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Page added on February 2, 2015
The Transition Agony Aunt on how to talk about peak oil
“Dear Agony Aunt. Given that we are now seeing oil at below $50 a barrel, how is my Transition group meant to talk about ‘peak oil’? Peak oil has always been one of the foundations of Transition, but should we drop it now, or how else do we explain it? Does so much cheap oil mean peak oil as an argument is now over? In my group we can’t seem to agree, so Agony Aunt, what do you think?”
We had similar concerns in our group (Transition Reading), but we now explain the situation, in public, as follows. That, in fact, the low oil price is, in fact, a symptom of peak oil. Conventional oil production peaked around 2005-2008, and year on year it is declining by about 3.5 million barrels a day. So, to maintain the global oil supply, we need to bring on-stream the equivalent of a new Saudi Arabia every 3 years.
Most of the new oil is of the unconventional kind, meaning that it is produced offshore in deepwater, from tar sands and by fracking shale. Since these are expensive technologies, no one would have bothered with them, had the price of oil not risen to $100 a barrel and more, prior to the recent crash. Indeed, the high price urged new investment, resulting in a surge in production, while simultaneously, a weakened global economy means that demand has fallen.
The supply of oil has been enlarged by renewed output from Iraq and Libya, and by OPEC’s refusal to cut production, because they want to keep their market share. As a result of overproduction against demand, the price has plummeted from a high of $115 in June 2014, to under $50 now. Since this is less than it costs to produce much of the “new oil”, many scheduled production projects will not now go ahead. The consequence will be less oil being produced a year or more down the line. Accordingly, the oil glut will peter out, and the price will rise again.
While the return of a sufficiently high price may encourage new investment, it is unlikely that we can grow production of new oil to equal five Saudi Arabias within the next 15 years, especially from sources that are more expensive and more difficult to produce from than the oil they must serve to replace. Therefore, we can anticipate a contraction of the global oil supply within this timescale.
Today’s Transition Agony Aunt was Chris Rhodes, Chair of Transition Town Reading. What do you think? How would you advise our reader? Please comment below.
51 Comments on "The Transition Agony Aunt on how to talk about peak oil"
GregT on Tue, 3rd Feb 2015 10:05 am
In my 20s I worked in the oil patch. I spent two years building a pipeline compressor station in a place called Limestone Mtn., about half way between Banff and Jasper up in the foothills. Some of the most beautiful country that you could imagine. I have backpacked extensively throughout the region. The longest trip I took was 15 days from Jasper west into the Willmore Wilderness area. It’s hard to describe looking back down a river valley from 10,000 ft ASL seeing nothing but untouched wilderness. I still have photos of that trip, worthy of Natural Geographic.
That was a bad year for bears. There had been a late spring and there weren’t much in the way of berries in the alpine. There were three people killed by grizzlies that year, two of them during the two + weeks that we were on that trip. We were followed for three days by a grizzly until we came upon a group of outfitters camped on the edge of the alpine. We could see it a day or so behind us on the trail whenever we had a good vantage point. No guns allowed in the area, and there was no such thing as bear spray back then. Not a pleasant experience at the time, but definitely something to remember. I still have pictures of the bear as well.