The Coming Mystery Of The Missing Barrels Of Oil

We have been conditioned throughout the oil age to count our supply of energy by the barrel. And over the first half of oil’s production curve that’s been a fair and accurate way of doing it. But as we go through the topping of the curve, things are going to change drastically. There are two big factors that will be doing this and both are little appreciated.

The first is net exports. You have to consider that, post peak, the global production decline rate must be modified by the rising internal consumption rate by the growing economies of the oil producing nations. A rising oil price enriches the producing economies and creates growing oil demand, cutting the amount of oil they put on the market for the importing nations. This has been modeled by Jeffrey Brown, a geologist, and is known as the ELM (Export Land Model). You can read a detailed description of it at en.wikipedia.org/wiki/Export_Land_Model but the upshot of it is that we, that is the importing nations, will be coming up short on our barrels of energy if we’re just counting barrels produced as this ELM chart shows:

Post peak, this graph assumes a global production decline rate of 5% per year with a growing oil consumption rate among the producing nations of 2.5% per year (very close to what these two rates are estimated at). It also assumes that at peak, about half of oil produced is exported (again very close to the current global figures). If you do the math, you wind up with the red line being the amount of oil exported and see the shocking result that it goes to zero just 9 years after global peak production is reached! If we are at or near peak now, this is not good. For the importing nations, the barrels produced will become a more and more distorted measure of energy available.

The other big factor that will distort our traditional barrel counting is net energy. For this, I refer you to my Instablog post “The Alternative Energy No One Is Thinking About”. If you attempt to draw up a quantified projection of how the makeup of our barrels is changing as we approach the net energy cliff, you could draw something like this:

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