Prepare for Peak Oil Now

By Richard Heinberg, AlterNet. Posted November 14, 2005.

Editor’s Note: This paper, exclusively available to AlterNet, was presented at a Reception with Their Royal Highnesses The Prince of Wales and the Duchess of Cornwall, at the California Leaders Round Table Dialogue on Peak Oil, Climate Change and Business Action; November 7, 2005 in San Francisco.

The subject I teach -- human ecology -- is a discipline that largely concerns population and resources. Over the past few years I have chosen to study oil, because it is the most important energy resource of the modern world.

Only 150 years ago, 85 percent of all work being accomplished in the U.S. economy was done by muscle power -- most of that by animal muscle, about a quarter of it by human muscle. Today, that percentage is effectively zero; virtually all of the physical work supporting our economy is done by fuel-fed machines. What caused this transformation? Quite simply, it was oil's comparative cheapness and versatility. Perhaps you have had the experience of running out of gas and having to push your car a few feet to get it off the road. That's hard work. Now imagine pushing your car 20 or 30 miles. That is the service performed for us by a single gallon of gasoline, for which we currently pay $2.65. That gallon of fuel is the energy equivalent of roughly six weeks of hard human labor.

It was inevitable that we would become addicted to this stuff, once we had developed a few tools for using it and for extracting it. Today petroleum provides 97 percent of our transportation fuel, and is also a feedstock for chemicals and plastics.

It is no exaggeration to say that we live in a world that runs on oil.

However, oil is a finite resource. Therefore the peaking and decline of world oil production are inevitable events -- and on that there is scarcely any debate; only the timing is uncertain. Forecast dates for the peak range from this year to 2035.

The peaking phenomenon itself has been observed again and again in individual oil fields and in entire producing nations. One of the first countries to hit its peak was the U.S.. During the 1930s and '40s, half the world’s production of petroleum came from Texas and Oklahoma. However, U.S. production reached its all-time maximum in 1970 and has been declining ever since. Currently the U.S. imports 60 percent of its oil.

Concern over the likelihood of an impending world peak has increased markedly in recent months as global spare production capacity has dwindled and as prices have achieved what seems to be a new baseline of over $50 per barrel.

Evidence that we are approaching peak includes the following:

• ExxonMobil documents that global oil discoveries peaked in 1964. Declining rates of discovery are therefore a long-established trend.
• Chevron notes in recent advertisements that 33 of 48 nations are in decline. We have thus seen the peaking of production in a majority of individual nations, including some important producers such as Indonesia, Norway, Great Britain, and Venezuela. Mexico will reach its peak within the next two years.
• As noted by the International Energy Agency, there is evidence that a substantial amount of "proven reserves" in OPEC countries are illusory, the result of a scramble for market share within a cartel that allocates export quotas based on stated reserves.

With regard to this last point it should be noted that reserves figures, even when accurate, have historically given little warning of peaking. The U.S. instance is once again emblematic: in 1970, U.S. oil reserves were higher than ever; so were production rates. But only a year later, American production began its terminal decline. The study of discovery rates and depletion rates gives us a much better idea of when the global peak is likely to occur.

Optimistic estimates of future discovery and production issued by Cambridge Energy Research Associates and the U.S. Geological Survey have been criticized by several analysts. The optimists have generally failed to anticipate peaks, first in the U.S. and repeatedly in the case of other nations around the world.

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