Why is Peak Oil a Problem? - Peak Oil, Resource Depletion, Transition Preparation and Energy Descent

Why is Peak Oil a Problem?

See also: What is Peak Oil?, The End of Suburbia (Video), The Power of Community: How Cuba Survived Peak Oil (Video), Why the Global Economy is About to Crash, What To Do About the Upcoming Economic Crash, Arithmetic, Population and Energy Video.

To understand why peak oil is a problem you need to be able to understand about a dozen facts. If you can do that then suddenly a light will go on in your mind — you will "get it" — and from then on you will realise the nature, depth, and scope of the problem. If one critical fact is missing from your understanding, then you might still be able to say to yourself that this may not be that important an issue to consider in your life.

Eventually I may add links from these basic points to more lengthy explanations of them. There are plenty of other websites with this information already there, if you look for it.

  • Oil is necessary for every aspect of our modern society.

    Not only transport—it is the raw material for all plastics, basically all pharmaceuticals (drugs), pesticides (needed for our modern methods of food production), and many other chemicals and other items essential to maintain our modern way of life. Fertilisers, also essential for our modern food production, are made from natural gas—which is usually found with oil, has its own peak of production, and appears to have already peaked in North America.

    Without oil, we would be able to produce only a fraction of the food supply that we can now.
    It is estimated that 9 in 10 calories in our modern/western food come from fossil fuels, not even allowing for packaging and transportation (then it would be 19 in 20). You hear quotes all the time like how what farmers used to think of as "soil" is increasingly becoming just a sterile substrate for the addition of fossil-fuel-based fertilisers and pesticides, to allow for food to grow.

    If you are indoors right now, have a look around the room you are in. Almost everything you see around you — including the inside surfaces of the building, the outsides (and many of the insides) of the objects in the room, and even what you can see of the other people — is actually made from oil. This includes anything made from plastic, the paint coverings on anything (including the walls), and anything made from "synthetic fibres" (including the carpet and much of what people are wearing). People even cover their faces in it (cosmetics and face creams, etc.).

    Our dependence on oil is so masssive that if archaeologists from the future were to discover our remains and do a study on us, they would almost certainly call us "the oil people".
  • All oil production, when drawn on a graph of production versus time, follows a bell-shaped curve. That is, oil production initially increases, then peaks, then inevitably and relentlessly declines. This happens in an individual oil well due to the physical properties of oil and how it is stored underground. It also happens to the total production summed over many wells in an oil field, an oil production region, a country, and eventually, to the whole world.

    Once production has peaked there is nothing that can be done to stop the decline in the rate at which the oil can be extracted. It is a matter of the physics of oil (and you can trust me on this, I have a first-class honours degree in physics) — it has nothing to do with economics or how high the price of oil becomes. This is the phenomenon known as "peak oil".
  • The best proof that "peak oil" as explained in the point above is a reality, is the example of the USA.

    In 1956, M. King Hubbert (a geologist for Shell Oil) predicted that oil production in the USA would peak in 1970, and then continually and permanently decline. He was ridiculed at the time, but as it turned out, he was spot on correct in his prediction. The USA is the most oil-hungry nation on Earth, using about 25% of all the world's oil, with the most desperate need for oil of any country. It is also the country with the best access to the latest and greatest technological resources, to find and develop new oil fields. But despite all this they have not been able to turn around their own "Hubbert Peak" of oil production. (See other comment and graph here).
  • Essentially no new oil is being discovered, nor is it expected to be discovered.

    The global peak of oil discovery occurred between 1962 and 1965. This is shown on the graph below. These days, a new field of something like 500 million barrels of oil will be reported in the media as a huge find, that will make headlines in the business section of the papers. That may sound like a lot of oil to the uninitiated, however the world is using something like 73 million barrels a day. So that "huge find" will be used up in about one week.

    Advances in modern technology, including those as used in oil exploration, have been incredible in the last few decades. Even in the 1980s it was possible for Earth-orbiting satellites to read a newspaper from space. The entire world has been scanned optically, seismically, geologically, from space, from the air, from the ground, by sea, in every possible which-way—and still the peak of oil discovery was the beginning of the 1960s. It is very, very unlikely that there are any more significant oil reserves remaining left to be found.

Global Peak of Oil Discovery

Global Oil Discovery (Source: ASPO)

  • Note: The recent (September 2006) large oil discovery in the Gulf of Mexico is speculatively estimated at 3 to 15 billion barrels (gigabarrels). This has been reported in the news as an awesomely huge find, the largest single find since the 1960s. Although this is true, it is also true that on a world scale it is really not that much oil. Look at the axis on the left of the graph above to see how 3 to 15 gigabarrels fits into the world scenario. It represents from about 1 to 6 months worth of oil consumption (the red line is annual consumption).

    Furthermore, this field will have its own Hubbert peak of production, occurring at approximately the point where half of the oil has been pumped out. So only half this much oil will be available as "cheap oil"—the kind that we are used to and that our economy depends on—with the remaining half being extracted under conditions of continually decreasing production rates and increasing cost. In other words, the find will delay the global peak of oil production by between 1.5 and 7.5 gigabarrels, or about 0.5 to 3 months. Although to use the term "cheap oil" to describe any of this find may be a misnomer, considering that it is located "175 miles offshore, 30,000 feet below the gulf’s surface, among formations of rock and salt hundreds of feet thick" (Source: New York Times), making it one of the deepest (and potentially most expensive to extract) oil finds in history.
  • A great many significant experts in the oil industry fully (and publicly) agree with this view of the oil situation.

    In fact, from what I have been able to gather, most oil industry insiders—who do not obviously have a vested interest in promoting an artificially optimistic view (such as to hold up the share price of the company they work for, so that, for example, they are able to maintain their status as "currently employed" insiders of the oil industry)—fully agree with this view. Even those (the obviously corporate-sponsored and/or politically-sponsored voices) that do not agree are only disagreeing with when the peak will occur, not the reality of peak oil as a phenomenon. (See also here).
  • Oil is by far the cheapest and most productive source of raw energy humanity has ever known.

    The ratio of profit-to-cost of oil extraction is often as high as 100 to 1, and rarely worse than 10 to 1. That is like investing $1,000 in the bank and getting back $100,000. That degree of affluence, in terms of cheap (almost free) energy, is what we have become used to (and are now dependent on) in our modern western way of life.

    People are so accustomed to these vast amounts of almost free energy, that we have almost no comprehension of just how much energy (actual energy, in terms of calories, kilojoules) is needed to power our modern way of life. A V8 car engine with your foot hard on the accelerator puts out something like 300kW (that is, kilowatts, thousands of watts) of power. Driving a small family car like a Toyota Corolla around, it may be something like 100 kW. The "watt" is a unit of power equal to one joule of energy consumed per second. A human being can do about 100 watts of work. So, from now on, every time you drive your car around, think how the engine under the bonnet is actually performing the work equivalent to between 1000 and 3000 (depending on how big your engine is) human slaves. Of course the same almost unbelievable ratios (except the numbers are even larger) apply to heavy machinery, farming implements, mining machinery, trucking, air travel, sea travel, and so on. Without oil, we would have nothing even remotely like the standard of living that we have become used to.

It's interesting to note that the end of slavery in the United States coincided with the advent of widely available oil.
Thom Hartmann, The Last Hours of Ancient Sunlight, p34 (revised edition).

  • A while ago someone questioned me on that quote above, claiming that it was incorrect. So I looked up the facts. Slavery was abolished in the USA in 1865, and The first modern commercial oil well in the world was drilled in Asia in 1848. (There are claims of oil wells in China in 347 A.D, however these obviously did not lead to an age of oil).The first commercial oil well in the USA well was drilled in Titusville, Pennsylvania by Edwin Drake, in 1859. During the 1860s many pioneering wells were drilled in North America, and the modern oil industry got underway — right after the end of the Amercian Civil War.
  • There are six times as many humans on the planet to feed than when oil was discovered.

    This extreme population growth has occurred, and is only currently possible, because of oil-based farming technology. And the natural resources of planet Earth have been vastly depleted since oil was discovered, so it's not like we can even go back to the way the world used to be in the 1850s, even if we reduced our population to what we had in the 1850s.

Peak Oil and World Population

World Population (Source: Wikipedia)

  • All so-called "alternatives" to oil are really just derivatives of oil.

    It is estimated that nuclear power, biofuels, and all the other so-called alternatives can only exist because the fossil-fuel inputs that go into their production are so cheap. When you account for the fossil fuel calories that have mined and enriched the uranium, built the reactors, fertilised and pest-controlled and harvested and transported the bio-ethanol, and so on, these alternative forms of energy production in actual fact do not make very much, if any, energy at all—or actually run at a loss.

    Even without having to work out the actual calculations to determine how accurate that statement is, clearly there are vast amounts of inputs of existing oil-powered energy that go into creating all forms of alternative energy. (Mining and extracting the ore from which the wind-generators and solar panels, are made, machining the parts, transporting and assembling them, feeding and transporting the workers who build them, etc, etc... Plus the raw materials such as plastics and chemicals that are actually made from oil.) These alternatives are all currently much more expensive to produce than oil-based energy.

    The myth is that once the price of oil becomes a lot higher, the alternatives will therefore become relatively cheaper, and therefore viably able to compete with oil. The reality is that there are so many oil-based inputs to making the alternative energy in the first place, that when oil costs 10 times what it does now, then nuclear and biofuels and windfarms and all the rest will also cost almost 10 times what they already do now. In other words, they will still be much less efficient than oil, and still much more expensive than oil. That is, much too expensive for us to be able to continue our current economic growth and way of life.

    And that is not to mention the other inefficiencies with the alternatives. For example it is estimated that to provide the energy the USA now consumes in oil calories by using biofuels (such as ethanol or biodiesel) instead, something like 1/3 of the entire land mass of the USA would be needed to grow the crops. All of the other alternatives, such as wind and solar, have similarly impossible limitations.
  • The problem is not that the alternatives don't produce energy, the problem is that they are nowhere near as cheap or effective an energy source as oil.

    In other words, the energy from them is a lot more expensive than that from oil, and the amount of energy that can be extracted from them is a lot less than from oil. We are used to a certain amount of energy, and we are used to having available increasingly large amounts of energy. After the peak of oil production, there is no possible combination of energy sources that can give us the same vast amounts of cheap (and continuously growing) energy that we have up till now been able to obtain from oil. That means that energy will become increasingly more expensive, and increasingly less of it will be available. That means that ongoing economic growth, as we have come to know it, will no longer be possible.
  • The existence of our modern economy (and way of life) is dependent on ongoing economic growth.

    That means, that once oil peaks, and economic growth is no longer possible, our modern economy will also no longer be able to exist. I have written a separate page about this.

The relationship between the supply of oil and natural gas and the workings of the global financial system is arguably the key issue to understanding and dealing with Peak Oil.
Matt Savinar, lifeaftertheoilcrash.net

  • Most modern people think the incredible developments in science, engineering, knowledge, and technology are what is responsible for our modern lifestyle, but this view is false.

    The discovery of oil, and the energy and raw materials it has provided us with, is what has made possible all of the recent advances in science, engineering and modern technology. Oil has given us vastly increased amounts of cheap, almost free, energy. Having that resource available, we have found things to use it for—such as car and tractor engines, and pesticides. With those, we have been able to do more things, grow more food, and have less people involved in farming and more in thinking about how to find even more uses for all this ever-increasingly-cheap energy. The development of modern technologies has followed in the footsteps of the discovery and production of available energy resources, and oil is the king of all of these.

    Most people in our society are so used to continuous growth that we take for granted new developments in technology—as if growth and newly invented high-tech marvels are as natural as the sun rising in the east each day. Many economists think of alternative energy sources in the same way that they think of everything else. That is, as something that will become viable, profitable, once sufficient investment is poured into it. That is, everything is based on the assumption that all you have to do is focus enough "investment" on something and it is guaranteed to, eventually, grow. But what does that "investment" consist of? Money is the obvious answer, but what does that money represent? It represents real resources, human and otherwise, including, of course, energy.

    Consider a windmill, for example, that is capable of producing a certain amount of kilowatts of energy for a certain amount of cost of inputs (research and development, raw materials, construction, etc). There is no law of nature that says that increasing the amount of those inputs will automatically increase the amount of energy the windmill can produce per unit cost, and keep on increasing it, on an ongoing basis, until it can compete with oil as a cheap, cost-effective energy source.

    Putting effort into something (even with the benefit of modern science) does not automatically imply that growth and energy will magically come out of it. People are used to thinking that enough "development" of something will allow it automatically to "grow", without realising that it is the continual growth we have had in our underlying basic energy supply that has allowed us to get used to that way of thinking.

No techno-messiah is going to save us from the coming crisis. Technology doesn't produce energy. Technology uses energy. Energy comes before technology. Without energy, [modern] technology is useless junk.
Matt Savinar, lifeaftertheoilcrash.net

  • Any viable non-oil energy source, even if there was one, would require incredible amounts of changes to existing infrastructure.

    That means absolutely massive amounts of investment in new forms of both energy-producing and energy-using technology. Yet, there will be no economic incentive for this to happen until the oil shocks really start to hit. Once the oil shocks really start to hit, new investment (that is, growth) will be essentially impossible. The economy will at best be permanently contracting and at worst be in complete anarchy/chaos. We won't even be able to keep up our modern energy-intensive systems of food production and supply, let alone manufacture millions and millions of new post-oil-high-tech car engines, jet engines, tractors, fertilisers, and so on.
  • Even if peak oil did not exist, (and even if there was an alternative to oil that could possibly be developed and implemented before all the stock markets crash, and even if maintaining growth of our energy supply was not about to become impossible) there are many other critical resources that are being depleted, and the limits of human consumption and growth, on a planetary scale, are around this time also peaking.

    I will list some of these on a separate page also, sometime later on. Some examples of these are: Globally we are running out of fresh water, topsoil, forests, ability to produce food (even with current levels of oil consumption, global grain production appears to have peaked during the 1990s and is now in decline), and several mineral and other resources critical to our modern way of life. It appears likely that natural gas has peaked in North America, meaning that it will be basically impossible for the USA and Canada to grow their economy any more, even aside from oil and other issues. There is also climate change (global warming), the emergence of plague diseases (e.g. the little known fact that somewhere between 1/6 and 1/3 of the entire world's population is currently infected with the tuberculosis bacillum), and other factors. Although we will never see more than a fraction of a percent of the real extent of this problem on TV, most of the world's scientific community is in full agreement with this view.
  • It is essentially impossible for the mass media to adequately address, or to realistically inform the public of, this problem.

    The reason for this is that the message of peak oil (and the other issues we are facing), its ramifications, and all of its realistically possible solutions are anti-corporate, anti-big-business, anti-economic-growth, anti-profits-for-shareholders, anti-share-price-benefit, anti-advertising-revenue-generating, anti-votes-for-politicians-generating, and so on.

    Another way of saying this is that, due to the way that our economic system works, if complete knowledge of the upcoming crash was reported in the mass media, it would only bring the crash on faster. This unfortunate paradox means that the situation we are all facing can never be reported even remotely close to adequately by the media.

    The influence that the mass media has on the collective consciousness of our society is awesomely powerful. Most people in Western society truly think that if something is not being reported on TV (and/or in the other media), then it cannot be real. The effect of this is that if anything actually is true and real, and not reported in the media, then anyone who does possess knowledge of that thing will be (at least in respect to that particular knowledge) isolated from the community at large. They will be continually faced with the psychological effects that follow from most/all other people around them in everyday life simply not being able to believe in that thing (because they are not seeing it on TV). This is probably the biggest reason why knowledge of peak oil and the other environmental problems and their implications has (so far) been limited to a small percentage of the population. Even when that small percentage includes most of the world's nobel prize winners.

    Some people object to the idea that our media could really forget to tell us about something this important. The resoning goes that anything this important would surely talked about in the media by someone, just because it is so important, even if it does not make money for anyone. The reality is that it costs a heap of money to give something exposure in the mass media. It's not a matter of anyone being evil or deceptive or involved in some kind of weird conspiracy. It's just a simple matter of cost. Who is going to pay for it? Who is going to spend the hundreds of millions of dollars (if not billions) that it would take to bring this kind of information to the level of public awareness that it deserves? Someone has to pay for it before it can possibly happen. Who is that going to be? Me? You? The company you work for? (Try asking your boss perhaps.) Its not that there must be a "conspiracy", it's just that there is no mechanism for public awareness to happen. Therefore it's not going to happen. (Until, perhaps, it is already completely obvious — though even then, it is likely that the problems will be blamed on something else entirely. Which will most likely be something that could motivate people to spend more money, or vote, or fight in some war, etc... i.e. a politically or financially motivated reason.)

    If you still have any doubt about whether the media would really neglect to tell us about something this important, assuming it was really true, click here.

The practical outcome of all of this is that the modern way of life we have all become accustomed to is about to change on a major scale. This website (along with many others on the internet) is an attempt to help people to come to terms with these changes, and to take appropriate action in response.

What is Peak Oil?
The End of Suburbia (Video)
The Power of Community: How Cuba Survived Peak Oil (Video)
World Scientists' Warning to Humanity
Why the Global Economy is About to Crash
What To Do About the Upcoming Economic Crash
Arithmetic, Population and Energy Video
What A Way To Go: Life at the End of Empire (Video)
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