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Peak Possibilities

Justin Fox, TIME Magazine
In July 2006, the world’s oil rigs pumped out crude at a rate of nearly 85.5 million bbl. a day. They haven’t come close since, even as prices have risen from $75 to $98 per bbl. Which raises a question of potentially epochal significance: Is it all downhill from here?

It’s not as if nobody predicted this. The true believers in what’s called peak oil–a motley crew of survivalists, despisers of capitalism, a few billionaire investors and a lot of perfectly respectable geologists–have long cited the middle to end of this decade as a likely turning point.

In the oil industry and the government agencies that work with it, such talk is usually dismissed as premature. There have been temporary drops in oil production before, after all–albeit usually during global economic slowdowns, not boom times. In most official scenarios, production will soon begin rising again, peaking at more than 110 million bbl. a day around 2030.

That’s alarming enough in itself. Even the optimists think we have less than three decades to go? But at industry conferences this fall, the word from producers was far gloomier.

…In “peak lite,” as some call it, the big issues are not so much geological as political, technical, financial and even human-resource-related (the world apparently suffers from a dearth of qualified petroleum engineers). These factors all delay the arrival of oil on the market, meaning that production would not so much peak as plateau. But with demand rising sharply, especially from China and India, even a plateau could be precarious.

…Among the peakists, war and economic breakdown are favorite themes. They figure that cheap oil is the essential fuel of modern capitalism, which will founder without it. A more hopeful take is that innovation is the essential fuel of modern capitalism and that high oil prices will drive rapid advances in conservation and alternative energy. Either way, the beginning of the end of the oil era may be upon us, well ahead of schedule.
(21 November 2007)
Contributor Carl Etnier writes:
Like the recent Wall Street Journal article, this article from the corporate media shows a growing but grudging willingness to acknowledge that peak oil is worth having a conversation about. Sure, peakists are comprised of a lot of “survivalists [and] despisers of capitalism,” but they have some more respectable company. There’s a heavy dose of blame on speculators for high oil prices, with the proviso that if OPEC doesn’t increase production over the next few years, the “blame the traders” mentality won’t wash. No mention of the plateau in world oil production.

It’s a start.

“Warmer, warmer, we’re getting warmer!”

As Carl says, coverage of peak oil does seem to be getting much better, if still not as deep or comprehensive as we would like.

One thing that TIME and the mainstream media have not really understood yet, is the nature of the peak oil movement. This TIME article describes us as “true believers,” yet it would be hard to find a more skeptical, wonkish, evidence-driven movement – just the opposite of true believers.

TIME does begin to grasp the diversity of the movement by characterizing it as “a motley crew of survivalists, despisers of capitalism, a few billionaire investors and a lot of perfectly respectable geologists.” However, most of the peak oil people that I know do not fit into these categories. It’s true that there is a streak of survivalism in peak oil, but it is much more intelligent than other forms of survivalism (for the most part, it’s not rugged individuals in their bunkers). Much more influential are the relocalization and “transition town” movements.

Far from being “despisers of capitalism,” peak oilers tend to be professionals and solid citizens who have done well under capitalism. This doesn’t prevent us, however. from writing several million words analyzing and criticizing capitalism.

For any reporter brave enough, there is a big story in how this little movement managed to grow so quickly and topple the accepted wisdom. Who are these people? How did they do it? -BA

Demand, and high oil prices, are here to stay

Loren Steffy, Houston Chronicle
…Just a few weeks ago, we wrote stories about $90 oil. A couple of months before that, it was $80. So far this year, oil prices have almost doubled. Pick your marker. They all bear the same message: The oil market is changing.

Oil economists and geologists debate whether world oil supplies have peaked. In the markets, though, the debate is over.

Oil will hit $100 for the same reason it hit $90. We market watchers can twitter about inventories, warm winters and the role of trading, but the rising price of oil is driven, ultimately, by the most basic concept in economics: Demand is rising faster than the supply.

…Higher prices make new sources of oil – mining the sands of northern Canada or baking shale in the Rockies, for example – economically viable, but the new production won’t offset demand enough to sustain lower prices.

…The immediate fear is whether $100 oil, sustained or not, will exacerbate the economic effect of the mortgage meltdown and the credit crunch, adding to recession fears.

Even so, the prospect of $100 oil, psychological milestones aside, seems less threatening than it once did.

… At some point, though, we must come to terms with the price trend that moves against us. Our best weapon is a portfolio of viable alternative fuels and conservation programs that can slow our rising demand for petroleum.

Loren Steffy is the Chronicle’s business columnist
(24 November 2007)

Apocalyptic vision of a post-fossil fuel world

Paul Eccleston, Telegraph (UK)
An apocalyptic vision of how the world will look after the oil runs out has been given by a top scientist.

Richard Heinberg, one of the world’s leading experts on oil reserves, warned that the lives of billions of people were threatened by a food crisis caused by our dependence on dwindling supplies of fossil fuels.

Higher oil prices, the loss of farmland to biofuel crops, climate change and the loss of natural resources would combine with population growth to create an unprecedented food shortage, he claimed.

The only way to avoid a world food crisis was a planned and rapid reduction of fossil fuel use – oil, coal and gas – and a switch to more organic methods in the growing and delivery of food. It would mean a return to living off the land not seen for 150 years.

The stark predictions were made by Heinberg in a lecture to the Soil Association in London.

Heinberg, an author and former advisor to the National Petroleum Council, specialises in ‘Peak Oil’
(22 November 2007)

Don’t be fuelled..

John Humphrys, Sunday Mirror (UK)
… If the price of petrol keeps going up at this rate we’ll need to take out a second mortgage every time we stop on the motorway. But maybe it’s a good thing. For the last 40 years we’ve been told oil is running out and we’ll soon have to get used to living without it.

No more holidays on the Costas – it’s Skegness or Blackpool from now on, they said. And it’ll take a week to get there and back by bullock cart.

…The world runs on oil – whether it’s manufacturing fertiliser to grow our food or generating electricity to heat our homes. So what can we do – apart from getting the needles out and start knitting night caps to keep us warm in our icy bedrooms?

Well, one part of the answer may be something called “transition towns”. They’re springing up all over the country. The idea is that local people get together and arrange, for instance, to do a deal with farms in the area to buy their produce. So instead of buying carrots that have travelled halfway around the country to be packed and then sent back to your town, you buy them direct. And you don’t pay the supermarkets’ mark-up either.

Schemes to generate electricity locally are being set up too. By the time the juice from a big power station comes out of the socket in your wall half of it has already leaked out of the cables carrying it through the grid.

…You don’t believe there’s any need even to think about this sort of thing? You reckon this latest oil crisis is just another scare and the danger of global warming is being exaggerated?

Well maybe you’re right. I hope you are. But if you’re wrong, doesn’t it make sense to think local rather than rely on politicians at national and world level to get us out of the mess they’ve helped create?

Even if it doesn’t save the planet, the carrots will taste better.
(25 November 2007)

The needle and the damage done

David Olive, The Star
The hastening end of the Petroleum Age, a scenario that always has been confidently rejected by the global oil industry, is becoming harder to ignore.

This has little if anything to do with a world crude oil price poised to cross the $100 (U.S.) per barrel threshold. Oil, which closed last week at $98.18, is still below its all-time inflation-adjusted high of $102 per barrel set in April 1980. Which means it has taken 27 years for oil to recover to its previous peak price – six years longer than it took for stock prices to regain their losses during the Great Depression.

If anything, the sticker shock motorists have experienced at the pumps in recent years doesn’t yet reflect the enormity of a crisis in oil that even industry and pro-industry government agencies are beginning, finally, to acknowledge.

The world is not running out of oil. But, sooner than expected, it will run short of the kind that is easily and cheaply tapped, a day of reckoning some experts predict will be upon us early next decade – in the blink of an eye for a capital-intensive industry that thinks decades into the future.

Long before that point, before pools of conventional oil already in decline are depleted altogether, consumers, governments and the industry will have to make some very tough decisions (see “What”). We are close to a tipping point.
(25 November 2007)