Peak Oil is Here

The top story of the year is that global crude oil production peaked in 2008.

The media, governments, world leaders, and public should focus on this issue.

Global crude oil production had been rising briskly until 2004, then plateaued for four years. Because oil producers were extracting at maximum effort to profit from high oil prices, this plateau is a clear indication of Peak Oil.

Then in July and August of 2008 while oil prices were still very high, global crude oil production fell nearly one million barrels per day, clear evidence of Peak Oil (See Rembrandt Koppelaar, Editor of “Oil Watch Monthly,” December 2008, page 1) http://www.peakoil.nl/wp-content/uploads/2008/12/2008_december_oilwatch_monthly.pdf. Peak Oil is now.

Credit for accurate Peak Oil predictions (within a few years) goes to the following (projected year for peak given in parentheses):

* Association for the Study of Peak Oil (2007)

* Rembrandt Koppelaar, Editor of “Oil Watch Monthly” (2008)

* Tony Eriksen, Oil stock analyst and Samuel Foucher, oil analyst (2008)

* Matthew Simmons, Energy investment banker, (2007)

* T. Boone Pickens, Oil and gas investor (2007)

* U.S. Army Corps of Engineers (2005)

* Kenneth S. Deffeyes, Princeton professor and retired shell geologist (2005)

* Sam Sam Bakhtiari, Retired Iranian National Oil Company geologist (2005)

* Chris Skrebowski, Editor of “Petroleum Review” (2010)

* Sadad Al Husseini, former head of production and exploration, Saudi Aramco (2008)

* Energy Watch Group in Germany (2006)

Oil production will now begin to decline terminally.

Within a year or two, it is likely that oil prices will skyrocket as supply falls below demand. OPEC cuts could exacerbate the gap between supply and demand and drive prices even higher.

Independent studies indicate that global crude oil production will now decline from 74 million barrels per day to 60 million barrels per day by 2015. During the same time, demand will increase. Oil supplies will be even tighter for the U.S. As oil producing nations consume more and more oil domestically they will export less and less. Because demand is high in China, India, the Middle East, and other oil producing nations, once global oil production begins to decline, demand will always be higher than supply. And since the U.S. represents one fourth of global oil demand, whatever oil we conserve will be consumed elsewhere. Thus, conservation in the U.S. will not slow oil depletion rates significantly.

Alternatives will not even begin to fill the gap. There is no plan nor capital for a so-called electric economy. And most alternatives yield electric power, but we need liquid fuels for tractors/combines, 18 wheel trucks, trains, ships, and mining equipment. The independent scientists of the Energy Watch Group conclude in a 2007 report titled: “Peak Oil Could Trigger Meltdown of Society:”

“By 2020, and even more by 2030, global oil supply will be dramatically lower. This will create a supply gap which can hardly be closed by growing contributions from other fossil, nuclear or alternative energy sources in this time frame.”

With increasing costs for gasoline and diesel, along with declining taxes and declining gasoline tax revenues, states and local governments will eventually have to cut staff and curtail highway maintenance. Eventually, gasoline stations will close, and state and local highway workers won’t be able to get to work. We are facing the collapse of the highways that depend on diesel and gasoline powered trucks for bridge maintenance, culvert cleaning to avoid road washouts, snow plowing, and roadbed and surface repair. When the highways fail, so will the power grid, as highways carry the parts, large transformers, steel for pylons, and high tension cables from great distances. With the highways out, there will be no food coming from far away, and without the power grid virtually nothing modern works, including home heating, pumping of gasoline and diesel, airports, communications, and automated building systems.

It is time to focus on Peak Oil preparation and surviving Peak Oil.
http://survivingpeakoil.blogspot.com/
http://www.peakoilassociates.com/POAnalysis.html

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Hey Adam. Yeah, by all means use less oil. Although if you believe Clifford Wirth’s post, that won’t help us. But I will use less. In fact I will use less than anyone you know.

Hey Derek. I’m not sure that there could be a peaceful and organized transition to a “low-fuel” economy. When I think of the city dwellers who crowd onto buses or the obese recipients of the modern American welfare culture – or when I think of older people whose knees don’t work, or the physically handicapped or infirm, I can’t help thinking that I’m looking at people who couldn’t make the transition you’ve mentioned. Some would die off. Some would suffer. Some would become a menace to society.

Maybe culling the heard is okay, maybe it’s tragic. These days I’m leaning toward okay, but that’s because my knees still work and I’ve got a full set of bicycle tools.

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yo Man review this whole report

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Dream on Derek. Do you have any idea how much time, money, and energy it will take for your so called transition. Where does all this new infrastructure come from…….all that steel, those tracks, those cables, etc etc………are they all smeltered in those green electric toaster smelters that the other guy was talking about. And building all this while we are in recession, possibly a recession that we will not fully recover from…….ever…….not for the long term anyway. Besides…….people assume that if the public transport system was far better that people would use it instead of their cars…..never happen. You can walk out to your car anytime of day or night…..no waiting for anything……..get in your car and drive to any address anywhere in your country that you like………in privacy……and safety……..when public transport gets that good…….never…..then people will use it in place of their cars. The fact is……people will keep using their cars after peak oil………and if it costs so much to fuel them that they have to go without other stuff……it will be the car that gets the chop last.

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Not so fast, peak oil. There are lots of discoveries yet to be made, for one thing. Also, please consider the idea that the “statistics” could be faulty, a lie driven by a conspiracy by oil interests to make us believe that SUPPLY is short so that PRICES will go higher.
There is more oil to be burned that the atmosphere can absorb in any case, so we have to replace oil energy with renewable energy. I like the suggestion that, if peak oil is a reality, then we should use the remaining fossil fuels to make renewable energy equipment.
The electric car killing debacle is evidence that oilmen are fighting the change to “the electric economy”, and so everything is suspicious where we hear resistance to renewable energy.

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Any discussion about oil prices over the next decade must include an attempt to quantify emerging economy demand as an important driver at the margin. Here is a simple thought experiment using Chinese demand to give some idea of the magnitude of the supply issues we face:
- China moves from 3 bbls/person/year to the South Korean per capita consumption level of 17 bbls/person/year
- Transition takes 30 years
- No peak in global production

In next 10 years we must find 44 million BOPD. If you superimpose peak production on top of this demand profile using the following parameters oil prices would increase approximately 250% in real terms over next 10 years:
- Oil demand elasticity of -0.3
- Current production 84 million BOPD, current price US$ 80
- Peak production 100 million BOPD
- Post peak decline rate of 3-4%

If you want to try the model for yourself using your own assumptions it can be found at: http://www.petrocapita.com/index.php?option=com_content&view=article&id=128&Itemid=86

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