What is Peak Oil?
Simply, peak oil is the point at which global oil production (measured in barrels per day) is at its maximum. After this point production will inevitably decline over time.
Is oil running out?
Peak Oil does not mean that oil is running out. On the contrary, there is lots of oil and other related fossil fuels left in the ground, but they are getting increasingly difficult and therefore expensive to recover. It is likely that we will never actually run out of oil. Instead the last oil in the ground will remain there because it will be too expensive and too difficult to extract.
But I heard that we’ve got reserves to last for hundreds of years!
It’s true that there are a lot of fossil fuels left in the ground; however not all fossil fuels are the same. It’s like the difference between trying to get the same amount of calories from a bottle of coke, a thick milkshake, and a lump of toffee dropped on a beach and covered in sand.
The oil we’ve mostly used so far to build our global industrial economy is like the bottle of coke, at first it comes out under pressure, literally bursting up the pipes, then once the pressure has released we have to suck it up, but it’s relatively easy, and the rate of production is high.
Now a lot of the oil we use is thicker, heavier, like drinking the thick milkshake with a straw, it needs better technology to suck it up from the ground, and more refining to turn it into the petrol etc that we use it for. Because it’s harder to extract, we can’t pump so much per day, the flow rate is reduced and it’s more expensive.
Now when people say we’ve got hundreds of years of supply left, often they are referring to the oil sands of Canada and other places. These are like the sand covered toffee. To start with they’re not liquids at all, but thick sandy tar. These require a huge amount of effort to dig them up, clean them, and convert them into useful substances. All of which uses vast amounts of water, and natural gas to do so, and one of the end results is terrible pollution. It also means that the rate at which we can produce them is very low.
Oil shale is another term you might hear. This is misleading as it isn’t actually oil at all, but something called kerogen. Oil is normally formed under great heat and pressure underground, and kerogen is made up of the ingredients of oil that haven’t yet been through this process. So we have to do the cooking ourselves to turn the kerogen into oil. This uses a lot of energy in the process, and like tar sands, the amount we can produce is limited and the environmental effects disastrous.
Big reserves of oil aren’t so important, what’s important for keeping our economies and infrastructure running is the rate at which you can extract them and that is what will soon be declining as we start sliding down the slope of peak oil.
It’s like having a million pounds in the bank, and only being allowed to withdraw ten pounds each month, it doesn’t help much if your monthly rent is £500.
Why will the production go down if there’s still a lot left?
When we extract any resource, it’s natural that we go for the easy to reach deposits first. Then as we get better at extracting them, and technology improves, we are able to reach deposits that previously would have been impossible. Eventually however we run out of the easy to reach deposits, and have to rely on the more difficult and expensive ones.
Imagine you’re digging into a big box of sweets. At first all your favourites are at the top, so you can easily get at them. After a short while you have to start digging around a bit below the top layer to find them, but there’s still lots left, so you can keep on munching away without too much difficulty. Eventually you have to dig around at the bottom, trying to find the one or two stray favourites hidden beneath the mountain of (in my own case) coffee creams. The effort required to satisfy your sweet tooth has gone up considerably, and you might even give up without finding the last few.
Compare this to oil. To begin with we found deposits that were near the surface that could be easily extracted with the simple early technology (think of the old wooden oil wells across Texas). Then we had to dig deeper, and explore more widely to find the oil and the technology needed increased dramatically in complexity. Now, all that nice easy oil has gone, and we are reduced to using hugely expensive drilling rigs, searching miles beneath the sea for a few small deposits of oil.
When will production begin to decline?
M. King Hubbert, first predicted in 1956 that US oil production for the 48 states would peak in 1970. Despite the ridicule he received, his prediction turned out correct. He also predicted a world-wide peak around 2000. If it had not been for the politically driven oil crisis of the 1970’s which kept a lot of production off the market and encouraged consumers to save oil, he might well have been spot on. As it is, it looks like he was only a few years out with his prediction.
The majority of experts today are now suggesting that the peak either already happened in 2008, or that it will do within the next few years. Since 2005, oil production has been flat, neither increasing or decreasing, despite increasing prices. This is because the production decline from old fields has been offset by production on new fields. As more and more old oil fields begin to decline, the new production will no longer be able to offset this decline, and overall production will drop.
I’ve read the term EROEI, what does this mean?
EROEI stands for Energy Returned Over Energy Invested, basically it’s a measure of energy profit. In the early days of oil production, the EROEI was around 1:100. For every barrel of oil invested in oil production, we received 100 barrels back – a healthy profit indeed. Now, as oil gets harder to find, it’s estimated (it’s very difficult to calculate exactly) that the EROEI for new discoveries is probably around 1:20, still good, but nowhere near as good as it was. For the tar sands and other ‘unconventional’ oil, the EROEI could be as low as 1:5 or even 1:2, which is getting to the point where it is no longer feasible to extract it. If the EROEI falls to anywhere near 1:1 there will be no point in extracting it, because there will be no net energy gain.
As we’re gradually obtaining less energy profit from our oil production, then this means we have less left over to run everything else that we use it for. To a certain extent this can be seen in the way that oil exports have been declining since 2005, despite the fact that total oil production has been flat.
What are the implications of peak oil?
There are many possible effects of declining oil production, some positive (less global warming?) and some negative. Opinions vary from the blindly apocalyptic: “We’re all DOOMED!” To blind optimism: “We don’t need oil, we’ll just switch to electric cars!” Predicting the future accurately is difficult, however declining oil production is likely have huge impacts on the worldwide and local economy and we need to prepare ourselves now.
There are too many potential effects to go into detail here, but some of the possible outcomes, and a few of their solutions are below.
Many peak oil aware experts correctly predicted the economic crisis of 2008 (as world oil prices reached a record high). Moving forward it is likely that any economic recovery will cause oil demand and therefore prices to rise again. Those high oil prices will then again limit the recovery, almost certainly leading to another, deeper recession. Further credit crunches are likely to be a direct consequence of peak oil.
This is why transition towns elsewhere are looking at ways of boosting local economies, with schemes designed to keep trade flowing locally. Local currencies and bartering systems (look up Reading LETS for a local one!) are just two ways of dealing with the economic impacts of peak oil. What do you think we could do locally? Would you like to see a local currency?
Oil provides 90% of the world’s energy requirement for transportation, therefore as oil production declines, goods will be harder and more expensive to transport over long distances.
Because of this we won’t be able to rely so much on goods made oversees in the future, so rebuilding local production and trade is important as we move forward. Local craftspeople, local food production and low energy means of transport are all going to help. Something as simple as an allotment, a bicycle or learning a new skill such as carpentry might make us as individuals more resilient to this.
Even if you don’t have a skill, or somewhere to grow your own food, there’s probably someone living close who does, so making and strengthening connections in our local communities is a big step forward in coping with the challenges of peak oil. Happily, stronger community links tend to make people happier, and less prone to depression, so despite the huge challenges we face, all this peak oil preparation could end up putting smiles on our faces.
Our food supply is also very reliant on oil and other fossil fuels for fertilisers, pesticides, running farm machinery, packaging, and last but definitely not least, transport (think of all those supermarket lorries you see on the motorway, and the empty shelves during the recent truckers strike. This means we will need to revert to more organic methods of production, involving more manual labour, just like we used to. We’ll also need much more local food production. Think of the victory gardens in the Second World War, and think legumes, not lawns!