365 Days of Climate Awareness 88 – Peak Oil

This is another topic, like eutrophication, which is not specifically part of the global warming problem, but it is of direct importance to society and to our use of petroleum. Peak oil theory states that, since petroleum is a finite resource, while humanity is not in imminent danger of running out of recoverable oil, the remaining oil will be increasingly hard to obtain, requiring more time and resources, becoming a less efficient process which is increasingly not beneficial to the economy or humanity.

In 1956 Marion King Hubbert, a geologist for Shell Oil, was commissioned to report on future oil recovery in the United States. After a statistical study of all available oil field data, Hubbert developed a bell-curve model for conventional crude oil production predicting a peak in the early 1970’s. In fact conventional oil—wells drilled on land, without the application of advanced recovery techniques—peaked slightly before Hubbert’s prediction, topping out at 9.5 million barrels per day (mmbd). Similarly detailed information is not available for oil fields in other countries—Saudi Arabia is not about to give out detailed information about production and reserves, which would compromise its geopolitical strength, for example—so similarly detailed predictions cannot be made for the planet as a whole.

Marion Hubbert's prediction curve for conventional (onshore) US oil production.

Furthermore, unconventional oil production has increasingly come to dominate the market, with offshore and fracked wells leading to new peaks in production, notably in the United States (which currently leads the world in crude oil production at slightly over 10.5 mmbd). So what to make of a theory which was correct on its initial terms—predicting maximum onshore oil production in the United States—but avoided predictions for the markets which developed later, and have led to later, higher production?

A very astute observer several years ago (h/t to Rockman at the old Oil Drum site) that even without the specific claims many made—lots of Chicken Littles in this field—coming true, the peak oil dynamic has long been at work. It is extremely difficult, if not impossible, to find precise amounts for simple crude oil produced around the world, without other varieties of petroleum being added in, such as extra-light fracked oil, and ultra-heavy varieties. One researcher has concluded that conventional crude oil production peaked around 2005, which is when the massive rise in oil prices—anyone here remember $5.00/gallon gas?--began which helped lead to the economic crash of 2008.

The peak oil dynamic, as described by Rockman, includes the drive for ever-harder-to-find, ever-harder-to-produce types of oil. It involves the economy being forced to subsist on previously unthought-of prices per barrel (over $150/bbl in the mid-aughts, and over $100/bbl before the oil crash of 2014). Financiers who pronounce oil unlimited—regardless of the “externality” of environmental damage—due to unlimited creation of capital, take into no account the real effect on small consumers’ domestic budgets of unlimitedly expensive oil: they reduce consumption and the market fails. That is now part of the peak oil dynamic: too much demand causes oil prices to rise to an unsustainable level, leading to the oil market’s collapse. There is now an economic ceiling on oil’s use.

Another important aspect of the peak oil dynamic is Energy Return on Energy Invested (EROEI, alternately EROI, or Energy Return on Investment). It is an apples-to-apples comparison of how much oil must be spent in order to extract a given amount. Researchers have found that, around the turn of the 20^th century, EROEI was roughly 100:1, that is, one barrel in for one hundred out. More recent, resource-intensive methods like deep offshore and fracking are closer to 10:1. Tar sands extraction is closer to 4:1.

And these are merely the economic terms of the fossil fuel problem. If humanity is to have any chance of surviving this environmental crisis with something like our present society, we need to realize now that the concept of the “externality” as applied to business and economics is false. It’s as true for the extraction industries as it is for facebook. Your own actions directly affect your viability. There is no free lunch. There is no externality.

Tomorrow: beginning to look more closely at the IPCC’s 2019 report on oceans and the cryosphere.

Be brave, and be well.