PEAK OIL

October 29, 2011

Introduction

Sometimes we ask ourselves why bother trying to be self-sufficient. Well, a major reason is peak oil. Peak oil is that time when the world can no longer produce as much oil as we need. From the time of peak oil going forward, production will decline as demand continues to increase. Let’s see what the US Department of Energy thinks of this.

The 'Hirsch Report'
A U.S. Dept. of Energy commissioned study “Peaking of World Oil Production: Impacts, Mitigation and Risk Management” was released in early 2005. Prepared by Science Applications International Corporation (SAIC), it is known commonly as the Hirsch Report after its primary author Robert L. Hirsch. For The executive summary of the report warns as follows:  "The peaking of world oil production presents the U.S. and the world with an unprecedented risk management problem. As peaking is approached, liquid fuel prices and price volatility will increase dramatically, and, without timely mitigation, the economic, social, and political costs will be unprecedented. Viable mitigation options exist on both the supply and demand sides, but to have substantial impact, they must be initiated more than a decade in advance of peaking."

Conclusions from the Hirsch Report and three scenarios
• World oil peaking is going to happen, and will likely be abrupt.
• Oil peaking will adversely affect global economies, particularly those most dependent on oil.
• Oil peaking presents a unique challenge (“it will be abrupt and revolutionary”).
• The problem is liquid fuels (growth in demand mainly from the transportation sector).
• Mitigation efforts will require substantial time.
• 20 years is required to transition without substantial impacts
• A 10 year rush transition with moderate impacts is possible with extraordinary efforts from governments, industry, and consumers
• Late initiation of mitigation may result in severe consequences.
• Both supply and demand will require attention.
• It is a matter of risk management (mitigating action must come before the peak).
• Government intervention will be required.
• Economic upheaval is not inevitable (“given enough lead-time, the problems can be solved with existing technologies.”)
• More information is needed to more precisely determine the peak time frame.
• It is not temporary. It is permanent.
• It will take trillions of dollars to fix.
• We need the help of other countries.

Three Possible Scenarios Hirsch Report:
• Waiting until world oil production peaks before taking crash program action leaves the world with a significant liquid fuel deficit for more than two decades.
• Initiating a mitigation crash program 10 years before world oil peaking helps considerably but still leaves a liquid fuels shortfall roughly a decade after the time that oil would have peaked.
• Initiating a mitigation crash program 20 years before peaking appears to offer the possibility of avoiding a world liquid fuels shortfall for the forecast period.

As of 2011 we have not done much that will mitigate this problem nor has any plan been developed. That means if oil has already peaked, or will peak in the next couple of years, we will have a significant liquid fuel deficit for more than 20 years. For a copy of the entire Hirsch report, go to www.netl.doe.gov/publications/others/pdf/oil_peaking_netl.pdf

There is a big problem
We are dependent on oil for our cars, and for all other types of transportation. We will experience higher prices for fuel, the cost of products that are shipped, and over 4000 products that are made from petrochemicals .
• This includes most products made with plastic (bags, artificial limbs, computers, eyeglasses, helmets, heart valves, fishing rods, milk jugs, paint brushes, patio furniture, telephones) to clothing (polyester, nylon) to dishwashing liquids, to fertilizers to flooring (carpet, linoleum) to insect repellent to shampoo to solvents to adhesives to tires.
• Food - Pesticides and agro-chemicals are made from oil. Food may become the highest use of oil products, as we cannot produce nearly enough food without oil. Farming machinery such as tractors and trailers are constructed and powered by oil.
As the price of oil increases, so will the price of these products. In fact there will come a time when we must decide whether to fuel our vehicles or use oil for our more important products.

Impact on Societies of the world
Our industrial societies and our financial systems were built on the assumption of continual growth – growth based on ever more readily available cheap fossil fuels. Oil in particular is the most convenient and multi-purposed of these fossil fuels. Oil currently accounts for about 43% of the world's total fuel consumption and 95% of global energy used for transportation. Oil and gas are feed stocks for plastics, paints, pharmaceuticals, fertilizers, electronic components, tires and much more. Oil is so important that the peak will have vast implications across the realms of war and geopolitics, medicine, culture, transport and trade, economic stability and food production.

Most of the predictions say we are in the middle of peak oil right now. Of the three scenarios of the 2005 Hirsch report, it looks like we have waited until world oil production peaks before taking action. This leaves the world with a significant liquid fuel deficit for more than two decades. The question now is how this is most likely to play out. Maybe being self-sufficient is a good idea after all.
 

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