10 ms·

Former BP geologist: peak oil is here and it will 'break economies'

81 points by evolve2k 13y ago

manglav 13y ago
This is quite scary when you think about the fact that so most economies are ultimately tied to their oil prices (except Greenland). Because peak refers to production, as the world goes, we have some more time to prepare, but price will increase in the meantime. What's interesting is that I'm more hopeful that the oil companies will find a common ground solution than the governments of the world will, because at least the companies are motivated by their collective wallets.
- eru 13y ago
  > This is quite scary when you think about the fact that so most economies are ultimately tied to their oil prices (except Greenland). Oil can only get so expensive. We have lots of alternative sources of energy that put a lid on the oil price. Just to give some examples, at some point, making artificial oil out of coal will become viable on a large scale (just like Germany did during WWII), and there's always nuclear power. And there's also lots of oil at sea that we have barely started to explore.
  - waps 13y ago
    Except for nuclear, what technologies are you talking about ? If we expect oil to do what this article says it'll do we'll need at least 50 new nuclear plants across the US in 10-15 years, maybe less. They're not interchangeable with oil at all. Even if we did have those plants, we'd still need to replace half the current infrastructure.
    - eru 13y ago
      There's plenty of coal, and natural gas. And solar is already viable at high prices, with costs falling fast. Wind energy is also well understood. Methane hydrate might work, too, but I don't know enough about it. And more boringly, energy conservation and increased efficiency can have the same effect as new sources. A `smart grid' becomes a more and more lucrative investment as energy prices go up.
  - manglav 13y ago
    I don't understand your comment. 1. How can oil "only" get so expensive? By oil, we are referring to the act of gathering existing oil. There is no limit to the cost of gathering. Going deeper and deeper, or from lower concentration will become more expensive as time goes on. 2. We have a lot of alternative sources of energy that put a lid on oil price. Can you explain the mechanism for this? Are you referring to the true cost of oil, or just at the fillup station? Are you saying the major cost of gathering oil is the input energy, and because the input energy is alternative, the EROIE is infinite? Please elaborate. 3. making artificial oil out of coal will become viable on a large scale. Making artificial oil has nothing to do with gathering oil. The reason they did that was that oil was a more valuable energy medium than coal, because it can be used for many products, not just trains/ships/electricity. 4. There's always nuclear power. I am a big fan of nuclear power, but have no faith in governments making a sound scientific analysis. So unless nuclear power becomes cheap (infrastructure-wise), I think peak oil is still a big concern. 5. Lot's of oil at sea we haven't explored. There's a reason we haven't explored it - it costs way, way, too much. But I'm sure we will as the EROIE goes down.
    - eru 13y ago
      Let's ignore technical progress for a while. You can order every Joule of oil by how much effort the extraction is. There's basically no limit on the effort here. But, if you add all energy from other sources into your line-up, you will see that we won't touch the crazy difficult oil until we have exhausted the easier alternative sources. So, if oil ever gets expensive enough, nobody will use it until we have used up eg more coal. While we use the coal and _not_ the oil, oil won't become scarcer, and thus won't increase in price. Of course, it doesn't really make sense to go for oil that has less energy output than what its extraction costs. At any price. [0] Technologic progress will take care of some of that. [0] Unless you use the oil as a kind of battery. Ie use 100J of solar power that's only available during the day, to extract 50J of oil usable anytime---that might be worthwhile, but it would compete with battery technology not with energy sources.
skinnycow 13y ago
Moar US oil subsidies please.
barry-cotter 13y ago
Title exaggerates to my mind. Peak oil is here; it was reached in 2008 apparently but 'break economies' is doom mongering. It seems depressingly plausible that the decline in liquid petrocarbons will lead to a lower growth rate absent large technological changes. I just hope nuclear or the unproven renewables come on line smoothly, otherwise coal might come back. There's 200 years supply for North America at current energy usage, in North America. But coal is awful. Just the radiation released into the air by burning it kills more people every year than Chernobyl and that's without considering "normal" air pollution.
- krakensden 13y ago
  I suspect it's not doom mongering for some of the goofier regimes propped up by oil money. Would not want to live in Saudi Arabia when the money runs out.
  - jrockway 13y ago
    Money doesn't expire after oil runs out. The oil-dependent countries can live off of investment income for a long time. Doesn't Norway's oil fund control like 1% of the global equity market?
    - barry-cotter 13y ago
      He did say "some of the goofier regimes". The Gulf monarchies might be comparable to Norway, Saudi Arabia isn't. There are so many Saudis that even though it's a petro-state there are some who have neither professional jobs nor do they live on the dole.
    - caoilte 13y ago
      I wonder what the global equity market will be worth once the oil runs out?
      - jrockway 13y ago
        My guess is a lot. The equity market represents most of humanity's value output. Will we stop generating value when energy gradually becomes more expensive over a few decades? I doubt it.
eru 13y ago
> [...] showed that conventional oil had most likely peaked around 2008. Oh, so it's "conventional peak oil" and not "peak oil".
- mike_esspe 13y ago
  Global oil production in 2013 increased by 2.2%. Natural gas production increased by 1.9%. http://www.bp.com/en/global/corporate/about-bp/energy-economics/statistical-review-of-world-energy-2013/review-by-energy-type/oil/oil-production.html http://www.bp.com/en/global/corporate/about-bp/energy-econom... http://www.bp.com/en/global/corporate/about-bp/energy-economics/statistical-review-of-world-energy-2013/review-by-energy-type/natural-gas/natural-gas-production.html http://www.bp.com/en/global/corporate/about-bp/energy-econom...
thewarrior 13y ago
I think that if we were facing such an imminent and catastrophic collapse world governments wouldn't be so complacent. There would be moves being made to secure each countries future. I mean the main job of the CIA etc is to predict and stay on top of such trends. Also in such a scenario I would expect countries like Saudi Arabia to curtail their own exports and start preserving it for their own needs. The day you see that happen you can rest assured that we're in deep trouble. The actions of the Chinese govt are also interesting to observe. They've been buying up oil around the world but haven't really being attempting to engineer a paradigm shift in their energy policy. We have endless summits on climate change and such but not even a single global summit on such an important issue. The govts of the world maybe incompetent but I would like to believe that they arent incompetent to this scale. So the gist of my point is that we might be facing some difficult times ahead but not an outright collapse.
- coenhyde 13y ago
  Why would Saudi Arabia curtail their own exports? They'll make a lot more money exporting it. The ruling class has no incentive to care how expensive oil is for their domestic economy.
  - Anon84 13y ago
    They can make more money by exporting it later when it's scarser.
- caoilte 13y ago
  The main job of the CIA is WHAT?
  - makomk 13y ago
    It's their job, they're just not very good at it.
fizx 13y ago
I feel like the crazy decline in cost of solar will catch us in time, even if this is true. http://www.treehugger.com/slideshows/renewable-energy/important-graph-cost-solar-headed-parity-coal-and-gas/ http://www.treehugger.com/slideshows/renewable-energy/import...
- olefoo 13y ago
  To what extent is the solar economy dependent on the petrol economy? Solar is great for architectural uses, and with a decent electrical grid you can even out and match up the fluctuations in demand and generation. But if you need to ship quantities of energy dense easily usable power around; it's really hard to beat hydrocarbon fuels. And for manufacturing and installing all those solar facilities...?
randyrand 13y ago
Again? 1882: "only 95 Million barrels remaining/4 years of oil left" 1919: "only 20 years of oil left" 1950: "only 100 Billion barrels left" 1956: "peak oil" by 1970 1980: "only 648 Billion barrels left" 1993: "only 999 Billion barrels left" 2000: "only 1016 Billion barrels left" 2008: "only 1238 Billion barrels left" The point is not the peak oil will never happen, it's that we have no clue when it will. Past precedent says prices will rise slightly, technology will improve, and new oil that was once too expensive to obtain becomes obtainable. Here's my prediction: We will switch to some cheaper alternative long before oil ever runs out. There won't be some dramatic crisis where everything goes to shit. It will be a gradual change where oil prices steadily climb and consumption slowly diminishes. Just like has already happened with countless other resources and just like is happening now. Source and video explanation [Are we running out of Resources?]: http://www.youtube.com/watch?v=AcWkN4ngR2Y http://www.youtube.com/watch?v=AcWkN4ngR2Y
- coldtea 13y ago
  >Past precedent says prices will rise slightly, technology will improve, and new oil that was once too expensive to obtain becomes obtainable. And common logic says that a resource that is finish will, sooner or later, finish. It also says that there's no natural law that "technology will improve" always, so that getting harder to get oil will only require the prices to rise "slightly". At some point a specific technology does not improve anymore, or you get diminishing returns. Also, common sense says, that as time goes by, and measurements improve, it's far more likely for us to predict correctly how many barrels are left that it was in the past. Common sense says that for a civilisation to run out of a resource and NOT find a proper, similarly cheap, replacement in due time, it's bloody probable. Nothing strange about it. Now, some people like to think that stuff like "technology always improves in time to save us" is some kind of natural law. I guess they are more into science as religion, than in science as science.
  - CamperBob2 13y ago
    Now, some people like to think that stuff like "technology always improves in time to save us" is some kind of natural law. I guess they are more into science as religion, than in science as science. (Shrug) On the one side, we have some people who have always said that. They have always been right. On the other side, we have some people who have always forecast an imminent heat death of Malthusian malaise for us all. Those people have never been right, so I'd say they bear the burden of proof that This Time It's Different.
legohead 13y ago
ah, the yearly peak oil outcry
coldtea 13y ago
It's amazing how many people think that something like peak oil can't happen, not for anything else, but for their ardent zeal in scientific progress that makes them believe that things can only get better and there are no limits...
- baq 13y ago
  especially when it's scientists from the field in question sounding the alarm.
- roel_v 13y ago
  It depends what you call 'peak oil'. That there will be a point in time where we consume the maximum amount of oil ever is inevitable - we will run out, and the usage curve will have a maximum somewhere. But 'peak oil' is being used as some sort of scientific-sounding synonym for a precursor to a Mad Max style society. It's this part that is absurd and highly unlikely - much more unlikely than the alternative in which we more or less gradually transition into a society based on other energy sources and modes of energy transport.
graeham 13y ago
The oil industry works like industries are supposted to from Econ 101: at $150 oil like there was in 2008, there is a lot more oil that becomes economically viable than the $100 oil now, or the $30 oil in the early 2000's (off-shore, oil sands, and fracking). The article seems to say that the recession was caused by a peak in oil supply - I would suggest it is instead made a peak in oil demand (or rather the downward slope on the other side of the peak). They are probably correct that cheap oil is done - the oil sands in Alberta, Canada are viable only when oil is above about $70/barrel. Of course when the price goes up, demand drops, so the need for higher production goes down. In my opinion peak oil isn't the question: what we should be asking is how do we want to change our industies and lifestyles to reflect that energy is more expensive than it has been.
- psbp 13y ago
  You just sloppily restated the article.
caoilte 13y ago
It's most illustrative that this lecture was given to future actuaries. Branches of society that have to concern themselves with the future are already well advanced in making preparations for it. For example, a friend who is a town planner has to make sure that all new infrastructure takes expected sea level rises into account - even as her political masters deny global warming exists. Meanwhile, mass society still can't even come to terms with the fact that many well respected mavens predicted that the Iraq War would be a disaster, that there would be a housing crash and that banks were incentivized to be corrupt and loot the economy. What hope for anti-biotics misuse, over-dependence on synthetic fertilizers and civilization surviving the anthropocene?
baq 13y ago
RIP http://www.theoildrum.com/ http://www.theoildrum.com/ everyone should go read at least one article from that site. doesn't matter which one.
Choronzon 13y ago
Forget production rates barrels left and the economic value of the oil. They are second order approximations .The way to measure peak oil is in joules. The energy from the oil - the energy to extract in the first place is what your economy is left with .We will never run out of oil but running out of energy efficient oil is probable

81 points by evolve2k 13y ago

This is quite scary when you think about the fact that so most economies are ultimately tied to their oil prices (except Greenland). Because peak refers to production, as the world goes, we have some more time to prepare, but price will increase in the meantime. What's interesting is that I'm more hopeful that the oil companies will find a common ground solution than the governments of the world will, because at least the companies are motivated by their collective wallets.

eru 13y ago
> This is quite scary when you think about the fact that so most economies are ultimately tied to their oil prices (except Greenland). Oil can only get so expensive. We have lots of alternative sources of energy that put a lid on the oil price. Just to give some examples, at some point, making artificial oil out of coal will become viable on a large scale (just like Germany did during WWII), and there's always nuclear power. And there's also lots of oil at sea that we have barely started to explore.
- waps 13y ago
  Except for nuclear, what technologies are you talking about ? If we expect oil to do what this article says it'll do we'll need at least 50 new nuclear plants across the US in 10-15 years, maybe less. They're not interchangeable with oil at all. Even if we did have those plants, we'd still need to replace half the current infrastructure.
  - eru 13y ago
    There's plenty of coal, and natural gas. And solar is already viable at high prices, with costs falling fast. Wind energy is also well understood. Methane hydrate might work, too, but I don't know enough about it. And more boringly, energy conservation and increased efficiency can have the same effect as new sources. A `smart grid' becomes a more and more lucrative investment as energy prices go up.
- manglav 13y ago
  I don't understand your comment. 1. How can oil "only" get so expensive? By oil, we are referring to the act of gathering existing oil. There is no limit to the cost of gathering. Going deeper and deeper, or from lower concentration will become more expensive as time goes on. 2. We have a lot of alternative sources of energy that put a lid on oil price. Can you explain the mechanism for this? Are you referring to the true cost of oil, or just at the fillup station? Are you saying the major cost of gathering oil is the input energy, and because the input energy is alternative, the EROIE is infinite? Please elaborate. 3. making artificial oil out of coal will become viable on a large scale. Making artificial oil has nothing to do with gathering oil. The reason they did that was that oil was a more valuable energy medium than coal, because it can be used for many products, not just trains/ships/electricity. 4. There's always nuclear power. I am a big fan of nuclear power, but have no faith in governments making a sound scientific analysis. So unless nuclear power becomes cheap (infrastructure-wise), I think peak oil is still a big concern. 5. Lot's of oil at sea we haven't explored. There's a reason we haven't explored it - it costs way, way, too much. But I'm sure we will as the EROIE goes down.
  - eru 13y ago
    Let's ignore technical progress for a while. You can order every Joule of oil by how much effort the extraction is. There's basically no limit on the effort here. But, if you add all energy from other sources into your line-up, you will see that we won't touch the crazy difficult oil until we have exhausted the easier alternative sources. So, if oil ever gets expensive enough, nobody will use it until we have used up eg more coal. While we use the coal and _not_ the oil, oil won't become scarcer, and thus won't increase in price. Of course, it doesn't really make sense to go for oil that has less energy output than what its extraction costs. At any price. [0] Technologic progress will take care of some of that. [0] Unless you use the oil as a kind of battery. Ie use 100J of solar power that's only available during the day, to extract 50J of oil usable anytime---that might be worthwhile, but it would compete with battery technology not with energy sources.

skinnycow 13y ago

Moar US oil subsidies please.

barry-cotter 13y ago

Title exaggerates to my mind. Peak oil is here; it was reached in 2008 apparently but 'break economies' is doom mongering. It seems depressingly plausible that the decline in liquid petrocarbons will lead to a lower growth rate absent large technological changes. I just hope nuclear or the unproven renewables come on line smoothly, otherwise coal might come back. There's 200 years supply for North America at current energy usage, in North America. But coal is awful. Just the radiation released into the air by burning it kills more people every year than Chernobyl and that's without considering "normal" air pollution.

krakensden 13y ago
I suspect it's not doom mongering for some of the goofier regimes propped up by oil money. Would not want to live in Saudi Arabia when the money runs out.
- jrockway 13y ago
  Money doesn't expire after oil runs out. The oil-dependent countries can live off of investment income for a long time. Doesn't Norway's oil fund control like 1% of the global equity market?
  - barry-cotter 13y ago
    He did say "some of the goofier regimes". The Gulf monarchies might be comparable to Norway, Saudi Arabia isn't. There are so many Saudis that even though it's a petro-state there are some who have neither professional jobs nor do they live on the dole.
  - caoilte 13y ago
    I wonder what the global equity market will be worth once the oil runs out?
    - jrockway 13y ago
      My guess is a lot. The equity market represents most of humanity's value output. Will we stop generating value when energy gradually becomes more expensive over a few decades? I doubt it.

eru 13y ago

> [...] showed that conventional oil had most likely peaked around 2008. Oh, so it's "conventional peak oil" and not "peak oil".

mike_esspe 13y ago
Global oil production in 2013 increased by 2.2%. Natural gas production increased by 1.9%. http://www.bp.com/en/global/corporate/about-bp/energy-economics/statistical-review-of-world-energy-2013/review-by-energy-type/oil/oil-production.html http://www.bp.com/en/global/corporate/about-bp/energy-econom... http://www.bp.com/en/global/corporate/about-bp/energy-economics/statistical-review-of-world-energy-2013/review-by-energy-type/natural-gas/natural-gas-production.html http://www.bp.com/en/global/corporate/about-bp/energy-econom...

thewarrior 13y ago

I think that if we were facing such an imminent and catastrophic collapse world governments wouldn't be so complacent. There would be moves being made to secure each countries future. I mean the main job of the CIA etc is to predict and stay on top of such trends. Also in such a scenario I would expect countries like Saudi Arabia to curtail their own exports and start preserving it for their own needs. The day you see that happen you can rest assured that we're in deep trouble. The actions of the Chinese govt are also interesting to observe. They've been buying up oil around the world but haven't really being attempting to engineer a paradigm shift in their energy policy. We have endless summits on climate change and such but not even a single global summit on such an important issue. The govts of the world maybe incompetent but I would like to believe that they arent incompetent to this scale. So the gist of my point is that we might be facing some difficult times ahead but not an outright collapse.

coenhyde 13y ago
Why would Saudi Arabia curtail their own exports? They'll make a lot more money exporting it. The ruling class has no incentive to care how expensive oil is for their domestic economy.
- Anon84 13y ago
  They can make more money by exporting it later when it's scarser.
caoilte 13y ago
The main job of the CIA is WHAT?
- makomk 13y ago
  It's their job, they're just not very good at it.

fizx 13y ago

I feel like the crazy decline in cost of solar will catch us in time, even if this is true. http://www.treehugger.com/slideshows/renewable-energy/important-graph-cost-solar-headed-parity-coal-and-gas/ http://www.treehugger.com/slideshows/renewable-energy/import...

olefoo 13y ago
To what extent is the solar economy dependent on the petrol economy? Solar is great for architectural uses, and with a decent electrical grid you can even out and match up the fluctuations in demand and generation. But if you need to ship quantities of energy dense easily usable power around; it's really hard to beat hydrocarbon fuels. And for manufacturing and installing all those solar facilities...?

randyrand 13y ago

Again? 1882: "only 95 Million barrels remaining/4 years of oil left" 1919: "only 20 years of oil left" 1950: "only 100 Billion barrels left" 1956: "peak oil" by 1970 1980: "only 648 Billion barrels left" 1993: "only 999 Billion barrels left" 2000: "only 1016 Billion barrels left" 2008: "only 1238 Billion barrels left" The point is not the peak oil will never happen, it's that we have no clue when it will. Past precedent says prices will rise slightly, technology will improve, and new oil that was once too expensive to obtain becomes obtainable. Here's my prediction: We will switch to some cheaper alternative long before oil ever runs out. There won't be some dramatic crisis where everything goes to shit. It will be a gradual change where oil prices steadily climb and consumption slowly diminishes. Just like has already happened with countless other resources and just like is happening now. Source and video explanation [Are we running out of Resources?]: http://www.youtube.com/watch?v=AcWkN4ngR2Y http://www.youtube.com/watch?v=AcWkN4ngR2Y

coldtea 13y ago
>Past precedent says prices will rise slightly, technology will improve, and new oil that was once too expensive to obtain becomes obtainable. And common logic says that a resource that is finish will, sooner or later, finish. It also says that there's no natural law that "technology will improve" always, so that getting harder to get oil will only require the prices to rise "slightly". At some point a specific technology does not improve anymore, or you get diminishing returns. Also, common sense says, that as time goes by, and measurements improve, it's far more likely for us to predict correctly how many barrels are left that it was in the past. Common sense says that for a civilisation to run out of a resource and NOT find a proper, similarly cheap, replacement in due time, it's bloody probable. Nothing strange about it. Now, some people like to think that stuff like "technology always improves in time to save us" is some kind of natural law. I guess they are more into science as religion, than in science as science.
- CamperBob2 13y ago
  Now, some people like to think that stuff like "technology always improves in time to save us" is some kind of natural law. I guess they are more into science as religion, than in science as science. (Shrug) On the one side, we have some people who have always said that. They have always been right. On the other side, we have some people who have always forecast an imminent heat death of Malthusian malaise for us all. Those people have never been right, so I'd say they bear the burden of proof that This Time It's Different.

legohead 13y ago

ah, the yearly peak oil outcry

coldtea 13y ago

It's amazing how many people think that something like peak oil can't happen, not for anything else, but for their ardent zeal in scientific progress that makes them believe that things can only get better and there are no limits...

baq 13y ago
especially when it's scientists from the field in question sounding the alarm.
roel_v 13y ago
It depends what you call 'peak oil'. That there will be a point in time where we consume the maximum amount of oil ever is inevitable - we will run out, and the usage curve will have a maximum somewhere. But 'peak oil' is being used as some sort of scientific-sounding synonym for a precursor to a Mad Max style society. It's this part that is absurd and highly unlikely - much more unlikely than the alternative in which we more or less gradually transition into a society based on other energy sources and modes of energy transport.

graeham 13y ago

The oil industry works like industries are supposted to from Econ 101: at $150 oil like there was in 2008, there is a lot more oil that becomes economically viable than the $100 oil now, or the $30 oil in the early 2000's (off-shore, oil sands, and fracking). The article seems to say that the recession was caused by a peak in oil supply - I would suggest it is instead made a peak in oil demand (or rather the downward slope on the other side of the peak). They are probably correct that cheap oil is done - the oil sands in Alberta, Canada are viable only when oil is above about $70/barrel. Of course when the price goes up, demand drops, so the need for higher production goes down. In my opinion peak oil isn't the question: what we should be asking is how do we want to change our industies and lifestyles to reflect that energy is more expensive than it has been.

psbp 13y ago
You just sloppily restated the article.

caoilte 13y ago

It's most illustrative that this lecture was given to future actuaries. Branches of society that have to concern themselves with the future are already well advanced in making preparations for it. For example, a friend who is a town planner has to make sure that all new infrastructure takes expected sea level rises into account - even as her political masters deny global warming exists. Meanwhile, mass society still can't even come to terms with the fact that many well respected mavens predicted that the Iraq War would be a disaster, that there would be a housing crash and that banks were incentivized to be corrupt and loot the economy. What hope for anti-biotics misuse, over-dependence on synthetic fertilizers and civilization surviving the anthropocene?

baq 13y ago

RIP http://www.theoildrum.com/ http://www.theoildrum.com/ everyone should go read at least one article from that site. doesn't matter which one.

Choronzon 13y ago

Forget production rates barrels left and the economic value of the oil. They are second order approximations .The way to measure peak oil is in joules. The energy from the oil - the energy to extract in the first place is what your economy is left with .We will never run out of oil but running out of energy efficient oil is probable