Peak Oil is You
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Page added on April 30, 2012
Without oil, modern civilisation doesn’t work
Treasury’s last Inter-generational Report contains, hidden away on page 91, a simple stunning statement: Australia’s oil will be gone by 2020. The timing could not be worse. By 2020 Peak Oil is likely to have rendered oil imports precarious and costly. And without oil, modern civilisation doesn’t work.
The media ignored this part of the Report, so the ministers of our two major parties and the bureaucrats who advise them, have rarely been required to explain why they let this happen. On those rare occasions the question has been brushed aside with assurances that either market forces will always supply oil (or a substitute) at reasonable prices or Australia has vast reserves of natural gas.
Both these arguments are shaky. Firstly, for many uses, such as aviation, mining, and most road transport, there simply is no good substitute for oil. No one has yet built a gas-powered plane.
It may seem impressive to find an urban taxi scooting around powered by a large tank of compressed gas that has taken over the boot, but the energy required to find and transport that gas, and to compress it to an amazing 2500 psi, and safely seal it in a robust tank, did not come from gas. We are a long way from knowing how to run our civilisation on gas.
And without cheap oil, most business plans might crash. BHP for instance is threatening to pull out of the Olympic Dam expansion unless diesel prices are kept low but the Pentagon’s projection is that oil prices will in time double.
It is also far from clear that market forces will provide oil cheaply, or spread it evenly. The International Energy Agency has provisions to compel equitable sharing of traded petroleum. Yet once Peak Oil bites, energy-producing countries may hoard the increasingly precious stuff, like Russia did with its grain harvest recently, or sell it selectively to their friends. Or to those who bully them.
Energy shortage will affect each country differently, and often via its effects on fertiliser and food production. Australia’s generally thin soils are particularly dependent on fertilisers made from or transported by fossil fuels. As the Immigration Department’s recent Sobels report (p. 89) showed Australia’s future food supplies are not guaranteed.
As well, higher prices may create a rush to “cut green tape”, which is code for going after dirtier and more environmentally destructive forms of energy. Examples include BP’s deep-sea drilling, or the U.S. “fracking” craze with its now well-known health and environmental risks. Optimists argue that the U.S. is now looking to export Liquid Natural Gas, and hence world gas prices are actually falling. Yet some experts believe the shale gas industry drilled the best sites first, hyping prospects to attract investment and that politicians, and the media, desperate to identify a new energy source to support future economic growth, accepted the hype uncritically.
Turning to the government’s second excuse, Australia does not have vast reserves of gas put aside. We have, or have had, very large gas fields, but almost none of this is kept for Australian use, because we don’t reserve gas: we sell the stuff off soon after we find it. Or we all but give it away, in return for ephemeral jobs and often inappropriate or damaging “development”.
The last government to make a creditable attempt to retain Australia’s energy reserves was the Whitlam government – which got into trouble for trying to borrow huge sums to buy back energy reserves that had been sold off while still in the ground. Oddly enough, the lesson most politicians seem to have learnt from this, under the tutelage of the Murdoch Press, is not that further energy discoveries should be retained, but that they should be sold off as fast as “market forces” would like.
Democratic leaders are often so focussed on getting re-elected in one, two or three years, that they make utterly short-sighted decisions to get a temporary upswing in GDP, so they can boast of being “good economic managers”.
On a slightly kinder view, they may be blinded by economic growthism – the belief that if you just keep “the economy”, meaning GDP, growing today, your successors are bound to find some other expedient to keep it growing in the future.
The media often imposes such views. In 2011 when the federal government approved the Wheatstone gas project in W.A. TheAustralian burbled that thanks to this sell-off “Australia is poised to become a global energy superpower”, and implied that Chevron had done us a favour by accepting the deal.
In Pantera Press’s forthcoming debate book Big Australia Yes/No? (of which I did the No case) I wrote: My opponents claimWe will have enough food and water. They do not consider energy, without which neither food nor water can be supplied to large cities in a semi-desert continent. Yet Australia has recklessly sold off its energy resources…True, the 2010 Intergenerational Report Australia to 2050: future challenges, says on page 91 that our known reserves of natural gas would last about 70 years if we continue to use it at 2008 rates. But this is unlikely. After Peak Oil, gas may be used at far higher rates, and hence be gone in a fraction of the time.
We can’t assume that Australia will keep a strategic reserve of its own gas to protect us from the world peak in gas. Some experts predict global gas supplies will peak as early as 2020, though others predict no decline before 2030. Studies of how civilisations fall, such as Jared Diamond’s Collapse, show a common cause is that populations outgrow their resources.
Sure there are plenty of politicians and advisers who think there is no problem. Maybe by the time our gas runs out, we’ll have invented something else. Or we’ll have discovered another major field that some enlightened future government won’t sell off.
Yet we have a history of grossly over-estimating energy resources. The desire of exploration companies to boost their share-price by overstating a find combines with the tendency of journalists, once they have taken on a story about a find, to exaggerate its implications. We have often been assured we have centuries’ worth of a resource when in fact we have only decades.
The U.S. Professor of Statistics Albert Bartlett gives a withering account of this pattern in his article Arithmetic, Population and Energy. He points out that despite claims that the U.S. had “more than 500 years” of coal, and more recently that globally “coal will last us for at least 119 years,” it seems coal may in fact be peaking now. Similar points are cogently made in Richard Heinberg’s Forward to the recent report Will Natural Gas Fuel America in the 21st Century?
And now even industry is getting worried, and claiming that our sell-off of gas may leave us short of energy as early as 2015. According to Andrew Liveris, the Australian CEO of Dow: “Most obviously, Australia has no evident energy strategy…You tend to get what you plan for. And if you don’t plan…
13 Comments on "Without oil, modern civilisation doesn’t work"
george on Mon, 30th Apr 2012 6:05 pm
do not be concerned
vegemite will save the day
TIKIMAN on Mon, 30th Apr 2012 6:14 pm
“Without oil, modern civilisation doesn’t work”
Well, no shit.
DC on Mon, 30th Apr 2012 6:25 pm
This is very well written article. For example, you could swap Canada for Australia, and you would it would nearly spot on. I didnt know some Australians were pushing the ‘energy superpower’ trope, Canadian politicans invoke that constantly. But there definition of super-power is pretty strange. Canada barely owns the resource, barely collects royalties, is given to amerikans practically for free, the enviromental damage will be paid, not by amerika, and it being dug up and sold off as fast as it can be. Being a superpower usually implies your the setting the terms and conditions, neither Aus or Can are even remotely in charge of there own resources.
Sounds exactly like whats going on in Australia doesnt it?
Kenz300 on Mon, 30th Apr 2012 8:12 pm
Every country needs to develop a plan to balance population with resources, food, water, oil and jobs. Those that do not will be exporting their people. Resources are finite.
MrEnergyCzar on Mon, 30th Apr 2012 9:57 pm
This is a chapter title for an elementary school book…
MrEnergyCzar
Bob Owens on Mon, 30th Apr 2012 11:26 pm
What’s sad about this is the fact that some 90% of the population is unable/unwilling to grasp the facts in this article. One correction: once it dawns on everyone that they need the energy all these sold resources will be nationalized and hopefully be used for the resident population. Contract or no contract.
Stephen on Tue, 1st May 2012 12:28 am
I think society will have to make very hard choices if this is true. I think it will require major reforms on an individual, corporate, political, economic, etc. I suspect it will mean a future where growth is curtailed, quality of life is put ahead of corporate profits as a national priority, re-localizing the food system, revive the railroad system, not relying on China, India, Indonesia, Bangledesh, et all for goods, a debt jubilee, repeal the laws of losing everything when debts are not paid, and changes to the tax system and a rebuild of generation Y an Z’s retirement system.
Kenz300 on Tue, 1st May 2012 2:32 am
The global economy does not work in an era of high energy prices. Shipping fruit, vegetables and products around the world gets expensive as shipping costs rise. Local production of goods and reduced shipping costs may overcome cheap labor.
BillT on Tue, 1st May 2012 3:15 am
Stephan, what world does your society live on? It cannot be Earth. If you think that the Empire or China or any other country is going to curtail corporate greed, you are dreaming. Corporations own those countries. Nothing will be done until it is too late.
Your ideas are very good, but like fusion power, not practical or workable today. We are not as wise and intelligent as we pretend to be. We will go over the cliff with the pedal to the metal and a smile on our face.
sandu635 on Tue, 1st May 2012 4:57 am
Kenz,you are right but this will not happen very soon even if the price goes higher. Shipping because of the ever increasing scale is very efficient compared with trucking over continents or cargo by plane.A person in an SUV going 10-20km to get 3-4kg of bananas , that will go first.
Stephen on Tue, 1st May 2012 4:01 pm
BillT, I think my ideas are very workable when we go over that cliff and finally realize that “endless growth” and “corporate profits at all costs” economic policies aren’t sustainable. If there is not enough fuel available to ship everything from the third-world labor countries, or if the fuel costs are way too high, it may make first-world labor costs for assembly close to where the goods will be sold seem very cheap.
BillT on Wed, 2nd May 2012 1:04 am
Stephen, after we go over the cliff, there will be no way to build new factories in the Us or anywhere else. If you have never been in a factory that produces, say train locomotives or rail cars or even steel, you have little idea of the requirements in energy just to get to the assembly line start phase. I worked in a steel foundry for several years in the lab. The 3 small electric furnaces required as much electric as the small town nearby. It had it’s own power substation. It produced about 20 tons of manganese steel per day. 20 tons. That would not even make enough steel for one huge mining shovel.
I worked in another factory in the maintenance department that made heavy aluminum products. It too had it’s own power station and used enough electric that the power company did what it asked, no questions.
If you think that normal life can resume a few weeks or months after the collapse, you need to think again. Most of it will never resume. It cannot as it will not have the energy and equipment base in place to do so.
VelsswewayVah on Sun, 6th May 2012 12:41 pm
But the availability of a and declining means of my experiences servicesv irreversibly declines in the poorer countries, will be only partially offset by complexity of many of the commitment to educating people to have the necessary skills and to my experiences provision of the necessary equipmentl the predicted continuing growth in population will not to meet the projected demand. There will, however, be no reversion to the pre industrial levels of the global community. This is because the rate of draw down per capita equity to earn outsized returns. These operations include using the widespread wising up in all rate of decline of natural capital. is deemedxii to be Smail does say that the my experiences of the ecosystem by building the material capital. That would just tend to ensure that even the Scandinavian down the trickle up effect, doubtless there. http://www.dreddyclinic.com/forum/viewtopic.php?f=37&t=6138
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