentage increase in the crude oil price will be less
problematic for Sweden and other European countries because of our tax system (the crude oil’s share, c. 25%, in the gasoline price is quite small, compared to the taxes). The poor countries will suffer most from an increased price.

China and India and several nations in South-East Asia and Latin America are now
experiencing rapid economic development. Continued high oil prices will jeopardize their
chances of economic growth. Many countries, for example in Africa, may not even be able to
develop economically in the absence of cheap oil. With China and India emerging as engines
of the global economy, the sharp increase in the oil prices which we are witnessing today could
lead to a serious international economic recession, similar to those that followed the oil price increases in 1973-74 and 1981. The European economies may be severely affected.

There is at present an extreme dependence on supply from the Middle East holding more
than 60 % of the global oil reserves. A key country is Saudi Arabia, which is supposed to hold
about 20% of the global reserves of conventional oil and much of the world’s spare capacity.
Some analysts maintain that there are inherent technical problems in the Saudi oilfields, but
this is not an uncontested viewpoint. It is uncertain how much the oil production in the Middle East can be increased in the next few years and to what extent it would be in the interest
of these countries to greatly increase production. It is clear that, even in these countries,
conventional oil is a limited resource that they are almost totally dependent on. It is, however,
also clear that the countries of the Middle East are undergoing massive internal and regional
changes which may have negative consequences for the global oil supply system. Mitigation
measures must be initiated in the next few years in order to secure a continued adequate
supply of liquid fuels, especially for the transport sector. Over the longer term, completely new solutions are required. Therefore, increased R&D (Research and Development) in the energy
sector is urgently needed.

Key points
1. Shortage of oil
The global demand for oil is presently growing by nearly 2 % per year and the current
consumption is 84 million barrels per day (1 barrel=159 liters) or 30 billion barrels per year.
Finding additional supplies to increase the production rate is becoming problematical, since
most major oilfields are well matured. Already 54 of the 65 most important oil-producing
countries have declining production and the rate of discoveries of new reserves is less than a
third of the present rate of consumption.

2. Reserves of conventional oil
In the last 10-15 years, two-thirds of the increases in reserves of conventional oil have been based on increased estimates of recovery from existing fields and only one-third on discovery of
new fields. In this way, a balance has been achieved between growth in reserves and production.

This can’t continue. 50% of the present oil production comes from giant fields and very few
such fields have been found in recent years. Oil geologists have a wide range of opinions on
how much conventional oil there is yet to be discovered, but new reservoirs are expected to
be mainly found in the deeper water, outer margins of the continental shelves, and in the
physically hostile and sensitive environments of the Arctic, where the production costs will
be much higher and lead times much longer than they are today. A conservative estimate of
discovered oil reserves and undiscovered recoverable oil resources is about 1200 billion barrels, according to the US Geological Survey; this includes 300 billion barrels in the world’s, as yet unexplored, sedimentary basins.

3. Middle East’s key role
Only in the Middle East and possibly the countries of the former Soviet Union is there a potential to significantly increase production rates to compensate for decreasing rates in other
countries. Saudi Arabia is a key country in this context, providing 9.5 million barrels per day
(11% of the current global production rate). Their proven reserves are 130 billion barrels and
their reserve base is said to include an additional 130 billion barrels. Iraq also has considerable untapped oil reserves.

4. Unconventional oil resources
In addition to conventional oil, there are very large hydrocarbon resources, so-called
unconventional oil, including gas (c. 1000 billion barrels of oil equivalent, much of which could
be converted to liquid fuels), heavy oil and tar sands (c. 800 billion barrels) and oil shales (c.
2 700 billion barrels); coal, from which liquid fuels can be produced and methane hydrates
provide a vast additional potential. During a transition period, gas often available adjacent to
the oil fields, will help to bridge future deficits of conventional oil. With the exception of gas, all unconventional oil is expensive to produce (c. $ 20-40/barrel) and exploitation involves significant environmental problems. At $ 40 oil, which is now commonly accepted as the long
term equilibrium price, the cost of developing unconventional oil is less problematic. (see pt.
7 below). At present, 1 million barrels of oil per day comes from Canadian tar sand and 0.6
million barrels from Venezuelan heavy oil. The Canadian government estimates that by 2025
the daily production rate will have increased to 3 million barrels per day. Thus, the problem
with these unconventional oils is not so much price, but lead times and non-price related
aspects, such as the effects on the environment and availability of water and natural gas for the
production process.

5. Immediate action on supplies
Forceful measures to improve the search for and recovery of conventional oil as well as
improving the production rate of unconventional oil are required to avoid price spikes,
leading to instability of the world economy in the next few decades. Improved recovery of oil
in existing fields can be expected. The estimated reserves of conventional oil are, however,
located primarily in unexplored sedimentary basins, in environments difficult to access. A
substantial part has yet to be found! Sizeable contributions from unconventional oil need time
(some decades) to become really effective. It is necessary to have public funding for long term
petroleum-related research, since this must not be an exclusive task for the oil companies.

6. Liquid fuels and a new transport system
Oil supply is a severe liquid fuels problem and less of a general energy supply problem; 57 % of the world’s oil is consumed in the transport sector. Unless government’s ration oil, there
will never be a shortage of oil; just increasing prices. Major programs need, therefore, to be
implemented to develop alternatives to oil in the transport sector. Until these measures have
been introduced, (which may take one to two decades) demand for oil for the needs of a globally expanding transport sector will continue to rise; other users of oil will suffer, including those concerned with power generation.

7. Economic considerations
At present the high oil prices are due to the limitations of worldwide production, refining and
transportation capacities. Furthermore, the price is influenced by the threat of terrorist attacks
on the world’s oil supply, transport system and infrastructure. In the long run, the price of
crude oil will be determined by the price of substitutes. Some estimates indicate that oil may
be produced from tar sand at a price of 20-25 USD a barrel, compared to the present cost of
about USD 5 for Saudi Arabian oil. Liquid fuels from coal could be produced for many decades;
cost estimates vary greatly and generally exceed USD 30. Factors that are hard to estimate are
environmental requirements, taxation levels and profit margins. However, we can anticipate
continued high oil prices, as long as the pressure from the expanding Asian economics is
maintained.

8. Environmental concerns
Unconventional oil will significantly extend the length of the hydrocarbon era, assuming that
the negative impacts on the environment can be avoided. Constraints similar to those imposed
on other fossil fuels (for example emission controls and CO2 sequestration) will be necessary and provide major challenges for industry. The impact on the environment, in general, and on the
atmosphere and climate in particular, produced by combustion of fossil fuels, is not considered
here. However, it is worth noting that such considerations provide further support for the
conclusions presented below.

9. Increased R&D and international efforts
To avoid acute economical, social and environmental problems worldwide, we need a global
approach, with the widest possible international cooperation. Activities in this direction have
started and they should be strongly encouraged and intensified; the technically advanced
countries have a particular responsibility. Considerably increased resources for R & D on
alternative non-fossil energy sources, as well as on efficient and sustainable use of energy,
particularly electricity, are necessary. In order to develop a sustainable energy system beyond
the fossil fuel era, we need a full system analysis of the energy sector based on realistic time scales. The Energy Committee intends, in the next couple of years, to study other sources of
energy and evaluate their relative merits and impact on environment and climate.


Members of the Energy Committe at the Royal Swedish
Academy of Science:
Sven Kullander, Professor em., Uppsala University
Gia Destouni, Professor, Stockholms University
Harry Frank, Professor, Mälardalens University
Karl Fredga, Professor em., Uppsala University
Bertil Fredholm, Professor, Karolinska Institutet
David Gee, Professor em., Uppsala University
Karl Grandin, Ph.D., Center for History of Science
Peter Jagers, Professor, Chalmers Institute of Technology
Bengt Kasemo, Professor, Chalmers Institute of Technology
Rickard Lundin, Professor, Swedish Institute of Space Physics
Karl-Göran Mäler, Professor em., The Beijer International Institute of Ecological Economics
Kerstin Niblaeus, Director General, Council of the European Union
Bengt Nordén, Professor, Chalmers Institute of Technology
Contact persons:
Malin Lindgren, Information Of. cer, +46 8 673 95 22, +46 709 88 60 04, malin@kva.se
Eva Krutmeijer, Executive Director, +46 8 673 95 95, + 46 709 84 66 38, evak@kva.se

The Royal Swedish Academy of Sciences
Box 50005, SE-104 05 Stockholm, Sweden
Phone: +46 8 673 95 00, Fax: +46 8 15 56 70
E-mail: info@kva.se, Website: www.kva.se

~~~~~~~~~~~~~~~ Editorial Notes ~~~~~~~~~~~~~~~~~~~

Several presentations on the topic of Peak Oil are available as PDFs and streaming audio from The Committee on Energy and Commerce website:
energycommerce.house.gov/108/Hearings/12072005hearing1733/hearing.htm

These include presentations by Reps Roscoe G. Bartlett and Tom Udall and Robert L. Hirsh, Senior Energy Program Advisor at SAIC.

Thanks to Kjell Aleklett for also sharing his presentation here.

-AF

[papabear]

http://japanfocus.org/article.asp?id=493

Twilight in the Desert: an interview on peak oil with Matthew Simmons

By Sandra Ward



Barrons, the weekly magazine for investors published by Dow Jones (publisher of the Wall Street Journal), is a pillar of the American business elite. So when Barrons runs a lengthy article on the “twilight for oil,” take it as a strong signal that the issue has parked itself squarely in the mindset of the global investor class.

Of course, it has been obvious for several months that investors’ hot money was in part driving oil prices upwards. Some of them raked in large profits by taking advantage of escalating concerns over the adequacy of oil and gas supplies, especially as the effects of hurricanes, the continuing war in Iraq, disruptions in Nigeria and elsewhere, and other threatening news regularly appeared on the front pages of the global media.

But this particular article is at best tangentially about how to make yet more money from the continuing energy crisis. Rather, it’s well worth a close read because it presents the views of oil analyst Matthew Simmons, one of the most respected exponents of the thesis that we face a catastrophe of immense proportions unless we start taking our collective energy predicament seriously.

Simmons’ argument is detailed in his June 2005 book “Twilight in the Desert”. Drawing on hundreds of technical papers and other resources, he demonstrates that Saudi Arabia’s oil output will soon peak. Their big fields, in his view, are mature and en route to gradually declining levels of output. Note that he doesn’t argue that the Saudis are running out of oil. They clearly have large reserves, though the immensity of the volume is a matter of debate. Simmons does argue that the Saudis are confronting the limits of their ability to ramp up production and thus keep one step ahead of ever-increasing global demand.

This assertion – coming from a ranking insider in the oil business – has sent low-frequency shock waves around the world. Simmons describes the criticism as well as activism that have followed the publication of his book. We will not recap it here. One of the several items he does not mention, however, is that in mid-December of last year, Swedish PM Göran Persson appointed a committee to study peak oil and energy alternatives. The aim is to become completely independent of oil by 2020.

Why the steadily growing concern? The short answer is that if Saudi Arabia – the linchpin producer – can’t come up with a lot of extra supply, in the face of rapidly growing world oil demand, then we are in deep trouble. Set aside for a moment the climatic threat we are leaving our children and especially theirs to confront. Energy shortages and their dire effects are threats we face in the present. Not only does the developed world consume increasing amounts of fossil fuels, but much of the rest of the world – and especially the 2.5 billion people in China and India – are making strides to achieve similar lifestyles. Production is at present running neck and neck with this escalating consumption, forcing prices up to an average of US$ 57 in 2005, US$ 15 over the average of 2004. As Simmons points out, this price escalation has not dampened demand or the economic growth that drives it.
So if the Saudis can’t keep pace, and if there are no other substantial untapped resources that can swiftly expand production, prices will skyrocket and the world will have to learn very quickly how to conserve energy, exploit alternatives and so forth. It is hardly likely to be a smooth transition.

We see a foreshadowing of the politics of energy scarcity in the Russian gas pressure on the Ukraine (with its obvious and deliberate signal to Europe). The Putin regime is using natural gas and oil reserves to rebuild Russia as a superpower of state capitalism that can reclaim its position of primacy over Eastern Europe, and indeed, makes its weight felt in Western Europe as well, as the primary provider of natural gas. At the same time, with Iraq producing only approximately half of prewar oil, the Bush regime clings desperately to its hold on Iraqi reserves while justifying the war in ways that scrupulously exclude any mention of oil. As the world contemplates the approach of the tipping point on global oil production, power is shifting to producers, especially those concentrated in the Middle East, the most unstable region in the world. This only adds to the incentives to fight over the spoils.

In the midst of all this, Japan under the Koizumi regime appears to be virtually sleepwalking. Japan imports virtually all its oil. It is the world’s third largest importer, and about 80 percent of its oil comes from the Middle East. Yet the country is well behind the curve on seeing the emerging problems. Only recently has Japan begun pushing its major oil firms (puny by global standards) to combine. Japan is shifting towards a strategy of securing supplies, as opposed to complacently waiting for imports, confident in the power of the yen to ensure them. As Simmons points out, however, the concern over peak oil has reached the highest political circles in the US. This suggests that the Koizumi regime, too, might be shocked out of its complacency and into seeking to play a leadership role on energy alternatives. This, rather than Koizumi’s housebound troops in Iraq or fueling US ships in the Persian Gulf, would be a real contribution to the global community -- even if the dire scenarios that Simmons and others sketch are only partially correct. AD


Twilight for Oil?

Sandra Ward interviews Matthew Simmons, Chairman, Simmons & Co. International


Since publishing Twilight in the Desert: the Coming Saudi Oil Shock and the World Economy this past summer, and touching off one of the great debates of the early 21st century, energy banker Simmons has been squarely in the spotlight. Simmons argues that Saudi oil fields, contrary to reports, have been in decline for some time, and he views skeptically Saudi claims that it can adequately boost supply to meet accelerating demand. Simmons, who has headed the Houston-based energy investment banking firm Simmons & Co. International for 30 years, is no stranger to bold calls and controversy. His vision of higher energy prices through much of the 'Nineties never really materialized, for instance. For why it's different this time and oil could be headed to $200 a barrel by 2010, give a read.

Barron's: The premise of Twilight in the Desert is that Saudi Arabian oil reserves aren't enough to meet demand and oil prices are going to skyrocket. How did you reach that conclusion, and any second thoughts since you wrote the book?
Simmons: In about the second week in May I made the last changes to the book. I wondered if I could have made a mistake, and yet I felt as confident as if I was a lawyer and had just submitted my papers to the Supreme Court that I couldn't have made a mistake. The data was too compelling and it was the Saudis' data, and judging from the unbelievable knee-jerk negative reaction, I clearly hit a chord.

But your position has been controversial.

The very best criticism -- the most detailed and the best written -- was called "Another Day in the Desert" and was written by a very highly regarded firm in Calgary. But where they went wrong was their assertion that my claim is Saudi Arabia's oil is about to go into a sudden and irreversible production collapse. That's wrong. The summary of my book is the myth that the oil fields could grow forever is false. There is a lot of evidence that each of these key oil fields are very mature and we should start to expect their decline. An analysis of papers from the Society of Petroleum Engineers form the basis of the book. They provided a massive paper trail over three decades of how these oil fields were getting more and more mature and having a tougher and tougher time.
People don't dispute we have reached peak oil production in Saudi Arabia. But they disagree that it is a crisis because advances in technology and other countries' reserves will offset any decline there.

It is a great thesis but there is no data to support it. The book actually is full of praise for the fact they are using the single best technology known to man to fight these problems. It is just that the problems are bigger than the technology. It was the basic understanding of modern oil-field technology that led me into becoming such a worrier about the decline in rates we were creating through the technology. I've taken big issue with the major oil companies, who have talked for the past five to seven years about how they were going to finally start growing their production. They weren't looking at their own numbers. The technology is basically making oil and gas come out of the ground far faster than we could ever do before, and it's creating decline rates of 30% a year when it used to be 3% a year, and it is not recovering vast amounts of additional oil.

The Saudis' response to your concerns has changed, hasn't it?

They have dropped what was a very loud critical campaign. As recently as May they said they could produce 15 million barrels a day for 50 to 75 years. Now the claim is we can develop 12-to-121⁄2 million barrels a day by 2009 by doing five new projects. But the projects won't happen for several more years because they can't get access to enough drilling rigs. The projects they are talking about are very technically demanding projects. They are coming to the end of the very, very highly productive parts of these fields, and they are turning to parts of the fields where the oil comes from rocks that are far tighter and where you need a lot more intense drilling and a lot more intense water injection. They are just starting to go out to bid on the most ambitious of the new projects, the Khurais Field, which is a field that is potentially going to produce 1.2 million barrels a day in 2009, half their new supply. The new cost estimates are $11 billion, and one of the big costs are two massive parallel pipelines coming from the Persian Gulf to inject about seven million barrels of sea water a day into the field to get 1.2 million barrels of oil out. So it gives you a pretty good snapshot of the intensity of these new projects. The risk they don't produce that much is high.

Can the Saudis keep their current production where it is for quite a while?

That is certainly a likelihood. But there is a real but unquantifiable risk that it starts into the same type of decline we've seen in the North Sea. It is utterly obvious the North Sea oil peaked in 1999. In 1995, after a few hours of analysis, I made a presentation in Aberdeen saying with almost total certainty the North Sea would peak between 1998 and 2000. Yet the 10 major oil companies operating in the North Sea were confident the North Sea would not peak until 2010. They estimated by 2000 the U.K. and Norway would be producing 7.3 million barrels a day: the U.K. at 3.6 million and Norway at 3.7. It turns out in 1999 the U.K. and Norway produced just under 6.1 millions barrels a day, and by this summer they are estimated to be down to about 3.5 million barrels a day. You are talking about the most technically advanced oil companies in the world looking at their own fields and getting mesmerized by modern oil-field technology, and the mesmerization turns out to be a myth.

Yes, but does that hold true for other areas such as, say, Nigeria?

It holds true for every area with the exception of heavy oil and unconventional oil. It takes a lot more to refine them, and also they just don't come out of the ground very fast. There's less of a likelihood of production declines with heavy oil because you can't get it out of the ground fast enough to have a production decline. A perfect example of a really heavy oil field is one of the top 10 fields in the United States: the Midway-Sunset Field in Kern County, Calif. It was discovered in 1888 and is producing about 100,000 barrels a day, and it probably will for about another hundred years. But it is a massive steam-injection mining program.

What about the argument that demand will adjust to meet supply?

The likelihood of demand stopping is zero, unless we have a bird-flu pandemic. Demand is still accelerating. For the top 25 emerging markets, GDP [gross domestic product] change year-over-year is averaging up 5.5% for 25 countries. Argentina is 10.1%. Chile is 5.2%. China is 9.4%. Hong Kong, 8.2%. India, 8%. Indonesia, 5.3%. Malaysia is 5.3%. The Philippines is 4.1%. Singapore is 6%. Embedded in that is a continuation of an inexhaustible increase in the use of oil, particularly in the countries where they are barely using any oil. The wealthier they get, the faster they start using oil. The idea that $60 oil is really hurting the emerging economies is a myth. It doesn't seem to be affecting them at all. The Energy Information Administration numbers that came out recently showed the U.S. crossed 22 million barrels a day of petroleum use, a brand new record. So it is not stopping the U.S., either. To everyone's surprise, the economy grew by 4% in the third quarter, even with the hurricanes.
That was when we had almost $65 oil.

But oil supply isn't going to grow. As we move into the brutal brunt of the winter, we could easily have 45-to-60 days where demand is basically two-to-four million barrels a day higher than supply. Then we will test how robust our inventories are, because we've never experienced that kind of a stock draw before. In the United States, in some areas we must be down to hours of spare inventory on a days-use basis, particularly in diesel fuel. When 85% of the things in Wal-Mart we buy come from China, the implications for trucks on the highway system is profound. Those trucks are chugging along getting three-to-six miles per gallon, which is why we are setting an all-time record in the use of diesel fuel. I was in Toronto a few weeks ago and there was a front-page story in the Globe and Mail about a tire shortage. The tires are massive -- 13 feet high and six feet wide -- that are used in strip-mining coal and in the oil sands. These tires have a short shelf life because they are used so intensively. We are in the middle of a rubber shortage, so there is a tire shortage. We are not going to have big growth in oil-sands production if we can't expand. We are starting to bump into capacity limitations in the funniest places: tires on big trucks, rigs, people, refineries, pipelines, tankers, well-head capacity.

What do you say to people who view you as an investment banker talking his book? That somehow your thesis on oil will help you get more business?

I'm going smack against and totally opposite from what the major oil companies are saying. So if I'm trying to get more business by disagreeing with them, that's a clever ploy. And if I turn out to be wrong, then I basically have destroyed my career. I would never take the business risk in the hope it would make me a penny an hour selling books.

Are you sticking with your forecast for $200 oil?

Thanks to John Tierney of the New York Times I've placed a $5,000 bet that oil prices will average $200 a barrel in 2010. I don't have any idea where oil prices are headed but they could easily be above $200 a barrel. At $65 a barrel, or 10 cents a cup, we are still grossly underpricing oil, which is why it doesn't have any impact on demand. As the markets get tighter, sooner or later we are going to have shortages. And the two times we ha ve ever had shortages in North America within 90 days, the price of oil went up threefold.

Your critics call you an alarmist. Do you see yourself as an alarmist?

I'm absolutely an alarmist. I'm giving as many speeches as I can because if we don't understand this it will be the single worst event of the 21st century.

What will be the consequences?

We could start fighting over oil and natural gas because we don't have enough. Look at some of the abhorrent individual behavior in the 'Seventies when people were in gas lines; people stole gas and people became violent. We could start to see regional competition, and sooner or later we have country competition and we are in the middle of a really ugly energy war.

So if reducing demand isn't an option, what do we do?

Let's actually assume there is a reasonable chance this awful peak oil and peak natural gas is real and do something about it, so that if it turns out to be real it isn't a show stopper and if we did something and it turns out it wasn't real, we bought ourselves an insurance policy. We could do something on a global basis that has the intensity of the way we tackled the Marshall Plan when we rebuilt Japan and Europe after World War II. We have to figure out how to make a massive change in the way we use oil so that if it turns out by 2020 we only have 60 million barrels a day versus 120 million barrels a day we can cope. We need to make a major shift in the way we distribute goods over long distances. Go for zero tolerance in shipping goods by trucks over long distances and get the goods on a rail bed till you get them to water and then send them on water to as close as possible to where they will be delivered. By making that transformation, we take a huge chunk out of the energy intensity of shipping goods and we also get trucks off the road system, which saves lives and has a major material impact on traffic congestion. Traffic congestion is Public Enemy No. 1 through 5 on our current fleet of passenger cars. So you probably end up getting greater passenger-car efficiency, then a huge program of new CAFE [Corporate Average Fuel Economy] standards that takes about 25 years to implement. Then we encourage business leaders to start liberating their workforce and let workers work any place they would like to and pay them by productivity versus the system we have in place. Productivity improves as does worker satisfaction. Then we re-engineer how we grow and distribute food and get away from this ridiculous system we have today of creating ornamental food that looks good all year long but doesn't taste very good because it comes from too far away. Have you ever had blueberries from Chile? To have food taste good it has to be grown locally. We are going to end up going back to bottling and canning.

What?

Do you ever cook pasta? Do you cook tomato sauce? Have you ever used local tomatoes?

Yes. Yes. Yes.

Tomatoes by can are fabulous tomatoes because they have been canned at the peak of the tomato season, and that process is still as good today as it was when I was growing up. Then we have to take a page out of Whole Foods, one of the most successful food models ever, by having a stringer system of organic farms within 20 miles of their stores. Organic farms are just victory gardens. Making all of those changes at the same time will leave our economies in better shape. One of the things we have to do to make that plan work is to dredge all of our ports, all of our river systems, and rebuild all of our railroad systems. That will create the biggest construction activity the world has ever seen. It will also create such a shortage of blue-collar workers that the blue-collar workforce will be more prosperous than it has ever been so it won't mind paying $10 a gallon or more for gasoline.

People make the point you are close to members of the Bush administration. Yet the Bush administration doesn't seem to be acknowledging there is much of an energy problem.

Most people in Washington listen to the American Petroleum Institute and to the major oil companies. They lobby, I don't. But in Washington in October there was a two-day workshop at the International Academy of Science & Engineering on peak oil. A few weeks ago there was the first hearing in the history of the Congress on peak oil. A few months ago Energy Secretary Samuel Bodman sent a letter to ExxonMobil's Lee Raymond in his capacity as chairman of the National Petroleum Council and requested the NPC roll up its sleeves and do an intensive study of all issues related to peak oil. In the last couple of months Congressman Tom Udall and Congressman Roscoe Bartlett, one a Democrat, one a Republican, formed the Peak Oil Caucus, and around 13 or 14 congressmen have signed on. For an issue that didn't have any traction, it is gaining big momentum.

What do you say to those who say this is about the umpteenth time we've heard we're running out of oil?

Most of those now most vocal that peak oil is a silly issue or decades away are the same folks who were equally as dismissive of the naysayers who warned the U.S. natural-gas supply was in decline three-to-five years ago. They were contemptuous of a handful of us pessimists that were warning in 1999 through 2002 that we had a massive natural-gas crisis on our hands because we built almost 30% of our generation capacity for electricity and all growth from here on out on gas-powered power plants thinking we had an abundant amount of natural gas. Natural gas has peaked and we are in decline. Recently there was a pretty frightening article in The Wall Street Journal that the energy leadership of New England realizes if we have a really cold winter we could have electricity blackouts this winter. That's dangerous. If we have an electricity blackout of any intensity in the winter, we'll then have an enormous rush to rent power generators and we'll drain the diesel pool and have diesel shortages. It will begin the great American nightmare.

This is Barron's, so how do people profit from this?

If oil prices don't collapse, energy will be the best place to invest in 2006.

Even though the stocks have had such a run-up?

Yes. Maybe they will be only up 1% and everything else will be down 10%, but I doubt that. The current prices we have for energy stocks are finally high enough to start some really significant spending on badly needed projects that have been ignored for a long, long time. The major oil companies can't spend money fast enough. The average E&P budget this coming year is up 35% to 50%. The problem is there are no more drilling rigs. So the backlog in the petroleum-equipment sector is starting to build.

What kinds of companies will benefit?

Engineering. Valve companies. Flange companies. Pipe companies. Construction companies. The oil-service industry. Recently our analysts were updating our year-end earnings models. There were about three instances in a row in which earnings were expected to go from $2 in 2005 to $8 in 2007.

Why does ExxonMobil have a different view of where the oil price is headed?

I don't have the vaguest idea why they could ever think we are going back to $25 oil other than their business model desperately needs that to happen to have their long-term strategy work. High oil prices are very bad news for big oil. The higher the price, the more proven reserves they've already booked they lose in these foreign concessions, because once their projects hit their payout targets, then the host government's share rises. I think the major oil companies are lost in the wilderness right now.

Thanks, Matt.

This article appeared in Barrons on January 2, 2006. Posted at Japan Focus January 6, 2006.

ISSN: 1557-4660

[papabear]

TUC Radio: Ken Deffeyes: THE PEAK OF WORLD OIL PRODUCTION
downloads here: http://www.radio4all.net/proginfo.php?id=15855

Robert Hirsch on peak oil mitigation:
http://globalpublicmedia.com/interviews/615

http://media.globalpublicmedia.com/RM/2005...ch.20051117.mp3

http://transitionculture.org/?p=175#more-175
Robert Hirsch Tells It Like It Is…
Posted by Rob under Peak Oil , Localisation , Economics

One of the leading figures in the peak oil community is Robert Hirsch. I have written about him previously at Transition Culture, his ‘Hirsch Report’ has been hailed by many as one of the most important pieces of research in this area. The report was asked to look at how far in advance it would take to prepare for the peak, rather than when the peak would be. The results shocked even Hirsch and his team. The scale and magnitude of the challenge they identified was such that Hirsch admits to feeling overwhelmed; it took a few months before he felt able to go out into the world and be constructive and positive about the challenge of oil peak. Hirsch has not given that many interviews (at least not many that I have come across..), so I was fascinated to see that David Room of Global Public Media has just posted an interview with Hirsch. It is fascinating, sobering and illuminating listening.

Hirsch talks about the now famous report that bears his name, and attempts to dispel the myth that the US Department of Energy tried to suppress it and that it only appeared because it was leaked. He talked about the scale of the challenge that peak oil presents us with, and you really get a clear sense of the profound effect this awareness has had on him.

“This problem is truly frightening. This problem is like nothing that I have ever seen in my lifetime, and the more you think about it and the more you look at the numbers, the more uneasy any observer gets. It’s so easy to sound alarmist, and I fear that part of what I’m saying may sound alarmist, but there simply is no question that the risks here are beyond anything that any of us have ever dealt with. And the risks to our economies and our civilization are enormous.”

One of the first things he and his team looked at was the role of conservation, and concluded that even really deep cuts were still only a small part of dealing with the challenge. The thing he makes very clear is that peak oil is about liquid fuels. It is the transport network that needs rethinking, and the knock on effects of its inevitable contraction. We have to educate people, he says, that a windmill is different from a tractor; some things need liquid fuels, some things don’t, and there simply are no replacements.

The Hirsch Report’s central finding is that in order to make the transition to an economy beyond oil, a run in of 20 years minimum would be needed. Hirsch suggests the urgent need for a bridge economy to make the transition to a post carbon one. He talks of making petrol from coal, from natural gas, using enhanced oil recovery, but it was interesting that he didn’t once discuss actually reducing the amount of cars on the road, his focus was rather on making existing cars more energy efficient.

His assessment of the practicalities of making the transition was deeply sobering. We need, he believes, a crash programme of building a new infrastructure that will get us beyond liquid fuels. However, he argues, the world doesn’t really have the capacity to do crash programmes, it will require an unprecedented scaling up of factories and retraining of people. We will have to do things on a scale that has never been done before, he says.

I was interested in his belief that we will be drawn to using the last fossil fuels in order to power the transition, and that global warming will not be enough of an argument to stop that from happening. When the economy crashes and goes into hyper unemployment, economic issues will, he believes, take precedence over environmental ones, after all, he says, global warming is still an uncertainty (I’d have to beg to differ there…), your being thrown out of your house for defaulting on the mortgage because you lost your job is a certainty. I would argue that the two are not necessarily mutually exclusive; he says that the situation is so severe that we have to do whatever it takes.

David Room asks him a question about localized economies, and what role relocalisation might play in all this. His response is disappointing, saying that by the end of the whole process that is what we would probably end up at, but he doesn’t seem to see it as an integral part of the process at this stage. His observation is that to redesign and retrofit existing settlements, be they suburbia or higher density cities, will take a lot of time, money and liquid fuels. It is not something that can be done overnight. Hirsch doesn’t say what we as communities might do about it, he seems to think that Governments and industry will have to do it all.

It was very good for me to hear it from the horse’s mouth as it were. The Hirsch Report has had such a profound effect on the peak oil community it was good to hear from the man himself. He came across as calm, clear and hugely well informed, and as someone who does not particularly relish his job of telling people the bad news but doing it with purpose and kindness. My only point of difference with him is his belief that the drive will have to come from national government. It is clear to me at this stage how National Government has decided to deal with the peak oil problem. Nuclear power stations and political skullduggery to secure access to what is left. If we wait for them to initiate a programme of national powerdown it will be too late (if it isn’t already). It is down to us, as communities, individuals, local Governments, businesses, NGOs and all the other pieces of the jigsaw, to pull together and start to design what we want, and to begin its rapid implementation. Hirsch, although, he seems to be less up to speed with some of the more cutting edge thinking on what we can do about it, has given us a hugely important tool with which to impress upon people the gravity of where we find ourselves. This challenge is the big one.

I would very much recommend that you give it a listen. I found it fascinating. Here is a man who has focused his considerable experience and intellect on a problem and has been really shocked by his findings.

[papabear]

http://www.energybulletin.net/12040.html

Published on 13 Jan 2006 by Energy Bulletin. Archived on 13 Jan 2006.
Drivers In For A Shock

by Roger Adair
RELATED NEWS:
Roger Adair contrasts a new study showing Irish drivers' unwillingness to change their driving habits to the inevitable changes forced by Peak Oil and the collapse of complex societies.

Ireland in a Jam

“Ireland in a jam – how Irish motorists are coping with rising oil prices” Amarach Consulting, Dublin (www.amarach.com).

This recent study was based on a sample of 622 Irish motorists who use their car to travel to work. They were asked to indicate their level of support for various measures to reduce oil use as proposed by the International Energy Agency. It is possible that similar results would be obtained in many other countries as well

Not surprisingly, the most popular options were working week compression (4 x 10 hour working days) and free public transport!

64% agreed it was difficult to get to work without a car and 50% indicated that they would definitely not prefer to use public transport, even if the system was improved.

However the most telling response was to the question of how high the price of road fuel would have to rise before they would stop using their car to get to work. A staggering (and touchingly defiant) 29% claimed they would never ever give up their car no matter how expensive road fuel became (lucky, old, well heeled and optimistic them!) and 32% just “didn’t know”!

To paraphrase the author of the report “ … the vast majority cannot imagine any price increase that would change their behaviour. i.e. they either don’t know or they simply refuse to change. ” (my emphasis).

For a nation apparently blessed with copious, indeed on occasions extravagant, imagination this is an interesting comment on our inability to imagine what effect rising oil prices and scarcity might have on our society and economy.

We in Ireland are, it seems, largely prepared to spend whatever it takes to keep using our expensive and ego confirming chariots in the absence of any perceived viable alternatives. Public transport is clearly for tree huggers and other assorted losers


Imagination Deficit

This set me thinking that purely economic and technical fix proposals, for addressing increasing resource shortages, must inevitably fail due to the extent we are “locked in” to the current system with little real alternatives other than minor cosmetic tweaks. We may also have very, very unrealistic expectations about what such measures can achieve to retain our current positions and maintain our current comfort zones and energetic lifestyles.

From a politician’s point of view Peak Oil is clearly a total anathema that seriously, seriously needs to be denied. There are clearly no, easy strokes, popular votes or “good news” in it, no comforting sweeties to feed the electorate, and a set of apparently insoluble consequences that they would generally much rather was perceived as someone else’s problem.

It is thus very difficult to usefully imagine the reality of what lies ahead and therefore how one should or have to respond. As many people cannot, or do not want to, imagine anything very different than what they have become used to it would seem inevitable that change will be most likely continue to be resisted to very near the end of the cheap oil era.

Even for those who lived through it, the economically stagnant high interest and tax, emigration period in Ireland is a rapidly fading reality. Surely it, or something even worse, could never happen again after the miraculous “Tiger Economy”?

Still they say that making predictions is difficult, especially about the future, and especially when we choose to forget the past.

Virtually nobody in the 80s foresaw what Ireland was in for in the 90s.


The Road To Who Knows Where

On this basis the only likely energy scenario for Ireland would appear to be increasingly desperate and ineffectual attempts to maintain the business as usual status quo for as long as possible with a few expensive and poorly executed attempts at technical policy fixes. That, until we are hugely surprised to find that forced localisation is inevitably thrust upon us, at a late stage, by external events outside our control.


Ecology and Energy

These sobering thoughts turned me to consider the ecological approach to energy and society popular in the USA. This is the starting point for some of the proselytising Peak Oil commentators exemplified, for example, by Richard Heinberg in his very readable “The Party’s Over”.

Two of the main gurus of this approach are an unlikely pair of American academics, William Catton, a professor of Sociology and Joseph Tainter, a professor of Archaeology. Their style, whilst academic and uncompromising, is laced with an occasional strange and very dark humour that puts me in mind of the writings of Irish novelist Flann O’Brien.

Catton’s magnum opus, “Overshoot – The Ecological Basis of Revolutionary Change” was originally published in 1980 and still a hot seller. His theme is essentially that we are living off the future to bankroll the extravagant and unsustainable present. The planet has overshot its sustainable carrying capacity due to overpopulation temporarily supported by the “phantom” carrying capacity of non renewable resources.

The end result being “die off” – a huge reduction in human population and energy consumption to sustainable levels. This is reminiscent of the exuberant life cycle of yeast introduced into the sugar and nutrient laden environment in a wine brewing vat.

He describes a range of strategies relating to how homo sapiens has leveraged advantage over the natural environment including takeover (colonisation), tool use, specialisation, scope enlargement and drawdown. Whatever you may think of his overall thesis these are very useful concepts to understand how we have got where we are and what the future may hold once drawdown, the using up of natures non renewable stocks of energy sources, becomes non viable.

Tainter, on the other hand, develops a general theory of social complexity as a problem solving strategy in his seminal 1988 work “The Collapse of Complex Societies”. His theme is that past complex societies have collapsed essentially as a result of the decreasing rates of return on investment in increased levels of (energy and resource consuming) complexity in society. He illustrates his theory with detailed and scholarly reference to numerous collapsed societies including the (solar powered) Roman Empire.

He postulates that once the point of initial high returns from increased complexity is well passed any society or empire becomes increasingly susceptible to collapse as increasing amounts of scarce and limited resources have to be devoted to obtaining less, and eventually negative, marginal benefit at ever increasing costs.

This surely sounds very familiar today in modern Ireland with ever larger amounts of public money energy being used to less and less effect in an apparently impossible task of obtaining value for money “progressing” in an increasingly complex world. Tainter illustrates this unavoidable phenomenon with reference to the productivity of such areas as modern health care and research in the USA.

He concludes that however much we like to think of ourselves as something special in world history, in fact industrial societies are subject to the same principles that caused earlier societies to collapse.


Sustainable Societies and Denial

Tainter, the archaeologist, revisits Complexity in a 1996 paper “Complexity, Problem Solving and Sustainable Societies”. Here he addresses the problem of how aversion to historical knowledge leads policy makers to look for the causes of events only in the recent past and thus the opportunity to understand the long term reasons for current problems is lost. He concludes:-

“Regardless of when our efforts to understand and resolve contemporary social problems reach diminishing returns, one point should be made clear. It is essential to know where we are in history.”

Catton, the sociologist, addresses the problem of denial of the earth’s finite carrying capacity in a 1994 paper “The Problem of Denial”.

Here he proposes that the outpourings of proponents of unlimited growth are like confabulations (elaborately unreal stories concocted as rationalisations) and this behaviour resembles symptoms of the medical condition anosognosia (inability of stroke patients to recognise their paralysis).

He concludes “ Denial by opponents of human ecology seems to be a way of coping with an insufferable contradiction between past convictions and present circumstances, a defence against intolerable anomalous information”


Conclusions

So there you have it, a pretty heady combination of overshoot, die off denial, adversity to historical knowledge and societal collapse. It is no wonder these works have been taken to heart by various “end of the world” survivalists well represented on various e-groups and web sites such as Running on Empty, Die Off, PeakOil.com etc.

However, as Tainter makes clear, collapse need not necessarily be into a state of total chaos and some sort of dog eat dog, “Mad Max” style, future conflict between well armed survivalists defending their fortified bunkers and fuel supplies. He defines collapse (and the consequential localisation) as reversion to a simpler state of civilisation (localisation) which can result in a sustainable and improved return on the resulting reduced cost of social complexity.

I believe he is correct in this conclusion and that efforts put into developing sustainable post peak oil strategies must take this on board as a central precept and a likely eventuality to prepare for.

It looks as if all those motorists who cannot imagine change are in for quite a shock.

http://www.energybulletin.net/12002.html

Published on 11 Jan 2006 by World Watch. Archived on 11 Jan 2006.
Oil: A Bumpy Road Ahead

by Kjell Aleklett, President of ASPO
RELATED NEWS:

The Countdown for the Peak of Oil Production has Begun – but what are the Views of the Most Important International Energy Agencies...

When I was born in 1945, none of the four small farms in my little Swedish village used oil for anything. Ten years later, the oil age had arrived: we had replaced coal with oil for heating, my father had bought a motorcycle, and tractors were seen in the fields. From 1945 to 1970, Sweden increased its use of energy by a factor of five, or nearly 7 percent per year for 25 years. This journey into the oil age transformed Sweden from a rather poor country into the third wealthiest country (per capita) in the world. Ninety percent of the energy increase came from oil. Cheap oil made Sweden rich.

Now consider China, a developing country with 21 percent of the global population. It consumes 8 percent of the global oil supply, and thinks it is fair to claim 21 percent, or 17.6 million barrels per day (mbpd). During the last five years the average annual GDP growth in China has been 8.2 percent and the average increase in oil consumption 8.4 percent per year. We can now see the same correlation between increase in GDP and use of oil in China as in Sweden 50 years ago. If the China's economy grows 8 percent per year over the coming five years, we can expect that it will need an increase in the consumption of oil of 3 million barrels per day. According to Professor Pang Xiongqi at of the China University of Petroleum in Beijing, China's production will plateau till 2009 and then start to decline. This means that the total increase in the consumption must be imported. As China is already importing 3 million barrels per day, it will have to increase imports 100 percent during the next five years. Where will it come from?

Since 2001, when the Association for the Study of Peak Oil & Gas (ASPO) was founded, we have tried to tell the world that there will soon be a problem supplying the world with crude oil while demand continues to rise. The estimated peak-production year at the first depletion workshop in Uppsala in 2002 was 2010. Two years later at our Berlin meeting it had moved to 2008, and now it looks like we are back to 2010, because production from deepwater oil fields will yield more than we expected. The exact year for peak oil depends very much on future demand and we will not know when we have peaked until we have crossed the threshold. It will certainly happen before 2020.

Unfortunately, very few have heeded our alerts, even though the signs have been so obvious that even a blind hen could see them. Fifty years ago the world was consuming 4 billion barrels of oil per year and the average discovery rate (the rate of finding undiscovered oil fields) was around 30 billion barrels per year. Today we consume 30 billion barrels per year and the discovery rate is dropping toward 4 billion barrels per year (see figure). This is significant; Chevron is even running an ad saying, "The world consumes two barrels of oil for every barrel discovered. So is this something you should be worried about?" (By discovery, I mean only new oil fields. Some analysts include reserve growth-newly accessible oil in old fields-as new discoveries, but we are using the same approach as IEA, the International Energy Agency.)


http://www.energybulletin.net/image/articles/11621/fig1.png
If we extrapolate the downward discovery slope from the last 30 years, we can estimate that about 134 billion "new" barrels of oil will be found over the next 30 years. The latest large oil field system to be found is the North Sea (in 1969), which contains about 60 billion barrels. In 1999 the North Sea field production peaked at 6 mbpd. Our extrapolation suggests that over the next 30 years we will find new oil fields equal to twice the size of the North Sea-a very pessimistic prediction, according to our opponents. But I think the oil industry would be ecstatic to find two new North-Sea-size oil provinces.

The IEA's 2004 base-case scenario projects that by 2030 global oil demand will be 121 million barrels per year, which will require increasing production by 37 million barrels per day over the next 25 years, of which 25 mbpd is predicted to come from fields that have yet to be discovered. That is, we'll have to find four petroleum systems of the size of the North Sea. Is this reality?

Every oilfield reaches a point of maximum production, which advanced technologies can delay or extend, but not eliminate. The oil industry and IEA accept the fact that the total production from existing oil fields is declining. According to ExxonMobil, the average production decline rate is between 4 and 6 percent per year. Current global production is 84 million barrels per day, so next year at this time all current fields will produce a total of roughly 80 million barrels per day. Given the expected increase in global GDP, one year from now total oil demand will be 85.5 mbpd-so new capacity will have to make up for 1.5 mbpd plus 4 mbpd, or 5.5 mbpd. Two years from now the needed new production will be 11 mbpd and in 2010 at least 25 mbpd. Can the industry deliver? If we extend the decline in existing fields through 2030, and accept the IEA base-case scenario (global demand of 121 mbpd), then "we need new production that is of the order of 10 new Saudi Arabias." Some might call this a doomsday scenario, but if so I'm not the doomsayer-it's Sadad Al Husseini, until recently vice-director of Saudi Aramco, the largest oil company in the world.

Excluding deepwater oilfields, output from 54 of the 65 largest oil-producing countries in the world is in decline. Indonesia, a member of the Organization of Petroleum Exporting Countries (OPEC), not only can't produce enough oil to meet its production quota, it can't even produce enough for domestic consumption. Indonesia is now an oil importing country. Within six years, five more countries will peak. Only a few countries-Saudi Arabia, Iraq, Kuwait, United Arab Emirates, Kazakhstan, and Bolivia-have the potential to produce more oil than before. By 2010, production from these countries and from deepwater fields will have to offset the decline in 59 countries and the increased demand from the rest of the world.

Can they do it? Let's look at Saudi Arabia, which in the early 1980s produced 9.6 million barrels per day. According to the IEA and the U.S. Energy Information Administration, Saudi Arabia must produce 22 mbpd by 2030. But Sadad Al Husseini claims that "the American government's forecasts for future oil supplies are a dangerous over-estimate." The Saudi Ghawar oil field, the largest in the world, is in decline. Saudi Aramco says that production can be increased to 12.5 mbpd in 2015. They plan a new pipeline with a capacity of 2.5 mbpd, so it looks like they are willing to increase production to 12.5 mbpd, but so far there are no signs of reaching 22 mbpd.

Now consider Iraq, which in 1979 produced 3.4 mbpd. Iraq officially claims reserves of 112 billion barrels of crude oil, but ASPO (and other analysts) think that one-third of the reported reserves are fictitious "political barrels." At a recent meeting in London, I was told (privately, by a person who is in a position to know) that Iraqi reserves available today for production total 46 billion barrels. If this is the case, it will be hard for Iraq to reach its former peak production level in a short time.

And so on. It's time to ask, can the Middle East ever again produce at the peak rates of the 1970s?

Many countries in the world are very poor. It may be necessary to double global GDP to achieve any kind of decent life for people in these countries. The examples of Sweden and China suggest that, if past economic development patterns are followed, doubling GDP will require doubling global oil production. Can this even be done? And can the planet tolerate the increase in CO2 emissions?

The United States, the wealthiest country in the world, has 5 percent of the global population and uses 25 percent of the oil. It is time to discuss what the United States should do to cut consumption-and rapidly. In February 2005 a report for the U.S. Department of Energy (Peaking of World Oil Production: Impacts, Mitigation, and Risk Management) argued that "world oil peaking represents a problem like none other. The political, economic, and social stakes are enormous. Prudent risk management demands urgent attention and early action." Any serious program launched today will take 20 years to complete.

Animals that face food shortages have a hard time adjusting to this situation and usually their populations decline. Some believe that we as human beings will face a similar situation. I can't accept that. As human beings we can think and come up with ideas, and I believe we can find solutions. The road will be bumpy and many people will be hurt, but we must come to the end of the road as a sustainable society. It will not be possible to travel this road without using part of the existing stocks of fossil fuels and, for industrial countries, nuclear energy as well, but we can do it in a manner that will have minimal impact on the planet. The problem is that we should have started at least 10 years ago. We must act now, as otherwise the bumps and holes in the road might be devastating.

___________________________

Kjell Aleklett is Professor of Physics at Uppsala University, Sweden, and President of the Association for the Study of Peak Oil & Gas.

[papabear]

http://www.energybulletin.net/12093.html

Published on 15 Jan 2006 by Resource Insights. Archived on 16 Jan 2006.
Demand destruction: who gets destroyed?

by Kurt Cobb
RELATED NEWS:

Economists who comment on the possible effects of world peak oil production love to ridicule those who make statements such as "demand at some point will exceed supply." Strictly speaking, those economists are right that supply and demand are always in balance. The variable that changes to make it so is price.

So an economist who accepts the possibility of an oil peak may still believe that the marketplace will allow us to make a relatively smooth transition to a new energy economy as the price encourages the development of alternatives to oil and as demand is destroyed. The latter phrase is often glossed over. But demand destruction is at the core of misconceptions by economists about the likely course of events leading up to and following an oil peak.

A smooth transition away from oil mediated entirely by market prices essentially assumes two things: 1) a very gradual decline in oil supplies after the peak and 2) a recognition in the market price that the peak is coming long before it arrives.

Both assumptions are called into question by Robert Hirsch's study of oil depletion curves in various countries across the globe. Hirsch's study indicates that any world peak is likely to have a sharp crest followed by a swift decline in oil production--anywhere from 3 percent to 13 percent per year if the historical record can be relied upon. Hirsch also notes that "in all cases, it was not obvious that production was about to peak a year prior to the event." This would help explain why the second assumption listed above is likely to turn out to be wrong as well. Market participants are unlikely to see the peak coming. This means that prices will only start to signal that alternatives are needed for oil long after it is too late to prevent tremendous disruptions.

Douglas Reynolds gives a more detailed explanation of how energy and other mineral markets misinterpret price signals as indicative of future supplies. When finite mineral resources are involved, the market typically creates "the appearance of decreasing scarcity," something I've commented on previously in Faith-based economics II: The case of oil's sudden scarcity.

The final argument on which the smooth transition idea rests brings us back to demand destruction. An economist will properly point out that people will stop using oil for some applications and will turn to alternatives where they are available. All that is true enough. But it is worth asking what they mean by "applications." In reality, it is the poor who will stop using oil for "some applications," both in industrialized countries and across the world. If alternatives are not available or are just as expensive, they will simply have to forgo the benefits of those "applications." That will help keep a lid on oil prices, but it won't solve the problem: too little oil for all the activities that power and feed 6 billion people.

With a sudden decline in oil availability it is almost certain that agriculture, which is heavily dependent on oil and oil derivatives, will be less productive; that many marginal factories will close in short order; that tremendous financial turmoil will occur in world markets; that many people will have to do with less heat or without heat at all; that skyrocketing prices for transportation will prevent commodities including food from freely circulating around the world, and so on. In short, there would be no smooth transition.

The heightened price of oil would certainly encourage conservation--i.e., demand destruction--but that conservation might come in the form of terrible hardship for millions and perhaps billions of people and possibly death for many. That would give a rather gruesome connotation to the notion of demand destruction. High prices would also encourage the development of alternative energy sources, but that's assuming that world society does not become so disoriented and chaotic that such efforts cannot actually be effected.

If one assumes that the oil peak is far off and that technology will allow us to make a smooth transition to the next energy economy (and solve other related problems that threaten to annihilate us such as global warming), then there is no need to worry about the effects of sudden demand destruction in the oil markets. But, if the peak arrives soon, say, within the next 10 to 15 years, then no bloodless abstraction such as "demand destruction" will be able to obscure the fact the it is people who are going to get destroyed, and lots of them.

[papabear]

http://www.globalpublicmedia.com/news/621

BBC Radio's daily "Farming Today" report on Friday 6th January 2006 begins with, There are seven and a half million people in the greater London area. They all need feeding. But what would happen if the oil ran out?" The segment covers the possibilities of war or catastrophic climate change bringing about energy shortages - what would happen to the transportation of food to London, not to mention the growing of that food? The report briefly discusses alternative fuels, as well as individuals growing their own food and farmers switching to organic methods.

[papabear]

http://www.earthpolicy.org/

http://www.globalpublicmedia.com/lectures/629

Deffeyes: The Peak of World Oil Production: Thanksgiving Day, 2005

1 December 2005 Oil

In Brief: Kenneth Deffeyes' December 1, 2005 Lauritsen Lecture at the California Institute of Technology, entitled The Peak of World Oil Production: Thanksgiving Day 2005".

Kenneth Deffeyes' December 1, 2005 Lauritsen Lecture at the California Institute of Technology, entitled The Peak of World Oil Production: Thanksgiving Day 2005". Audio recorded and provided by the LA Sound Posse.

"The methods which M. King Hubbert used to predict the peak of United States oil production can now be applied to world production. Dr. Deffeyes's analysis places the world oil production peak on Thanksgiving Day, 2005. Severe consequences are to be expected for transportation and for agriculture. It may be too late to arrange for a soft landing; the consequences of a hard landing are not cheerful to contemplate."

http://media.globalpublicmedia.com/RM/2005...feyes120105.mp3

[papabear]

http://www.amconmag.com/2006/2006_02_13/article1.html

February 13, 2006 Issue
Copyright © 2006 The American Conservative

Lumpen Leisure

Bread and circuses … and jet-skis.

By James Howard Kunstler

Among the many wonders and marvels of American life in the 20th century, especially after World War II, when our country ruled much of the world economically, was the astounding rise in standards of living among social classes that had hardly known leisure or had a dollar to spare on its accoutrements from time immemorial. The subject of class in America has been so sore that we can barely acknowledge its existence, despite the workings of whole industries devoted to exploiting the envy of the lower orders. The very term—lower orders—would be considered grounds for sacking if I had the misfortune of teaching at a college and will certainly be seized on by critics as evidence of my intellectual unfittedness. In short, any discourse on class consciousness is regarded in America these days as an obscenity far worse than stealing $100 million from the shareholders of a telecom corporation.

I write this as someone who does not have a Marxist bone in his body—I am devoid of the impulse to reform the social class system per se precisely because I regard it as an implacable fact of life. The universe is organized hierarchically, and that’s all there is to it. All of the subcategories of things in it tend to be organized hierarchically, too, especially the social life of animals, including human beings. It might be argued that the hunter-gatherers of prehistory enjoyed more pure equality in their little bands and tribes, but that was only because they possessed next to nothing in material wealth. The rest, literally, is history. Once civilization got up and running, the story was nothing but class, since our complex societies required many layers of organization in the making, moving, and caretaking of things, and some persons enjoyed more favorable roles than others.

Industrial civilization enlarged the middle class without necessarily relieving the misery of the lower classes, which also grew, shifting their labors from the farm to the factory. Marxism was, of course, an effort to reform industrial society by inciting the lower orders to make war on all the orders above them. It failed because it eliminated the necessary incentives for producing industrial wealth—namely, the legal right of persons to accumulate it—while it additionally failed to abolish privilege among the politically connected. So privileged persons in places like the Soviet Union simply worked around the artificial impediments to a superior lifestyle, while the masses toiled in squalid and resigned futility.

Now, the high tide of industrial society, the 20th century, also happened to be an era of tremendously destructive industrial warfare. By mid-century, after two World Wars, the industrial nations of Europe had exhausted and bankrupted themselves and lay physically shattered. The same was true of Asia’s only industrial power, Japan. The situation in the United States, on the other hand, was favorable to the extreme. The U.S. continental homeland went unscathed in both World Wars, and at the end of the second, our factories, mines, oil fields, harbors, and railroads stood completely intact while everyone else’s were devastated. We set out immediately to supply the rest of the shattered world with the necessary manufactured goods to resume civilized life and lent them money to buy our stuff. Once this program got underway in earnest, one of the side effects was a fabulous enrichment of America’s laboring classes.

These classes—the assembly-line workers, the road-builders, the house-framers, masons, auto mechanics, truck drivers, et cetera—entered this miraculous new age straight from the lengthy sequential traumas of the Great Depression and the Second World War. Their expectations following the war were modest. Many were glad to have simply made it home alive from the canebrakes of the Solomon Islands and the beaches of Normandy. There was widespread anxiety that without the artificial stimulus of war production, America would sink into economic depression again. This worked out otherwise. The factories easily converted back to car-making from tank-building; William Levitt figured out how to mass produce the suburban house, starting a boom; and the American oil industry got the world’s motors up and running again to get the big cleanup of Europe and Asia underway. As an added benefit, the American managing classes had returned from their stints as officers in the armed forces with equally modest expectations for the rewards of being in charge of things in civilian life. The Army had conditioned them into a subculture assembled by rank but careful in the allocation of privilege, so as to keep up morale through the ranks for the greater good of winning the war. The officers-turned-executives brought these values into postwar corporate life for the greater good of winning a durable prosperity. By the same token, the lower ranks came out of the war with a fund of respect for the authority that had engineered their victory.

And so, by 1956, say, the president of a toaster company might be paid several multiples more than the guy on the assembly line but not obscenely more. In 1956, both would certainly be owners of American cars—a Cadillac versus a Ford Fairlane—and might well have owned their own homes in greater or lesser suburbs. But their standards of living would seem, from today’s standpoint, startlingly similar. Both families would have had TV, perhaps one versus several, but both families also went to the movies at the Loews Theater and democratically took their seats first-come-first-served. Ditto the ballparks and football stadiums in the days before luxury boxes. Both upper and working class families ate the standard supermarket victuals of the day because the gourmet stratification of America had not yet happened. Both families might well have sent their children to public schools. Both fathers may have been Sunday golfers, though on different public and private courses. By the early 1960s, with America at the height of its manufacturing dominance, General Motors assembly-line workers made as much money as tenured college professors.

Now, politically, the situation I describe would seem to be very desirable, perhaps ideal, considering all the unjust systems that had existed before and elsewhere. The American system in those years was fairly equitable and appeared to be stable. But like all good things deriving from industrial civilization, this social-leveling process had some strange diminishing returns. One was that the lower ranks of American society became so affluent by historical terms that they were able to impose their tastes on everybody else, if only because there were so many of them, with so much money to spend. They began to occupy and modify the terrain of America in a way that lower classes never had been able to before—using the prime artifact of industrial civilization to accomplish that takeover, the car. They bought homes in the new subdivisions that were obliterating the rural hinterlands of the cities, and before long all the commercial accessories followed: the strip malls, the department stores, the fried-food huts, the cinemaplexes, the office parks, the Big Box store—an entire alternate infrastructure to the tired, bleak downtowns of the industrial cities, which had begun to sicken in the Great Depression and with a very few special exceptions would never return to health again. The new stuff built all over America in the late 20th century was analogous to the content of the television programming to which the lower classes insidiously became addicted—a cartoon simulacrum of a real world that was systematically being obliterated. Instead of a real countryside outside the hated cities, we now had suburbia, a cartoon of country living. Instead of towns, shopping malls. Eventually the theme park became both the embodiment of the destruction wreaked across the land and paradoxically the last refuge from it. Americans would flock to Walt Disney World in Orlando to put themselves in a saccharine replica of the authentic Main Street environments that they had thoroughly trashed in their own home places.

Another diminishing return of the American postwar industrial fiesta was that thanks to our exertions, our salesmanship, and our generosity, the other industrial nations were back on their feet making things again, and before too long they were making things better than we were and less expensively, too. Thus, beginning in the 1970s and coincident with our all-time peak in oil production, America began to hemorrhage blue-collar factory jobs. Families that had grown comfortable in high-paying assembly-line jobs, who had motor boats and second homes on little lakes and took vacations at the Disneyplexes and expected life to get ever better, were clobbered by the stagflation and other economic disorders of the day. Meanwhile, the labor unions that had guarded their interests for decades rapidly lost their power to negotiate for workers whose jobs increasingly no longer even existed.

At this point, a new economy began to replace the old smokestack economy. But the new one was not the one that was advertised in politics or the news media. It was not the information economy based on the spread of computers. Neither information nor computer-aided efficiency had net social value when jobs and standards of living were being destroyed. Nor was this new economy the vaunted service economy, a perpetual-motion fantasy akin to the proverbial village whose denizens supported themselves by taking in each other’s laundry. No, all that was mendacious balderdash. The real new economy was the final blowout of the cheap-oil era: the hypertrophic build-out of suburban sprawl and the furnishing and final accessorizing of it. In other words, our living arrangement essentially became the remaining basis of our economy, in the absence of any other purposeful creation of value or wealth, such as manufacturing things. And because it was a racket devoted to a way of life with no future, it spawned enormous cynicism. Just as the immersive ugliness of the suburban highway strip was economic entropy made visible, so the cynicism of the public was entropy applied to human values, a force propelling things into disorder. When nothing was sacred, everything became profane.

The demoralization of the American public, and especially of the economic lower orders, proceeded remorselessly from the 1980s on and became focused on two very pernicious ideas: first, the belief that it was possible to get something for nothing, and second, the belief that when you wish upon a star, your dreams come true.

The first derived from the fact that Americans still appeared to generate wealth without really producing anything of value. This was achieved through the accumulation of debt represented by the false collateral of suburban real estate—the infrastructure of a living arrangement with no future. Meanwhile, this debt, or credit—hallucinated surplus wealth—was cleverly converted into huge batches of tradable financial instruments and used to drive both bond and derivatives markets. Since finance is ultimately predicated on the expectation that the wealth of societies will ever increase, this economy was the greatest shuck and jive the world had ever seen.

The second idea, that when you wish upon a star your dreams come true, was its perfect accompaniment. It derived from the mental bombardments of advertising and Hollywood movies, and it provoked the American masses to believe that sooner or later the time would come when their individual big payoff would arrive, their ship would come in, their lottery number would hit the jackpot, they would break the house at the blackjack table of the Mirage Hotel.

Now, the trouble with this kind of demoralizing belief system is that most adult human beings realize at some level that it is at odds with the way the universe works, that it is an edifice of lies—just as a maxed-out collection of credit cards was a lie about one’s personal finances. Their sensed moral failures aroused in Americans a welter of negative emotion including guilt, shame, unworthiness, powerlessness, terror, and ultimately anger over having to feel these unpleasant emotions, and they expressed their anger by striking out against nature, employing the very machines that defined the terms of their existence, the automobile and its spawn: monster trucks, motorcycles, dune buggies, snowmobiles, all-terrain vehicles, and gigantic motorboats whose chief attractions were their power to negate the scale of the average freshwater lake while making enormous amounts of noise. These were people who no longer felt comfortable or even ontologically present in the world unless engines of some kind were ringing in their ears. Their assault on the landscape of America completed the destruction that suburbia had left unfinished. And as the cheap oil, which made the whole exercise possible, fades into history with the global oil-production peak upon us, America was reduced to a nation of tattooed, overfed clowns in paramilitary drag, pretending to be powerful.

The tendency for symbolic behavior in human beings is impressive. We are naturally and unselfconsciously metaphorical beings. By the 1960s, when America’s industrial smokestack economy was at its zenith, cigarette smoking was at its peak, too. Forty percent of the adult population smoked, each smoker behaving like a little factory, expelling the by-products of combustion at all hours of the day and night. It was practically required as a mark of adulthood. It was at least an entitlement. You could smoke on the job and in the college classroom. You could smoke in the doctor’s waiting room. You could smoke in your seat on an airplane—a little ashtray was provided right there in the armrest—and nobody was allowed to complain. In those days, smoking was more central to socializing than sharing food. TV broadcasting was largely supported by tobacco advertising. Smoking defined the character of movie stars: Humphrey Bogart expressed the entire range of human emotion in the way he handled his beloved Chesterfields, and eventually it killed him. In the middle of Times Square, a mechanized billboard with a hole in it blew “smoke rings” of steam out over the masses on the sidewalk. The adult population had plumes of smoke coming out of its collective mouths and nostrils the way that our society had smoke coming out of its cities and mill valleys. Notice how cigarette smoking has waned in lockstep with the decline of American smokestack industry.

Along similar lines today, it’s compelling to see how NASCAR auto racing has risen to the level of a mania in early 21st-century America as the nation has reached its absolute zenith of automobile use. Even as the world approached the all-time global oil-production peak, Americans rallied obliviously to the weekend proving grounds of the stock-car gods. NASCAR eclipsed baseball, football, and basketball in popularity among spectator sports. Of course, in real life, driving automobiles had come to occupy a huge amount of the public’s time. Many adults were spending a good two hours a day commuting to work and back. They were spending more time alone in their cars than with their spouses and children. NASCAR was the apotheosis of the same kind of cars that Americans drove to work. The competition vehicles were called stock cars, after all, because they were, theoretically, just souped-up versions of the same models that anyone could find in stock at an ordinary car dealership—unlike the Formula One racecars favored in Europe. What’s more, the American economy was now mostly based on creating and maintaining the enormous infrastructures of motoring, i.e., suburbia, just as it had previously been centered on the infrastructures of industrial production. So the masses had merely shifted their symbolic behavior focus from an emphasis on expelling smoke to an emphasis on watching souped-up ordinary cars move symbolically around in circles.

Or more precisely, ovals, which, from the grandstand, was sort of like sitting on a freeway overpass for five hours watching traffic. The NASCAR racetracks had evolved from county-fair dirt tracks with a few rickety bleachers to gargantuan stadiums accommodating more than 100,000 spectators. It was significant, too, that the NASCAR subculture arose in the South, the old Dixie states, where the automobile had tremendous social transformative power in the previous half century. Prior to the Second World War, Dixie had been an agricultural backwater with few cities of consequence, peopled by, among other groups, a dominant Caucasian peasantry, called “rednecks” because of the effects of the sun on exposed pale skin in the dusty crop rows.

States like Georgia, North Carolina, and Alabama were huge. You could fit 11 Connecticuts in Alabama and have room for Rhode Island and Delaware. Unless they lived right along the railroad line, the folks down on the farm were pretty much stuck in place. The automobile liberated the rednecks from the oppression of geography as emancipation had liberated blacks from the legalities of chattel ownership. In fact, the effect of the car was arguably much greater, since blacks continued to exist in economic quasi-serfdom despite the putative change in their legal status. The car and all its manifold benefits hoisted poor rednecks into a middleclass existence that had seemed like a distant fairy tale previously, something only seen in the magazine pages they had used to wallpaper the rooms of their cracker cottages—their own typological term for such a dwelling. They became truckers and car dealers and car repairmen and the owners of fried-food franchises out on the highway. They made good wages, and some became rich. Once a broad money base was established, they excelled at suburban development because rural land was so cheap and there was so much of it. They worshipped the car more than they worshipped Jesus.

The economy of the South was utterly transformed after the Second World War and the new economy was mostly about the car. Cheap gasoline along with cheap air-conditioning made the South livable for people who had a choice about where to make their homes. Cheap air-conditioning in particular made city life possible in a region that had lagged hopelessly behind the states of the Old Union—to the degree that Dixie had not a single city substantial enough for a major league baseball team prior to the 1960s. But the cities that arose in Dixie after the war were not like cities elsewhere in physical form. Orlando, Houston, Charlotte, and places like them had gone from being smaller than Buffalo to becoming immense crypto-urbations of ring freeways, radial commercial highway strips, and far-flung housing subdivisions around tiny withered peanuts of pre-war traditional downtown cores. Houston by the year 2000 was not a city in the traditional sense of being composed of neighborhoods and districts; rather it was an assemblage of single-use-zoning wastelands: the shopping wasteland, the medical-services wasteland, the university wasteland, the cul-de-sac house wasteland, and so on, dominated by massive overlayments of automobile infrastructure.

The economy of the New South, as it liked to call itself in the late 20th century, was more about the making of suburban sprawl than of the corporations that were lured down from the north to the Carolinas, Tennessee, and Georgia for their cheap labor. After all, the factories themselves eventually closed up shop as globalism made even cheaper labor in distant nations more attractive to corporate enterprise—but the sprawl remained, along with the office parks where obscenely paid top executives now ran things, while the once mighty working classes slid into a new kind of trailer-trash penury. And that is where things stand today, with the region, and the nation it is still attached to, sleepwalking into the early years of a permanent global fossil-fuel crises that will once again transform the nation in ways we can only sketchily imagine.

Into the first decade of the new century, the New South was viewed as being so successful compared to failing regions like the Midwest rust belt that the behavior emanating from Dixie became paradigmatic for the nation as a whole. It was infectious. These days, the working and sub-working classes from Maine to Minnesota follow country music as avidly as the homefolks down in Spartanburg, South Carolina.

Some lumpen motoring activities obviously have regional characteristics that don’t migrate well. Snowmobile culture arose in the northern states around 1970, when the take-home pay of people performing low-skill jobs reached its all-time high, and a machine formerly used as a rescue vehicle at ski areas and a maintenance tool on ranches was marketed as a winter toy for grown-ups. This was clearly something that was not going to be as popular in Arkansas as in Minnesota. In fact, as this relatively new snowmobile subculture evolved, it became less about the machines themselves and more about drinking with friends in the outdoors—an unfortunate combination as anyone who reads the newspaper in what’s left of small-town America can see in the Monday police blotters when snowmobilers with six Budweisers under their belts decapitate themselves running through fence lines at 50 miles an hour.

All-terrain vehicles, those clumsy three- and four-wheeled motorbikes, were most popular proportionately in the American West, where hunters were able to extend their range to the vast backcountry of federal lands and get their meat home with the assistance of a gasoline engine. Likewise, the dune-buggy originated in California for the simple reason that desert terrain was adjacent to the populous Los Angeles basin. While it has persisted in its limited milieu, dune-buggy culture never quite recovered socially from its association with the murderous doings of Charles Manson and his “family.” The dirt-bike phenomenon also came out of California, but evolved quickly from an off-road work and play vehicle to the dirt-bike tracks of competitive racing, where it gave young men a way to channel surplus testosterone by winning trophies and cash. Ironically, wilderness-trail areas around the suburbs have lately been taken over by non-motorized mountain bikes, which are causing plenty of destruction in their own right.

The jet-ski is perhaps the most baroque and arguably the last in the line of such dedicated leisure vehicles, being in essence a boat with hardly any storage capacity on which one can do little else besides move at great speed over water while soaking wet. Fishing from such craft is awkward. Even drinking on them presents problems, especially where the bulky favored beverage of the sporting masses, beer, is concerned.

The abuse of public lands during this long fiesta of off-roading has led to a crisis of ethics and law. Of the 262 million acres under the federal Bureau of Land Management, 93 percent is open to off-road riding machines. Of 155 national forests, only two are off limits to off-roaders. Regulation of snowmobiles, ATVs, and dirt bikes on public lands has consistently failed in the face of lobbying by corporations who make these toys and of the peremptory claims of rights by those who use them. In a nation of outsourced blue-collar jobs, shrinking incomes, vanishing medical insurance, rising fuel and heating costs, and net-zero personal savings, the anxiety level of the struggling classes has to be appeased politically, and one way to minimize the current cost of that is to charge it off to posterity and the public interest.

Where does this leave us as we enter the post-cheap-oil world and eventually a world altogether without recoverable fossil fuels? You could say up a cul-de-sac in a rusted GMC Denali without a fill-up. Or in a society that will have to get its thrills and satisfactions in other ways, involving fewer prosthetic projections of our will to power. The will to power itself will probably be subdued by something more elemental: a will to stay warm, clean, and well nourished in the era of post-oil-and-gas hardship and turbulence we are entering.

In this new era, coming soon to a 21st-century region near you, the formerly industrial nations will have a great deal of trouble keeping the lights on, getting around, and feeding their people. Vocational niches by the hundreds will vanish, while the need to make up for a failing industrial agriculture, with all its oil-and-gas inputs, will require a revived agricultural working class in substantial numbers. This is in effect a peasantry, and the word itself obviously carries unappetizing overtones, especially among those who used to be certain that the perfection of both human nature and human society was at hand. It all seemed that way, I suppose, in the early 1960s, when the United Auto Workers union was setting up vacation camps along the Michigan lakes, and President Kennedy promised to put a man on the moon before the decade ended, and the doctrine of mutually assured destruction kept a sort of peace among the great military powers, and dad drove home from the Pontiac showroom with a new GTO, which his son, Buddy, used to cruise the strip on Friday nights while “Born to Be Wild” rang out of the radio and out into the warm, soporific San Fernando night.

All over but the keening for our soon-to-be-lost machine world. We’ll have to find new satisfactions now looking inward and reaching out with our limbs to those around us to discover what they are finding inward and outward about themselves. We’ll certainly find music there, and dancing, and perhaps some fighting, and we will still have the means to make bases and balls and sticks for hitting them and gloves for catching them and twilight evenings in the meadow to play in. Amid a great stillness. With the moon rising.
__________________________________________________

James Howard Kunstler is the author, most recently, of The Long Emergency.

February 13, 2006 Issue

[Godotology]

Finally read JHK's piece, and will probably need to read a 2nd and even 3rd time to completely let it absorb in.

Overall it's a great critique of the flaws of Communism, globalist trade, and our consumption habits.

Unfortunately I don't see either parties giving up their neo-liberal stance on economics/trade, while certain businesses and industries wouldn't be too happy seeing changes in life styles that would hurt their business. All I can say is we're screwed.

[papabear]

From: http://www.energybulletin.net/12790.html

http://www.oilcrisis.com/duncan/OlduvaiThe...ialContract.pdf

The Olduvai Theory: energy, population, and industrial civilization (PDF)
Richard C. Duncan, The Social Contact
"The Olduvai Theory states that the life expectancy of industrial civilization is approximately 100 years: circa 1930-2030. Energy production per capita (e) defines it. The exponential growth of world energy production ended in 1970. Average e will show no growth from 1979 through circa 2008. The rate of change of e will go steeply negative circa 2008. World population will decline to about two billion circa 2050. A growing number of independent studies concur...."
(Winter 2005/6 issue)

[papabear]

http://www.tomdispatch.com/index.mhtml?pid=58126

Tomgram: Michael Klare, Just How Addicted to Oil Are We?

On a recent sunny San Francisco Bay Area Saturday, having walked the beach at Limantour Spit and seen nature red in tooth and claw -- actually, an Osprey flying overhead, a large fish in its talons -- I paid the price for visiting the wilds. It turned out to be $2.53 a gallon for unleaded regular on my trip back to reality -- and that was by no means the worst price I saw that day.

For anyone who slips into the driver's seat of a car -- and except for those who live in cities like New York with full-scale public transport systems, that's most of America most of the time -- life is already a permanent energy crisis. No wonder the President stumbled across reality this year and declared before the nation that we were all oil addicts in a hooked homeland and it was time to rid ourselves of our "dependence" on Middle Eastern oil (a region where, as it turns out, oil use is surging). You know -- that horribly "unstable" part of the world the President personally destabilized with his invasion of choice.

The Saudis were mildly insulted by the presidential speech (especially since they sell us their oil at relatively cut-rate prices while energy-hungry Asian powers pay top Euro for it); the big oil execs, knowing the truth of the situation, were unflustered ("No combination of conservation measures, alternative energy sources and technological advances could realistically and economically provide a way to completely replace those imports in the short or medium term," said Exxon Mobil senior vice president Stuart McGill); and the President, it turned out, had his facts upside down. It's true that we now import 60% of our oil from elsewhere, but because it's cheaper to transport energy from relatively close at hand, our one-two punch in imported oil turns out to be neighbors Canada and Mexico. (The Saudis only place, and right behind the top three comes not, say, Kuwait, but... gulp... Hugo Chavez's Venezuela.) To add insult to injury, just this week, the government's Energy Information Administration announced that "U.S. and world oil demand growth in the second quarter [of 2006] is expected to be stronger than previously forecast."

From the beginning, the Bush administration has been an all-oil-all-the-time regime. Chevron even dubbed one of its double-hulled tankers the Condoleezza Rice because she was on the company board. (The name was changed when she became Bush's national security adviser.) Our President and Vice President were, of course, in the business and the government has since been Halliburtonized; Zalmay Khalilzad, our ambassador first to Afghanistan and now to Iraq, was once an advisor to Unocal, the energy company that tried to negotiate the running of a natural-gas pipeline through the Taliban's Afghanistan... and so on.

Though various neocons and top administration officials dreamed of a Pax Americana in the Middle East, they certainly never meant to take those heartland energy reserves for the United States. Settling permanently into bases in Iraq was to be the royal way to global dominance over other energy-desperate powers. (Imagine the frustration, then, that Iraq can now hardly get its oil out of the ground!)

Still, the President had a point. We do have a problem. Of course, problem number one was how little lay behind Bush's words. As Valerie Marcel, energy expert at the Royal Institute of International Affairs in London commented, "Bush was playing to a very, very domestic agenda. It's just rhetoric."

What's the point, after all, in announcing that we're a nation of addicts, if you're not only not planning to put money into treatment centers, but cutting funds for them? As Michael Klare so vividly points out below, we are entering what is, in essence, a permanent global state of energy crisis without significant thought or planning.

The Bush administration largely rejects the very idea of climate change -- only the Pentagon and NASA seem to take it seriously -- and the main form of alternative energy that really interests them right now, nuclear energy, is essentially another form of addiction. Elsewhere in the world, there are people putting some thought into the onrushing crisis we face, but not us. The Chinese, worried about their energy future, have not only been stomping the planet from Sudan and Iran to Venezuela looking to nail down their long-term fossil-fuel fixes, but have been putting some time, energy, and thought into renewables. Sweden has, remarkably enough, just launched a fifteen-year plan to make itself the first advanced industrial country to go permanently off oil. (Already, 26% of the energy consumed there comes from renewables.) But not us.

This is, of course, painfully shortsighted. After all, there's the Swedish government working closely with Saab and Volvo to produce cars and trucks that will work off biofuels -- and where is our government? (Note to GM: How long will you really sell those monsters of yours in a $4 or $5 a gallon world?) So, with Michael Klare, author of the (sadly) ever more indispensable book, Blood and Oil: The Dangers and Consequences of America's Growing Dependence on Imported Petroleum, at your side, consider our predicament in the new world of eternally tight energy. Tom


The Permanent Energy Crisis
By Michael T. Klare

President Bush's State of the Union comment that the United States is "addicted to oil" can be read as pure political opportunism. With ever more Americans expressing anxiety about high oil prices, freakish weather patterns, and abiding American ties to unsavory foreign oil potentates, it is hardly surprising that Bush sought to portray himself as an advocate of the development of alternative energy systems. But there is another, more ominous way to read his comments: that top officials have come to realize that the United States and the rest of the world face a new and growing danger – a permanent energy crisis that imperils the health and well-being of every society on earth.

To be sure, the United States has experienced severe energy crises before: the 1973-74 "oil shock" with its mile-long gas lines; the 1979-80 crisis following the fall of the Shah of Iran; the 2000-01 electricity blackouts in California, among others. But the crisis taking shape in 2006 has a new look to it. First of all, it is likely to last for decades, not just months or a handful of years; second, it will engulf the entire planet, not just a few countries; and finally, it will do more than just cripple the global economy -- its political, military, and environmental effects will be equally severe.

If you had to date it, you could say that our permanent energy crisis began, appropriately enough, on New Year's Day, 2006, when Russia's state-owned natural gas monopoly, Gazprom, cut off gas deliveries to Ukraine in punishment for that country's pro-Western leanings. Although Gazprom has since resumed some deliveries, it is now evident that Moscow is fully prepared to employ its abundant energy reserves as a political weapon at a time of looming natural gas shortages worldwide. It won't be the last country to do so in the years to come. In just the few weeks since then, the world has experienced a series of similar energy-related disturbances:

* The sabotage of natural gas pipelines to the former Soviet republic of Georgia, producing widespread public discomfort at a time of unusually frigid temperatures;

* An eruption of oil-related ethnic violence in Nigeria, resulting in a sharp reduction in that country's petroleum output;

* Threats by Iran to cut off exports of oil and gas in retaliation for any sanctions imposed by the U.N. Security Council over its suspect nuclear enrichment activities;

* And as result of such developments, a series of mini-spikes in crude oil prices as well as reports in the business press that, if this pattern of instability continues, such prices could easily rise beyond $80 per barrel to hit the once unimaginable $100 per barrel range.

Vectors of Crisis

Events like these will certainly spread economic pain and hardship globally, especially to those who cannot afford higher transportation and heating-fuel costs. As it happens, though, these are not isolated, unrelated events. Think of them as expressions of a deeper crisis. Like the tremors before a major earthquake, they suggest the dangerous accumulation of powerful energy forces that will roil the planet for years to come.

Although we cannot hope to foresee all the ways such forces will affect the global human community, the primary vectors of the permanent energy crisis can be identified and charted. Three such vectors, in particular, demand attention: a slowing in the growth of energy supplies at a time of accelerating worldwide demand; rising political instability provoked by geopolitical competition for those supplies; and mounting environmental woes produced by our continuing addiction to oil, natural gas, and coal. Each of these would be cause enough for worry, but it is their intersection that we need to fear above all.

Energy experts have long warned that global oil and gas supplies are not likely to be sufficiently expandable to meet anticipated demand. As far back as the mid-1990s, peak-oil theorists like Kenneth Deffeyes of Princeton University and Colin Campbell of the Association for the Study of Peak Oil (ASPO) insisted that the world was heading for a peak-oil moment and would soon face declining petroleum output. At first, most mainstream experts dismissed these claims as simplistic and erroneous, while government officials and representatives of the big oil companies derided them. Recently, however, a sea-change in elite opinion has been evident. First Matthew Simmons, the chairman of Simmons and Company International of Houston, America's leading energy-industry investment bank, and then David O'Reilly, CEO of Chevron, the country's second largest oil firm, broke ranks with their fellow oil magnates and embraced the peak-oil thesis. O'Reilly has been particularly outspoken, taking full-page ads in the New York Times and other papers to declare, "One thing is clear: the era of easy oil is over."

The exact moment of peak oil's arrival is not as important as the fact that world oil output will almost certainly fall short of global demand, given the fossil-fuel voraciousness of the older industrialized nations, especially the United States, and soaring demand from China, India, and other rapidly growing countries. The U.S. Department of Energy (DoE) projects global oil demand to grow by 35% between 2004 and 2025 -- from 82 million to 111 million barrels per day. The DoE predicts that daily oil output will rise by a conveniently similar amount -- from 83 million to 111 million barrels. Voilá! -- the problem of oil sufficiency disappears. But even a cursory glance at the calculations made by the DoE's experts is enough to raise suspicions: Behind such estimates lies the assumption that key oil producers like Iran, Iraq, Nigeria, and Saudi Arabia can double or triple their oil production -- unlikely in the extreme, according to most sober analysts. On top of this, the DoE has been lowering its own oil-production estimates: In 2003, it predicted that global oil output would reach 123 million barrels per day by 2025; by the end of 2005, that number had already dropped by12 million barrels, reflecting a growing pessimism even among the globe's great oil optimists.

This is not to say that oil will disappear in the years ahead: There will still be adequate supplies for well-heeled consumers who can afford higher fuel bills. But much of the world's easy-to-acquire petroleum has already been extracted and significant portions of what remains can only be found in places that present significant drilling challenges like the hurricane-prone Gulf of Mexico or the iceberg-infested waters of the North Atlantic -- or in perennially conflict-ridden and sabotage-vulnerable areas of Africa, Central Asia, and the Middle East.

No Escape from Scarcity

To make the energy picture grimmer, "spare" or "surge" capacity seems to be disappearing in the major oil-producing regions. At one time, key producers like Saudi Arabia retained an excess production capacity, allowing them to rapidly boost their output in times of potential energy crisis like the 1990-91 Gulf War. But Saudi Arabia, like the other big suppliers, is now producing at full tilt and so possesses zero capacity to increase output. In other words, any politically inspired (or sabotage related) cutoff in oil exports from countries like Russia or Iran will produce instant energy shock on a global scale and send oil prices soaring to, or through, that $100 a barrel barrier.

A chronic shortage of oil would be hard enough for the world community to cope with even if other sources of energy were in great supply. But this is not the case. Natural gas -- the world's second leading source of energy -- is also at risk of future shortages. While there are still major deposits of gas in Russia and Iran (potentially the world's number one and two suppliers) waiting to be tapped, obstacles to their exploitation loom large. The United States is doing everything it can to prevent Iran from exporting its gas (for example, by strong-arming India into abandoning a proposed gas pipeline from Iran), while Moscow has actively discouraged Europe from increasing its reliance on Russian gas through its recent cutoff of supplies to Ukraine and other worrisome actions.

In North America, the supply of natural gas is rapidly disappearing. In a reflection of our desperate (and demented) condition, Canada is now starting to divert some of its remaining natural gas to the manufacture of synthetic oil from tar sands, so as to ease the pressure on supplies of conventional petroleum. Given the prohibitive cost of building gas pipelines from Asia and Africa, the only practical way to get more gas supplies to North America would be to spend several hundred billion dollars (or more) on facilities for converting foreign sources of gas into liquified natural gas (LNG), shipping the LNG in giant doubled-hulled vessels across the Atlantic and Pacific, and then converting it back into a gas in "regasification" plants in American harbors. Although favored by the Bush administration, plans to construct such plants have provoked opposition in many coastal communities because of the risk of accidental explosion as well as the potential for inviting terrorist attacks.

As for renewables -- wind, solar, and biomass -- these are still at a relatively early stage of development. With a trillion dollars or so of added investment they could indeed ease some of the strain on fossil fuels in decades to come; however, at present rates of investment, this is not likely to occur. The same can be said of "safe" nuclear power and "clean" coal -- even if the severe problems associated with both of these energy options could be overcome, it would take several decades and a few trillion dollars before they could possibly replace existing energy systems. The only source of energy that can compensate for a shortage of oil and gas at this time is conventional (unclean) coal, and a rise in its consumption would increase the risk of catastrophic climate change.

The New "Great Game"

With looming energy shortages, the risk of conflict over energy access (and the wealth fossil fuels generate) is certain to grow. Throughout history, competition over the control of key supplies of vital raw materials has been a source of friction between major powers and there is every reason to assume that this will continue to be the case. "Just at it did when the Great Game was played out in the decades leading up to the First World War, ongoing industrialization is setting off a scramble for natural resources," John Gray of the London School of Economics observed in a recent article in the New York Review of Books. "The coming century could be marked by recurrent resource wars, as the great powers struggle for control of the world's hydrocarbons."

As in the Great Game, such conflicts most likely would not arise from head-on clashes between the great powers, but rather through the escalation of local conflicts sustained by great power involvement, as was the case in the Balkans prior to World War I. In their competitive pursuit of assured energy supplies, today's great powers -- led by the United States and China -- are developing or cementing close ties with favored suppliers in the Middle East, Central Asia, and Africa. In many cases, this entails the delivery of large quantities of advanced weaponry, advisors, and military technology -- as the United States has long been doing with Saudi Arabia, Kuwait, and the United Arab Emirates, and China is now doing with Iran and Sudan.

Nor should the possibility of a direct clash over oil and gas between great powers be ruled out. In the East China Sea, for example, China and Japan have both laid claim to an undersea natural gas field that lies in an offshore area also claimed by both of them. In recent months, Chinese and Japanese combat ships and planes deployed in the area have made threatening moves toward one another; so far no shots have been fired, but neither Beijing nor Tokyo have displayed any willingness to compromise on the matter and the risk of escalation is growing with each new encounter.

The likelihood of internal conflict in oil-producing countries is also destined to grow in tandem with the steady rise of energy prices. The higher the price of petroleum, the greater the potential to reap mammoth profits from control of a nation's oil exports -- and so the greater the incentive to seize power in such states or, for those already in power, to prevent the loss of control to a rival clique by any means necessary. Hence the rise of authoritarian petro-regimes in many of the oil-producing countries and the persistence of ethnic conflict between various groups seeking control over state-oil revenues -- a phenomenon notable today in Iraq (where Shiites, Sunnis, and Kurds are battling over the allocation of future oil revenues) and in Nigeria (where competing tribes in the oil-rich Delta region are fighting over measly "development grants" handed out by the major foreign oil firms).

"Up to this point," Senator Richard G. Lugar told the Senate Foreign Relations Committee on November 16, "the main issues surrounding oil have been how much we have to pay for it and whether we will experience supply disruptions. But in the decades to come, the issue may be whether the world's supply of oil is abundant and accessible enough to support continued economic growth…. When we reach the point where the world's oil-hungry economies are competing for insufficient supplies of energy, oil will become an even stronger magnet for conflict than it already is."

Averting Environmental Catastrophe

In addition to this danger, we face the entire range of environmental perils associated with our continuing reliance on fossil fuels. Consider this: The DoE predicted in July 2005 that worldwide emissions of carbon dioxide (the principal source of the "greenhouse gases" responsible for global warming) will rise by nearly 60% between 2002 and 2025 -- with virtually all of this increase, about 15 billion metric tons of CO2, coming from the consumption of oil, gas, and coal. If this projection proves accurate, the world will probably pass the threshold at which it will be possible to avert significant global heating, a substantial rise in sea-levels, and all the resulting environmental damage.

The surest way to slow the increase in global carbon emissions is to reduce our consumption of fossil fuels and accelerate the transition to alternative forms of energy. But because such alternatives are not currently capable of replacing oil, gas, and coal on a significant scale (and won't be, at present rates of investment, for another few decades), the temptation to increase reliance on fossil fuels is likely to remain strong. We are, in fact, caught in a conundrum: the world needs more energy to satisfy rising global demand, and the only way to accomplish this at present is to squeeze out more oil, gas, and coal from the Earth, thereby hastening the onset of catastrophic climate change. In turn, the only way to avert such change is to consume less oil, gas, and coal, which would involve severe economic costs of a sort that most national leaders would be reluctant to consider. Hence, we will be trapped in a permanent crisis brought on by our collective addiction to cheap energy.

The sole way out of this trap is to bite the bullet and adopt heroic measures to curb our fossil-fuel consumption while embarking upon a massive program to develop alternative energy systems – an effort comparable to, and in some sense a reversal of, the coal-and-oil-fueled industrial revolution of the nineteenth and twentieth centuries. In the United States, this would, at an utter minimum, entail the imposition of a hefty tax on gasoline consumption, with the resulting proceeds used to fund the rapid development of renewable energy systems. All funds now slated for highway construction should instead be devoted to public transit and high-speed inter-city rail lines and all new cars sold in America after 2010 should have minimum average fuel efficiencies of 50 MPG or higher. This will prove costly and disruptive -- but what other choice is there if we want to have some hope of exiting the permanent global energy crisis before the global economy collapses or the planet becomes uninhabitable by humans.

Michael T. Klare is the Professor of Peace and World Security Studies at Hampshire College and the author, most recently, of Blood and Oil: The Dangers and Consequences of America's Growing Dependence on Imported Petroleum (Owl Books) as well as Resource Wars, The New Landscape of Global Conflict.


Copyright 2006 Michael T. Klare