Peak oil – Feb 18

Click on the headline (link) for the full text.

Many more articles are available through the Energy Bulletin homepage

Reasons to see red over green energy
Ashley Seager, The Guardian
You’d hope, wouldn’t you, that the government department responsible for energy to heat our homes, power our cars and so on would be on top of two key issues – a switch to a low-carbon economy and the possibility that oil might run out sooner than we thought.

Both these issues should concern us greatly and, indeed, there is growing discussion of them everywhere. But, the Department of Business As Usual (DBERR) doesn’t seem to be on the case at all.

… Another key reason to push for a dash for renewables is energy security.

There is a growing fear among academics and many in the oil industry, that oil may be running out quicker than we thought.

I used to write about the oil industry 15 years ago and more and back then the conventional wisdom was that “peak oil” theories had been right about US oil production but were fantasy for the world as a whole. As soon as the oil price rose, went the argument, producers would spend more on getting oil out of the ground.

Well, oil prices have been rising for about a decade. They’ve gone up 500% roughly. That’s a lot. You might expect that, even allowing for the lags in developing new fields, supply might have responded by now. This is basic economics.

But it hasn’t, not really. We are stuck at about 85m barrels a day in global production. And the output of the oil majors Exxon, Shell and BP fell last year!

I don’t want to get into an argument about whether peak oil is upon us but you have to admit that it could be. After all, UK oil production peaked at 3.2m bpd in 1999 and has since halved. Dirty tar sands in Alberta could perhaps produce 3m bpd (Canadian estimates, not mine), but that’s not going to be enough. Not that it ever should be dug out – it’s filthy stuff that requires huge amounts of energy to produce.

The point is that you may hope BERR would have a plan for coping with oil at $200 or $300 a barrel in a few years’ time, or a physical shortage (remember the fuel protests of 2000?). As my colleague George Monbiot noted last week, when asked about peak oil, BERR also quotes the International Energy Agency as saying the peak won’t be till 2030. But the IEA doesn’t say that any more – it has said there is a great deal of uncertainty about the issue.

So you might think BERR would have a Plan A in case peak oil is upon us. But no, they don’t want to work on a contingency plan in case news gets out about what they are doing and causes a panic.

That panic, though, would be nothing compared to the panic if oil starts to run short. If I were BERR I would be having a dash for renewables. They plan to subsidise nuclear power for decades to come so why not bung some money at proper green energy that won’t need subsidy for very long?
(18 February 2008)

Implications of China’s Growing Demand for Oil: A Case Study in Venezuela
Lieutenant Keith Alan Peterson, Naval Postgraduate School
Abstract: China’s economic rise has been coupled with a growing need to find reliable foreign energy sources. China is the world’s second largest oil consumer. China’s demand for oil is outpacing previous estimates and accounted for 38 percent of the world’s increased demand in 2006.

Venezuela is the sixth largest oil producer and is now providing oil to China as a way to diversify exports away from the United States. As China’s demand increases and global oil production wanes, China will become major a competitor for oil supplies against the United States. To compete for oil China will need strategic allies, and it has found a willing partner in Venezuela.

The solution to the looming problem of increasing oil demand and decreasing supplies is a new approach to international oil markets that removes politics from the sale of oil. A multilateral effort led by Japan has the greatest likelihood of success in a world that is becoming increasingly competitive over resources. Creating a framework that promotes cooperation before supply becomes limited is very important for success. If the three largest importers — the United States, Japan, and China — all work together, the likelihood of future war or severe economic shock over oil competition among the great powers will be diminished.

… IV. B. WORLD OIL PRODUCTION CRISIS

As a general rule, today’s system of oil imports and exports has been relatively stable among the major importers over the last half century.223 Aside from a few glitches, global oil production has grown in harmony with demand. This system will not last forever. The world’s proven oil reserves are estimated at approximately 1.3 billion barrels.224 At the present rate of consumption, this will last for another 39 years.

However, according to the peak oil theory, the rate at which the oil can be produced will decline well before the oil runs out.225 The good news is that this will make oil last much longer than 39 years. Unfortunately, it also means that at some point in the future the world’s demand for oil could far outpace total production. In a purely economic sense this would cause prices to skyrocket. However, oil is highly intertwined with politics and therefore would also likely cause tension or even conflict as the larger oil importers to attempt to acquire a greater share of the dwindling supply.

Estimates for the timing of peak oil vary dramatically, ranging from years to decades before it becomes a serious issue.226 Few reputable reports suggest that this will not happen. The most pessimistic reports by some prominent geologists is that the world has already reached peak production levels in 2005 and is already slipping.227 This could produce very dramatic oil shortages in the next few years and would be potentially disastrous for not only the Chinese economy, beyond China, a sudden shift in the structure of the oil market will cause major disruptions in many economies in the world.

The arrival of peak oil is likely to be a watershed moment in Sino-American relations, especially as they relate to Venezuela and other oil exporters. When both countries are clamoring for oil to meet their demand, it will be up to Venezuela to decide which country it will support. If the rhetoric from Chavez is to be believed, the United States could lose a significant source of oil.
(1 December 2007)
Contributor writes:
Section IV mentions peak oil, the Hirsch report, and the Energy Watch Group report.

Government Accountability Chief Resigns
Elizabeth Williamson, Washington Post
One of government’s chief internal watchdogs resigned yesterday, as Comptroller General David M. Walker, an outspoken gadfly and frequent witness on Capitol Hill, announced his plans to lead a new foundation focused on U.S. fiscal responsibility.

Walker has led the Government Accountability Office, Congress’s investigative agency, for a decade.

Walker was an outspoken critic of the costs of the wars in Iraq and Afghanistan, Social Security, Medicaid and Medicare spending — issues on which the Democratic-led Congress, and Republicans before it, have had trouble building consensus.

In September, the administration and the military took issue with a bleak GAO assessment of progress in Iraq; the top military command in Baghdad described the assessment as flawed and “factually incorrect.” Despite last-minute changes to address the criticism, the final report cast serious doubt on U.S. efforts to build a functioning democracy in Iraq.

… Walker’s resignation takes effect March 12. He will lead the Peter G. Peterson Foundation, a new think tank whose mission, according to its Web site is “to enhance public understanding of the nature and urgency of selected key sustainability challenges that threaten America’s future,” including “unsustainable” growth in entitlement spending, and energy consumption.
(16 February 2008)
The GAO has been one of the most respected agencies in the U.S. government under Mr. Walker. Last March, the GAO published a groundbreaking report on peak oil (references on EB). -BA

Relocalization in Rural British Columbia: A Guide for Communities Before the Long Emergency (excerpts)
Rural Futures
This section contains excerpts from the book Relocalization in Rural British Columbia: A Guide for Communities Before the Long Emergency, currently in writing.

Extreme Scenarios

Will the post-peak oil world be a time when we North American’s rediscover our spiritual, inter-human roots, when we shed the materialism that has deflected us from real values like some store-bought narcotic, when children learn again to make a game with a stick and a ball? Or will it be a time when even the United States fractures into pieces along lines of energy haves and have nots, cities and suburbs become unliveable and hordes of shivering, hungry former accountants and dock workers roam the countryside in search of something to eat and a place where they have a chance to survive?

Those are the extreme views offered by thoughtful, researched voices.

No one can tell the future. We can determine that oil is going to be in short supply. We can measure how that will impact the world economy. We can look at history to help us guess what will follow. In some respects, the near future is easier to predict now than at any time during the industrial age. The commodity that is most responsible for economic growth is about to be in short supply. One over-riding change is going to super-impose itself on human activity. Change is most difficult to foresee when the range of emerging probabilities is expanding. Peak oil will signal a contraction of emerging probabilities. It will stifle the range of possible futures. It is not that difficult to predict what our challenges will be; only difficult to tell how we will deal with them.

… British Columbian Bill Henderson, editor of the Energy Bulletin, assembles economic and social predictions of impacts of the energy descent that are similar to Kuntsler’s, but with less alarm.

• oil spikes upwards over $100 a barrel, perhaps $200 a barrel;

• companies in key industries – airlines, tourism, distribution, etc. – go bankrupt
• deflation pounds existing speculative bubbles – real estate, stock markets – which burst
• as deflation accelerates, lack of demand, plus increased energy costs for production and distribution, plus strikes/fuel price protests, rapidly paralyse existing trade.
• Places like where I live on B.C.’s Sunshine Coast are forced to become largely self-reliant, with little support from provincial and federal governments overwhelmed by widespread demand for disaster assistance, while revenues plummet and governmental agencies and resources atrophy.
• Our local pulp mill and other forest industry employers cease production. Tourism dies. Pensions and investment income fade away.
• Present imports of food and other commodities including medicines, perhaps energy, information, etc., are seriously disrupted. Local governments are besieged by desperate constituents as a drastic relocalization of the economy is forced in a very short timeframe.

(February 2008)
About Rural Futures.

Online peak oil class
Will Rollins (Peakaware), The Public School
Students will read excerpts from certain books/articles/essays and watch a documentary or two that address the subject of Peak Oil. The first part of the class will look at the history of peak oil; second, where we are now; lastly, what we can do in preparation for what is to come. Discussions and sharing of ideas will be integral to not only the course but to our sanity as we approach a post-oil world.
peakaw

About The Public School
The Public School is a school with no curriculum, located underneath TELIC Arts Exchange.
It operates as follows: first, classes are proposed by the public (I want to learn this or I want to teach that); then, people have the opportunity to sign up for the classes (I also want to learn that); finally, when enough people have expressed interest, the school will find a teacher and offer the class to those who signed up.
(17 February 2008)
Author maintains the site Peak Aware.