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What is Peak Oil?    

 Peak oil refers  to the point at which increasing global demand meets declining oil production. It's a bell shaped curve, each in opposite directions and X marks the spot where our lives will change forever. Many experts believe this has already occurred and many others believe that point is very near. It is the view of the author that we have experienced the "peak of cheap oil" and while shale drilling may keep supplies up for another couple of decades, we are moving into an era of ever increasing oil prices unless world demand slows for some unforeseen reason.

The term "peak oil" was first used in 1956 by a Shell Oil Company geologist named Dr. Marion King Hubbert. who proposed that oil production in the United States faced an irreversible peak. Such a peak did indeed occur in the 1970's, within an year of his prediction and we have since gone from the world's largest oil exporter to the largest importer. Despite a recent uptick in US oil production, long term reserves won't be enough to keep up with demand.  Hubbert predicted the world as a whole would see peak oil happening somewhere in the 1990's but what threw his prediction off a few years was the huge drop in U.S. consumption due to the Arab oil embargo in the 1970' and a temporary switch to smaller cars.

"Peak Oil" or the peak and decline of world oil production, is not some crackpot theory, but one that a number of prominent scientists, geologists and even oil company executives like T. Boon Pickens believe is happening right now or very soon. From the time of the peak  onward, things  that we take for granted will change forever.

The major news headlines of the times almost universally relate in some way to peak oil.  Whether it is war in the Middle East or Wall Street crashing, the high price of energy is a part of it. This site is dedicated to finding and disseminating those news stores about peak oil that shed light on how serious the problem really is.                                    

We Eat Oil, Literally

Oil and natural gas give all of us a quality of life far beyond that of any other humans that have ever lived on planet earth. We literally eat oil, every day. A calorie is a unit of energy and of the food calories that we eat, ten or more calories of petroleum based energy was needed to produce only one of the many calories we eat daily. Oil powers the tractors that plow the fields, and makes the fertilizers and chemicals today's crops require. It transports those same farm products to factories where they are processed using oil and wraps them in oil based plastic to be kept in supermarkets cooled with petroleum energy for shoppers who drive to get their food in gas guzzling cars and take it home to cook over  a petroleum flame. How will we produce as much food without oil?  

Relatively cheap foreign oil has allowed us to build homes far from our workplaces and to heat and cool ever larger homes cheaply. Now a slowing economy which was propelled in part by the premise of cheap energy and easy credit is threatening to spiral into a worldwide depression as the dual whammy of the mortgage crisis and high energy prices devastate our economy.

Even as markets crash and jobs are lost or downsized the burden of high gas, diesel and heating oil prices continue to contribute to the misery.

Before peak oil occurred we took  for granted travel to faraway places. Now the headlines are filled with stories of airlines and cruise ship companies going bankrupt since they cannot afford the high cost of fuel. The way we think about vacations and business travel may be about to change forever.

There are many that argue that there is still a good quantity of oil remaining in the earth's crust. They are partly right, however the portion of that which is easily recoverable has mostly been discovered. New discoveries in deep water, such as in Brazil and the tar sands of Canada require that oil prices be over $100 for recovery to be economically feasible. It's not about the quantity of oil that remains, It's about how much the remaining oil will cost to be recovered and if we can afford it without loosing all that we have become accustomed to.

Just as a person dying of dehydration still has a large amount of H2O still in their body we still have a large quantity of oil remaining. It is the massive volume of oil and natural gas that the world's economy needs at a certain price that matters. The world economy is beginning to suffer from "oil dehydration." as it becomes more and more expensive due to high recovery costs of  the remaining deepwater and tar sand deposits.

No Easy Options Or Alternatives To Oil

It may be possible to replace petroleum products such as gasoline and diesel with new vehicle fuels such as hydrogen  but we are far behind in beginning any such transition.  Also, hydrogen does not make itself, it takes large amounts of energy to crack it from H2O. Promising technologies such as algal bio-diesel are still in the laboratory stage and years away from production.

There are no easy options for replacing oil based energy. There is simply not enough uranium left to fuel the many nuclear power plants that would need to be built and even if a crash course in plant building was started today it would take decades to build enough nuclear plants to replace a fraction of oil derived energy. Not to mention the fact that Uranium is mined and transported using large amounts of diesel fuel which is increasing in cost.

Wind power is a valuable addition to the energy mix but to produce the amount of turbines we need to replace oil will require billions of barrels of oil to produce fiberglass resins used in blades, transport turbines and smelt the steel and aluminum used in the towers and transmission lines.

What many "doomers" or peak oil doomsday theorists predict is a massive global famine and die off as oil becomes too expensive to keep up world food production at current rates. We are barely producing enough food to supply the world (with ten calories of oil energy used for every one calorie of food energy produced). What will happen when energy costs increase fourfold, fivefold or even tenfold in the coming years? Will peak oil mean global famine?

Why Peak Oil Isn't Headline News

The corporations and politicians that control our media have a lot riding on keeping the subject of peak oil from going mainstream. Just look at who owns the outlets we get our news from. Fox News in owned in part by a Saudi Prince and a UAE holding company,  and CBS is owned by companies such as GE and Westinghouse which have a large stake in the oil industry. Our entire false economy, and their share prices are built on the premise of unlimited growth and cheap oil. Our stock market and retirement plans depend on increased growth and if peak oil is really happening it means that our financial house of cards is going to fall. Our economy is 100% built on the back of cheap oil and stock values would plummet if the truth about oil depletion was made public. Even the leaders of oil rich countries such as Saudi Arabia must now keep figures about their oil reserves secret lest their own citizens revolt when they find there is no future. (Read Matt Simmon's Book Twilight In The Desert"). As oilfields such as the Gwahar field in Saudi Arabia and Mexico's Cantarell field deplete rapidly the truth is finally coming out.

Despite the importance that oil has in our lives it only makes headlines when it is extremely expensive. Our economy was built on the prospect of oil remaining cheap forever. Despite recent drops, would you have called the current price per gallon cheap four years ago?

Can't We Just "Drill Baby Drill"?

I'm not sure where the catchphrase "drill baby drill" came from but it is being parroted more and more these days as the solution to all of our problems. Even if we allowed drilling to begin in all the sensitive environmental areas such as ANWR and in coastal areas it would take years for any of that oil to reach the market. According to many experts we would see only a fifty cent decrease in the cost of gasoline even then. The Arctic National Wildlife Reserve holds only one years worth of oil at current consumption rates.  Offshore drilling is extremely expensive. For many areas, such as deep Gulf Of Mexico and the Petrobras salt dome area off of Brazil, oil needs to be in the $100 a barrel range just to make drilling profitable. Offshore drilling doesn't mean cheap oil. In fact deep offshore drilling NEEDS high oil prices to be viable. If we use 25% of the world's oil and have just 2-3% of it here the math doesn't work out. The solution is not to "drill baby drill" but how to move away from oil if it is not already too late.

Peak Oil And Our Modern Day Easter Island       

  peak oil analog              cause of peak oil, consumption      peak oil gas guzzler hummer

Stone Statues On Easter Island.                   Mall Of America, Minneapolis     Stretch Hummer, 4 Miles Per Gallon

If we wait much longer we may find ourselves in the same position as many anthropologists believe that the inhabitants of Easter Island were once in.

The islanders spent generations building stone monuments to worship, cutting down all of their forests in the process to use as rollers to move the stones. When the land became barren and their resources were all used up they had no lumber with which to build rafts and leave the barren island and most of them starved to death or were killed fighting each other for food.

In the same way, our civilization has spent decades building a society completely based on the false premise unlimited growth.  Many of us, "the islanders" failed to question our leaders about how many shopping malls, Hummers and multi thousand square feet homes our society really needed and why we weren't spending our energy and money building a strong, energy independent infrastructure for our children.

The energy we expended building such a false economy should have instead been spent on renewable, clean energy in case oil ever ran out.    If that had happened It is doubtful that we would be involved in the current costly overseas wars. The very people we are now fighting would not have had any money to attack us with if we had never sent them so much of ours.

If we had our own source of domestic renewable energy would places like glittering Dubai, or Saddam's former palaces have existed? While Ronald Reagan was responsible for some good things, like the fall of the Soviet Union, he also set us upon a path of oil dependence. The week after he took office he had the solar panels and wind power ripped off of the roof of the White House and slashed the budgets of most government energy research and incentive programs while making long term deals with  dictators in countries that would eventually rise to challenge us like Iraq. The same doctrine of dependence on cheap Middle East Oil continued right on through to the Bush presidency.

There was simply too much easy money to be made overseas by U.S. oil companies who have had Washington in their back pocket for so long. Because of our government's policies the domestic oil industry all but shut down in the 1980's as we made deals with the Saudi's and opened the floodgates of cheap OPEC oil.   Thousands of hard working oilfield workers lost their jobs.

The solar and wind industries all but died.  Now we have to import wind turbines from the largest manufacturer, Vestas, in of all places, Denmark which has had a strong renewable energy program all along!   Behind closed doors the big multinational companies  like Exxon are scared straight. They have been kicked out of country after country as those nations nationalized oilfields and they are running out of new places to drill. They know peak oil is a reality and hire consultants like CERA, the Cambridge Energy Research Associates to come up with figures that "prove" that peak oil is years away. The insiders of those companies know that the times of big profits are coming to an end but they can't let shareholders know or the house of cards, and stock prices will eventually plunge.

Go to fullsize image  Vestas V52 Turbine In Texas, Imported From Denmark

Because of this lack of action may well have squandered the time needed to transition to a non oil based economy. Politicians promise "energy independence".  Can we really afford a massive crash spending plan now after the massive mortgage bailout? Will we shelve all of the alternative energy plans if oil stays "cheap" for a few months and be in the same situation again when it skyrockets back with the rebounding economy?   And so here we all are, at a crossroads at which critical decisions need to be made to save us from peak oil and yet we are  still distracted by pop culture, reality TV and other diversions, believing life as usual will continue on.   Those paying attention and preparing will be the ones to survive the upheaval brought on by peak oil in the end.

See   Hypothetical Worst Case Survival Strategies

 

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Update: Recently the price of oil has begun to climb as the world economy rebounds from recession.

Most experts in the field of peak oil, as well as oil and gas investors such as T. Boone Pickens expect oil to quickly return to pre-crash highs as soon as the world credit markets ease. In addition, financial experts such as Stephen Leeb and Marc Faber, (both predicted the current crisis) expect the dollar to weaken in coming months, leading oil into the $150 per barrel and above range.   Low oil prices will remain only if you believe that the world economy will not rebound in the coming months and people will never consume anything again and return to being hunter - gatherers living in caves.

Many of the large mutual fund managers, who are investing heavily in energy right now at bargain prices, believe that this lull in oil prices is temporary. All we can do is be prepared and not waste this opportunity as a country to develop alternatives.

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