WHAT'S REALLY UP WITH PEAK OIL?
(Posted 2006-07-09 15:23:23 by Ray Lopez)

What's up with Peak Oil?

"Peak oil" is a topic that is slowly starting to make it's way into the
common consciousness of the American public.  Briefly, peak oil is all
about the idea that the world is quickly depleting it's most easily
accesible supplies of crude oil. The term "peak" comes from the fact that
the supply of easily accessible crude oil (whether from a single oil field
or the supply of the entire earth) may be graphed as a bell curve.  Much
oil is supplied as the peak of the curve is approached, and less and less
oil is supplied post-peak.

There is no doubt that crude oil is a finite resource.  And there is no
question that at some point in time we will run out of oil.  The big
questions are 1) When is all of this going to happen, and 2) What exactly
with the depletion of oil resources look like?

With regard to the first question, there are generally two large schools of
thought.  The first tells us that peak oil has already happened.  We're
already hit the peak of the bell curve and are starting to see the
depletion of several key oil sites (e.g., the North Sea). If we had the
truth from the Saudis, we'd know that they are also running out of oil as
well.  According to these folks, all of planet earth is already post-peak,
and in a matter of years we're going to see increased global competion for
the few remaining resources we have left.  All of this I view as the more
"pessimistic" of the peak oil prophesies.

On the other end of the spectrum we have the more optimistic view, which
tell us that the peak oil curve is anywhere from 25 to 50 years into the
future. These peak oil prophets don't deny the reality of finite oil
resources.  Rather, they think that the oil supply will dwindle in a slow
and predictable fashion, such that we'll have time to make arrangements to
run our world on other sources of energy.

In summary, we have an optimistic and pessimistic view of when peak oil
will occur.  What about the next question, regarding what will happen?

Again, we have an optimistic and a pessimistic view.  From the optimistic
viewpoint, the bottom line seems to be that technology and markets will
come to the rescue.  These people tend to believe quite strongly in the
power of the free market and human ingenuity.  They argue that as oil
supplies dwindle, the price of oil and oil by-products will greatly
increase.  This increase will necessarily make other forms of energy more
marketable, and thus great amounts of capital will be spent on the
development and deployment of new energy sources, all in time to thwart the
effects of a dwindling oil supplu.

On the other side, of course, are the pessimists.  Their main line of
argument is that since peak oil has already started, we've already lost
much precious time needed to develop new energy sources.  Even if we were
to start today with a "Manhattan Project"-style program aimed at developing
new replacements for crude oil, we would never have everything developed
and deployed in time to aid us in dealing with the effects of peak oil
Furthermore, we have the added complication regarding the incredible
versatility of crude oil.  It is used not only as a primary energy source,
but also used to create an extremely wide variety of things, from plastics
to agricultural chemicals.  The most dire pessimists warn us that the
"carrying capacity" (i.e., the number of people that can be sustained) of
the planet earth has been artificially inflated by the use of oil to power
modern economies and feed untold billions of people. When oil goes away, we
will experience a massive "die off," the likes of which have never been
seen in human history.

To summarize, we again have two contrasting views of what will happen to us
when peak oil hits.  On the one side we'll be resued by free markets and
technology.  On the other side, we're too late to do anything about the
problem.  We have run out of time and resources needed to avert a
catastrophe of biblical proportions.

Of course the big question is, "Who's right?" If you go searching for
information on peak oil, you come away with a mishmash of viewpoints, from
the pessimistic views of people like Jim Kunstler (who is an excellent
writer) and Matt Savinar, to the propaganda spread about by the oil
multinationals. Over the last year or so I've spent a considerable amount
of time studying all of these sources and have come to the conclusion that
is similar to one that we see again and again everytime we're dealing with
an extremely complex topic: The truth is likely somewhere in the middle.

Thus, with regard to the idea of when peak oil is likely to occur, my best
guess is that we are something like 10 to 15 years away from the world-wide
oil peak. This means that around the year 2018, give or take a few years,
we'll hit peak oil, and almost immediately will begin to see the effects of
hitting that bleak milestone.

I believe further that the effects of peak oil will be somewhere in the
middle of the optimistic and pessimistic viewpoints.  This middle ground
will likely resemble a worldwide economic depression, with greatly reduced
economic production, massive unemployment, food shortages, perhaps even
large numbers of deaths in third world countries.  I also think it possible
that we'll see some wars break out, with the US and other global powers
fighting for remaining resources.

The real wild card in this scenario isn't really the what and when of peak
oil.  In my opinion the real wild card has to do with global warming and
it's effects. Will global warming alter the climate so much that we'll face
severe droughts and water shortages? If so, then we'll have the concurrent
catastrophes of peak oil, no water, and no food. While there seem to be
clearly optimistic versus pessimistic viewpoints in the world of peak oil,
there are no such clear-cut views with regard to the ultimate effects of
global warming.

In sum, the end of the oil age will likely bring about an economic
depression and hardship for the world's poor. It will mean the end of much
of the American lifestyle. But I don't think it will mean a massive die-off
of the world's population, and do belive that the economic depression will
force the world to alter it's lifestyle and force both governments and free
markets to come up with viable alternatives to the use of crude oil.  This
is all likely to happen about 15 years from now. The only question mark in
all of this, and the thing we should be equally worried about, is global
warming. By itself, peak oil would probably be a difficult but manageable
problem. But if global warming ultimately causes a global reduction in the
supply of fresh water and food, we're in for a rough ride, perhaps an
apocalypse of unprecendented proportions.

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