User:Kgrr/Sandbox/Peak oil



According to Hubbert peak theory, peak oil is the date when the peak of the world's conventional petroleum (crude oil) production rate is reached. After this date the rate of production is predicted to enter terminal decline, following the bell-shaped curve predicted by the theory. Some observers such as Kenneth S. Deffeyes, Matthew Simmons, and James Howard Kunstler believe that because of the high dependence of most modern industrial transport systems on inexpensive oil, the impending post-peak production decline and possible resulting severe price increases will herald negative implications for the future outlook of the global economy.

M. King Hubbert, who devised the theory, predicted in 1974 that peak oil would occur in 1995 at 12-GB/yr "if current trends continue".

Because of world population growth, oil production per capita peaked in 1979 (with a plateau 1973-1979).

Supply
Oil is a finite, non-renewable resource.

The rate of oil 'production,' meaning extraction and refining (currently about 84 million barrels/day), has grown in most years over the last century, but once we go through the halfway point of all reserves, production becomes ever more likely to decline, hence 'peak'. Peak Oil means not 'running out of oil', but 'running out of cheap oil'.

About 70% of the world’s petroleum comes from only 370 giant fields, dubbed "elephants" because they are so huge. In part because of their size, the elephants were easy to find and inexpensive to produce. The discovery rate for elephants peaked in the 1960s. It’s getting more and more difficult to find new ones, even with new technology.

Reserves
The Mideast remains the largest oil-producing region.

Demand
The U.S. Department of Energy categorizes national energy use in four broad sectors: transportation, residential, commercial, and industrial. In the United States, in contrast to other regions of the world, about 2/3 of all oil use is for transportation, 1/5 goes to industrial uses, and the remainder goes to residential, commercial and electric energy production.

Transportation
Because most oil is consumed in transportation, approximately 66.6% in the United States and 55% worldwide, much of the discussion regarding mitigation of the effects of oil depletion center around the development of transportation that uses less oil.

There are many forms of transportation that do not require oil or require much less than the standard automobile. Today, these include the application of public transport, biofuels, high mpg hybrid vehicles, bicycles, diesel vehicles, battery electric vehicles, and plug-in hybrid electric vehicles. Hydrogen vehicles such as General Motors Sequel are also being developed, although hydrogen fuel would need to be sourced from hydrocarbons (oil) or water (requiring a greater energy input than that generated by combusting the resulting hydrogen). Because America uses 1 out of every 4 barrels of global oil consumed and uses 66.6% for transportation, it uses roughly 17% of global oil consumption for transportation and is potentially the largest market for any new type of vehicle. However less than 30% of personal auto expenditures in 2003 were on gasoline and oil as compared with over 40% in 1980 and personal use is just one component of overall transportation.

More comprehensive mitigations include better land use planning through smart growth to reduce transportation inducements, increased capacity and use of mass transit, vanpooling and carpooling, bus rapid transit, telecommuting, and human-powered transport from current levels. Rationing and driving bans are also forms of mitigation. In order to deal with potential problems from peak oil, Colin Campbell has proposed the Rimini protocol.

Population
Population growth is causing an increase in oil demand.

Industrialization
Nations industrializing causes an increase in oil demand.

Implications of an unmitigated world peak
According to the Hirsch report prepared for the U.S. Department of Energy in 2005, a global decline in oil production would have serious social and economic implications without due preparation. Initially, an unmitigated peak in oil production would manifest itself as rapidly escalating prices and a worldwide energy crisis. While past oil shortages stemmed from a temporary insufficiency of supply, crossing Hubbert's Peak means that the production of oil continues to decline, so demand must be reduced to meet supply. If alternatives or conservation (orderly demand destruction) are not forthcoming, then disorderly demand destruction will occur, with the possible effect that the many products and services produced with oil become scarcer, leading to lower living standards. Shipping costs are particularly relevant to a country like Japan that has greater food miles. US indications of economic volatility have manifested themselves in the largest increase in inflation rates in 15 years (Sept. 2005), due mostly to higher energy costs. Oil industry analyst Jan Lundberg proposes a dark scenario called petrocollapse. Contrasting views note that most uses of oil, from plastics to transportation fuels, have substitutes.
 * Air travel, using roughly 7% of world oil consumption, would be one of the affected services. The energy density of hydrocarbons and the power density of a jet engine are so necessary for aviation that hydrocarbon fuels are nearly impossible to replace with electricity, to an extent beyond any other common mode of transport.
 * A US Army Corps of Engineers report on the military's energy options states
 * Shipping costs
 * Increasing cost of oil for importing countries ultimately reduces those countries' purchase of non-oil goods abroad. The Federal Reserve Bank of San Francisco discusses oil and the US balance of trade:
 * Significant oil producing countries will have a national purchasing advantage over similar countries with no oil to sell. This can result in larger militaries for oil producers or inflation of the price of whatever commodities they purchase. Saudi Arabia purchased US$40 billion worth of arms from the US between 1990 and 2000.
 * The United States averaged 464 gallons of gas per person in 2004. Therefore, increased gasoline cost will make gas reducing alternatives popular for lower income US residents.

Mitigation
The effects of peak oil can be mitigated through conservation and finding alternatives.

Conservation
Oil can be conserved in a number of ways.

Alternatives to conventional oil
Of the currently available alternatives to oil, the most viable ones are:
 * renewable energy sources (solar, wind, hydro, tidal, geothermal, wave, ocean thermal)
 * ethanol fuel
 * butanol fuel
 * biodiesel
 * tar sands
 * oil shale
 * coal liquefaction
 * gasification
 * nuclear energy (fission or fusion)

One near-term alternative source of liquid fuel is the Athabasca Tar Sands in Alberta, Canada. Production from this source is around 1 mbbl/day as of 2006, and is expected to build up to 3.2 mbbl/day by 2015. New technology has drastically reduced the cost of extracting oil from this source. The current extraction process, however, requires large inputs of natural gas and fresh water. The figure for recoverable reserves from this source was around 180 billion barrels as of mid-2005 (cf. the Saudi Arabian reserve of about 260 billion barrels of conventional oil). A similar field, the Orinoco tar sands in Venezuela, is also being exploited. These two are the largest known fields of tar (i.e., bitumen) sands.

Even in 2005, before further dramatic techological improvements in the ease of extraction, the potential of oil shale in the US is discussed by a RAND study: Synthetic fuel, created via coal liquefaction, requires no engine modifications for use in standard automobiles. As a byproduct of oil embargoes during Apartheid in South Africa, Sasol, using the Fischer-Tropsch process, developed relatively low-cost coal-based fuel. Currently, about 30% of South Africa's transport-fuel (mostly diesel) is produced from coal. With crude-oil prices above US$40 per barrel, this process is now cost-effective.

Peak oil production—has it happened already?
Matthew Simmons, Chairman of Simmons & Company International, said on October 26, 2006 that global oil production may have peaked in December 2005, though he cautions that further monitoring of production is required to determine if a peak has actually occurred.

In State of the World 2005, Worldwatch Institute observes that oil production is in decline in 33 of the 48 largest oil producing countries. Other countries have also passed their individual oil production peaks.

World oil production growth trends, in the short term, have been flat over the last 18 months. Global production averaged 85.24 mbbl/d in 2006, up 0.76 mbbl/d (0.9%), from 84.48 mbbl/d in 2005. Production in Q4 2006 was 85.38 mbbl/d, up 1.09 mbbl/d (1.3%), from the same period a year earlier. Average yearly gains in world oil production from 1987 to 2005 were 1.2 mbbl/d (1.7%), with yearly gains since 1997 ranging from -1.4 mbbl/d, (-1.9%; 1998–1999) to 3.3 mbbl/d (4.1%; 2003–2004).

Of the largest 21 fields, about 9 are already in decline.

Mexico announced that its giant Cantarell Field entered depletion in March, 2006, as did the huge Burgan field in Kuwait in November, 2005. Due to past overproduction, Cantarell is now declining rapidly, at a rate of 13% per year. In April, 2006, a Saudi Aramco spokesman admitted that its mature fields are now declining at a rate of 8% per year, and its composite decline rate of producing fields is about 2%, thus implying that Ghawar, the largest oil field in the world, has peaked.

Many commentators have pointed to the Jack 2 deep water test well in the Gulf of Mexico, announced September 5, 2006, as evidence that there is no imminent peak in global oil production. The Jack 2 field may have the potential to provide nearly 2 years of U.S. consumption at present levels. Peak oil theory, however, does not suggest that there will be no major oil finds in the future, but rather that new discoveries and new production will not be able to offset depletion in other parts of the world.

Increasing investment in harder to reach oil is a sign of oil companies' belief in the end of easy oil: The "harder work" mentioned has, however, already displayed the potential to unlocking crude oil measured in the trillions of barrels. Chuck Masters of the USGS says:

This "harder work" has failed, however, to either significantly increase the actual production of oil globally, or to significantly reduce the price of oil. This paradox&mdash;between theories of how to extract untold trillions of barrels of oil with stagnant actual oil production&mdash;highlights the core of peak oil theory: peak oil does not mean that we will run out of oil, or even that we will cease to make major oil discoveries, but rather that we will be unable to maintain current levels of oil production.

Oil price
In 2004, 30 billion barrels of oil were consumed worldwide, while eight billion barrels of new oil reserves were discovered in new accumlations, a number which excludes reserve growth in existing fields. In August 2005, the International Energy Agency reported global demand at 84.9 million barrels per day, resulting in an annual demand of over 31 billion barrels. This means consumption is now within 2 Mbbl/d of production. At any one time there are about 54 days of stock in the OECD system plus 37 days in emergency stockpiles. In June 2005, OPEC admitted that they would 'struggle' to pump enough oil to meet pricing pressures for the fourth quarter of that year. The summer and winter of 2005 brought oil prices to a new high (not adjusted for inflation). On the other hand, some analysts attribute much of this new high to disruptions caused by the war in Iraq.

An oil price chart can be seen here.

Market economy versus government
Part of the current debate revolves around energy policy, and whether to shift funding to increasing energy conservation, fuel efficiency, or other energy sources like solar, wind, and nuclear power. For example, in the USA Rep. Tom Udall at congressional peak oil hearings:

For the United States investments like FreedomCAR, Hydrogen Fuel Initiative and a DOE loan guarantee program are driven by Hubbert peak theory applied to US peak production as well as global peak predictions. In China and Japan lack of native oil resources may also overshadow the world peak. In Europe initiatives such as Renewable Transport Fuel Obligation are marketed more in terms of the environment.

The Congressional Budget Office provides debate of government research versus incentives:

A warning of the level of incentive required for market driven research and development is stated by Rogner:

The problems of privately funded research and development, especially that funded by venture capital, are not unique to peak oil mitigation.

The severity of the problem for energy is echoed in the International Energy Agency's latest report

In the US, transportation by car is guided more by the government than by an invisible hand. Roads and the interstate highway system were built by local, state and federal governments and paid for by income taxes, property taxes, fuel taxes, and tolls. The Strategic Petroleum Reserve is designed to offset market imbalances. Municipal parking is frequently subsidized. Emission standards regulate pollution by cars. US fuel economy standards exist but are not high enough to have effect. There is also a gas guzzler tax of limited scope. The United States offers tax credits for certain vehicles and these frequently are hybrids or compressed natural gas cars, see Energy Policy Act of 2005.

In order to be profitable, many alternatives to oil require the price of oil to remain above some level. So investors in these alternatives must gamble with the limited data on oil reserves available. This imperfect information can lead to a market failure caused by a move by nature; for instance see Hotelling's rule for non-renewable resources. Even with perfect information the price of oil correlates with spare capacity and spare capacity does not warn of a peak:

This problem might be solved by the government establishing a price floor for oil. A tax shift raising gas taxes is the same idea. Opponents of a price floor for oil argue that the markets would distrust the government's ability to keep the policy when oil prices are low.

Oil production per capita
Because of world population growth, oil production per capita peaked in the 1970s. It is expected that worldwide oil production in the year 2030 will be the same as it was in 1980. The world’s population in 2030 is expected to double from 1980 and much more industrialized and oil-dependent than it was in 1980. Consequently, worldwide demand for oil will significantly outpace worldwide production of oil.

Some physicists maintain that the non-sustainability of oil production per capita was not addressed due political correctness implications of suggesting population control. Others say the peaking wasn't noticed due to global socioeconomic inequality.

Prediction

 * Backstop resources
 * Matthew Simmons
 * Lawns To Gardens
 * Oil reserves
 * Abiotic oil
 * Hirsch report
 * Ehrlich-Simon bet
 * Energy conservation
 * Energy crisis
 * Olduvai theory
 * Limits to Growth
 * Global strategic petroleum reserves
 * Energy: world resources and consumption

Economics

 * Gross domestic product per barrel
 * 1973 energy crisis
 * 1979 energy crisis
 * 1990 spike in the price of oil
 * Oil price increases of 2004-2006
 * Petrodollar
 * OPEC
 * Iranian Oil Bourse
 * Biophysical economics
 * Kuznets curve
 * Low-carbon economy
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Technology

 * Energy conservation
 * Energy efficiency
 * Energy development
 * Fuel economy
 * Renewable energy
 * Nuclear power
 * Tar sands
 * Fischer-Tropsch process
 * Karrick process
 * Future energy development
 * Soft energy path
 * Energy: world resources and consumption

Others

 * Proposed Oil phase-out in Sweden
 * Overpopulation
 * Special Period - Events in Cuba in the 1990s following the withdrawal of cheap Soviet oil exports.
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Web sites

 * U.S. Energy Information Agency Petroleum Data
 * Association for the Study of Peak Oil
 * PeakOil.com
 * Wolf at the Door Beginner's Guide to Peak Oil
 * Oil Depletion Analysis Centre in the United Kingdom
 * PowerSwitch in the United Kingdom
 * Energy Bulletin Peak Oil related articles
 * Peak Oil in the News Daily round-up of Peak Oil news
 * The Oil Drum Discussions about Energy and our Future
 * TrendLines' current Peak Oil Depletion Scenarios Graph A monthly compilation update of 16 recognized estimates of URR, Peak Year & Peak Rate
 * Carbon War
 * Energy Supply page at The Global Education Project Charts and graphs on current energy reserves and use, and peak oil.
 * Culture Change - life after the peak.
 * Post Carbon Institute to assist communities in the effort to Relocalize and adapt to an energy constrained world.
 * From The Wilderness original peak oil reporting
 * Life after the crash Deal With Reality or Reality Will Deal With You
 * Oil Protocol A plan for a sensible energy future]
 * Solutions for food, housing and transportation

Books

 * Colin J. Campbell,
 * Kenneth S. Deffeyes,
 * Richard Heinberg,
 * Rashid, Ahmed,
 * Kenneth S. Deffeyes,
 * Richard Heinberg,
 * Rashid, Ahmed,
 * Richard Heinberg,
 * Rashid, Ahmed,
 * Rashid, Ahmed,
 * Rashid, Ahmed,
 * Rashid, Ahmed,
 * Rashid, Ahmed,
 * Rashid, Ahmed,
 * Rashid, Ahmed,
 * Rashid, Ahmed,
 * Rashid, Ahmed,
 * Rashid, Ahmed,
 * Rashid, Ahmed,

Online videos

 * Informative and brief (12 minute) Australian video about the problem
 * Peak Oil: brief overview slide show by Powerswitch.org.uk
 * Peak OIl? ABC (Australian Broadcasting Corporation) -- excellent, balanced presentation. It includes interviews with Colin Campbell,  Robert Hirsch,  Chris Skrebowski, and others.
 * Arithmetic, Population and Energy. Dr. Albert Bartlett (Both video and MP3 available. A transcript is also available)
 * A post-oil man. A humorous (?) look at preparing for peak oil.
 * Roscoe Bartlett explains peak oil in US Congress

DVDs

 * What a Way to Go: Life at the End of an Empire (2007)
 * Oil Crash (2006)
 * Oil, Smoke & Mirrors (2006)
 * Peak Oil: Imposed by Nature (2005)
 * The End of Suburbia: Oil Depletion and the Collapse of the American Dream (2004)

Articles

 * John V. Mitchell (Associate Fellow Chatham House, London): A New Era for Oil Prices; 32 Pages, August 2006
 * The Future of Oil from Foreign Policy
 * The End of Cheap Oil — Colin Campbell & Jean Laherrère, Scientific American
 * International Energy Agency press release
 * The End of Oil? — Mark Williams, MIT Technology Review
 * The End of Cheap Oil — Tim Appenzeller, National Geographic
 * The New Pessimism about Petroleum Resources — Michael C. Lynch
 * Peak Lite — Robert Rapier
 * Oil shale back in the picture — Robert E. Snyder
 * Paul Roberts, "Last Stop Gas", Harper's Magazine, August 2004, pp. 71-72
 * 'Sweden aims to be world's first oil-free nation by 2020' - Larry West
 * BBC News: 'Peak oil' enters mainstream debate
 * Between Peak Oil and Climate Change Dan Welch at The Peakist examines the implication of the peak oil crisis for climate changes
 * Actions everyone can take to prepare for the possible end of an era - Donna Mosher, Citizens League for Environmental Action Now 
 * Peak Oil & Aviation
 * Actions everyone can take to prepare for the possible end of an era - Donna Mosher, Citizens League for Environmental Action Now 
 * Peak Oil & Aviation

Reports, essays, and lectures

 * Roscoe Bartlett explains peak oil in US Congress
 * Review: Oil-based technology and economy - prospects for the future The Danish Board of Technology (Teknologirådet)
 * Peakoil conference 19-20 October 2004
 * Rep. Prof. Roscoe Bartlett's hour long Peak Oil presentation to (an empty) U.S. House of Representatives
 * An Introduction to Peak Oil by Jim Bliss
 * David Holmgren talks about Peak Oil and Permaculture (July 28, 2004) [archive.org]
 * Trends in Oil Supply and Demand, Potential for Peaking of Conventional Oil Production, and Possible Mitigation Options: A Summary Report of the Workshop (2006), National Research Council
 * The End of Oil, essay 1.pdf, very concise peak-oil study by Bob Lloyd, July 2005
 * Peak Oil Theory – “World Running Out of Oil Soon” – Is Faulty; Could Distort Policy & Energy Debate

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