"Peak Oil" life after the oil crash

JaiSacinandana · November 21, 2005

Dear devotee's and guest's, i would be interested on your feed back with this perticular subject after you have read this artical by Matt Savinar.

Dear Reader,

Civilization as we know it is coming to an end soon. This is not the wacky proclamation of a doomsday cult, apocalypse bible prophecy sect, or conspiracy theory society. Rather, it is the scientific conclusion of the best paid, most widely-respected geologists, physicists, and investment bankers in the world. These are rational, professional, conservative individuals who are absolutely terrified by a phenomenon known as global "Peak Oil."

"Are We 'Running Out'? I Thought

There Was 40 Years of the Stuff Left"

Oil will not just "run out" because all oil production follows a bell curve. This is true whether we're talking about an individual field, a country, or on the planet as a whole.

Oil is increasingly plentiful on the upslope of the bell curve, increasingly scarce and expensive on the down slope. The peak of the curve coincides with the point at which the endowment of oil has been 50 percent depleted. Once the peak is passed, oil production begins to go down while cost begins to go up.

In practical and considerably oversimplified terms, this means that if 2000 was the year of global Peak Oil, worldwide oil production in the year 2020 will be the same as it was in 1980. However, the world’s population in 2020 will be both much larger (approximately twice) and much more industrialized (oil-dependent) than it was in 1980. Consequently, worldwide demand for oil will outpace worldwide production of oil by a significant margin. As a result, the price will skyrocket, oil-dependant economies will crumble, and resource wars will explode.

(Graph: Dr. C.J. Cambpell/Petroconsultants)

The issue is not one of "running out" so much as it is not having enough to keep our economy running. In this regard, the ramifications of Peak Oil for our civilization are similar to the ramifications of dehydration for the human body. The human body is 70 percent water. The body of a 200 pound man thus holds 140 pounds of water. Because water is so crucial to everything the human body does, the man doesn't need to lose all 140 pounds of water weight before collapsing due to dehydration. A loss of as little as 10-15 pounds of water may be enough to kill him.

In a similar sense, an oil-based economy such as ours doesn't need to deplete its entire reserve of oil before it begins to collapse. A shortfall between demand and supply as little as 10-15 percent is enough to wholly shatter an oil-dependent economy and reduce its citizenry to poverty.

The effects of even a small drop in production can be devastating. For instance, during the 1970s oil shocks, shortfalls in production as small as 5% caused the price of oil to nearly quadruple. The same thing happened in California a few years ago with natural gas: a production drop of less than 5% caused prices to skyrocket by 400%.

Can't We Just Explore More for Oil?"

Global oil discovery peaked in 1962 and has declined to virtually nothing in the past few years. We now consume 6 barrels of oil for every barrel we find.

Oil Discovery: (3 Year Average, Past and Projected)

Source: Association for the Study of Peak Oil

According to an October 2004 New York Times article entitled "Top Oil Groups Fail to Recoup Exploration Costs:"

. . . the top-10 oil groups spent about $8bn combined on

exploration last year, but this only led to commercial

discoveries with a net present value of slightly less than

$4bn. The previous two years show similar, though less

dramatic, shortfalls.

In other words, significant new oil discoveries are so scarce that looking for them is a monetary loser. Consequently, many major oil companies now find themselves unable to replace their rapidly depleting reserves.

Take a look at the above chart. During the 1960s, for instance, we consumed about 6 billion barrels per year while finding about 30-60 billion per year. Given those numbers, it is easy to understand why fears of "running out" were so often dismissed as unfounded.

Unfortunately, those consumption/discovery ratios have nearly reversed themselves in recent years. We now consume close to 30 billion barrels per year but find less than 4 billion per year.

In light of these trends, it should come as little surprise that the energy analysts at John C Herold Inc. - the firm that that foretold Enron's demise - recently confirmed industry rumors that we are on the verge of an unprecedented crisis.

"What About the Oil Sands in Canada and the Oil Shale in the American West?"

The good news is that we have a massive amount of untapped "non conventional" oil located in the oil sands up in Canada.

The bad news is that, unlike conventional sources of oil, oil derived from these oil sands is extremely financially and energetically intensive to extract. Whereas conventional oil has enjoyed a rate of "energy return on energy invested" (EROEI) of about 30 to 1, the oil sands rate of return hovers around 1.5 to 1.

This means that we would have to expend 20 times as much energy to generate the same amount of oil from the oil sands as we do from conventional sources of oil.

Where to find such a huge amount of capital is largely a moot point because, even with massive improvements in extraction technology, the oil sands in Canada are projected to only produce a paltry 2.2 million barrels per day by 2015. This doesn't even account for any unexpected production decreases or cost overuns, both of which have been endemic to many of the oil sands projects.

More optimistic reports anticipate 4 million barrels per day of oil coming from the oil sands by 2020. Even if the optimists are correct, 4 million barrels per day isn't that much oil when you consider the following:

1.We currently need 83.5 million barrels per day.

2.We are projected to need 120 million barrels per day

by 2020.

3.We will be losing over 1 million barrels per day of production

per year, every year, once we hit the backside of the

global oil production curve.

4.The general consensus among now disinterested scientists

is that oil production will peak by 2010 at the latest.

The huge reserves of oil shale in the American west suffer from similar problems. Although high oil prices have prompted the US government to take another look at oil shale, it is not the savior many people are hoping for. As geologist Dr. Walter Youngquist points out:

The average citizen . . . is led to believe that the United

States really has no oil supply problem when oil shales hold

"recoverable oil" equal to "more than 64 percent of the

world's total proven crude oil reserves." Presumably the

United States could tap into this great oil reserve at any

time. This is not true at all. All attempts to get this "oil" out

of shale have failed economically. Furthermore, the "oil"

(and, it is not oil as is crude oil, but this is not stated) may

be recoverable but the net energy recovered may not equal

the energy used to recover it. If oil is "recovered" but at a

net energy loss, the operation is a failure.

This means any attempt to replace conventional oil with oil shale will actually make our situation worse as the project will consume more energy than it will produce, regardless of how high the price goes.

"What About So Called 'Reserve Growth'"?

In recent years, the USGS and other agencies have revised their estimates of oil reserves upwards. Peak Oil "deniers" often point to this revisions as proof that fears of a global oil shortage are unfounded. Unfortunately, these upwards revisions are best classified as "paper barrels", meaning they exist on paper only, not in the real world:

A.USGS Poor Track Record

As recently as 1972, the USGS was releasing circulars that estimated US domestic oil production would not peak until well into the 21st century, and possibly not until the 22nd century. (See Theobald, Schweinfurth & Duncan, U.S. Geological Survey Circular 650)

This was despite the fact US production had already peaked in 1970, just as Hubbert had predicted. Richard Heinberg reminds us, "in 1973, Congress demanded an investigation of the USGS for its failure to foresee the 1970 US oil production peak."

In March 2000 the USGS released a report indicating more "reserve growth." Colin Campbell responded to the report by reminding us of the ludicrous estimates put out by the USGS in the 1960s and early 1970s:

Let us not forget that McKelvey, a previous director of the

USGS, succumbed to government pressure in the 1960s to

discredit Hubbert’s study of depletion, which was

subsequently vindicated in the early 1970’s after US

production actually peaked as Hubbert had predicted. It did

so . . . in a very damaging report . . . that successfully

misled many economists and planners for years to come.

These deeply flawed upward estimates were released for obvious reasons: abundant supplies of oil are good for the financial markets as affordable oil is necessary for economic growth.

B.OPEC's Spurious Revisions:

During the 1980s, several OPEC countries issued some rather "interesting" upwardly revised estimates of their proven reserves of petroleum. Ron Swenson, proprietor of the website HubbertsPeak.com explains:

Either their reported reserves remain the same year after

year, suggesting that new discoveries exactly match

production, or they have suddenly increased their reported

reserves by unfeasibly large amounts.

The chart 1/2 way down this page graphically illustrates Swenson's points. How were such large increases in reserve size possible without correspondingly large discoveries? The answer is quite fascinating as it connects to the Reagan administration's amazingly simple strategy to collapse the Soviet Union.

During the 1980s, the Soviet Union was the number two producer of oil in the world. It used the revenue from oil sales to finance the arms race it was engaged in with the US. The Reagan Administration's strategy to bring down the Soviet Union was simple: bring down the price of oil, thereby crippling the Soviet Union's ability to finance the arms race. The Reagan administration did this by "asking" Saudi Arabia to flood the market with oil. (See Victory: The Reagan Administration's Secret Strategy to Hasten the Collapse of the Soviet Union by Peter Schweizer)

While Reagan's strategy was both simple and effective, it came with a catch: the amount of oil an OPEC nation such as Saudi Arabia could pump was tied to the amount of proven reserves it reported as compared to the other OPEC nations. The only way Saudi Arabia could continue to flood the market into the late 1980s was to revise its oil reserve estimates upwards.

If the Saudis had said no to the Reagan administration's request to flood the market, the US would have stopped protecting them from their enemies, including Saddam Hussein. In other words, the Saudis had a choice: cook their books or die. The 1991 Gulf War was fought, in part, because the US needed to uphold the bargain it made with Saudi Arabia during the Reagan years.

In order to stay competitive under OPEC's proportional export rule, the other OPEC nations issued similarly bogus upward estimates.

Thus, most if not, all of the so-called "reserve growth" in the Middle East is little more than a desert mirage of creative accounting.

"What About this Theory that Oil is

Actually a Renewable Resource?"

A handful of people believe oil is actually a renewable resource continually produced by an "abiotic" process deep in the Earth. As emotionally appealing as this theory may be, it ignores most common sense and all scientific fact. While many of the people who believe in this theory consider themselves "mavericks," respected geologists consider them crackpots.

Moreover, the oil companies don't give this theory the slightest bit of credence even though they are more motivated than anybody to find an unlimited source of oil as each company's shareholder value is based largely on how much oil it holds in reserve. Any oil company who wants to make a ridiculous amount of money (which means all of them) could simply find this unlimited source of oil but refuse to bring it to the market. Their stock value would skyrocket as a result of the huge find while they could simultaneously maintain artificial scarcity by not bringing it to the market.

Even if the maverick/crackpot theories of "unlimited oil" are true, they aren't doing us much good out here in the real world as production is declining in pretty much every nation outside the Middle East.

It certainly isn't doing us any good here in the United States. Our domestic oil production peaked in October 1970 at 10 million barrels per day. It has since declined a little bit each year and now stands at about 5 million barrels per day despite the fact that the US oil industry has more money, more muscle, and more motivation to pump oil than anybody other than God.

If oil is a renewable resource, why isn't it renewing itself here in the good ole' US of A?

"If the Environmentalists Would Get Out

of the Way, Can't We Just Drill in ANWR?"

While some folks desperately cling to the belief that oil is a renewable resource, others hold on to the equally delusional idea that tapping the Arctic National Wildlife Reserve will solve, or at least delay, this crisis. While drilling for oil in ANWR will certainly make a lot of money for the companies doing the drilling, it won't do much to help the overall situation for three reasons:

1. According of the Department of Energy, drilling in ANWR

will only lower oil prices by less than fifty cents;

2. ANWR contains 10 billion barrels of oil - or about the

amount the US consumes in a little more than a year.

3. As with all oil projects, ANWR will take about 10 years to

come online. Once it does, its production will peak at

875,000 barrels per day - but not till the year 2025. By

then the US is projected to need a whopping 35 million

barrels per day while the world is projected to need 120

million barrels per day.

"Won't the Market and the Laws of

Supply and Demand Address This?"

Not enough to prevent an economic meltdown.

As economist Andrew Mckillop explains in a recent article entitled, "Why Oil Prices Are Barreling Up," oil is nowhere near as "elastic" as most commodities:

One of the biggest problems facing the IEA, the EIA and a

host of analysts and "experts" who claim that "high prices

cut demand" either directly or by dampening economic

growth is that this does not happen in the real world.

Since early 1999, oil prices have risen about 350%. Oil

demand growth in 2004 at nearly 4% was the highest in 25

years. These are simple facts that clearly conflict with

received notions about "price elasticity". World oil demand,

for a host of easily-described reasons, tends to be bolstered

by "high" oil and gas prices until and unless "extreme" prices

are attained.

As mentioned previously, this is exactly what happened during the oil shocks of the 1970s - shortfalls in supply as little as 5% drove the price of oil up near 400%. Demand did not fall until the world was mired in the most severe economic slowdown since the Great Depression.

While many analysts claim the market will take care of this for us, they forget that neoclassic economic theory is besieged by several fundamental flaws that will prevent the market from appropriately reacting to Peak Oil until it is too late. To illustrate, as of April 2005, a barrel of oil costs about $55. The amount of energy contained in that barrel of oil would cost between $100-$250* dollars to derive from alternative sources of energy. Thus, the market won't signal energy companies to begin aggressively pursuing alternative sources of energy until oil reaches the $100-$250 mark.

*This does not even account for the amount of money it would take to locate and refine the raw materials necessary for a large scale conversion, the construction and deployment of the alternatives, and finally the retrofitting of the world's $45 trillion dollar infrastructure to run on these alternative sources.

Once they do begin aggressively pursuing these alternatives, there will be a 25-to-50 year lag time between the initial heavy-duty research into these alternatives and their wide-scale industrial implementation.

However, in order to finance an aggressive implementation of alternative energies, we need a tremendous amount of investment capital - in addition to affordable energy and raw materials - that we absolutely will not have once oil prices are permanently lodged in the $200 per barrel neighborhood.

While we need 25-to-50 years to retrofit our economy to run on alternative sources of energy, we may only get 25-to-50 days once oil production peaks.

Within a few months of global oil production hitting its peak, it will become impossible to dismiss the decline in supply as a merely transitory event. Once this occurs, you can expect traders on Wall Street to quickly bid the price up to, and possibly over, the $200 per barrel range as they realize the world is now in an era of permanent oil scarcity.

With oil at or above $200 per barrel, gas prices will reach $10 per gallon inside of a few weeks. This will cause a rapid breakdown of trucking industries and transportation networks. Importation and distribution of food, medicine, and consumer goods will grind to a halt.

The effects of this will be frightening. As Jan Lundberg, founder of the Lundberg Survey, aka "the bible of the oil industry" recently pointed out:

The scenario I foresee is that market-based panic will,

within a few days, drive prices up skyward. And as supplies

can no longer slake daily world demand of over 80 million

barrels a day, the market will become paralyzed at prices

too high for the wheels of commerce and even daily living in

"advanced" societies. There may be an event that appears

to trigger this final energy crash, but the overall cause will

be the huge consumption on a finite planet.

The trucks will no longer pull into Wal-Mart. Or Safeway or

other food stores. The freighters bringing packaged techno

-toys and whatnot from China will have no fuel. There will be

fuel in many places, but hoarding and uncertainty will trigger

outages, violence and chaos. For only a short time will the

police and military be able to maintain order, if at all.

Once the seriousness of situation is generally acknowledged, a panic will spread on the markets and bring down the entire house of cards even if production hasn't actually peaked. For this reason, the mainstream media cannot discuss this issue without largely whitewashing the truly dire consequences for the average person. If they told the truth, people would panic and the markets would crash.

In summary, we are a prisoner of our own dilemma:

1.Right now, we have no economically scalable alternatives

to oil. (Emphasis placed on economic scalability, not

technical viability.)

2.We won't get motivated to aggressively pursue

economically scalable alternatives until oil prices are

sky high;

3.Once oil prices are sky-high, our economy will be

shattered, and we won't be able to finance an aggressive

switch-over to whatever modest alternatives are available

to us.

4.An aggressive conservation program will bring down the

price of oil, thereby removing the incentive to pursue

alternatives until it is too late.

5.The raw materials (silicon, copper, platinum) necessary for

many sources of alternative energy are already in short

supply. Any attempt to secure enough of these resources

to power a large scale transition to alternative energies is

likely to be met with fierce competition, if not outright

warfare, with China.

6.The media and government can't tell the public the truth

without creating a panic and crash of the Stock Market.

7.Most of the steps we need to take to deal with this, such

as driving less, would severely hurt large sectors of the US

economy. For instance, an aggressive fuel conservation

program would lower the demand for new vehicles as

people would be driving less, thereby increasing the life of

their vehicles. One out of every six jobs in the US is either

directly or indirectly dependent on the automobile

manufacturing sector. With GM and Ford already on the

ropes, any aggressive program of conservation would likely

send them spiraling into bankruptcy. While some interests

may rejoice at the notion of "Big Auto" going bankrupt, this

is only because they don't realize the devastating effects

a GM and/or Ford bankruptcy would have on all of us,

regardless of our political affiliations.

"What About All the Various Alternatives

to Oil? Can't We Find Replacements?"

Many politicians and economists insist that there are alternatives to oil and that we can "invent our way out of this."

Physicists and geologists tell us an entirely different story.

The politicians and economists are selling us 30-year old economic and political fantasies, while the physicists and geologists are telling us scientific and mathematical truth. Rather than accept the high-tech myths proposed by the politicians and economists, its time for you to start asking critical questions about the so called "alternatives to oil" and facing some hard truths about energy.

While there are many technologically viable alternatives to oil, there are none (or combination thereof) that can supply us with anywhere near the amount of net-energy required by our modern monetary system and industrial infrastructure.

People tend to think of alternatives to oil as somehow independent from oil. In reality, the alternatives to oil are more accurately described as "derivatives of oil." It takes massive amounts of oil and other scarce resources to locate and mine the raw materials (silver, copper, platinum, uranium, etc.) necessary to build solar panels, windmills, and nuclear power plants. It takes more oil to construct these alternatives and even more oil to distribute them, maintain them, and adapt current infrastructure to run on them.

Each of the alternatives is besieged by numerous fundamental physical shortcomings that have, thus far, received little attention:

"What About Green Alternatives like

Solar, Wind, Wave, and Geothermal?"

Solar and wind power suffer from four fundamental physical shortcomings that prevent them from ever being able to replace more than a tiny fraction of the energy we get from oil: lack of energy density, inappropriateness as transportation fuels, energy intermittency, and inability to scale.

I. Lack of Energy Density/Inability to Scale:

Few people realize how much energy is concentrated in even a small amount of oil or gas. A barrel of oil contains the energy-equivalent of almost 25,000 hours of human labor. A single gallon of gasoline contains the energy-equivalent of 500 hours of human labor. Most people are stunned to find this out, even after confirming the accuracy of the numbers for themselves, but it makes sense when you think about it. It only takes one gallon of gasoline to propel a three ton SUV 10 miles in 10 minutes. How long would it take you to push a three ton SUV 10 miles?

Most people drastically overestimate the density and scalability of solar, wind, and other renewables. Some examples should help illustrate the limited capacity of these energy sources as compared to fossil fuels:

1.According to author Paul Driessen, it would take all of

1.California's 13,000 wind turbines to generate as much

1.electricity as a single 555-megawatt natural gas fired

1.power plant.

1.According to the European Wind Energy Association's

3.Wind Force 12 report issued in May of 2004, the

3.United States has 6,361 megawatts of installed wind

3.energy. This means that if every wind turbine in the

3.United States was spinning at peak capacity, all at the

3.exact same time, their combined electrical output

3.would equal that of six coal fired power plants. Since 3.wind turbines typically operate at about 30% of their 3.rated capacity, the combined output of every wind

3.turbine in the US is actually equal to less than two

3.coal fired power plants.

1.The numbers for solar are ever poorer. For instance,

1.on 191 of his book The End of Oil: On the Edge of a

1.Perilous New World, author Paul Roberts writes:

" . . . if you add up all the solar photovoltaic cells now

running worldwide (2004), the combined output -

around 2,000 megawatts - barely rivals the output of

two coal-fired power plants."

2.Robert's calculation assumes the solar cells are

2.operating at 100% of their capacity. In the real world, 2.the average solar cell operates at about 20% of its

2.rated capacity. This means that the combined output

2.of all the solar cells in the world is equal to less than

2.40% of the output of a single coal fired power plant.

2.According to ExxonMobil, the amount of energy

4.distributed by a single gas station in a single day is

4.equivalent to the amount of energy that would be

4.produced by four Manhattan sized city blocks of solar

4.equipment.

4.

4.With 17,000 gas stations just in the United States,

4.you don't need to be a mathematician to realize that 4.solar power is incapable of meeting our urgent need for 4.a new energy source that - like oil - is dense,

4.affordable, and transportable.

3.According to Dr. David Goodstien, professor of physics 5.at Cal Tech University, it would take close to 220,000 5.square kilometers of solar panels to power the global

5.economy via solar power. This may sound like a

5.marginally manageable number until you realize that

5.the total acreage covered by solar panels in the entire 5.world right now is a paltry 10 square kilometers.

4.According a recent MSNBC article entitled, "Solar

7.Power City Offers 20 Years of Lessons:"

By industry estimates, up to 20,000 solar electricity

units and 100,000 heaters have been installed in the

United States — diminutive numbers compared to the

country’s 70 million single-family houses.

This means that even if the number of American

households equipped with solar electricity is increased

by a factor of 100, less than two million American

households will be equipped with solar electric

7.systems. Assuming we are even capable of scaling the

7.use of household solar electric systems by that huge a

7. factor, we must ask ourselves two questions:

A.What do the other 68 million households do?

AA. What about the millions of companies, nations,

and industries around the world on which we in

the industrialized world are dependent?

B.Since it is oil, not electricity, that is our primary

transportation fuel (providing the base for over

90% of all transportation fuel) what good will

this do us when it comes to keeping our global

network of cars,trucks, airplanes, and boats

going?

II. Energy Intermittency

Unlike an oil pump, which can pump all day and all night under most weather conditions, or coal fired/natural gas fired power plants which can also operate 24/7, wind turbines and solar cells

only produce energy at certain times or under certain conditions. This may not be that big of a deal if you simply want to power your household appliances or a small scale, decentralized economy, but if you want to run an industrial economy that relies on airports, airplanes, 18-wheel trucks, millions of miles of highways, huge skyscrapers, 24/7 availability of fuel, etc., an intermittent source of energy will not suffice.

Consequently, in order to produce energy during times when the wind is not blowing or the sun is not shining, large scale solar/wind farms must be backed up by things like . . . oil pumps or natural gas/coal fired powered plants. Ironically and paradoxically, the expansion of renewables like wind power require an expansion in the supply of fossil fuels. Journalist Michael Kane writes:

Europe is light-years ahead of America in wind energy, and

Germany leads the world. The German numbers are painting

a dismal picture for wind’s capacity. E.ON Netz – one of the

world’s largest private energy providers – owns over 40% of

Germany’s wind generating capacity. They released a report

titled "WIND REPORT 2004" stating that wind energy requires

"shadow stations" of traditional energy on back-up reserve

in case the wind forecast is wrong. They state that reserve

capacity needs to be 60% to 80% of the total wind

capacity! So as more wind comes on line, it is all but certain

that more hydrocarbon reserve capacity will be required,

further demonstrating how renewable energy is used to

supplement over-consumption.

Here is the real kicker: these shadow stations cannot just be turned on and off at will. In order to be ready to produce electricity when the wind is not blowing or the sun is not shining, they must be fed a constant supply of natural gas or coal.

III. Inappropriateness as Transportation Fuels:

Approximately 2/3 of our oil supply is used for transportation. Over ninety percent of our transportation fuel comes from petroleum fuels (gasoline, diesel, jet-fuel). Thus, even if you ignore the challenges catalogued above, there is still the problem of how to use the electricity generated by the solar cells or wind turbines to run fleets of food delivery trucks, oceanliners, airplanes, etc. . .

Unfortunately, solar and wind cannot be used as industrial-scale transportation fuels unless they are used to crack hydrogen from water via electrolysis. Hydrogen produced via electrolysis is great for small scale, village level, and/or experimental projects. However, in order to power a significant portion of the global industrial economy on it, we would need the following:

1.Hundreds of trillions of dollars to construct fleets of

hydrogen powered cars, trucks, boats, and airplanes.

2.Hundreds, if not thousands, of oil-powered factories to

accomplish number one.

3.The construction of a ridiculously expensive global

refueling and maintenance network for number one.

4.Mind-boggingly huge amounts of platinum, silver, and

copper, and other raw materials that have already

entered permanent states of scarcity.

IV. Painfully Low Starting Point:

Finally, most people new to this issue drastically overestimate the amount of energy we will be able to realistically derive from these sources inside of the next 5-25 years. If the examples in Part I didn't convince you that solar and wind are incapable of replacing oil and gas on more than a small scale/supplemental level, consider the following, easily verifiable facts:

In 2003, the US consumed 98 quadrillion BTU's of energy. A whopping .171 quadrillion came from solar and wind combined. Do the math (.171/98) and you will see that a total of less then one-sixth of one percent of our energy appetite was satisfied with solar and wind combined. Thus, just to derive a paltry 2-3 percent of our current energy needs from solar and wind, we would need to double the percentage of our energy supply derived from solar/wind, then double it again, then double it again, and then double it yet again.

Unfortunately, the odds of us upscaling our use of solar and wind to the point where they provide even just 2-3 percent of our total energy supply are about the same as the odds of Michael Moore and Dick Cheney teaming up to win a 5K relay race. Despite jaw-dropping levels of growth in these industries, coupled with practically miraculous drops in price per kilowatt hour (95% drop in two decades), along with increased interest from the public in alternative energies, the percentage of our total energy supply derived from solar and wind is projected to grow by only 10 percent per year.

Since we are starting with only one-sixth of one percent of our energy coming from solar and wind, a growth rate of 10 percent per year isn't going to do much to soften a national economic meltdown. Twenty-five years from now, we will be lucky if solar and wind account for one percent of our total energy supply.

While other alternative energy sources, such as wave and geothermal power, are fantastic sources of energy in and of themselves, they are incapable of replacing more than a fraction of our petroleum usage for the same reasons as solar and wind: they are nowhere near as energy dense as petroleum and they are inappropriate as transportation fuels. In addition, they are also limited by geography - wave power is only technically viable in coastal locations. Only a handful of nations, such as Iceland, have access to enough geothermal power to make up for much of their petroleum consumption.

This is by no means reason not to invest in these alternatives. We simply have to be realistic about what they can and can't do. On a household or village scale, they are certainly worthy investments. But to hope/expect they are going to power more than a small fraction of our forty-five trillion dollar per year (and growing) global industrial economy is woefully unrealistic.

On a related note, even if solar, wind, and other green alternatives could replace oil, we still wouldn't escape the evil clutches of so called "Big Oil." The biggest maker of solar panels is British Petroleum with Shell not too far behind. Similarly, the second biggest maker of wind turbines is General Electric, who obtained their wind turbine business from that stalwart of corporate social responsibility, Enron. As these examples illustrate, the notion that "Big Oil is scared of the immerging renewable energy market!" is silly. "Big Oil" already owns the renewable energy market.

"What About the Hydrogen Economy?"

Hydrogen isn't the answer either. As of 2003, the average hydrogen fuel cell costs close to $1,000,000. Unlike other alternatives, hydrogen fuel cells have shown little sign of coming down in price. Unfortunately, hydrogen and/or hydrogen fuel cells will never power more than a handful of cars due to the following reasons:

I. Astronomical Cost & Short Supply of Platinum:

A single hydrogen fuel cell requires approximately 20-50 grams of platinum. There are approximately 700 million internal combustion engines on the road worldwide. Let's say we want to replace 1/3 of those (or about 210 million) with hydrogen fuel cell powered cars. Twenty-to-fifty grams of platinum per fuel cell x 210 million fuel cells equals between 4.2 billion and 10.5 billion grams of platinum required for the conversion.

The cost? $900 per gram. Thus, just the platinum alone for your fuel cell car is going to run you $18,000-to-$45,000.

With the fuel cell powered cars themselves costing $1,000,000 a piece, replacing 210 million cars with fuel cells is going to cost $210,000,000,000,000 (two-hundred and ten trillion dollars).

Furthermore, as a recent article in EV World points out, the average fuel cell lasts only 200 hours. Two hundred hours translates into just 12,000 miles, or about one year’s worth of driving at 60 miles per hour. That's not much of a deal for a car with a million-dollar price tag.

Platinum supply problems are as daunting as the cost problems. World platinum production is currently at about 240 million grams per year. (Note: production is quoted as 8 million ounces, with 30 grams per ounce.) As stated above, we need 4.2-to-10.5 billion grams just to convert 1/3 of the world's fleet of cars from internal combustion engines to fuel cells. That may not sound like a big deal until you realize platinum is astonishingly energy intensive (expensive) to mine, already in short supply, and is indispensable to thousands of crucial industrial processes.

If the hydrogen economy was anything other than a total red herring, such issues would eventually arise as 80 percent of the world’s proven platinum reserves are located in that bastion of geopolitical stability, South Africa.

Even if an economically affordable and scalable alternative to platinum is immediately located and mined in absolutely massive quantities, the ability of hydrogen to replace even a small portion of our oil consumption is still handicapped by several fundamental limitations. NASA, which fuels the space shuttle with hydrogen, may be able to afford to get around the following challenges, but there is a big difference between launching the space shuttle and running a global economy with a voracious and constantly growing appetite for energy.

II. Inability to Store Massive Quantities at Low Cost:

Hydrogen is the smallest element known to man. This makes it virtually impossible to store in the massive quantities and to transport across the incredibly long distances at the low costs required by our vast global transportation networks. In her February 2005 article entitled "Hydrogen Economy: Energy and Economic Blackhole," Alice Friedemann writes:

Hydrogen is the Houdini of elements. As soon as you’ve

gotten it into a container, it wants to get out, and since it’s

the lightest of all gases, it takes a lot of effort to keep it

from escaping. Storage devices need a complex set of seals,

gaskets, and valves. Liquid hydrogen tanks for vehicles boil

off at 3-4% per day

III. Massive Cost of Hydrogen Infrastructure:

A hydrogen economy would require massive retrofitting of our entire global transportation and fuel distribution networks. At a million dollars per car, it would cost $350,000,000,000,000 to replace half of our current automotive fleet (700 million cars world wide) with hydrogen fuel cell powered cars.

That doesn't even account for replacing a significant fraction of our oil-powered airplanes or boats with fuel cells.

The numbers don't get any prettier if we scrap the fuel cells and go with straight hydrogen. According to a recent article in Nature, entitled "Hydrogen Economy Looks Out of Reach:"

Converting every vehicle in the United States to hydrogen

power would demand so much electricity that the country

would need enough wind turbines to cover half of California

or 1,000 extra nuclear power stations.

Unfortunately, even if we managed to get this ridiculously high number of wind turbines or nuclear power plants built, we would still need to build the hydrogen powered cars, in addition to a hydrogen distribution network that would be mind-boggingly expensive. The construction of a hydrogen pipeline network comparable to our current natural gas pipeline network, for instance, would cost 200 trillion dollars. That's twenty times the size of the US GDP in the year 2002.

How such capital intensive endeavors will be completed in the midst of massive energy shortages is anybody's guess.

IV. Hydrogen's "Energy Sink" Factor:

As mentioned previously, solar, wind, or nuclear energy can be used to "crack" hydrogen from water via a process known as electrolysis. The electrolysis process is a simple one, but unfortunately it consumes more energy than it produces. This has nothing to do with the costs and everything to do with the immutable laws of thermodynamics. Again, Alice Friedemann weighs in:

The laws of physics mean the hydrogen economy will always

be an energy sink. Hydrogen’s properties require you to

spend more energy to do the following than you get out of it

later: overcome waters’ hydrogen-oxygen bond, to move

heavy cars, to prevent leaks and brittle metals, to transport

hydrogen to the destination. It doesn’t matter if all of the

problems are solved, or how much money is spent. You will

use more energy to create, store, and transport hydrogen

than you will ever get out of it.

Even if these problems are ignored or assumed away, you are still faced with jaw-dropping costs of a renewable derived hydrogen economy. In addition to the 200 trillion dollar pipeline network that would be necessary to move the hydrogen around, we would need to deploy about 40 trillion dollars of solar panels. If the hydrogen was derived from wind (which is usually more efficient than solar) the cost might be lowered considerably, but that's not saying much when you are dealing with numbers as large as $40 trillion.

Even if the costs of these projects are cut in half, that makes little difference over the course of a generation, as our economy doubles in size approximately every 25-30 years. In other words, by the time we will have made any real headway in constructing a "hydrogen economy", the problem will have already compounded itself.

If the "hydrogen economy" is such a hoax, why then do we hear so much about it? The answer is simple when you "follow the money" and ask "who benefits?" (Hint: GM, Shell, et al.)

"What About Nuclear Energy?"

Nuclear energy requires uranium, which is problematic because as David Petch explains in his article "Peak Oil and You", even in the most optimistic scenarios, uranium will soon be in short supply:

Figure 2 (shown in original article) illustrates the different

projections of uranium depletion, pending an increase in

annual consumption rates of 3%, 5% or 8%. Currently,

uranium production falls incredibly short of the demand. As

oil resources become scarce, uranium will have more

pressure put upon it as a resource. All three different

scenarios have a similar course until around 2013, where

they part trails. By 2020, there is a serious uranium

shortage.

Let's assume a Pollyanna position and assume that uranium

deposits can be doubled up in the coming decade. Figure 3

illustrates the 3 different scenarios, depending on the net

increase in consumption per year. Rather than 2013 being a

focal year, it is stretched out by 3 years to 2016.

Uranium supply issues aside, nuclear energy (like solar and wind) is not an economically or energetically feasible transportation fuel. Put simply, you can't power your car with a nuclear reactor in the trunk.

Even if these problems are assumed away, a large scale switch over to nuclear power is still not going to do all that much to solve our problems due to the cost and time frames involved in the of construction of nuclear power plants. s. It would take 10,000 of the largest nuclear power plants to produce the energy we get from fossil fuels. At $3-5 billion per plant, it's not long before we're talking about "real money" - especially since the $3-5 billion doesn't even include the cost of decommissioning old reactors, converting the nuclear generated energy into a fuel source appropriate for cars, boats, trucks, airplanes, and the not-so-minor problem of handling nuclear waste.

Speaking of nuclear waste, it is a question nobody has quite answered yet. This is especially the case in countries such as China and Russia, where safety protocols are unlikely to be strictly adhered to if the surrounding economy is in the midst of a desperate energy shortage. It may also be true in the case of the US because, as James Kunstler points out in his recent book, The Long Emergency:

. . . reactors may be beyond the organizational means of

the society we are apt to become in the future, mainly one

with much weaker central authority, less police power, and

reduced financial resources . . . in the absence of that

(cheap) oil we can't assume the complex social organization

needed to run nuclear energy safely.

Assuming we find answers to all questions regarding the cost and safety of nuclear power, we are still left with the most vexing question of all:

Where are we going to get the massive amounts of oil

necessary to build hundreds, if not thousands, of these

reactors, especially since they take 10 or so years to build

and we won't get motivated to build them until after oil

supplies have reached a point of permanent scarcity?

Remember, once we get the reactors built, we still have the not-so-inexpensive task of retrofitting a significant portion of the following to run on nuclear-derived electricity:

1.700 million oil-powered cars traversing the world's

roads;

2.Millions of oil-powered airplanes crisscrossing the

world's skies;

3.Millions of oil-powered boats circumnavigating the

world's oceans.

Scientists have made some progress in regards to nuclear fusion, but the road from success in tabletop laboratory experiments to use as an industrial scale replacement for oil is an extremely long one that, even in the most favorable of circumstances, will take decades to traverse.

Again, as with other alternatives to petroleum, all forms of nuclear energy should certainly "be on the table." But if you're hoping that it's going to save you from the ramifications of Peak Oil, you are sorely mistaken.

"What About Biofuels Such

as Ethanol and Biodiesel?"

Biofuels such as biodiesel, ethanol, methanol etc. are great, but only in small doses. Biofuels are all grown with massive fossil fuel inputs (pesticides and fertilizers) and suffer from horribly low, sometimes negative, EROEIs. The production of ethanol, for instance, requires six units of energy to produce just one. That means it consumes more energy than it produces and thus will only serve to compound our energy deficit.

In addition, there is the problem of where to grow the stuff, as we are rapidly running out of arable land on which to grow food, let alone fuel. This is no small problem as the amount of land it takes to grow even a small amount of biofuel is quite staggering. As journalist Lee Dye points out in a July 2004 article entitled "Old Policies Make Shift From Foreign Oil Tough:"

. . . relying on corn for our future energy needs would

devastate the nation's food production. It takes 11 acres to

grow enough corn to fuel one automobile with ethanol for

10,000 miles, or about a year's driving, Pimentel says. That's

the amount of land needed to feed seven persons for the

same period of time.

And if we decided to power all of our automobiles with

ethanol, we would need to cover 97 percent of our land with

corn, he adds.

Biodiesel is considerably better than ethanol, but with an EROEI of three, it still doesn't compare to oil, which has had an EROEI of about 30.

While any significant attempt to switch to biofuels will work out great for giant agribusiness companies (political campaign contributors) such as Archer Daniels Midland, ConAgra, and Monsanto, it won't do much to solve a permanent energy crisis for you.

The ghoulish reality is that if we wanted to replace even a small part of our oil supply with farm grown biofuels, we would need to turn most of Africa into a giant biofuel farm, an idea that is currently gaining traction in some circles.

Obviously many Africans - who are already starving - would not take kindly to us appropriating the land they use to grow their food to grow our fuel. As author George Monbiot points out, such an endeavor would be a humanitarian disaster. Any attempt to turn Africa into a large-scale biofuel farm will likely result in a continental-sized insurgency that would make the current disaster in Iraq look like a cakewalk.

Assuming the conversion of Africa into a large scale biofuel farm is even economically, technically, and militarily viable, and putting the humanitarian concerns of such a project aside for a moment, we would simply be replacing our "dependence on foreign oil" with "dependence on foreign grown biodiesel."

Some folks are doing research into alternatives to soybeans such as biodiesel producing pools of algae. As with every other project that promises to "replace all petroleum fuels," the project has yet to produce a single drop of commercially available fuel. This hasn't prevented many of its most vocal proponents from insisting that algae grown biodiesel will solve our energy problems.

The fact that so many people in the green/environmental movement refuse to acknowledge the fundamental inability of fuels like biodiesel to replace more than a tiny portion of our petroleum consumption underscores why a complete collapse of the petroleum powered world may now be unavoidable. As Dr. Ted Trainer explains in a recent article on the thermodynamic limitations of biomass fuels:

This is why I do not believe consumer-capitalist society can

save itself. Not even its "intellectual" classes or green

leadership give any sign that this society has the wit or the

will to even think about the basic situation we are in. As the

above figures make clear, the situation cannot be solved

without huge reduction in the volume of production and

consumption going on.

The current craze surrounding biodiesel is a good example of what Dr. Trainer is talking about. While folks who have converted their personal vehicles to run on vegetable oil should certainly be given credit for their noble attempts at reducing our reliance on petroleum, the long-term viability of their efforts is questionable at best. Once our system of food production collapses due to the effects of Peak Oil, vegetable oil will likely become far too precious/expensive a commodity to be burned as transportation fuel for anybody but the super-rich. As James Kunstler points out in an April 2005 update to his blog "Cluster . Nation", many biodiesel enthusiasts are dangerously clueless as to this reality:

Over in Vermont last week, I ran into a gang of biodiesel

enthusiasts. They were earnest, forward-looking guys who

would like to do some good for their country. But their

expectations struck me as fairly crazy, and in a way typical

of the bad thinking at all levels of our society these days.

For instance, I asked if it had ever occurred to them that

biodiesel crops would have to compete for farmland that

would be needed otherwise to grow feed crops for working

animals. No, it hadn't. (And it seemed like a far-out

suggestion to them.) Their expectation seemed to be that

the future would run a lot like the present, that bio-diesel

was just another ingenious, innovative, high-tech module

that we can "drop into" our existing system in place of the

previous, obsolete module of regular oil.

Kunstler goes on to explain that when policies or living/working arrangements are set up around such unexamined expectations, the result is usually a dangerous deepening of our reliance on cheap energy and "easy motoring."

"What About Synthetic Oil From Coal?"

Coal can be used to make synthetic oil via a process known as gasification. Unfortunately, synthetic oil will be unable to do all that much to soften the coming energy crash for the following reasons:

I. Insufficiency of Supply/"Peak Coal":

The coal supply is not as great as many assume. According to a July 2004 article published by the American Institute of Physics:

If demand remains frozen at the current rate of

consumption, the coal reserve will indeed last roughly 250

years. That prediction assumes equal use of all grades of

coal, from anthracite to lignite. Population growth alone

reduces the calculated lifetime to some 90−120 years. Any

new uses of coal would further reduce the supply. . . .The

use of coal for conversion to other fuels would quickly

reduce the lifetime of the US coal base to less than a human

lifespan.

Even a 50-75 year supply of coal is not as much as it sounds because coal production, like oil production, will peak long before the total supply is exhausted. Were we to liquefy a large portion of our coal endowment in order to produce synthetic oil, coal production would likely peak within 2 decades.

II. Falling "Energy Profit Ratio":

As John Gever explains in his book, Beyond Oil: The Threat to Food and Fuel in Coming Decades, the production of coal will be in energy-loser within a few decades:

. . . the energy profit ratio for coal slips to 20 in 1977,

comparable to that of domestic petroleum. While an energy

profit ratio of 20 means that only 5 percent of coal's gross

energy is needed to obtain it, the sharp decline since 1967 is

alarming. If it continues to drop at this rate, the energy

profit ratio of coal will slide to 0.5 by 2040.

In other words, with an EPR of .5, it will take twice as much energy to produce the coal than the coal actually contains. It will thus be of no use to us as an energy source.

III. Issue of Scale and Environmental Catastrophe:

The environmental consequences of a huge increase in coal production would be truly catastrophic. Caltech physics professor Dr. David Goodstein explains:

We use now about twice as much energy from oil as we do

from coal, so if you wanted to mine enough coal to replace

the missing oil, you’d have to mine it at a much higher rate,

not only to replace the oil, but also because the conversion

process to oil is extremely inefficient. You’d have to mine it

at levels at least five times beyond those we mine now—a

coal-mining industry on an absolutely unimaginable scale.

In his book, Out of Gas:The End of the Oil Age, Dr. Goodstein tells us that a large scale switch to coal could produce such severe global warming that life on planet Earth would cease to exist.

"Can't We Use a Combination of

the Alternatives to Replace Oil?"

Absolutely. Despite their individual shortcomings, it is still possible for the world economy to run on a basket of alternative sources of energy - so long as we immediately get all of the following:

1.A few dozen technological breakthroughs;

2.Unprecedented political will and bipartisan cooperation;

3.Tremendous international collaboration;

4.Massive amounts of investment capital;

5.Fundamental reforms to the banking system;

6.No interference from the oil-and-gas industries;

7.About 25-50 years of general peace and prosperity to

retrofit the world's $45 trillion dollar per year economy,

including transportation and telecommunication

networks, manufacturing industries, agricultural

systems, universities, hospitals, etc. , to run on these

new sources of energy.

8.A generation of engineers, scientists, and economists

trained to run a global economy powered by new

sources of energy.

If we get all of the above, we might be able to get the energy equivalent of 3-5 billion barrels of oil per year from alternative sources.

That's a tremendous amount of oil - about as much as the entire world used per year during the 1950s, but it's nowhere near enough to keep our currently mammoth-sized yet highly volatile global economic system going. The world currently requires over 30 billion barrels/1.2 trillion gallons of oil per year to support economic growth. That requirement will only increase as time goes on due to population growth, debt servicing, and the industrialization of nations such as China and India.

So even if the delusionally optimistic 8-step scenario described above is somehow miraculously manifested, we're still facing a 70-90% reduction in the amount of energy available to us. A 70-90% reduction would be extremely painful, but not the "end of the world" if it wasn't for the fact that, as explained above, the monetary system will collapse in the absence of a constantly increasing energy supply. If a shortfall between demand and supply of 5% is enough to send prices up by 400%, what to you think a shortfall of 70-90% is going to do?

To make matters worse, even if the all of the above obstacles are assumed away, we are still faced with the problem of "economic doubling time." If the economy grows at a healthy clip of 3.5% per year, it doubles in size every 20 years. That growth must be fueled by an energy supply that doubles just as quickly. Thus, our total "energy debt" will have compounded itself by the time we have made any major strides in switching to alternative sources of energy.

"What About Amazing New Technologies Such As Thermal Depolymerization, Solar Nanotech, Space Based Solar Arrays, and other 'Energy-Miracles'?"

Thermal depolymerization is an intriguing solution to our landfill problems, but since most of the feedstock (such as tires and turkey guts) requires high-grade oil to make in the first place, it is more "high-tech recycling" than it is a solution to a permanent oil shortage.

While the following analogy is certainly a bit disgusting, it should clearly illustrate why thermal depolymerization won't do much to soften the coming collapse:

Expecting thermal depolymerization to help solve our long

term energy problems makes as much sense as expecting

the consumption of our own feces to help solve a long-term

famine.

In both cases, the energy starved party is simply recycling

a small portion of the energy they had previously consumed.

On a less grotesque note, the technology is besieged by several fundamental shortcomings that those desperately hoping for a techno-messiah tend to overlook:

First, there is the problem of production costs. According to a recent article in Fortune Magazine, a barrel of oil produced via the thermal depolymerization process costs $80 to produce as of January 2005. To put that figure in perspective, consider the fact that oil pulled out of the ground in Saudi Arabia costs less than $2.50 per barrel, while oil pulled out of the ground in Iraq costs only $1.00 per barrel.

This means that with spot oil prices in the $50/barrel range, a barrel of oil produced via thermal depolymerization in January 2005 would have to sell for between $1,600-$4,000 per barrel to have a return on investment comparable to oil produced from Saudi Arabia or Iraq.

Oil prices of $1,600-$4,000 per barrel would put gas prices at roughly $80-$200 per gallon.

JaiSacinandana · November 22, 2005

World's Second Largest Oil Field Reaches Peak

by Chris Kulczycki

Tue Nov 15th, 2005 at 11:53:32 AM EDT

According to AME info , a respected Middle Eastern economic news site:

It was an incredible revelation last week that the second largest oil field in the world is exhausted and past its peak output. Yet that is what the Kuwait Oil Company revealed about its Burgan field.

More below.

--

The peak output of the Burgan oil field will now be around 1.7 million barrels per day, and not the two million barrels per day forecast for the rest of the field's 30 to 40 years of life, Chairman Farouk Al Zanki told Bloomberg.

But even the perpetually optimistic IEA has a lower forcast:

Last week the International Energy Agency's report said output from the Greater Burgan area will be 1.64 million barrels a day in 2020 and 1.53 million barrels per day in 2030. Is this now a realistic scenario?