Tom Whipple -- The Peak Oil Crisis: The Case for 2008

[GliderGuider]

The Peak Oil Crisis: The Case for 2008

It is conventional wisdom for most of the people following the peak oil story that we still have a few years to go before the real troubles begin. Some say 2011, others 2015 or later, but in general, among those calculating the depletion vs. new supply balance most have been talking about troubles starting in years rather than months.

In recent weeks there have been developments suggesting that the troubles associated with peak oil may be coming faster than many realize.

(...)

First, it is necessary to recall that world oil production has been essentially flat for the last three years.

Then we have the interesting news from the big producers. After ten years of rapid post-Soviet growth, Russian oil production seems to have reached a plateau. As Russian domestic consumption is rising rapidly, there is nowhere for their exports to go but down – and they are.

Next the Saudis, who after spending $100 billion or so on new oil wells in recent years, say they will soon have the capacity to produce 12.5 million barrels a day. However, the King of Saudi Arabia announced last week that he has decided to leave some of their oil in the ground for the grandchildren. Somebody passed the word the Saudi production was going down to 9 million barrels a day from 9.2 million -- so much for the hope that the Saudis were going to keep us in our accustomed lifestyles.

Then we have Mexican production and exports dropping faster than predicted and Venezuela doing its best to sell its oil to anyone but the U.S.

The most important factor, however, may be the Chinese who insist on growing their economy at 10 or 11 percent a year. Chinese oil imports are up 14 percent over last year in the first quarter and by almost 25 percent in March as domestic production stagnates and Beijing prepares for the Olympics. Chinese imports for May are already looking to be above normal.

(...)

There are many forces at work in the world’s oil markets today. How they will all balance out over the rest of the year is impossible to tell. During the last few months, however, developments suggesting much higher prices and shortages have come to the fore as witnessed by the steadily increasing prices for oil and gasoline. Unless something comes along to reverse these forces in the next few months, we are likely to suffer very serious economic troubles before the year is out.

I agree with Tom -- this is the year.

[Renew Deal]

1. I still remember the first peak oil post ever to get attention in GD

I bookmarked it:

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=104&topic_id=1196017

This post was a big deal on DU at the time.

[GliderGuider]

2. Yikes. The debate hasn't advanced much in 4 years.

Some get it, some don't, some think hydrogen will save us, some think Peak Oil is a crock, breeder reactors, desktop fusion, biogas, yaddayaddayadda ...

Plus ca change, plus c'est le meme chose.

[pscot]

3. What would be the effect of a major economic contraction?

I have a hard time believing that the world economy can keep humming along as energy inputs decrease in the face of rising demand. At some point growth is going to stop and begin to decline. Won't a world depression put the brakes on energy consumption? This seems like it has the making of a vicious cycle, that once begun, would feed on itself.

[phantom power]

4. Well, yes. It definitely does seem like that, if you are a doomer.

I'm a doomer, by the way.

[GliderGuider]

5. For me the question is

Will global demand stay ahead of supply even if the overall global economy crashes? Even if only parts of the world keep functioning there will probably be enough demand to soak up a declining supply.

We really don't know how this is going to play out, and any projections are no more than SWAGs. We've never been here before, so there's no way to make predictions with any kind of confidence.

All we know for sure is, "The times they are a-changin'" and "A hard rain's gonna fall".

[depakid]

6. You're correct to have a hard time believing that

as it would violate the laws of thermodynamics!

No system can grow- and growth is what "humming along" is predicated on, without also increasing its energy inputs OR drastically improving energy efficiency.

Neoclassical economists somehow think that the "circular flow" of the macroeconomy is divorced from natural laws and functions as some sort of perpetual motion machine

The reality is that that the macroeconomy doesn't exist in isolation:



It's integrated and wholly reliant on larger systems:

[robertpaulsen]

7. It was that post that first made me aware of Peak Oil.

It certainly was a big deal to me and my understanding of the world we face. Thanks for reposting it!

[Strelnikov_]

8. 'Peak Oil' will never occur

as far as the public is concerned, that is.


The 'War on Terror' is being conducted to safeguard us from Islamofacists.

The purpose of the war on terror is to foment 'fear of the other' to facilitate hegemony over the vast majority of the worlds remaining energetically viable petroleum resources, nearly all of which lie in lands occupied by those of the Islamic faith.

We invaded Iraq to stop WMD/spread democracy/fight terra (insert current talking point here).

See above. Phase II, placing of high EROEI reserves in the hands of crony capitalists.

The high price of oil is due to conflict in the Middle East.

See above.

The high price of oil is due to value of the dollar.

Really?



http://worthwhile.typepad.com/worthwhile_canadian_initi/2007/10/recent-oil-pric.html
http://www.econbrowser.com/archives/2007/10/does_dollar_wea_1.html

The high price of oil is due to speculators.

Anyone wonder why speculators would be running to a market where any day KSA can open their spigot and put an additional 4 M bbl/dy (as I have been told here on the DU) into the market? Or, just maybe, the speculators have figured out there is no more supply (rate), and little possibility of a decrease in demand over the near term. In other words, as good as gold.

The high price of oil is due to increased demand from China, India etc. etc.

See above.


And, as for the future . .

One-quarter of the population of the United States died from starvation and societal upheaval following destruction by Iran and civil war of 50% of the worlds petroleum export market as a response to the United States aerial bombing campaign against Iran. Peak Oil had nothing to do with the decline and fall of the United States.


We entered the 'last man standing' war to address 'peak oil' in 2001.

And even Biden, a few weeks ago, said the idea that we invaded Iraq for oil is ludicrous.


Peak Oil. That which cannot be be spoken of.

[hunter]

9. I think you are right.

They are blaming everyone and everything but the terrible reality staring us in the face.

[Doctor Cynic]

10. On the bright side, carbon emissions will also crash to earth...

...but by then, we'll be too busy looking for food to worry about global warming.

[IrateCitizen]

11. I don't think I'd bank on that...

The reason being that, when the price of oil goes through the roof, lights are going off and people are having trouble heating their homes -- America will probably turn to an energy source they still have in relative abundance.

COAL.

And if that happens, then all bets on emissions and global warming will be off. :scared: