Peak Oil is coming, it's great neon claws flexing to rend us asunder. Can it really be as bad as is made out on LATOC (as he likes to call himself in a way very reminiscent of the U.S. government and their endless acronyms)?
To precis the site:
Economically viable oil production - including R&D, exploration, drilling, processing and distribution - operates on a bell curve, because supply is limited. Once all the easy to find oil runs dry, the ROI goes down when we go looking for harder to find oil. That exploration requires greater investment (and remember wealth equates to oil, so it's investment of oil), which means we need more oil than before.
However the global economy that runs on oil operates on a linear growth curve, because our systems of finance require growth to in order to define wealth. Credit lending institutions need to know that their debtors will be able to pay them back. That they can pay back is dependent on an increase in wealth value of the debtors economy. America right now is a good example - even conservative papers like the Observer are running stories (Sunday 11.11.07) about the inevitable decline of US global power, as it is linked to the US economy which cannot maintain the confidence of its creditors, like China.
Two vicious cycles par excellence!
So the oil crash will happen because as we hit the down slope of the oil bell curve, our economy will still be trying to go up, and it will struggle higher and higher until it stalls and crashes when oil becomes prohibitively expensive to meet world demand.
The question is - has this become inevitable? Can we segue out of the global oil economy into one that runs on another energy source - while maintaining economic growth and our current standard of living?
In the LATOC website, Matt Savinar makes some very persuasive arguments to the effect that we cannot. One could find it quite easy to be persuaded, go outside to a hill somewhere and start building a bunker and a homemade wind turbine (actually not that hard to do). On the other hand, you could put your trust in the powers that be to implement renewable alternative energy paradigms for the global economy to run on, before it's gone; then you could invest in these energy types on the ground floor, so to speak, and become filthy rich (the catch - if the energy changeover doesn't happen or work, all money will become worthless, so investment as we know it will have been meaningless).
I'd like to diverge from my standard model of pontificating and then wrapping up, in order to open the floor and ask - which option would you go for, or would you suggest another? Maybe after a little to and fro, I'll be inspired to make up my own mind!
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7 comments:
A peak in oil production is inevitable, and I think it's exceedingly likely that it will happen within three to five years, if it turns out that it hasn't happened already. For a lot more on this, see my presentation The Oil Crunch (pdf):
http://www.grinzo.com/energy/downloads/theoilcrunch09x20x2007.pdf
Don't get your knickers in a twist about this. They've been predicting peak production for years yet reserves are still growing exponentially (the first part of the graph). Even old reserves have been observed to replenish, and the Russians have been doing deep drilling for decades to find even more oil straight from the core of the earth...
To me there are many flaws with the Peak Oil theory, but it's the motives that give the game away. This kind of sensationalist website is only a way to get you to accept the high-prices of the oil cartels.
If people were really worried about this, they'd stop burying legitimate research into alternative/free energy... instead they promote equally expensive energy sources that are easy to control (hydrogen fuel cells anyone?)
Frankly, this kind of mainstream pseudo-science is leading us towards a scientific dictatorship... (But then again, it fits in nicely with the rest of the police state that everyone seems to be accepting slowly.)
Perhaps the problem is even deeper than just sensationalism and justification of oil high prices. I tend to believe that the problem is real, and even if other oil reserves are found, they are still finite. If we don't do something about finding alternative energy resources, we're going to be in trouble soon.
One reason why the research in alternative energy is still buried might be because the large oil cartels that currently control the whole economy do not have any interest what so ever in making the research public, their main interest is to make as much profit as they can, and the situation certainly permits them as it is now. The real question is how long would they be able to stretch the global economy and grow the price of oil as they please before it collapses...
Besides, I think that nobody in their right mind wold just stand around and do nothing, waiting for this natural resource to be depleted. They probably have large investments in research, but for now it suits well their purposes to keep it quiet. Then when the time, comes, they will be able to still be in control and they will own the new alternative energy sources.
I think there is one glaring reason to believe in peak oil and that something is being done by the ruling classes (as opposed to people just sitting back and letting it happen). That is quite simply the lengths to which America has gone in the last 10 years to seizing oil reserves around the planet (and also uranium, which will become much more important as oil prices continue to increase...possibly the reason why the new French government, France is dependent on nuclear energy, is so eager to be part of the invasion of the oil and uranium rich Iran).
Just look at what has been happening globally. Just think back to Bush's first few months in power...he had a constant refrain "Energy crisis". I remember this clearly, he repeated it again and again in speech after speech (check it out if you don't believe me).
This was until 911 (I wont open that can of worms) and suddenly Afghanistan is captured and access to Caspian sea oil is secured, and then Iraq and oil reserves there are secured.
It is becoming increasingly likely that Iran is next (as I say they have large oil and uranium reserves).
Currently we are seeing some of the consequences of the increasing price of oil. The prime mortgage collapse for instance. This could be the beginning of a credit crunch. When loans are given on the prediction that over the next 20 years the economy would continue to grow, imagine the effect of large increases in the price of oil (which we are seeing). Suddenly a lot of loans are no longer viable...this has a knock on effect (just as rising oil prices has a knock on effect on every aspect of production).
So, for those nay sayers who believe that peak oil isn't happening, maybe you also believe there were WMD in Iraq, that there is an evil organisation that spans the world called al qaeda who wish to "destroy our freedoms" and whatever other line seems to justify the current resource grab the west (headed by America) is engaged in.
The way America views the few dwindling oil reserves that provide fast cheap oil is, its them or us. Us being the good guys, and them being anyone else. Who would you rather have controlling cheap accessible energy reserves? I cant say for sure, although under American hegemony things haven't been all that bad and Iran has threatened to nuke Israel. So, while cheap energy is there, someone has to use it (hence the lack of investment in more expensive alternatives)...take your pick who that is.
Thanks to all who commented so far. Alex: not sure which Alex this is?
"the Russians have been doing deep drilling for decades to find even more oil straight from the core of the earth"
The core of the earth? Surely you jest. Wouldn't it be nice if the centre of the world was made of oil (though not for the environment), but I fear the pressure is too great for oil to exist at any such depth.
I have to agree with most of what Kris is saying here. The problem with oil is not that there isn't vastly more of it waiting to be tapped, but that the cost of doing so will rise and rise until eventually it isn't viable to run any kind of economy on it. Peak Oil is about function, not existence. We will survive any crash, and may be better off in the long run. Any debate is simply about counting the dwindling of the supply/cost vs demand ratio, and comparing that with the political will, extant capital and available technologies to find a way to escape that dwindling ratio.
An oil crash is not inevitable. It is just that the more cynical among us refuse to believe that the 'powers that be' have any wish to do what could be done to prevent it, while the rest of humanity just isn't that interested, or awake, yet.
Although I don't agree with most of what Alex has said, I do agree that it is very difficult to tell where one is on the graph, and at the moment I don't see any firm evidence to assume we're close to the peak. Remember when the oil scares began in the 1970s and the 1990s were predicted to be the collapse of the oil economy? It didn't happen.
I believe we often underestimate the energy companies - they don't want to lose their cartel status, and I believe they have the capacity to adapt to the problem if they are given a sufficient nudge.
Part of the problem is the solutions that would work are politically undesirable while nations are still interested in invasion as a means of securing resources... One cannot build a global energy infrastructure and still have the intent to conduct war on the global stage.
We need to exert pressure in two places: on the energy companies, who can be swayed by consumer action, and the governments, who can be swayed by citizen action. Investment from governments may be needed to offset the cost of the new energy infrastructure - although it may be that the energy companies are wealthy enough we can just force them to foot the bill. I have my doubts about this, though.
Ultimately, I think we can dodge the bullet on this one: forewarned is forearmed.
Best wishes!
Chris: All the oil scares before were due to localised production dips that affected the U.S. - and the scare was because the knock on effect is always great when anything affects the U.S. economy.
I just don't think the paradigm of the global economy is controllable. Nobody has the reigns, and in such a situation all any one party can do is try to make as much out of their situation as possible. I mean, the ideal course of action would be to slow economic growth to give ourselves time to sort out all the messes we're in. But slowing is inimicable to the very nature of the global economy - for the powers that be to even mention it as a possible course would destabilise the markets.
Real wealth equates to energy, but monetary wealth equates to the perception of growth. The world's capital is locked into an expansionist economic strategy - it must expand to survive. Consume and produce more consumables = the means and the end.
How can we break out of that in time?
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