The term "peak oil" refers to the phenomenon of oil production reaching a maximum output at some point in time. Once peak production is reached, the number of barrels of this non-renewable resource extracted yearly will decline forever thereafter. Several nations have already reached peak oil for their domestic wells. The US, for example, reached peak oil in 1970 and has become dependent on imported oil, much of it from Canada.
The big question is when peak oil will occur on a global scale. M. King Hubbert, the oil geologist who devised the methodology for determining peak oil, predicted a global peak in the year 2000 . But he made this prediction before the "oil crisis" of the '70s and could not account for the decline in oil use over that period, thereby extending the period of peak oil by a few years.
Numerous estimates have been generated for the occurrence of peak oil on a global scale. They each use slightly difference assumptions about the amount of recoverable oil and global reserves (the most complete data on these issues are the private properties of various oil companies and oil producing nations). The vast majority of projections place the global peak sometime between 2000 and 2010. Some few projections go out as far as 2020 or 2030, but these are based on assumptions most geologists challenge. All estimates say the peak will occur within the next few decades.
The Association for the Study of Peak Oil (www.aspo.org) tracks the oil production of various countries and provides information about the phenomenon. Early in 2005 Exxon Mobil publicly stated that they have projected peak oil for non-OPEC countries to occur in five years.  The Saudi government announced in 2003 that it had reached its maximum production, and Matthew Simmons, a petroleum investment banker from Texas, and Vice Chair of Cheney's Energy Task Force, has declared that when Saudi Arabia (the world's largest oil producer) reaches peak oil, the world has reached peak oil (www.simmonsco-intl.com ).
Incidental evidence that peak oil is near is also drawn from the fact that no new oil tankers have been built for some time, and no nations are investing in new oil refining capacity (a major capital expenditure which would be unwarranted if peak oil is imminent). Also relevant is the fact that only a few major oil finds have occurred over the last few years, despite increasingly sophisticated and extensive exploration technologies and efforts.  Exploration companies are no longer recouping exploration costs.
The phenomenon of peak oil is a physical characteristic of oil wells and cannot be eliminated or pushed back by new technologies. The use of technology is more likely to do the opposite -- accelerate the occurrence of peak oil. But once peak oil is reached no technology can make as much oil come out of the ground as it did before the peak occurred. Ultimately, oil is a finite resource and once the peak occurs the rate of extraction will continue to decline.
Because of the nature of the oil industry and the element of uncertainty in projecting peak oil, probably we will not know with certainty when peak oil occurs until after it has actually happened.
Peak oil means that the world has reached the half way point in terms of extracting the oil available. It has taken us approximately 150 years to reach this point, but it will take us only a few decades to exhaust the remaining supply (demand for oil rose slowly at first over those 150 years, but is at an all time high now and expected to continue to rise in the future).
Demand for oil is increasing in developed countries; and newly developing countries such as China and India are now competing aggressively for oil imports. Once peak oil is reached the gap between increasing demand and reducing supply will grow. This will result in a gap many times greater than the supply problems generated by the "oil crisis" of the '70s.
The '70s "oil crisis" was artificial in that it was politically motivated. A political solution resulted in the supply increasing once again. Once global peak oil occurs it will be due to the physical characteristics of oil sources, and their non-renewable nature. The reduction in supply will get worse over time and the decrease will be permanent.
The problem of peak oil on a global basis has profound implications for the future. Oil accounts for more than one third of total global energy use, and for approximately 90 per cent of transportation uses. All modes of transportation which rely on liquid fuels will be affected. As oil becomes less available its price will increase. Oil over $100 a barrel in the next few years has already been projected by various financial institutions. But regardless of costs, the overriding impact will be reduced availability. As always, poor nations, and all but the wealthiest in rich nations, will suffer the greatest consequences.
The International Energy Agency (IEA) has already drawn up plans for rationing oil use when the production shortfall reaches a specified level. These plans call for reductions in the work week, forbidding use of cars on odd or even days of the week depending on licence plate numbers, and a variety of other measures. A plan for rationing is being openly discussed by the British government.
Global trade which depends on cheap energy will be greatly affected. Transporting goods long distances will become unaffordable. Prices for many goods which rely on such long distance transportation will become less stable, and will increase with each decline in annual oil production. Industries which rely on such transport will be affected, as will employment. Those sectors which have thrived from economic globalization will be most affected; the volume of goods shipped is already beginning to decline as a result of increased fuel prices. Food security will become a major concern of developed countries, which have increasingly relied on importation of basic foodstuffs. People who cannot walk, cycle, or take public transportation to work and to obtain basic necessities will find their lives increasingly difficult.
In short, the occurrence of peak oil on a global basis will change much of what is today taken for granted.
Oil is a unique energy resource in that it has an extremely high energy return on energy invested (100:1 for sweet light crude). It is also an extremely flexible energy source, easy to transport at ambient temperatures and relatively safe to store. No other energy source has these attractive characteristics. Natural gas has a high energy density, but it is difficult, dangerous, and expensive to transport and store; special facilities are required to liquefy it. Natural gas is not as flexible as oil and will peak a decade or two after oil peaks.
Unconventional oil sources are now being tapped or considered. These include deep sea, arctic, oil sands (although in Canada the latter, previously referred to as "tar sand," are miscategorized as "conventional") and shale. It is true that there is a considerable volume of oil in these sources, but how much oil can actually be extracted from these sources with a net energy gain is an open question. All of these sources require considerably more energy to obtain a barrel of oil than conventional sources. Alberta tar sands, for example, require large amounts of natural gas to heat and liquefy the tar sands to extract the oil. There is little net energy gain in the process, many times lower than the 100:1 of sweet light crude. The story is the same for each of the other unconventional sources. In addition, much of the remaining recoverable oil is in politically unstable and environmentally sensitive regions.
Coal also has a fairly high energy density and a considerable amount is still in the ground. However, coal is not as flexible as oil, and the greenhouse gas emissions from coal (as well as oil from any fossil fuel source) would not only further increase the threat of a runaway climate pattern, but would also greatly increase local pollution and health problems. Coal can be "cleaned" by various methods so that these results are reduced. However, it takes a considerable amount of energy to clean coal, reducing its energy return on energy invested from 60 or 80:1 (depending on the type of coal) to only 5 or 6:1. In addition, the remaining coal is of an inferior quality and would require a considerable amount of energy to both mine and clean it.
This reduction in energy return on energy invested is true for any renewable fuel alternative to oil. It's one of the most important issues that has to be faced along with the imminent arrival of peak oil. Wind energy has the highest energy return, of up to 30:1 under ideal conditions. And certain forest plantations are said to provide wood at an energy return as high as 40:1. But neither wind nor wood is as flexible as oil and therefore are no replacement for the inevitable decline in oil availability when peak occurs.
Nuclear energy is one of the options being considered as an alternative. However, nuclear plants take several years to build (using considerable amounts of fossil fuels in the process) and there is no net energy gain until several years of operation. The energy return on energy invested overall is only 5 or 6:1. Then there are the concerns over radioactive waste and terrorism. Furthermore, the extensive use of nuclear reactors would shorten the period over which reactor fuels would be available. Why make massive investments in another non-renewable energy source with such a low energy return and so many other problems? Similar sized investments in renewable sources such as wind would have many benefits relative to nuclear.
Other energy alternatives such as geothermal, wave and tide, solar and biomass also have low energy return ratios. Hydrogen, which has been touted as one of the alternatives, is not an energy source but a carrier, and requires energy from other sources. Nuclear fusion is still in very experimental stages and will require decades of further research before its feasibility can even be assessed.
Ethanol from corn, which the Canadian and some Provincial governments are beginning to subsidize, is part of a farm policy, not an energy policy. The energy return on energy invested for ethanol is roughly 1:1; it actually takes as much fossil fuel energy to produce roughly an equivalent amount of ethanol energy, and results in more than double the cost to accomplish the same amount of work. In Brazil, where ethanol production relies on three sugar cane crops a year, the energy return is approximately 5:1. Ethanol in Brazil may make sense, but not in Canada.
The lower energy return on energy invested for the alternatives to oil has profound implications for our global energy future. Much more financial and other resources would have to be devoted to energy production if we continue to demand as much energy as we currently do.
The age of oil has been a unique phenomenon in human history. It has allowed civilization to rapidly extract the energy slowly imbedded in fossil remains over millions of years. Once this supply is no longer available for our use, the inevitable conclusion is that we will have to learn to get along with considerably less energy. Most energy analysts who have examined this issue conclude that a variety of renewable energy sources will be required to support human needs, but that overall supply will not likely match what we have now.
The answer to this question is vital to the survival of human civilization, and the answer depends on values systems and world views. Herein lays the potential for considerable violent conflict.
A standard of living that is high by objective indices of human well being (e.g. infant mortality, female longevity, food availability, educational opportunities, etc) is possible with roughly one third of the daily energy use of the average North American. The same goes for subjective measures of personal happiness. Another way of stating this relationship between energy consumption and human well being is that about 60 per cent of North American energy consumption is wasted in that it provides no objective contribution to measures of well being. At the same time, because a minority of humanity consumes more energy than they need, approximately two billion people do not have access to electricity. Clearly, energy distribution is a major issue of social justice.
From an environmental perspective the oil age (and overall fossil fuel) is responsible for several major examples of global ecosystem degradation (climate change, atmospheric ozone depletion, biodiversity loss, soil fertility loss, water loss, and population size, among others). Use of (fossil fuel) energy has contributed directly to climate change, and overall energy use has indirectly contributed to all the others through economic growth (the correlation between energy use and economic growth is .99). So reduced energy use has the potential to reduce economic activity and restore ecosystem functioning to sustainable levels (www.sustainablescale.org).
Whether this will happen is an open question. The currently dominant policy of most governments and even intergovernmental agencies such as the World Bank, IMF and WTO, is one of economic growth. Economic growth is seen as the solution to most problems - energy, poverty, pollution, overpopulation, etc. Attempts to increase the global energy supply (and/or to secure access to known supplies through military means) are seen as essential to insure continued economic growth. Increased use of coal and more nuclear plants are already being proposed as solutions to the growing gap between energy supply and demand.
Increasingly, the issue which will define future conflicting world views will focus on whether current preoccupations with economic growth (requiring more energy use) are in fact the cause of our major problems rather than their solution. Currently dominant policies call for more economic growth, despite the evidence of its adverse environmental impacts, its inability to provide for just distribution, and the lack of improved well being from yet more economic growth in already rich nations.  Attempts at establishing a just and sustainable energy regime will conflict with this dominant view. How the energy gap is resolved will determine our future. Whether we can move the current approach characterized by violence against both nature and those with resources coveted by the powerful, to one of justice for all and sustainability for the ecosystems upon which we depend, will likely determine the fate of human civilization for centuries to come.
Jack Santa Barbara, Ph.D. is with the Sustainable Scale Project and the Centre for Peace Studies, McMaster University.
1 M. King Hubbert, "Nuclear Energy and the Fossil Fuels," American Petroleum Institute Drilling and Production Practice Proceedings (Spring 1956): 5-75.
2 Robert L. Hirsch, Roger Bezdek, Robert Wendling, "Peaking of World Oil Production: Impacts, Mitigation, & Risk Management" Report sponsored by the (US) National Energy Technology Laboratory of the Department of Energy, under Contracts No. DE-AM26-99FT40575, Task 21006W and Subcontract Agreement number 7010001197 with Energy and Environmental Solutions, LLC. Feb. 2005.
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