Denouement

Chair, Angeles Chapter Transportation Committee

Peak oil is the likely near-term peak and decline of worldwide oil production in the face of rising demand. It is uncertain how soon we will have reached peak oil, but there is no doubt that it will significantly impact the economy, the environment, and our lives.

How would $5 to $10 a gallon for gasoline affect your life? Will peak oil reduce fossil-fuel-driven pollution and global warming, or will substitution of other fuels make them worse? It is even more important now that we seek policies for efficient and sustainable energy use.

Peak oil, the short version

Dr. M. King Hubbert (1903-1989) was a leading geophysicist for Shell Oil and the U.S. Geologic Survey. He observed that oil production in a field follows a bell-shaped curve, increasing rapidly at first, peaking at the midpoint, and then declining.

Peak oil refers to the observation that oil production increases rapidly at first, peaks at mid-point, then declines. According to some scientists' predictions, we are now in the decline phase. Source: www.peakoil.net - Association for the Study of Peak Oil and Gas

Countries follow the same pattern, he proposed, and oil discoveries peak a number of years before production does. In 1956 he predicted the U.S. would peak between 1966 and 1972, which proved correct in 1970.

Dr. Colin Campbell, an exploration geologist and founder of the Association for the Study of Peak Oil and Gas, has updated Hubbert's work and predicts a world peak and decline within the next decade.

Discovery of new oil fields peaked in the 1960s, and the rate of current usage far exceeds new discoveries. North Sea oil production peaked in 1999. Saudi Arabia, which formerly could turn up production as needed, no longer appears to have surplus capacity to offer, and its giant Gahwar field may be in decline.

Some, such as the U.S. Energy Information Administration, refute the idea of peak oil. They claim that much greater oil reserves exist. There certainly will be new discoveries, and because higher prices will ensure that marginal production will be profitable, oil industries will continue to pursue these reserves. But this doesn't change the coming decline in oil production.

Economic effects from the end of cheap oil

The United States is extremely dependent on large quantities of cheap oil, especially for transportation. Despite constituting 5 percent of the world's population, the U.S. uses one-fourth of the world's 80 million barrels a day. Oil fuels 38 percent of total U.S. energy use and 97 percent of our transportation. Uses of oil beyond the 69 percent that goes for transportation include heating, industry, and production of plastics.

Modern agriculture is very dependent on oil and natural gas, both to fuel farm equipment and produce fertilizer.

World demand for oil is rising at 1.5 percent per year, with a recent surge from China and India.

When production declines, supply falls below quantity demanded and prices rise until supply expands and/or demand drops. Large price increases will significantly impact the economy, as happened during the 'stagflation' of the 1970s (price inflation in a stagnant economy).

Especially given the political uncertainties of major oil producers like the Middle East, Russia, and Venezuela, we can expect a 'rocky plateau' of price spikes from supply interruptions or diminishing production, then eased by reduced consumption and temporary production increases.

Alternatives-availability and impacts

What about substitutes for oil? Although there are other sources of energy, none can match the great quantity and low cost of oil. Here are the main candidates:

Tar sands in Canada and Venezuela may exceed remaining conventional oil reserves, and pilot plants are in production. Large quantities of water and energy are used to separate this mixture of sand and tar and convert it into synthetic crude oil. Production costs are significantly greater than drilling for conventional oil, and there are massive land impacts from strip-mining and waste pools.

Natural gas production is in decline in the United States, and is expected to peak worldwide within a few decades. Importing natural gas requires costly LNG (liquefied natural gas) ships and ports, which also pose safety risks if near cities. Gas is a clean and versatile fuel, but is not renewable and cannot take up the slack from declining oil supplies.

Coal can be converted to gas or liquid fuels, and there are many years of supply remaining. CO2 emissions are a major issue, although sequestration-such as injecting CO2 into old oil fields to keep it out of the atmosphere-is being studied. Strip mining of coal has huge land impacts.

Nuclear power's economics, risks, and permanent radioactive waste storage problems are well-known.

Hydrogen is an energy carrier, not a source. It must be converted from another energy source, which so far has mostly been non-renewable natural gas. Electricity is required to separate hydrogen from water; the proposed 'hydrogen economy' actually would likely be based on coal and/or nuclear power. Current battery-electric vehicles make more efficient use of electricity than intermediate conversion to hydrogen for fuel cells.

Ethanol, biodiesel, and other plant-based fuels have potential, as demonstrated by Brazil's production of ethanol from sugarcane. There are questions about whether their energy content is much greater than the energy used to grow them, however, and they take land away from food production and forests. They cannot provide sufficient quantities to replace conventional oil.

Wind and solar are sustainable, but each so far only produces about 1 percent of electricity generation in the countries that use them. Their production economics are improving, and installations are growing. They both also require storage and/or a conventional supplemental power source to balance when the sun shines and wind blows with electricity demand.

What we can do

The choices we make will have great economic and environmental consequences. Will ever-more-costly oil point us in the direction of efficiency and developing sustainable substitutes? Or will it lead to a push for environmentally destructive and unsustainable quick-fix substitutes like coal, tar sands, and nuclear? And will we act in time?

Pessimists foresee an end to civilization as we know it. Guarded optimists propose a combination of much-greater energy efficiency, rapid expansion of truly sustainable energy sources (wind, solar, and biomass), and a shift away from globalization (e.g., Chinese goods imported to Wal-Mart) back to local production.

Conservation is critical. A rapid increase in vehicle fuel efficiency-possible with current hybrid engines and lighter cars-would stretch out the oil supply and give more time to adapt. Electric vehicles (or 'pluggable hybrids' with battery storage) are more efficient than hydrogen at using sustainable electricity, and provide independence from coming gas station lines and high prices.

Given how often people replace their cars, it wouldn't take that many years to have a big effect. Per Lester R. Brown of the Earth Policy Institute, 'If over the next decade we convert the U.S. automobile fleet to gas-electric hybrids with the efficiency of today's Toyota Prius, we could cut our gasoline use in half.'

Peak oil is the 800-pound gorilla in the living room-we must deal with it before it deals with us.