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Economic Impact of Peak Oil Part 2: Our Current Situation
Gail Tverbert, The Oil Drum
This is the second of a three part series giving my view of the economic impact of peak oil.
Peak oil seems likely to make a huge change in our economic system–more than would be expected by a worldwide decline in oil production by a few percentage points a year. In Part 1, we looked at the contrast between economic systems before the industrial revolution and the current economic system. We also looked at economic studies that suggested that energy, and the more efficient use of energy, seem to be big contributors to the real economic growth that took place since the industrial revolution.
In this segment, we will look at some other changes affecting the economy besides the growth in the use of fossil fuels. We will look particularly at debt and how peak oil is likely to affect a financial system that is tied to debt. We will also look at some the stresses that the economy is currently under. Some of these stresses seem to stem from a failure of the United States to fully adapt to its own decline in oil supply since 1971; some of these stresses come from the fact that the world is finite, and we are reaching the earth’s limits with respect to more than just oil.
(24 September 2007)
Analysts watch, wince as Mexico’s oil supply dwindles
David Adams, St. Petersburg Times (Florida)
MIAMI – When left-wing guerrillas in Mexico bombed several pipelines in simultaneous attacks this month, it sent a shudder through that country’s large oil and gas industry.
The threat of economic sabotage by a shady group known as the Revolutionary Popular Army EPR poses a major new headache for the Mexican government. But Mexico’s energy industry problems run far deeper than terrorist attacks on its infrastructure, analysts say, and have major implications for U.S. oil supply.
“Mexico’s oil production is in decline. There’s probably no way to stop it,” said Mike Rodgers, an expert at one of the top oil industry consulting firms, PFC Energy in Houston.
Mexico is the second largest supplier of oil to the United States (about 1.5-million barrels a day). But output from its major fields is dwindling fast, according to official figures from the state-owned oil giant Petroleos Mexicanos (Pemex). The country’s known oil reserves will run out in nine years, the government says, potentially undermining the nation’s oil-dependent budget.
(24 September 2007)
ODAC News – Monday 24 Sept
Douglas Low, Oil Depletion Analysis Centre
Food – Australian Wheat Crop 2007
1/ Australia cuts wheat forecast by a third (Financial Times, Wed 19 Sep)
Natural Gas – China
2/ China 2020 natural gas consumption seen at 9 pct of energy total – CNOOC (CNN Money, Thu 20 Sep)
Food Security
3a/ Counting the cost of wheat price hike (BBC News, Fri 21 Sep)
3b/ Costs may lead EU to beef up ‘food security’ (Financial Times, Tue 18 Sep)
ASPO-6 Summary
4/ Two barrels of oil are used for each one found. $100 oil anyone? (Globe and Mail [Canada], Fri 21 Sep)
Economy – Subprime Crisis/Credit Crunch
5a/ Banking crisis: Don’t blame the central banks (Sunday Telegraph, Sun 23 Sep)
5b/ Economic Outlook: Housing waits to assess damage to confidence (Financial Times, Sun 23 Sep)
5c/ Growth only as safe as houses (Financial Times, Sun 23 Sep)
5d/ US expert warns of fresh shocks (Financial Times, Wed 19 Sep)
Nuclear Power
6/ Who Will Foot the Nuclear Power Bill? (Reuters, Mon 10 Sep)
Natural Gas – the Nabucco Pipeline
7/ Azerbaijan Plays Down OMV Hopes for Potential Nabucco Gas (Energy Intelligence [International Oil Daily], Mon 24 Sep)
(24 September 2007)
Peak oil made me do it: Adrienne Langman (Audio)
Richard Aedy, ABC National Radio
The idea that the world’s oil supply is going to end, and maybe not that far into the future is gaining acceptance.
Experts describe it as “peak oil”, a time when the production of oil reaches a climax, then goes into a permanent decline.
Peak oil had a big effect on Adrienne Langman, the author of “Choosing Eden, the real dirt on the coming energy crisis”.
She decided to move away from a comfortable existence in the city and away from her family, to a self sustaining lifestyle in the country.
(17 September 2007)
Contributor Wag the Dog writes:
The full Life Matters programme can be downloaded as an MP3 from:
mpegmedia.abc.net.au/rn/podcast/current/audioonly/lms_20070919.mp3
Adrienne Langman’s piece begins at about 30 minutes in.
Global oil extinction: Could be a blessing in disguise for Lanka
Sanka Wijeyaukulasuriya, Daily News – The Associated Newspapers of Ceylon Ltd..
[Article first describes the oil crisis in familiar terms…]
Are we ready for this? Our entire production and transportation market is based on oil. Sadly Sri Lankans haven’t done a thing to react to this humongous market collapse.
This is an energy crisis unlike any the world has ever before experienced. International currency rates will definitely fluctuate in a manner which is hard to predict.
Conflicts among countries will start for reasons based on substitute energy bases. Power shifts of world economy drivers will take place. Minor countries who adapts to the situation well will emerge as powerful nations. Climate changes will take place due to global warming.
The 2017 global oil extinction could be a blessing in disguise for Sri Lanka if we act quickly. We have “three unlimited power energy sources” we still haven’t touched.
1. Burning Sun
2. Strong Wind
3. Strong Waves
We are in an island covered by the Indian Ocean where we have sea wind and waves all around the country with the tropical sun above us. If we capitalise on these three sources, we can produce and export energy for as long as we want since they are not scarce.
This is a several billion dollar market opportunity if the Government is ready to grab it. Here we have a chance of becoming one of the next generation Middle East countries who sat on gold like oil mines. All we have to do is to convert from oil into solar, wind and wave energy as soon as possible.
The conversion process is not as easy as it seems, but the effort is definitely worth compared to the benefits. This alone is enough to redeem Sri Lanka from the unfortunate economic state we are in right now. Middle Eastern countries only have oil and we all know how rich they are. We just have to follow in their footsteps.
All the automobile companies in the world like Ferrari, Mercedes Benz, Jaguar, etc will be on the lookout for new sources to power their engines. Not to mention all the airbuses like Boeing, Chernov, etc. For them the first come will be first served. At the beginning of the crisis the global demand for a product like energy will be priceless.
This gives rise to the next unforgettable question, what will happen when we run out of substitute energy sources. Michel de Nostradamus in the 16th Century said that “we humans will come to the no return point of where there’s no natural resource left to consume.” The question is: Is this the first inevitable sign to the beginning of the end for natural resources?(23 September 2007)
Contributor Rick Dworsky writes:
An interesting perspective from an island nation. We’re all in the soup.
Peak Oil And The Fermi Paradox
Mike Byron, Ph.D., Truth to Power
Talking about the likelihood of other civilizations existing in our galaxy, physicist Enrico Fermi reportedly asked in 1950: “Where is everybody?” This question became known as the Fermi Paradox. The Paradox arises because there should be at least a few other civilizations in our galaxy of 400 billion suns.
In 1960, Dr. Frank Drake, created the Drake equation (see discussion at: en.wikipedia.org/wiki/Drake_equation ), which indicated that there ought to be at least 10 other civilizations in our galaxy right now. Yet we can find no evidence for thier existence. Which takes us back to Fermi’s question: “Where is everybody?”
If other civilizations exist, then it would seem reasonable that at least some would be more advanced than ours, and would presumably be able to travel to nearby star systems. After a few millions of years they ought to have colonized the entire Milky Way Galaxy. Radio astronomers have been searching ever since Frank Drake undertook the first scientific search for extraterrestrial civilizations with Project Ozma back in 1960. Yet there is no sign of extraterrestrial civilization anywhere in our galaxy. The silence across the galaxy has been deafening. So where are they?!
I think that the actual answer to the Fermi Paradox lies in the fact that while life itself is likely very common throughout the universe, the conditions needed for intelligent life–basically environmental stability for geological ages–are hugely improbable. Thus intelligent life is very, very, rare.
… assuming an intelligent species survives until it develops an industrial technology, there is only a very short window of opportunity for an emergent planetary civilization to bootstrap itself into the solar system. Again quoting from The Path Through Infinity’s Rainbow:
It is important to understand that only a high energy, high technology civilization is capable of bootstrapping itself into the solar system. There it can harness the vast resources of raw materials and energy found in the asteroid belt, the Kuiper Belt, and the Oort Cloud, the atmospheres of the gas giants-hydrogen in particular-and the endless supply of energetic sunlight which radiates outward ceaselessly, from our sun.
However, as we have seen, such a civilization has only a very narrow window of opportunity in which to transition from a civilization wholly dependent upon planetary energy and material resources, to one able to utilize the thousandfold greater resources of the entire solar system. This is because of the rapid onset of peak oil and global climate change, which in turn swiftly terminates high energy planetary civilization. Once such a civilization falls it can never be restarted again, as the easily exploitable hydrocarbon resources, as well as necessary metals and minerals, are gone.
The hydrocarbon energy available to a planetary civilization is analogous to the yolk of an egg: just as the yolk offers a newly emerged creature needed energy to break out of the egg and get established in the wider world, so too does a planet’s hydrocarbon energy deposits provide an emergent technological civilization the boost it needs to leave its birthworld and establish itself in its solar system. It offers a very brief window of opportunity to allow a species to develop the technologies and techniques to bootstrap itself off of its planet of origin. Once out into space, a civilization can take advantage of the thousandfold greater material and energy resources found across the solar system. Meanwhile the birthworld can rest and regenerate from its difficult birthing.
(24 September 2007)
John Michael Greer also wrote a post on peak oil and the Fermi Paradox.
UPDATE (added this title to the “summary”)
