The peak oil crisis: pondering the near future

by Tom Whipple

We are faced with three serious problems that are going to bring about radical changes in our lifestyles. In order of urgency, the problems are the great economic recession/financial crisis, the peaking of world oil and other fossil fuel production, and global warming. The opening effects of these problems are already upon us, but it will be months, years, and in the case of global warming, decades before their full impact is felt.

Our three problems are interrelated as changes in the status of one will lead to changes in the others. The global recession has already cut oil consumption, lowered gasoline prices, and put off the day when oil shortages develop. Someday soon faltering oil production will lead to much higher prices and thereby choke off an economic rebound. In the long run the depletion of fossil fuels should help the global warming situation if, as seems likely, we go over the infamous "tipping point" and the Antarctic ice cap melts. In this case, the world's oceans are scheduled to rise by 25 feet or so, inundating important parts of the world's land mass. It is likely to take centuries or perhaps millennia before all that water gets back into an iceberg on the Antarctic land mass where it belongs.

In thinking about the years ahead, is there anything, other than speculation, that can be said about what human life will be like in the rest of this century?

A few points seem obvious.

First, most of us are likely to become much poorer in terms of our physical possessions and our consumption of services. This is already happening at an alarming scale, with real estate values, equities, and employment plummeting worldwide; only a few living in remote areas will be left untouched. For nearly a year now governments around the world have been thrashing around in efforts to stem the decline. Opinions on the success of these efforts vary widely.

Government officials by the very nature of their positions must exude optimism and constantly tell us that changes for the better are just ahead. Others, without these responsibilities, and perhaps with a better grasp of the problems ahead, are skeptical and can foresee no immediate end to the economic troubles that could extend for decades.

What we will be doing to earn a living in the years ahead will change for many. The economic system that allowed so many of us to live better lives, or at least consume more, with much time for recreation and leisure, is clearly coming to an end for a while - perhaps a very long while. The abundance of wealth that allow so many to earn livings while sitting around offices - reading, writing, talking, designing, teaching, coordinating, meeting and leading -- is going to gradually melt away. With real wealth evaporating so rapidly, there simply will be less left over to support such activities that are not directly productive on the scale we have come to know.

This transition is going to be brutal for many. With white collar, manufacturing, construction, retail and hospitality jobs slipping away, keeping millions gainfully employed is going to be a major challenge for all levels of government. Currently, extended unemployment insurance and government stimulus programs are seen as the answer. The problem will come when we realize that the stimulus, while doing some good, is not sufficient. Unemployment insurance will run out and it will become apparent that we can longer print enough money to finance annual stimulus packages.

At some point, it is likely that the "free market", bereft of capital and customers, is not going to provide new jobs quickly enough to keep ahead of mounting social tensions. For many, friends and relatives will be the first resort after benefits and savings are used up. As distasteful as it may be to many, direct hire government job programs as were created in the 1930's may be the only way to avoid political unrest and damaging social problems.

The millions of essential, but hard, dirty, and far less desirable jobs - farm labor, construction, food processing, cleaning services, care of the elderly - that have come to be occupied by millions of legal and illegal immigrants will be an interesting case. As more desirable jobs slip away, the willingness and ability of people to move into much lower paying and less skilled jobs in order to survive will be a key test of civilization's resiliency.

Over the next decade or so the question of education and retraining a major portion of our workforce will come to the fore as it is highly doubtful that the job mix pattern which has grown up over the last few decades will last much longer. There obviously will be massive amounts of work to be done, at all skill levels, retooling our civilization to survive and prosper in the midst of climate change with sharply reduced liquid fuels and much less fossil fuel derived energy in general.

What appears to be lacking in the current economic debate is a coherent plan of where the U.S. and indeed the world's civilizations need to go. Unfortunately the only stated, and politically feasible, goal at the minute seems to be a return to "economic growth," an objective which is clearly unrealizable in the midst of the current but as yet unrecognized transition to non-fossil fuel energy.

Gradually, the realization will set in that returning to "economic growth", with cheap credit, McMansions in the suburbs, traffic jams and large cars simply is not going to happen. Somewhere in the next 12 months to 12 years the realization will come that returning to the abundance of the oil age is not going to happen for a long while and we can settle down to serious work.

 

Not sure who Tom Whipple is. Certainly sounds like a "glass half-empty" sort of guy. But here is ExxonMobil's outlook:

"Through 2030, non-OPEC crude and condensate production is expected to remain relatively stable. Mature areas like those in the United States and the North Sea will see further declines in production, but these will be largely offset by gains in Brazil, Kazakhstan and other non-OPEC growth areas. Canadian oil sands production should reach about 4 MBDOE by 2030. And natural gas liquids, OPEC condensate and other liquids will grow as gas production increases. Biofuels will also grow significantly, reaching 2.8 MBDOE by 2030.

...Overall, the resource base for liquids is sufficient to meet projected demand through 2030 and beyond. Considering just conventional crude and condensate, only one-third of the total recoverable resource has been produced to date.

Summary

Driven by growing populations and expanding economies, global energy demand is expected to increase by an average of 1.2 percent per year between 2005 and 2030, even assuming significant gains in energy efficiency. Global demand is projected to rise from 229 MBDOE in 2005 to 310 MBDOE in 2030 – an increase of 35 percent.

Oil, gas and coal will continue to provide the vast majority of the world’s energy needs – meeting close to 80 percent of global demand through 2030. Nuclear energy will grow as emphasis on low-carbon fuels increases. Renewable energy sources, such as wind, solar and biofuels will also grow rapidly.

Global CO2 emissions are projected to rise by close to 30 percent between 2005 and 2030, even with improved energy efficiency and growth in nuclear and renewable energies. While carbon-dioxide emissions are expected to begin declining in the United States and Europe over the period to 2030, these declines will be more than offset by increases in developing countries.

The energy imperative

The world has tremendous energy challenges before it. We must meet the ever-growing need for reliable and affordable energy – energy that is necessary to sustain economic and social progress – while minimizing the effects of this increased usage on the environment.

This challenge is multidimensional, involving a unique combination of factors including science, technology, economics and politics. The decisions that are made, and the approaches that are taken, will impact the world’s more than 6.5 billion people, the health of national economies and our environment.

At ExxonMobil, we believe the challenge requires an integrated set of solutions. Many of these are factored into our Outlook for Energy, however the challenge is one that must be met not only in this timeframe, but in the decades beyond."

Conclusion

The energy outlook for the next 20 years is a challenging one. We must meet the growing need for affordable energy around the world, invest in the production of existing fuel sources, develop new sources of energy and create the technology that will make it all possible.

We must do all that while reducing greenhouse gas emissions and the risk of climate change. However, with these challenges come unique opportunities. At ExxonMobil, we’re committed to doing our part to meet the challenges – and create the opportunities – that the energy outlook presents. The integrated set of solutions we’ve discussed today provides the framework for our actions and underpin our commitment to the world’s energy future:

by moderating demand through new technologies that improve energy efficiency in our vehicles, homes and businesses,
by expanding access to all economically viable energy sources – oil, gas, coal, nuclear and alternative and renewable sources such as wind, solar and biofuels, and
by mitigating CO2 emissions through technologies that advance energy efficiency, promote alternative and renewable energy and capture carbon emissions, our industry can balance the world’s growing energy needs and manage climate change risks."

The full report can be found here: http://www.exxonmobil.com/Corporate/energy_outlook.aspx

 

well i think it's just great with the outlooks, however so what? Do we forget that we should of tackled this issue after the oil crisis in the 1970's...of course we had so much left then, why bother. I hope that attitude doesn't conitinue on as the majority of us will still be alive and playing with our grandkids.

 

I think you just echoed the same sentiment made in the conclusion. You can't stand still. We all have much we can do here. But to imply it is all coming crashing down in the near future is a little much.

 

Oops....And I meant Mr. Whipple's implication - not anything Brassy said.

 

Good point.

I think "Peak Oil" has much in common with the hypothesis of "Global Warming / Global Cooling"

It is wonderful that scientists try to connect the dots of evidence for these things but they have very often been very wrong throughout the ages. Data can be misinterpreted or biased very easily. The problem is that many erroneous decisions have been made because politicians and the media believe the theories of academics in universities instead of talking to people in industry.

The last thing we need is a knee-jerk reaction which leads to hurried legislation and then, unintended consequences...like Kyoto...