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OIL PEAK By G.R.
"People cannot stand too much reality." - Carl Jung
“If the actions - rather than the words - of the oil business' major players provide the best gauge of how they see the future, then ponder the following. Crude oil prices have doubled since 2001, but oil companies have increased their budgets for exploring new oil fields by only a small fraction. Likewise, U.S. refineries are working close to capacity, yet no new refinery has been constructed since 1976. And oil tankers are fully booked, but outdated ships are being decommissioned faster than new ones are being built.” - Mark Williams, Technology Review, February 2005 "Throughout history, people have had difficulty in distinguishing reality from illusion. Reality is what happens, whereas illusion is what we would like to happen. Wishful thinking is a well-worn expression. Momentum is still another element: we tend to assume that things keep moving in the same direction. The world now faces a discontinuity of historic proportions, as nature shows her hand by imposing a new energy reality. There are vested interests on all sides hoping somehow to evade the iron grip of oil depletion, or at least to put it off until after the next election or until they can develop some strategy for their personal or corporate survival. As the moment of truth approaches, so does the heat, the deceptions, the half-truth and the flat lies." - Geologist Colin Campbell (Texaco, BP, Amoco ... retired) “What people need to hear loud and clear is that we’re running out of energy in America.” - George W Bush, May 2001
Are we running out of oil? No. We have plenty of oil left and at the present rate of consumption we have enough oil to last another 40 years. Don’t worry. Until then we will find some new resource, technology, we will switch to hydrogen and everything will be OK. Although there are some problems the market will take care of them. Right? Wrong. Although it is today’s economic (and not just economic) mantra there is a Catch-22. The statement that we have some 40 years of oil left seems to be correct but it is quite misleading. Now we are quite sure that at the beginning Earth contained about 2000 billion ( ≈ 2 x 10 12 ) barrels of oil. We have used about 1000 billion barrels. In 2003 we consumed about 28 billion (28 x 109) barrels. This is a huge amount of oil! 1000 billion barrels divided by 28 billion barrels per year gives us app 37 years of oil left. If one considers increased demand resulting from population and economic growth, that estimate is reduced to approximately 25 years. Now you shouldn’t assume that we will use oil at a stable rate for 40 or more years and then the oil will suddenly stop flowing and we will fall off the cliff. It is not that easy as the diagram below shows. The production (to be more precise, extraction) of crude oil resembles bell curve. The top of the curve is called Hubbert peak or Oil Peak. After that we are on the downhill. We've climbed up the ladder, our children and grandchildren will have to climb back down.
Are we running out of cheap oil?
Yes, and this is happening NOW. We are using or about to begin to use the other half and that means that we are using the oil which it is increasingly harder to extract and it is more expensive to do so. Another problem is that you need energy to produce energy. In the past it took 1 barrel of oil to produce app. 30 barrels of oil and today this ratio is more like 1 to 5. When we reach 1 to 1 oil is no longer energy source. It could still sit in the ground in vast quantities but it is not an energy source any more. Period.
Oil Peak or Hubbert’s peak is the name given to the highest point on the curve of an oil production for an oil field, state, region or the whole world. It is named after Dr. M King Hubbert, the geologist who in 1956 predicted the oil production peak of the USA in 1970. He was right. US (US 48) crude production behaved as he predicted. Others have attempted to do the same for the whole world, mostly since the late 1980s. The consensus is that it will happen by the end of this decade (2000-2010). It could be occurring right now, in 2005. We will know only after few years. As an example, the peaking of US production was accepted as a fact only after few years when nobody could deny that the US production peaked and was in decline since then. It also means that after our civilization extracts half of available oil the production of oil which is the most important energy source will start to fall. That plainly means decline and fall of what we call industrial civilization.
This is the latest (2004) projection from ASPO (Association for the Study of Peak Oil )
Oil accounts for around 40% of the world’s annual energy consumption! It is a cheap,
highly
It also mean that at the moment when FSU and OPEC reach peak the world as whole will peak. Also they will have to compensate for falling production elsewhere The signs are already here that both of them are peaking!
You can see the production of conventional oil has grown only slightly since 2000. In 1998-1999, the price of oil stayed around $11 per barrel. By March 2005 the price has risen to $57 per barrel. Now you know why.
Now, how come you don’t hear about it from our political leaders (yes, it is the same in Europe)? The sad truth is that they have known about it for years. This is a quote from Dick Cheney, Peak Oil and the Final Count Down By Kjell Aleklett from Uppsala University, Sweden. Quote: “In the April 2004 issue of the magazine the Middle East I found a statement that Vice- President Dick Cheney had made in a speech at the London Institute of Petroleum Autumn lunch in 1999 when he was Chairman of Halliburton. A key passage from his speech was: “That means by 2010 we will need on the order of an additional fifty million barrels a day.” It suggested that he was fully aware of the issue of peak oil. A full text of the talk had been available on the website of the Institute of Petroleum, but has now been removed (www.petroleum.co.uk/speeches.htm ). Nevertheless, further research did bring to light a printed version, dated 24.08.00, as follows: Dick Cheney: “From the standpoint of the oil industry obviously - and I'll talk a little later on about gas - for over a hundred years we as an industry have had to deal with the pesky problem that once you find oil and pump it out of the ground you've got to turn around and find more or go out of business. Producing oil is obviously a self-depleting activity. Every year you've got to find and develop reserves equal to your output just to stand still, just to stay even. This is as true for companies as well in the broader economic sense it is for the world. A new merged company like Exxon-Mobil will have to secure over a billion and a half barrels of new oil equivalent reserves every year just to replace existing production. It's like making one hundred per cent interest; discovering another major field of some five hundred million barrels equivalent every four months or finding two Hibernias a year. For the world as a whole, oil companies are expected to keep finding and developing enough oil to offset our seventy one million plus barrel a day of oil depletion, but also to meet new demand. By some estimates there will be an average of two per cent annual growth in global oil demand over the years ahead along with conservatively a three per cent natural decline in production from existing reserves. That means by 2010 we will need on the order of an additional fifty million barrels a day. So where is the oil going to come from? Governments and the national oil companies are obviously in control of about ninety per cent of the assets. Oil remains fundamentally a government business. While many regions of the world offer great oil opportunities, the Middle East with two thirds of the world's oil and the lowest cost, is still where the prize ultimately lies, even though companies are anxious for greater access there, progress continues to be slow. ( Bold by the author)” To understand the magnitude of the problem that Dick Cheney is addressing we can compare “fifty million barrels a day” with the total production coming from the six countries bordering the Persian Gulf (Saudi Arabia, Iran, Iraq, United Arab Emirates, Kuwait and Qatar), that in 2001 produced 22.4 million barrels per day (Energy Information Administration). End quote.
How important is Oil?
It is very important. We can almost call it the lifeblood of our civilization. Oil is made into many different products – gasoline, diesel fuel, jet fuel, lubricants, plastics, boats, oil filters, car battery cases, car bodies, tires, paint, solvents, wire coating, asphalt highways, anti-freeze, vinyl, trash bags, plastic toilet seats, VCR tapes, CD-s, plastic bottles, house paint, telephones, detergents, glues, carpets, fertilizers, insecticides, herbicides, containers, garden hose, fibers, nail polish, pillows, toothbrush, medicines,……and ENERGY for doing useful work. The list goes on and on. So it isn’t just about cheap gasoline at the petrol station but about almost everything we could think about. Our civilization is built on something that will soon reach its peak production (or it already has, we really do not know at that moment) and then decline. Think about it. Think about our supermarkets, suburbia culture, SUVs, giant metropoles, highways full of cars and trucks, ... They will be gone and distant memory within our lifetime, how fast we don’t precisely know, but we will all feel it very soon. The warning signs are already here. And remember, this is very important, our current food production and distribution is very dependent on cheap oil. Without fertilizers and pesticides and cheap diesel fuel for our farming machinery the food production will fall sharply. You can imagine what this means.
World oil discovery peaked in 1962 and has declined severely in recent years as you can see in the graph. The gap is widening.
Alternatives?
What can replace it?
Can going nuclear, wind, hydro-electric power, solar, methanol, ethanol, hydrogen (which is an energy CARRIER and not an energy source!), bio-diesel, coal, liquid gas, thermal depolymerization, synthetic gasoline from coal help in this situation? Sure it does a bit but it can’t replace oil. …. These can’t replace cheap and abundant oil. Sure they can replace a small portion of our energy needs which are now covered by oil but they can’t cover our ever increasing hunger for energy. Even combined they can’t replace oil, just small portion of it. You must also consider that industrialized world and food production as we now it today would not have existed if the EROEI (“Energy Return on Energy Invested” which is the ratio between how much energy it takes to acquire an amount of energy) of oil had been as low as the EROEI of the alternatives we hope to replace oil with.
What will happen to our monetary system?
Quote from The Oil Age is Over What to Expect as the World Runs Out of Cheap Oil, 2005-2050 by Matt Savinar, JD
"Our monetary system works as long as there is an excess of embodied energy constantly entering the economy. For the past 500 years, we’ve had a constantly expanding base of energy with which to fuel our economy. This excess of embodied energy enabled people to pay interest on their loans. Paying interest is what keeps the system churning. If there isn’t an excess of embodied energy entering the system, however, I won’t be able to find enough extra embodied energy to pay the bank the $6.00 of interest I owe on my $100 loan. The bank then can’t make a new loan to you. You are then unable to buy the hamburger from the local hamburger joint. The hamburger joint then goes out of business and defaults on its loan to the bank. The bank is then unable to make loans to other people. These people are then unable to buy goods and services or pay their employees. The process just keeps compounding itself until the whole system dissolves. The whole process resembles dominoes precariously arranged in constantly enlarging, interconnecting circles. The larger the circles get, the more dangerous the system becomes." End quote.
Can you say economic crash? Can you say starvation? Can you say police state? Can you say global massive die off?
And at the end... The last reserves of oil lies in the Middle East. China is now second in oil consumption, right after US. Think about Bible prophecy. Think about what is happening right now. The very important stage in human history is about to begin. I personally think that only God can save us now in this situation. It is not just about oil. You must see the whole picture and you should agree with Jesus:
For me it is very surprising that in the Christian world there is almost nobody who speaks about the subject of peak oil. I think that so many “prophets” cried “Wolf!” that now, when the real and clearly big danger is approaching nobody pays attention. But hasn’t this been this very situation of disbelieve predicted in the Bible? So, deal with the reality or reality will deal with you, as geologist Collin Campbell said.
As I see it it is the beginning of the end for this corrupt anti-God civilization. And we are at His mercy.
Maranatha!
G.R. 3. April 2005
Useful links:
…and many others. Just type Peak oil in Google. You now have access to an extensive literature on the subject of peak oil.
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