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Revisiting Peak Oil

When I started writing this column years ago, it was intended to be a voice for the Transition Vashon group.  We were espousing the need to plan for decreasing energy use due to the dangers of CO2 concentration and consequent global warming, and the arrival of peak oil.  Peak oil is the point at which a finite geographical area has pumped out half of its total supply of known oil reserves after which production will decrease year after year.  The idea was put forward by M. King Hubbert in the 1950s.  He predicted that the US would hit peak oil around 1970.  His theory gained credibility when the US peak appeared to have occurred around 1973.  He predicted that global peak oil would occur around 2000.  Credible estimates now put the date somewhere between 2000 and 2040, with most estimates ranging from 2005 and 2020.

The problem with experiencing peak oil is the economic stagnation that occurs if alternative energy supplies are not available.  Our entire civilization runs on oil.  All manufacture, transportation, food production, and technology depend on it.  At peak oil, we are only at the theoretical halfway point in the depletion of our supply, but decreasing supply, the theory said, would raise the price of oil and, therefore, the price of practically everything else.  The need to move away from petroleum to avoid severe climate change is obvious.  The changes required will entail a huge investment in research, redevelopment, and new infrastructure.  Peak oil was seen as an increasing impediment to making those changes by raising costs and generally destabilizing our economic and political bases.  

As little as five years ago, the prospect of steadily increasing oil prices appeared to be working in our favor by encouraging us to conserve energy, develop renewables, reinvent local economies that would starkly lower transportation needs, thus making us all more resourceful and resilient to shocks in the wider world.
What has happened since has surprised all of us.  We knew that the higher extraction cost reserves, such as tar sands, oil shale, and such would come into production when the price of oil was high enough.  The price rose and domestic production of hard to get fossil fuels began.  On the good side (from a transition perspective), prices at the pump were above $4/gal, and we were buying more efficient vehicles and driving less.  On the bad side, the extraction of these dirty and energy intensive tar sands and oil shale was causing a good deal of environmental damage.  What we didn’t foresee was the fracking boom.  Nobody in their wildest imagination expected that the US would become a fossil fuel net exporter once again.  In just the last three years, US oil production, which was not expected to increase much, if any, ever again, has gone from under 2 million barrels per day to almost 3½ million barrels per day, only a bit less than the all-time highs achieved at the so-called peak in the early 1970s!  The massive proliferation of fracking, along with the aforementioned more challenging reserves, with its known pollution impacts and yet unknown health and geological destabilization questions, has turned into a new fossil fuel boom that is nearly impossible to stop.  All of a sudden, we have pipelines and rail lines being co-opted to get these new resources out to our coasts so we can put them on ships and sell to the highest bidder.  You would think that we might want to hold our resources so as to remain energy independent, but cash flow is the name of the game.

It gets even more convoluted.  Seeing a big drop off in their market share, the OPEC countries (primarily the Saudis) started over-producing their conventional reserves to drive the price down and make it uneconomical for us North Americans to work our tar sands and oil shale deposits.  In addition to that, the decrease in demand as a result of the cooled down economy and the threat of climate change, have all resulted in oil prices  dropping precipitously and the high extraction cost operations shutting way down. Maybe the low price environment will last long enough for us to see the wisdom of leaving the dirty and difficult to extract fuels in the ground.  Maybe we will continue to heed the warnings of climate change and cut back on fossil fuel use and build renewable energy infrastructure.   The fact that the low prices have tempted us to buy gas guzzlers again is not a promising sign.  If the peak oil scenario had gone the way the transition movement originally expected, it would be easier for us to leave fossil fuels behind.  As it is now, we’ve created a temporary oil glut that encourages us to use more now at the expense of our future.  If we continue to react like lab rats, we will burn ourselves into a climate nightmare.  Our well-considered personal choices need to drive the economy, not the price of oil and the pursuit of dollars.

Between ever changing knowledge, technology, and human behavior, it is nearly impossible to predict what will happen next.  We do know, though, that conserving energy, keeping as local and as self sufficient as possible (the original strategy of the transition movement) is still the best approach.