Peak Oil: An alternative perspective
by Peter BrayMarch 13th, 2006 at 22:25:00
The peak oil stuff keeps coming up again and again. As an environmentalist, I am of course attracted to any argument and fact that might reduce consumption of CO2-producing fossil fuels and promote local economies.
However, despite this, I cannot help but seriously question the underlying science and logic of peak oil. Whether or not peak oil occurs in the near-term (the Club of Rome mis-predicted the same thing several decades ago) is probably unimportant. Why?
- Petroleum accounts for only a fraction of total energy production;
- Viable alternatives already exist, already are in widespread use, and are under rapid development in China, Canada, and the United States; and
- The peaking will be a “long emergency”, allowing for ample ramping-up of said alternatives.
Sadly, the alternatives I mention aren’t hydrogen or anything even remotely environmentally friendly. I am talking about coal. Indeed, as I highlight below, South Africa’s automobiles largely run on coal, which, when liquefied, is perfectly substitutable for gasoline. And while I personally do not like the idea of coal replacing oil, it is quite evident that this transition will occur as oil availability decreases.
I don’t mean to unnecessarily pour cold water on the peak oil argument. But, as progressives, we need to more carefully examine what we argue for. Peak oil, in my mind, is fundamentally flawed: not that it will not happen, but that its occurence will likely not herald the death of suburbia, rapid inflation, and other doom-and-gloom scenarios.
It seems to me that we have limited bandwidth to argue progressive causes before the public at large: focusing on peak oil may undermine our other arguments and limit our ability to convey more pressing environmental concerns.
The following is an email I wrote to an acquaintance after I received some peak oil arguments from him. I don’t mean for this to represent a comprehensive rebuttal of peak oil, but some points to carefully consider.
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I was forwarded some of the “peak oil” information and thought I would make a few comments.
The first is about supply and demand. In a recent New York Times article, the author said that the “demand for oil will soon outpace the supply”. This is a fallacy, as it ignores price equilibrium to guarantee a meeting place between supply and demand. For example, if oil cost 1 penny per gallon, well, demand would be a lot higher than it is now. And, conversely, if it was $100 a gallon, demand would be a lot lower (because very few could afford it). It’s important to remember that “demand” always means, in an economic sense, “demand at the current price”.
If, overnight, gas became $100/gallon, sure, the transportation system would grind to a fast halt. But as you’ve stated, the price increases will be part of a “long” shift. And as this shift to more costly oil increases (and as demand AT THAT PRICE therefore decreases), shifts in behaviors will occur. We already have seen this in the past few years, as sales in SUVs, for the first time ever, have decreased when compared to more gas-efficient vehicles.
And if the price per gallon were to double in the USA (after all, costs of gas in Europe and Japan are, what, 100% higher), we might start to demand more structural changes to transportation systems, such as rail, tele-commuting, locally grown food, and so on.
The history of petroleum is interesting… (by the way, I highly recommend the book Titan, a biography of Rockefeller): back in the mid 1800s, energy was needed for candlelight. And for this, people used the tallow from Sperm whales. As these were hunted close to extinction, a mini-fear of dark nights took hold… new R&D took place (in the form of drilling in Titusville), and kerosene was developed. (Gasoline was a “worthless” byproduct at the time, and it was dumped into rivers and the ground freely.)
Another key point to remember, of course, is that petroleum accounts for only about 25% of energy produced worldwide. Yep. The vast majority of energy is produced by coal. So even if oil suddenly rose by 10000%, the large majority of energy produced would not be impacted.
It’s true that oil currently accounts for the majority of the fuel used in personal transportation. But, if the price of oil continues to rise, alternative fuels can and will be developed.
For example, the majority of cars in Brazil run on ethanol produced from sugarcane.
And, more importantly, the majority of cars in South Africa run on oil produced from coal.
You might wonder: why on earth is South Africa producing oil from coal? It all comes back to supply and demand. In the 1980s, there was an embargo against oil to South Africa due to Apartheid. The cost of oil rose prodigiously in South Africa, and R&D quickly took the long-dormant German process and ran with it. The South African’s quickly found an alternative to oil.
The description of coal as some dark malice used as gas only by the Nazis isn’t quite right. The majority of Europe, for much of the 20th century, used “coal gas” to heat homes. In fact, my parents remember when they would turn on the gas in the home and it was gasified coal. The Nazi part is true in that their scientists discovered ways to liquefy coal. And it is this same process, more or less, that is used by South Africa’s Sasol to create syngas, which is virtually identical to unleaded gas — you can put it in a car without any modifications.
And coal, with 400+ years of use before current deposits are exhausted (which is a conservative prediction), is very abundant. The reason that we don’t put coal gas in our cars right now is simply because the price of oil is still so cheap. Only if oil can stay above $35/barrel per crude will coal gas be produced. Again, it all comes back to supply and demand.
By the way, China is rushing forward to liquidize coal.
And now that oil is above $60/barrel, Montana and Canada, too.
Don’t get me wrong, in many ways, I WISH all of this peak oil stuff was true. You can check out my personal blog (landusewatch.com) to see that I really wouldn’t mind a return to a land-based, locally grown economy where the suburbs rot away.
But, famously, the “Club of Rome” predicted the exact same thing in 1970. I just don’t think that peak oil will happen, particularly with coal so abundantly available.
I think that the peak oil idea is environmentalists’ schaedenfreude: something which will validate all of our feelings about the ways of the world in one quick, fell swoop.
March 20th, 2006 at 7:52 am
In denfense of the Club of Rome report, published in the mid 1970s, they did not predict when peak petroleum production would occur, but when peak proven reserves of petroleum would occur. Oil geologists had perfected their tools to a very high degree by the 1960s, and the discovery of new oil fields proceeded briskly indeed until sometime in the 1960s. Since then discoveries have become fewer and fewer with each passing year. The rate of oil discovery has formed a curve remarkably similar to the bell curve hyipothetized by M. King Hubbert in the 1950s, and the shape of the curve was sufficiently evident by the time the Club of Rome report was written to predict a peak of proven reserves approxmately at the turn of the century. I don’t have exact information when that was, but in 1998 the U.S. Dept. of Energy predicted that event with a couple of years.
As for the effects of demand getting ahead of petroleum, I rather think that American oil men have been perfectly aware of the petroleum situation all along — how could they not be? I suggest that steps were taken, and are being taken, by petroleum companies and national governments to strategically position themselves in adventageous positions. I suggest that the underlying reason for our occupation of Iraq was geopolitical — Iraq is ideally located to influence the entire petroleum production of the area. The large oil fields are all in Iraq or very close to the borders of Iraq. That our present administration of oil men is less than candid I think hardly surprising. Oil company executives and their supporters are, to use somebody else’s term, notoriously closed-mouthed.
May 29th, 2006 at 4:37 pm
This is general information to fill in the uncertainties that seem to show up in comments about peak oil.
Peak oil is when a location or country ceases to export and becomes an importer. It is a combination of both increased usage and decreasing local supply.
The US peaked around 1970 and California, third largest oil producing State, is closing entire oil fields as they run dry, witness Bakersfield and Taft. Texas and Louisiana are both closing down entire fields, too. We are down to producing 3% of our oil needs since 1970, when the US production peaked.
Lybia also peaked in 1970. Iran peaked in 1974. Romania peaked in 1976. Brunei peaked in 1979. Peru peaked in 1982. Cameroon peaked in 1985. Indonesia peaked in 1997, so did Trinidad. A total of 51 oil producing countries have already peaked (and production beyond that point is steadily decreasing as the world’s use of oil steadily increases).
Saudi Arabia claims to have enough so they won’t hit their oil peak until 2011 Their largest field, Ghawar, discovered in 1948, was claimed to have 87 BILLION barrels of oil. In the early ‘70s the oil companies ( Exxon, Chevron, Texaco, and Mobile) estimated 60 Billion barrels in Ghawar field. Since then Ghawar has pumped out 55 billion barrels of crude (by the records). Get this:
60 minus 55 means there is only 5 billion remaining. That would sustain global usage for three weeks. They quietly pump 7 million gallons of sea water into the Gahwar field each day to sustain pumping pressure.
Oil may only be a fraction of available energy, but given the internal combustion engine, we will not be free of the problem until our primary motive energy source changes radically.
November 1st, 2006 at 10:56 pm
The view of the impact of Peak Oil is extremely narrow when thought of only as the gasoline we put in our tanks. That barrel of oil is responsible for so much more than gasoline. How much do you depend on plastic in your life? Most of the plastic in this world is petroleum based. How about paints, rubbers, and many, many other of the products we use in our everyday lives. All petroleum based products will become more scarce and more expensive as the price point representing the balance of supply and demand increases as oil reserves diminish (and extraction costs increase). Finding non-petroleum alternatives to all these products sufficient to approach our current appetite is highly unlikely. Alternatives will reduce the overall impact, but it is hard to imagine not having to scale back our consumption considerably.
I must disagree with the limited bandwidth comment regarding affecting change in the environment. Increasing concern and action by more people will make issues more likely to be taken seriously. I do agree that prioritization is very important, and well thought out action is needed to make progress. We cannot have a din of concern and useless action and expect much progress.
The affects of Peak Oil (and many other issues) pale when compared to the urgency of dealing with global warming. Fortunately, many of the steps we need to take to reduce the impact of Peak Oil also contribute to solving the problem of Global Warming. Killing two birds with one stone, now that’s smart.
Think globally, …