Oil Has Peaked: Now Begins the Transition

As The Oil Drum pointed out last week, oil has peaked. We have officially entered the post-oil age in which the transition to lower energy lives is inevitable. (No doubt, pundits and policy wonks will debate this ad nauseum for the far too long, and to them I say, "AAAAAAAAAAAARGH!")

This energy transition can happen gracefully with fore-thought and planning, or, if we continue to consume energy at our current rate, the transition will be brought about faster and meaner than home redecoration by Blackwater. Shaun Chamberlin, author of The Transition Timeline: For a Local, Resilient Future, explores the implication of peak oil.

The following is an excerpt from Transition Timeline:

A 2005 report commissioned by the US Department of Energy concluded that,

"the peaking of world oil production presents the US and the world with an unprecedented risk management problem,"

and that without timely mitigation the economic, social and political impacts will be

"abrupt, revolutionary and not temporary".

The reasons for this are detailed and complex, but ultimately it comes down to this – energy is the ability to do work of any kind, and oil is our most useful and most heavily used source of net energy. The implications of both increasing (and increasingly volatile) prices and actual oil supply shortages will be profound.

The sheer usefulness of oil can perhaps best be summed up with a stunning statistic. A 40-litre fill-up of petrol represents the energy equivalent of four years of manual labour by a person (as peak oil educator Richard Heinberg says, compare the effortlessness of driving fuelled by oil with the amount of muscle power it takes to push a car just to the side of the road). Yet in the UK we currently pay only around £45 for that amount of energy (and in the US they pay less than half that)—we would be hard-pressed to find someone willing to work for us for four years for that sum!

Each 42-gallon barrel of oil yields around 20 gallons of petrol. We have seen that the world currently produces around 87 million barrels a day, so roughly speaking this works out at the energy equivalent of over 240 billion person-days of work contained in the world's daily petrol supply (quite apart from the diesel, jet fuel, heating oil etc. that we also produce from that oil). Our current global petrol supply can do approximately 35 times as much physical work as every person on the planet put together.

We take this available energy for granted much of the time in our everyday lives, but it is as though we had dozens of ‘energy slaves' working for us day and night. It has been calculated that this energy input from oil allows the UK economy to be between 70 and 100 times more productive than would be possible on human muscle power alone.

And in addition to being an abundant, reliable, cheap, super-concentrated form of energy, oil is also a liquid, making it far easier to transport, store and use than solid fuels. There are relatively few options for replacement liquid fuels, and since our vehicles and infrastructure are designed for oil, it would require technical innovation, a large investment of energy and other resources and a timeframe of at least twenty years to create an alternative system.

This incredible energy source fuelled the rapid developments of the 20th century, whether in technology, industry, food yield or transport, and is also the source of the plastics and many synthetic materials that are everywhere around us. Ninety-five percent of all goods in shops involve the use of oil, and ninety-five percent of the UK's food is now oil-dependent. Just to farm a single cow and deliver it to market requires six barrels of oil, enough to drive a car from New York to Los Angeles.

As oil becomes more expensive and less available it affects the price and availability of the products and services throughout the economy that are dependent on it, as well as the jobs tied into these products and services. And since oil features in the supply chain of almost every company, the health of the national and global economy is also threatened as they all find their costs increasing within an economy whose total productive capacity is decreasing.

In other words, the growth of our economy is dependent on a growing net energy supply, and for the first time in centuries it is unlikely to have it. A real cause for concern is that our economic system as currently designed fails without continued growth, leading to bankruptcies, defaults on loans and mortgages, mass unemployment, homelessness and a myriad of other unpleasant consequences.

At this point, however, it seems appropriate to remember the insight of the science fiction writer William Gibson that:

"The future is already here, it's just unevenly distributed."

Peak oil is no longer simply a future problem. While richer countries have been able to pay the increasing prices demanded for oil globally, those with less money have been struggling to afford the supplies they rely on.

In early 2007, a U.N. report found that:

"Recent oil price increases have had devastating effects on many of the world's
poor countries, some of which now spend as much as six times as much on fuel as they do on health. Others spend twice the money on fuel as they do on poverty alleviation. And in still others, the foreign exchange drain from higher oil prices is five times the gain from recent debt relief.

Of the world's 50 poorest countries, 38 are net importers of oil and 25 import all of their oil requirements."

When the report was published the oil price stood at $60/barrel, but over the next 18 months it proceeded up to over $140 a barrel. If the effects on the poorest countries were "devastating" at $60/barrel, they became yet more so.

The possible future America was warned of in that 2005 Department of Energy report, with its abrupt and revolutionary economic, social and political impacts, has already been unfolding elsewhere. Outright energy shortages and deadly fuel riots have been seen across the world, and the peak oil predicament underlying them is only worsening as time goes by.