A View From The Handbasket

Thursday, September 15, 2005
Overly long thoughts on peak oil: from Pollyanna to Cassandra
Posted by neros_fiddle at 5:25 PM
Peak oil is simultaneously the most important and least covered issue out there today. The basic idea is that oil production follows something like a bell curve -- it increases until all the "easy" oil is gone, extracting it more gets steadily more difficult and production inexorably drops. The shift from increasing to decreasing production is the peak. This has already happened in America, and those who know more about it than me suggest it will happen globally soon.

However, demand continues to increase, as energy demand knows nothing and cares less about supply. The global population grows. More and more products are developed that use petroleum (plastics, primarily). Agriculture uses more and more petroleum-based pesticides to maintain crop yields. Literally billions of Chinese and Indians are aspiring, and ever more able, to own and drive cars. A burgeoning fleet of planes and ships ferry around the products of the global economy. People live farther and farther away from work, driving in some cases hours back and forth every day, primarily to buy larger houses that require more heating and cooling.

Economics 101 tells us that growing demand and shrinking supply gives us high prices and scarcity. So what happens when there's not enough oil to go around?

There's very little agreement about this. Theories can be broken down roughly along these lines:

1. There's no problem. Oil is infinite. The Economist ran a piece arguing this viewpoint a while ago entitled "The Bottomless Beer Mug." (It's pay-only on their site, so no link.) An interesting sidebar to this is the concept that oil's origin is abiogenetic -- it's not dead dinosaurs but somehow manufactured by the earth.

While reassuring, I'm not sure how realistic an attitude this is.

2. Oil isn't going to peak for decades. Don't worry. This is more of a way of avoiding the problem than solving it. Even if you grant the premise, doesn't it make more sense to fix things now instead of waiting for a cataclysm?

The obvious answer to that is that there currently isn't a financial incentive to solve the problem, as oil is still the best source of energy available. But never fear...

3. The peak's coming, but the free market will fix it. This theory posits that as oil gets more expensive, two things will happen.

First, previously impractical sources of oil such as the Canadian tar sands will become profitable, maintaining an expensive but steady supply. If it costs, say, $30 a barrel to get oil out of the tar sands, and oil sells for $20 a barrel, then no one's going to try to get that oil. But if oil's selling for $60, then there will be a gold rush.

There's another factor there, however -- the oil is more expensive to get to, partly because it requires more energy to get to. With many of the "hard to get" sources of oil, you actually have to use more than one barrel of oil to retrieve a barrel of oil. So it's extremely inefficient. This isn't a realistic way to continue dependence on oil, though it may be useful as a way to get oil for "legacy" requirements that can't be converted to other forms. But that would require a non-oil method of expending the energy to get the oil. Which leads us to...

In the second prong of the market-based attack on peak oil, the floodgates will open to alternative energy sources -- biodiesel, hydrogen, solar, wind, fusion, gerbils -- which will pick up the slack. The problem here is that none of these (except perhaps fission, but you can't drive a car with fission) are viable (yet) on a large scale. They may well be someday, but it's like the old Far Side cartoon with a fiendishly complex equation on a chalkboard and a scientist pointing to one spot and saying, "Here, a miracle happens." This "solution" is largely dependent on faith in human ingenuity. That's not a bad thing to bet on, but it's still a gamble.

4. Life is going to change hugely to adapt. This seems to me to be the most logical outcome. A magic bullet that "replaces oil" isn't likely because oil is such a good carrier of energy. The ultimate answer will have to be a combination of different energy sources and signifcantly less consumption. There are many ways this could happen, and I'll talk about some of them down the road. It will be a painful transition, but short of...

5. Complete apocalypse. This is a favorite of lots of conspiracy theorists and professional doomsayers. A good example of the latter is James Howard Kunstler, who predicted mass carnage surrounding Y2K before moving on, disappointed, to Peak Oil. In this future, millions freeze for lack of heat, starve for lack of food, and die in global wars fought over the last scraps of oil. People grow a few scrawny vegetables in the backyard and fight off roving hordes with shotguns. The global economy collapses. (Then, after a few decades of this, a blissful agrarian utopia emerges, with hardy folk living off the land and singing songs around the campfire.) It seems to me that folks like Kunstler hate modern civilization so much that for them massive death, war, famine, disease and suffering would be preferable to another season of "Big Brother," and Peak Oil is the latest pale horse they've hitched their wagon to.

That doesn't mean they're automatically wrong -- betting against man's baser instincts is as much a sucker's bet as betting against our ingenuity.

At the end of the day, though, I'd rather bet on ingenuity than colossal failure, as much out of refusal to despair as anything else. But we'd better get used to the idea that expensive energy is here to stay, not just an aberration that will soon go away. When the peak happens is immaterial, the fact that it will happen is reason enough to do something about it.

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