[JayMorrison]

When I first strated reading about Peak Oil a few months ago, I was initially very worried. I thought I would be packing up and running for the hills with a 5 year old son. (He is 2 yrs old now)

Then after reading all of the websites about the problem, I decided to read the websites about the solutions.

Oil and and Natural Gas provide the basis of just about everything we do for transportation and fertilizer, affecting our ability to move, produce food, and transport goods. We all know that and are worried about it.

After doing a lot of research, I am not nearly as worried as I used to be.

Life may slow down a bit with oil becoming non-economical. We may not fly much on jets. We may not have a driving summer vacation (I don't do that anyway, so I dont care). There will be fewer imports and less trade in the world (I think that is good for employment in the US).

When finding a replacement for oil, people operate under the assumption that it must be a 100% replacement for the amount of energy missing from oil. That is not the case. I think we could cut our energy consumption by 50%. Japan and many European countries produce almost the same GDP per capita as the US on 1/2 the energy.

That tells me that we are wasteful and that there is a diminishing return for GDP versus the amount of energy inputs. For example, if we double our energy use tomorrow, will that double GDP? Nope. The reverse is also true. The economy will likely hit a severe recession during the initial phases of the transition away from oil.

Oil represents about 40% of our energy right now. That is going to start on a glide path downwards. It doesn't disappear on day 1 of the crisis. As I see it, the initial crisis will be most evident in the price of gasoline. Inflation for other goods will lag the initial price spike for gasoline.

We are amazingly wasteful. My family has two cars. It used to be 2 SUVs. A Lexus SUV (17 mpg) and a Jeep Liberty (20 mpg). I got rid of the Lexus about 3 months ago and got a used VW Jetta (29 mpg). Going from 17 mpg to 29 mpg for myself improved my fuel efficiency by 70%. Now when my family goes anywhere, we use the Jetta. The only reason I still have the Jeep is because it in on lease for another 18 months. I plan on getting the best hybrid possible (60+ mpg???) in January 2006. Then that will likely be our main car, thus improving our fuel efficiency by another 100%.

In the space of 2 years, my family will go from 20 mpg to 60 mpg. There might even be diesel hybrids that get 70+ mpg by then.

We will also be thinking seriously about extra driving that we dont need to make. We used to think nothing about taking 2 cars and meeting somewhere. We don't do that anymore. I am fairly well off with a family income over $100,000 per year. I dont need to be doing these things. But I do them now because I know.

The point I am trying to make is that relatively quick energy efficencies can be made with relatively low impact. We are HUGELY wasteful and that can change quickly. There are a lot of used cars on the market that get 30+ mpg. A buddy of mine with a Suburban (12 mpg???) went out and got a used Mitusbishi Mirage (35 mpg) when he first paid $80 to fill his tank.

That tells me that the first few years of post peak oil are survivable. That wakes up the United States and the world.

If we can manage for 5 to 10 years in a decline (and I think we can based on my observations above) then you will see massive capital investment in the infrastructure of non-oil energy systems. The technology exists. We simply don't have an incentive to build it yet.

I do not know what the eventual energy winner will be. Electric vehicles, bio-diesel, super hybrids that are 90% grid charge and 10% gasoline, hydrogen fuel cells, whatever. All of these things are possible. It remains to be seen what wins out in the end.

Will it be more expensive than cheap oil? YES. Will transportation disappear? NO. It will change dramatically over the decade of transition.

The average car weight in the US is 4000 pounds. Some SUVs are over 6000 pounds. If efficency is the goal, they will keep the weight down and do amazing things. (100 km per liter / about 230 mpg)
http://www.autoweb.com.au/cms/newsartic ... vwg0204221

We don't need to power ourselves purely with gasoline. Imagine that VW with a hybrid rechargable battery based on the following concept.
http://msnbc.msn.com/id/4952048

Imagine this... A super low weight diesel hybrid with battery system that is charged each night on the power grid in your garage. The diesel fuel is only used when the battery reaches 20% of charge remaining. For the average person on a daily commute, you never even use the diesel fuel. You lose more fuel due to evaporation from it just sitting in your tank.

All of those technologies exist right now, but they have not been put together in the same package. There has been no need to do so. How much would it cost to develop? $10 billion? I read that the average new car model costs $2 billion from scratch to develope. I am not sure. That is a drop in the bucket compared to what is at stake.

Most people who are looking at the darkest side to Peak Oil are viewing it as an unreplaceable resource. I think it is replaceable. It doesnt have to be 100% replaceable. We dont need to produce the same amount of energy of 40% on day one. It will be a gradual process of boosting the power grid via wind farms, nuclear, etc. Beyond just energy output, there is a lot of room for improvement in the efficiency of transmission lines in the power grid. How many power plants do we not have to build if transmission efficency improve by 20%?

We have spent $120 billion on Iraq so far. The govt perceived (right or wrong) Iraq as a threat and spent the money. When oil itself is widely recognized as a threat, there will be amazing amounts of investment thrown at the issue.

This post is getting too long so I will stop now. I have thoughts on food production and fertilizer/energy inputs. There are solutions there also that lead me to believe that a "Die off" is not likely.

[Jakob]

R-E-S-O-C-I-A-L-I-Z-E-D.

[Onyered]

Don't worry. Be happy.

[WaterBearer]

Conservation will occur. Of that there is no question.

At issue is whether or not growth is sustainable without a continuous influx of cheap energy. Without growth the system will fail. When that happens will be affected by market influences, but the All Powerful Market is unable to provide energy that doesn't exist. All things much eventually balance.

[Guest]

wow!
Thats a GREAT post

I think there will be a 'realisation', then society will change and adapt to the new reality

Once the aim is conservation we will do a LOT on very little
Look at Cuba - it has had to survive on very little oil for ten years. Yet their public transport system is better than in the UK (we have the WORST public transport in the world. It really, really sucks)

I like your point on our wastefullness
If we economise we could easily chop in half our usage of oil - we will have a big recession so it won't be easy but we can do it

The only problem I see is what happens after we economise all we can
Oil will be declining maybe 5% a year so we will have a decade or two to completely replace our use of oil - thats going to be MUCH harder than economising
The pessimists I think see this as an almost impossible problem, but on the plus side we will have time brought in by economising to work on this

Martin

[Guest]

Jay said;
"As I see it, the initial crisis will be most evident in the price of gasoline. Inflation for other goods will lag the initial price spike for gasoline."

And here's some stuff I found that is already happening:

Goods and services rising the most so far in 2004
Item Annualized price change

Motor fuels other than gasoline (diesel, etc.) - 62.7%
Gasoline - 58.1
Butter & margarine - 47.2
Motor vehicle fees (license & registration) - 32.4
Delivery service - 22.7
Fuel oil & other fuel - 18.4
Apples - 16.6
Women's suits & separates - 16.2
Airline fares - 13.0
Utilities (gas service) - 12.6
Other fats & oils including peanut butter - 12.3
Audio discs & tapes - 11.5
Hotels & motels - 11.0
Indoor plants & flowers - 10.9
Boy's apparel - 10.5
Household item repair - 9.5
College tuition & fees - 9.3
Bikes and other sports vehicles - 9.1
Legal services - 8.9
Men's shirts & sweaters - 8.8
Jewelry - 8.8
Pets & pet products - 8.8
Eggs - 8.7
Jewelry & watches - 8.3
Cheese & related products - 8.1

Data: January Source: U.S. Bureau of Labor Statistics

CPI is a lie.
Wonder how much poached frog legs will cost next year?

[Guest]

Jay is right on target.

For the first 5-10 years after peak oil.

15-40 years after peak oil I find the future VERY cloudy indeed.

The standard of living MUST come DOWN. It "stinks big time" but when the cheap energy goes, so too will our standard of living. As others point out, its already happening. Should oil production fall, AND the population rise (world wide)..... watch out!

One decade of those conditions, and it will have your average optimist screaming "moma"

[JayHMorrison]

$this->bbcode_second_pass_quote('Anonymous', '
')15-40 years after peak oil I find the future VERY cloudy indeed.

[Aaron]

http://www.eia.doe.gov/emeu/mecs/mecs94/consumption/dtotal.html

[nigel]

Jay - one of the most sensible posts on the whole site. Great positive rational balanced - this is what I had hoped to find here instead of all the gun toting, die off, survivalist stone age loopy de loop dulalley stuff.

I wonder if those people can really imagine what the USA would be like with 300 million gun-toting nutters heading out on foot to look for all those sensible types who thought they'd be safe with a farm full of walking beef burgers! One only has to look at the Zimbabwe farmers to see one cannot hold out against the hordes for long - and they still have policemen of sorts - and petrol. I suppose the cowboy image, pecan pie on the veranda and beans on a real fire has rose-blinded them.

Following on from your positive approach I offer this site - see the pdf file lecture in full. Prof Peter R Odell is a REAL expert and his balanced view is the basis for much long term government planning world wide. See Amazon also for his books. As you will see, it's still not all roses and there is a certain amount of uncertainty -(That's why it's called the future) but there's no PANIC or jobs for the kung-fu cavemen.

I am amazed that Odell is not mentioned on this site - but then he, like you, is positive and shoots CJ Cambell's thesis down in flames.



http://www.clingendael.nl/ciep/lectures ... _05_21.htm

[khebab]

$this->bbcode_second_pass_quote('nigel', '
')Following on from your positive approach I offer this site - see the pdf file lecture in full. Prof Peter R Odell is a REAL expert and his balanced view is the basis for much long term government planning world wide. See Amazon also for his books. As you will see, it's still not all roses and there is a certain amount of uncertainty -(That's why it's called the future) but there's no PANIC or jobs for the kung-fu cavemen.

I am amazed that Odell is not mentioned on this site - but then he, like you, is positive and shoots CJ Cambell's thesis down in flames.

http://www.clingendael.nl/ciep/lectures ... _05_21.htm

[trespam]

$this->bbcode_second_pass_quote('JayMorrison', 'A')fter doing a lot of research, I am not nearly as worried as I used to be.

Life may slow down a bit with oil becoming non-economical. We may not fly much on jets. We may not have a driving summer vacation (I don't do that anyway, so I dont care). There will be fewer imports and less trade in the world (I think that is good for employment in the US).

[khebab]

Jay, very good post. I agree with most of your suggestions to increase fuel efficiency. Americans are very late in this domain, for Europeans and Japanese, the gas mileage is the first criterion they are looking at when they are buying a new vehicle. It all comes down to having a political will in order to push the industry toward higher fuel efficiency standard. The American gvt is protecting the american auto industry as if they were defending the american lifestyle. The truth, the auto industry made bad choices and focused on size and power instead of efficiency. SUVs will be soon things from the past.

[Permanently_Baffled]

Agree with Trespam.

You have to consider that even the ASPO model assumes 60mpd in 2020, 50mpd in 2030, 40 mpd in 2040 and 35mpd in 2050 and then levelling off(this is 42% of todays production). This model assumes no coal liquidification and a modest increase in heavy oil production and no oil from shale.(which may or may not be energy positive).

The other question which nobody can answer is the demand destruction in the non producing poorer countries. If oil goes to $182 a barrel as predicted by C.Campbell(which is a fair enough prediction), then how on earth do Indian/Chinese/African citizens afford petroleum? Add into this the obvious savings that could be made in the US , the situation could be manageable.

Also another thing is that as petrol prices increase , then people have less income to buy other products, which are made and transported using oil! So you could find demand for oil in a 'oil shock' induced recession 'overshoots' and ends up below the production curve. This means we could have decades of oscillating growth/recession with the overall trend heading downwards.

Depending where you are , the population will inevitably start to contract as economic conditions degrade. Europe/Russia and FSU countries are all declining in population NOW, let alone in recession. The US birth rate has the highest birth rate for a developed nation but this is still below replacement levels. This will drop further and immigration will inevitably be a focus for the government of the day to lower the burden on the state. As for those countries with population explosions, well I jsut wouldn't wanna be there! Of the 9 billion people in 2050 half are in China/India and Southeast Asia!! That is a bubble waiting to burst!

There are two nations that could scupper this 'lesser of two evils' scenario and these are the US and China. If they decide they have to start a war with the winner getting the oil then we are all a gonna. But then the futility of this is obvious and I really do not think it will happen.

Just my 2 pennies worth.

No doubt Pkofsocal will give me some abuse for this optimistic, nieve post but hey ho nevermind !

PB

[khebab]

$this->bbcode_second_pass_quote('treespam', 't')he economic growth will either stagnate or decline (recession) because of the imbalances that exist in the world economy (e.g. US deficits). That will stretch out the peak into a plateau. Our largest problem will be unemployment. Then, as production can no longer keep up with demand, oil prices will drift ever higher, finding new price levels that will, in turn, destroy demand a bit more

[0mar]

I don't think you guys understand the scale of the problem. A 5% decrease in 1973 caused a recession that was only rivaled by the Great Depression. There was panic in the streets. We will be hit like that every single year.

Jay's proposals would work if people were rational. Unfortunately, people aren't rational. Individuals are, but surely not people. When gas prices spike to $3 a gallon and consumer goods rise to unprecedented levels, I think riots will break out before people collectively decide that they don't know that talking robot.

And remember ASPO's model assumes that the decline will steady. If times of crisis, we can easily lose more and more oil. Imagine if Ghawar collapsed, we'd lose 4.5 million barrels instantly. In response, if the US invades Iran, there's another 2 million barrels gone, because countries usually produce half of what they normally do due to stress. In a blink of an eye, we could see 6.5 million barrels gone. Try ratcheting up coal production, which is probably near it's economic maximum right now, to offset that.

The problem here isn't alternatives, we have tons. The problem is scale. I simply don't see the infrastructure to deal with a standard 3-5% decline, let alone a catastrophe I outlined above. If were a sustainable society, the scale would be easily made up by several alternatives. Yet we saw fit to dig ourselves a hole, both economically and physically.

Reducing our consumption by 50% would be equal to an economic recession or depression. The economy requires growth, otherwise the stack of cards falls apart. No matter what angle you look at it, the economic angle will always fail.

I would love to see more economical cars. Keep in mind that hydrogen fuel cells are a disaster. H2 comes from fossil fuels, either directly, through the oxidation of CH4 (among others) or indirectly, through the electricity provided by coal/natural gas in electrolysis. Fuel cells also require platinum, which is already in demand everywhere else and is only good for several years before platinum is degraded by containments. Retrofitting and producing hydrogen fuel cells cars is on a scale unimaginable. And this were the case, we should be setting up facilities to do so, not encouraging SUVs. Even if fuel cell technology wasn't complete today, the plans and course of action should be set in motion today. Instead, we are still giving tax breaks to those who buy SUVs. Other types of cars, such as compressed natural gas (CNG) require natural gas, of course. Unfortunately, in North America (the USA paticularly), we are probably on the downward slope of NG. Despite drilling 50,000 new wells last year, production went up only 2% (Heinburg, The Party's Over).

The more and more I research about countries, projects coming online and depletion, the more and more I become convinced that the peak will hit within THIS decade. For example, we have no mega projects coming online in 2008, there aren't any mega fields found today that are worth developing and discoveries are tapering off. Campbell has noted that most estimates place finding 400 billion barrels to be left found in the world. However, to just discover just over half of that, 210 billion barrels, you would need 35 years at current discovery rates.

http://wwwistp.murdoch.edu.au/teaching/ ... prodn.html

I simply don't see the infrastructure for 30 more years of business-as-usual. For one thing, the oil industry is contracting and merging as if the game were up. The average age of an oil rig worker is close to 40. The average age of a petroleum geologist is like 59. Unfortunately, there are fewer and fewer petroleum engineers and workers for the industry to draw upon. It is as if they know the jig is up. Outside of the Middle East, the World peaked in 1997. Given the spurious revision of 1987, I would doubt the veracity of published reserves by most OPEC countries. Saudi Arabia has pumped almost 70 billion barrels of oil in her lifetime, yet her reserves have gone up from 140 to 260. During the 1990s, Saudi Arabia issued a decree that oil reserves will not go down. Despite pumping 30 billion barrels during the 90s, reserve totals went up from 257 to 261. Fishy? I think so. Discoveries don't match reserve totals, unless the state has decided to keep them secret from everyone. It is more likely that they simply don't exist.

http://www.gulland.ca/depletion/endofcheapoil.htm
http://www.howestreet.com/story.php?ArticleId=328

There is a table showing the sudden increase and lack of depletion.

I think you aren't damned scared, then you are only doing a disservice to yourself and others. The data shows, to me at least, a massive punch in the nuts is coming and we are merrily walking along.

[Permanently_Baffled]

Omar.

Firstly, respect your views and actually I agree with you on a lot of things. However, neither myself, trespam et al , dispute the implications for the economy. I certainly do not expect business as usual , far from it! What I do dispute is the scale of the crisis. There is a big difference between decades of recession , rationing and unemployment to mass die off and anarchy.

I will try and deal with a few of your points:

$this->bbcode_second_pass_quote('', '
')
When gas prices spike to $3 a gallon and consumer goods rise to unprecedented levels,

[0mar]

Ah a UK person

I don't think you are accustomed to the American mindset. When gas prices went from 1.19 to 2.00, there was an outcry. People were betting that Bush wouldn't get elected because of this. Americans believe that cheap oil is literally their birthright, just as Kings' and Emperors' believed in their birthright to rule over men.

Ghawar collapsing would be traumatic to say the least. I don't think there have been records of fields like Ghawar collapsing, but then again, Ghawar is one of a kind. People have only prior, smaller fields, to go off and assumptions.

The thing is that we are overdue for a dieoff. Unless we all wish to have a living standard of a West Ghanian, I don't think the world can adqueately support 6 - 8 billion people. A die-off must occur if we want to insure that there is something for our children to inherit.

I am commenting for America when I say that there will be either be mass anarchy or a 1984 style government. The legislation is practically already here (intelligence "reform" bill and Patriot II). It is a question of when we want to pull out all the stops.

I don't see the ASPO's model as being pessimistic, I think they are realistic. BTW, thank you for correcting me on the mega projects. That link is another covert admission that peak oil is upon us. 2007 vs 2008 doesn't make one bit of difference when steps towards alternative fuels are not being made.

I think this is a case of seeing the same data and bringing out two different conclusions I think a full blown recession will hit us in 2009 and won't stop until 2050. That is my honest prediction. Mass anarchy? Maybe, if the conditions get bad enough.

[trespam]

$this->bbcode_second_pass_quote('0mar', 'A')h a UK person

I don't think you are accustomed to the American mindset. When gas prices went from 1.19 to 2.00, there was an outcry. People were betting that Bush wouldn't get elected because of this. Americans believe that cheap oil is literally their birthright, just as Kings' and Emperors' believed in their birthright to rule over men.

[big_rc]

Jay,

Thanks for the reasonable post. I really enjoy a rationale point of view. The only problem with it is that it is a very rationale and reasonable point of view. I think for many of us on this board who tend to be relatively well educated (and probably well compensated), our relative prosperity clouds our views. My concern when prices start to rise significantly is not how this hits my pocketbook but how this hits the pocketbooks of millions of Americans who are barely struggling to stay afloat right now. I don't think many lower middle to lower class people can make it if prices rise any further. It's very hard for middle class people to upgrade to more fuel efficient cars like you described in your post. These people are also limited in the areas where they can afford to live which means a jump in the gas prices is taking a BIG cut out of their weekly paychecks. Don't forget that it's very rough on many, many of your fellow Americans right now. Let me ask you this question. How many upper middle to upper class Americans will support raising taxes/charity measures to help these people out?