We’ve talked about Peak Oil Theory many times here on Backwoods Survival Blog; it remains a future threat, even though the exact nature of that threat has changed over time (more on that later in this article). The energy provided by oil and other fossil fuels are what made the Industrial Revolution possible. Everything from the gas in your car; to the synthetic pesticides and fertilizers used in modern agriculture that have allowed us to feed the burgeoning numbers of people; to something as ubiquitous as plastics and the synthetic fibers in most clothing, we owe to petroleum. Even the advances in the medical sciences that have extended life-spans can be traced largely to the energy created by cheap, plentiful oil resources; the problem being, of course, that those resources are finite and non-renewable. Petroleum is, quite simply, central to every aspect of the modern world. Period. Remove oil-inputs from the system and chaos would quickly ensue.
Strictly speaking, new oil is being made every day from the decay of biological material, but we consider it to be non-renewable because such processes take millions of years. All of that oil in the Middle East is the product of the death and decay of what was once, likely, the largest forest ever to grace this world, spread across what is now mostly barren desert. What is important to understand now is very simple: we’re consuming it much more quickly than the natural processes of the Earth can replenish it.
Here’s the thing: you can farm without oil-inputs; what you cannot do is feed billions upon billions of people without oil-inputs. Not only would it be far more labor-intensive of a process without diesel machinery, but farming without the help of synthetic fertilizers also necessitates the rotating of crops, so as not to ruin the land for future generations. This means fewer fields sown at any given time. Likewise, agriculture without synthetic pesticides may mean our food will be healthier, but it will also result in more frequent crop failures. What this all adds up to is less food for fewer people, and there is simply no way around that. The problem, of course, is that, with every passing day, there are more and more people being born and they are living longer, resulting in the need to produce more foodstuffs–not less–as well as more oil being used to produce the products they will consume throughout their lives.
It is generally said that it requires 10 units of fossil fuel energy to produce every one unit of food energy that makes it onto the average person’s dinner plate. Just think about that for a moment.
According to OPEC, the world’s proven reserves of crude oil equal over 1 trillion barrels, but these numbers are highly suspect and, at best, represent a floating “best guess” estimate. Many country’s so-called “proven” resources never go down, despite constantly pumping oil, for reasons that are more political than scientific. Some disparity is expected, due to new discoveries off-setting production, but the numbers often don’t add up. Kuwait, for instance, reported reserves of 96.5 billion barrels every year from 1991 through 2002, the number never changing despite them producing more than 8 billion barrels during that same time-period and making no significant new discoveries at all (source: WORLD ENERGY OUTLOOK 2005… pp. 125–126.).
Likewise, in 2006, Dr. Ali Samsam Bakhtiari, formerly a senior expert with Iran’s national oil company, stated that Iran, Iraq, Kuwait, Saudi Arabia, and the UAE have inflated their reserve numbers by a combined total of between 320–390 billion barrels, with Iran’s numbers being nearly a hundred billion over their true holdings; and, in 2007, Sadad al-Huseini, formerly the chief of exploration and production at Saudi Aramco, estimated that the published Saudi reserves of 1.2 trillion barrels are off by as much as 300 billion (25% !!!).
Also in 2006 and perhaps most damning of all, Petroleum Intelligence Weekly ran a report, citing confidential and official Kuwaiti government sources (documents), listing their reserves at only 48 billion barrels, only about half of which were proven with the other half only speculative. And this during a period between 2004-2010 when they were telling the world that they held 101.5 billion barrels in proven reserves. Folks, that’s a 75%+ inflation over and above their real numbers !!!
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| Photo courtesy of Peak Oil Australia |
Meanwhile, in 2011, the world consumed 87.4 million barrels per day (source: IEA), and that number is projected to rise in both 2012 and 2013 to over 90 billion barrels a day. Add to that, the growing numbers of new drivers and industrial efforts in the very populous nations of India and China, and it’s abundantly clear that increases are likely to be the new normal. Meanwhile, Dr. Albert Bartlett, Emeritus Professor of Physics at the University of Colorado, has stated that we are consuming our planet’s oil at a rate three times faster than new discoveries are being made, and 9 out of the 21 major oil fields on Earth are in decline.
Here’s the thing about Peak Oil Theory, though: people have the wrong idea. Once we thought a day was fast approaching when the oil would just stop flowing and the whole world would collapse. That day (if it even really exists), however is a long, long way off. There is oil available to us that has, as yet, not been bothered with for the simple reason that there were cheaper, easier sources available. Just like with coal, there’s a lot of it left in areas where it just wasn’t cost-effective to go after it. It was more profitable simply to move on to a better source, once the EROEI (Energy Returned On Energy Invested) became too out of balance.
The way that Peak Oil will begin to affect you and I will be by way of subtle, yet steady economic pressures. Once all of the cheap oil is gone, they will start in on the harder-to-get-at stuff. They’re drilling in shale oil sources, such as the Bakken fields, now, but the extra costs involved in pulling petroleum byproducts from such unconventional sources is being offset by the fact that the cheap, easy-to-get-at stuff is still flowing. As all of that continues to decline, more and more of the production will have to be shifted toward the unconventionals, which are more expensive to produce.
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| Photo courtesy of Raisethehammer.org |
That is the point when we will begin to see the price of all petroleum-related products skyrocket. This will include gasoline as well as other things people don’t always connect with oil in their minds. Are you able to grow tropical crops, such as coffee and bananas, in your front yard? If not, then that means those items are shipped to you over long distances, and, if the price of the fuel used to ship them rises, then the prices of those items will also rise. That’s how it works, right up to the point where the price rises so high that the majority of folks can no longer afford to buy these items; either rendering it no longer cost-effective for the companies to sell them at all or turning them into luxury items, which drives the price-point up even higher. If you shop at the average supermarket, most of the food you buy is, at very least, shipped cross-country, meaning prices will rise across the board.
In fact, some estimates envision a time when our current use of automobiles will have to drastically change. Gasoline will become so expensive that cars will be used only for emergencies and to make a few trips here and there to buy things you can’t produce yourself, such as salt. Forget commuting to a job 30 miles away; that lifestyle is officially on life-support — it’s just a matter of if the plug is pulled in our time or in our children’s.
We’ve, essentially, traded what we once thought was going to be a near-apocalyptic “fast crash” scenario for a more slowly-building economic crisis that will put even greater pressures on a society that already seems to sometimes teeter on the brink of chaos.
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| Photo courtesy of Survivingtoughtimes.com |
Plantagenet on Wed, 7th Jan 2015 10:59 am
Thanks to fracking we’re in an oil glut. The world will reach peak oil someday, but fracking now allows us to produce several hundred billion bbls more oil then previously thought possible
GregT on Wed, 7th Jan 2015 11:07 am
That’s right Plant. You just keep repeating that to yourself, over, and over, and over, and over.
While you’re stuck in your mindless feedback loop, those that actually have a clue will continue discussing reality.
Davy on Wed, 7th Jan 2015 11:13 am
Planter, more like thanks to fracking we have created an economic oil glut contagion now hollowing out the global economy. Sounds like a shit storm Planter not an allownance.
Plantagenet on Wed, 7th Jan 2015 11:52 am
The reality is that the world is experiencing an oil glut.
I’m travelling in Europe and am in Gibralter right now. I count 15…..16…..17……18 frigging oil tankers anchored off Gibralter right now waiting for the price of oil to go up.
If there isn’t an oil glut then why are there 18 oil tankers filled with oil waiting for the price to go up?
Northwest Resident on Wed, 7th Jan 2015 11:58 am
Plant — Finally! Know we know where that oil glut is being stored! Thank you!
I wonder what they’ll do when all the available tankers are topped off with oil and just floating around waiting/hoping for oil price to go up?
It doesn’t seem likely that oil price will go back up any time soon. But that’s just the impression I get.
I bet somebody would buy all that oil if the demand was there and the price was right. Problem of course is that demand is NOT there and the price is NOT right, which accounts for the oil glut, no doubt.
Davy on Wed, 7th Jan 2015 12:03 pm
Plant are the tankers full or empty? What do you know about tankers anyway? Maybe that is the normal deal in Gibraltar. Maybe no one wants the oil because no one is buying the oil.
Plantagenet on Wed, 7th Jan 2015 12:37 pm
And the 18 oil tankers I counted are just on the Mediterranean side of the “rock”. Tomorrow I’m going into town—- I’ll bet there are even more on the harbor side of Gibralter
antaris on Wed, 7th Jan 2015 1:05 pm
A nice 2 year old article that leads to an interesting web site energyintel.com
rockman on Wed, 7th Jan 2015 1:10 pm
Plant – No way for us to know but those tankers, if they are full of oil, may be stuck there because they can’t find buyers that can afford to pay the current price of oil. In years past I’ve seen tankers sit in anchorage at Sabine Pass at the Texas/La border waiting for some refinery willing to pay their asking price. If those tankers in the Med are waiting for higher prices they may end up collecting a lot of fees for just acting as floating storage.
BC on Wed, 7th Jan 2015 1:20 pm
Since 2012, US oil production achieved a log-periodic, super-exponential blow-off trajectory not experienced since 1927 and 1937. During the period, US oil consumption increased 2MMbbl/day and production increased 2.5MMbbl/day, with household and non-energy commercial and industrial consumption growing little, if at all.
Consequently, the energy and energy-related transport sectors consumed 80% of additional oil production in order to produce a marginal 500Kbbl/day.
That is the definition of Peak Oil, falling net energy, the “Red Queen Race”, and the precursor conditions to falling off the “Seneca Cliff”.
If the regression of the price of oil and US oil production holds, US oil production will fall 2-3MMbbl/day hereafter, with US oil consumption falling by a proportional amount. If so, the decline will surpass that of 2009-12 and match that of the early to mid-1980s.
But US debt to wages and GDP was a fraction of what it is today in the early 1980s, and real GDP per capita was 1.5-2% vs. less than 1% and ~0% since 2007-08. The collapse in the price of oil and the resulting energy sector bust this time around will not provide a stimulus to consumption but a net drag on real GDP per capita growth that is already the slowest in 60-80 to 120 years.
Without the marginal growth of US oil production hereafter, global oil production per capita will fall further than has already occurred since 2005-08. That puts the world where the US was in the mid- to late 1970s in terms of oil production per capita.
The race is now over, and we have just sprinted off the cliff.
bobinget on Wed, 7th Jan 2015 2:07 pm
Theose ‘fees’ are called ‘demurrage’ .
Get out your empathy manual.
Of course those hulls, if filled with oil and not seawater are awaiting higher prices.
Believe me, not everyone is buying depleted demand BS 100% .. In the US demand continues to grow. Now at 20.2 M B p/d By spring?
This, with major shifts away from heating oil to gas.
More people everyday understand battles between oil giants, like elephants fucking, trample lots of surrounding grass.
Oh, elephant intercourse can last up to 15 hours.
Premature ejaculation is considered under 12 hours.
The trick today is to figure out what hour we are in.
shortonoil on Wed, 7th Jan 2015 2:48 pm
BC said:
with household and non-energy commercial and industrial consumption growing little, if at all.
That is undoubtedly the case. It is what our model predicts, and what sketchy sources we can find to verify it are saying. If I may ask, where are you sourcing your info on that subject?
Thanks in advance,
BW Hill
http://www.thehillsgroup.org/
shortonoil on Wed, 7th Jan 2015 3:27 pm
Believe me, not everyone is buying depleted demand BS 100%
Of course gross demand has not yet begun to decline. That will only happen after total production volume has started to fall. Petroleum production per unit will require 2.47% more energy in 2015 than it did in 2014. Because production of petroleum itself now constitutes 53% of the total energy delivered from it, it is itself creating increasing demand.
The problem is that less, and less energy from petroleum is being delivered to the non energy goods producing sector of the economy. They are the ones who foot the total petroleum bill, and with less energy being delivered to it, it is less capable of doing so.
We project peak all liquids in 2016, after that demand will begin falling precipitously. The petroleum dilemma is not a volumetric obstacle, it is an energy deficiency crisis.
http://www.thehillsgroup.org/
Bandits on Wed, 7th Jan 2015 3:45 pm
Yes Short, some idiots can’t get into their dangerous minds that demand is capitulating. The quality of the fuel is like the quality of the air we breathe.
If the ppm of oxygen in the air decreases we “demand” more to stay alive. We breathe more air to use the same or less oxygen. The same of course applies to the BTU’s in the liquid fuel we use.
Although we may produce more oil or liquids, not the same amount YOY gets to the motorist or user due to declining EROI. Some production appears to be counted twice and inflate the actual production numbers, as in ethanol.
EROI is everything, while it was high, economies and populations exploded, as it declines, the reverse is taking hold but the decline won’t be as much fun as the incline.
GregT on Wed, 7th Jan 2015 3:54 pm
“Plant – No way for us to know but those tankers”
Actually, yes there is. Marinetraffic.com is a great source of information regarding ship movement around the world. Plant is correct, there are 18 tankers currently docked at Gilbraltar. The 3 that I have had the time to look at recently came from Europe. Probably waiting for passage to fill up.
According to Wikipeadia, there are 4295 oil tankers of over 1000 long tons worldwide.
http://en.m.wikipedia.org/wiki/Oil_tanker
So even if 18 were sitting somewhere full, this would be completely irrelevant. Whatever it takes to help Plant maintain his fixation on his Oil Glut.
Northwest Resident on Wed, 7th Jan 2015 4:51 pm
GregT — You mean the “oil glut” isn’t sitting in those 18 tankers that Plant saw? I take Plant as an oil expert, so of course I never questioned his authority on the subject. (cough,hack)
Meanwhile, here’s a little unpleasant truth on the subject of where oil and the civilization it supports is going:
“Wall Street and the oil boom are joined at the hip. Years of ceaseless and extraordinary hype brought in piles of new money from investors driven to sheer madness by the pandemic of central-bank zero-interest-rate policies. It forced even pension funds into high-risk deals to make up for the lack of yield on conservative investments. It kept the boom going for years. The likelihood that the price of oil could ever plunge, as it had done periodically in the past, never entered into the equation because central banks, with their ingenious policies, had eliminated all forms of risk.
Investors in these risk-free investments are learning that some of their capital has already gone up in smoke, and that more of it will go up in smoke. A sense of reality is setting in. Money to fund what is left of the drilling boom is drying up and getting a lot more expensive. And the consequences are spilling into other sectors of the economy.”
Oil-Bust Bloodletting: Projects Cancelled, Layoffs Ripple to Other Areas, Default Hits Private-Equity and Pension Funds
http://wolfstreet.com/2015/01/07/oil-bust-bloodletting-projects-cancelled-layoffs-ripple-to-other-areas-default-hits-private-equity-and-pension-funds/
shortonoil on Wed, 7th Jan 2015 5:17 pm
According to Wikipeadia, there are 4295 oil tankers of over 1000 long tons worldwide.
We’ve got a piece of software running around here somewhere that uses 4176 tankers. Thanks for the update. Now I just hope that it is written in C++, and not Pascal. But, 4295 1000 ton tankers represents 31 mb. Average transit time is 32 days. 1.5 million barrels over supply is a load of hooey. That 1.5 mb/d could be anywhere. It’s probably stuck at the LOOP because of a bad letter of credit. Supposedly that 1.5mb/d plunged oil prices 50%. Cut me a break!!
GregT on Wed, 7th Jan 2015 7:14 pm
NWR,
Maybe the “oil glut” is going into China’s strategic reserves? Or perhaps the Saudi’s are just pumping it all back into Ghawar to keep the water cut down?
1.5 to 2 million barrels a day for what? About 4 or 5 months? Somewhere on this planet ‘they’ are hiding between 180 to 300 million barrels of oil. No point in cutting production though, right? Much easier, and cheaper just to store it above ground. :rolleyes:
Makati1 on Wed, 7th Jan 2015 7:16 pm
And the beat goes on…
Everyone has their pet idea of why oil has suddenly crapped out and what the result will be. I also have my ideas, but I will try to restrain them this year so I don’t stress out some of you.
I will try to stay on topic and not get too radical. But I reserve the right to point out the obvious.
If you accept that this is my reasoning, you will understand my position:
“I would rather live surrounded by the exciting chaos of birth that is Asia, than the struggling chaos of death that is the West.” Josh Galt
http://www.zerohedge.com/news/2014-09-20/why-socialism-doesnt-work
trickydick on Wed, 7th Jan 2015 8:14 pm
“It is generally said that it requires 10 units of fossil fuel energy to produce every one unit of food energy that makes it onto the average person’s dinner plate. ”
Huh? Ok, so i get one carton of 12 eggs at the store. How much oil did it take to make that? I need to know what a unit of food is measured in and what a unit of fuel is measured in. I THINK what I may have read a while back is that one CALORIE of food requires 10 calories of energy to grow and transport to the grocery store. That could probably be transmogrified into an amount of oil or BTUs. But a ‘unit’?
GregT on Wed, 7th Jan 2015 9:16 pm
A calorie is the amount of energy required to raise the temperature of one gram of water, one degree Celsius, in a standard atmosphere.
Both the energy content of an egg, and the energy content in a given amount of oil, can also be measured in calories.
A ‘unit’ is any measurement of energy that can be determined in both.
J-Gav on Thu, 8th Jan 2015 10:07 am
Apart from allowing some interesting comments above, the article does provide a cogent reminder of the inflated reserves problem. I wish my bank account filled back up as miraculously as their oil stashes do …