Tuesday, January 26, 2010

What will Peak Oil Really Mean?

Ultimately peak oil will not be a geological crisis, not an economic crisis, not a political crisis. Inevitably peak oil will be a global philosophical and psychological crisis.

Peak oil will represent the traumatic end of hope, of optimism, of promise, of faith, to all of which we have become addicted and upon which our overly-complex global economy is built.

It will signal the end of the insanely counter-intuitive belief that the worse things are the better they will become. Any member of any other species learns from the reality of life experience. If it encounters danger, hurt, pain, injury, it quickly learns to avoid the source of that negative. It doesn't assume their survival is a sign that things are about to get better. That appears to be a peculiarly human interpretation.

We are suckers for optimistic promises.

No politician in this country can ever get elected without promising growth and prosperity. They count on the public's short attention span and the low probability that anyone will ever hold them accountable and check whether the promises are delivered on. Anyone seeking leadership of any organization, be it a church, a bank, or a boy scout troop, must promise growth, prosperity, improvement and change or they will never attain the leadership position they seek.

Not only can one not seek leadership by talking about negative growth, austerity, belt-tightening, reduced living standards and the like, they can not even gain leadership by talking about holding the line, by promoting non-growth, sustainability, getting by. Sustainability must be oxymoronically packaged as sustainable development or sustainable growth to be politically acceptable.

The reality, despite the mainstream denial and obfuscation, is that we have already passed global peak oil. I believe production statistics show we reached that milestone in May, 2005.

The peak oil theory originally referred to a peak in conventional, on-shore crude-oil production. At the time that was the only oil we could turn into the fuels and the plethora of products oil was transformed into. The perceived importance of peak oil was not that it would signal the end of oil but rather the end of cheap, easy to access, easy to process oil. The impact would be a clear impediment to economic growth, no small event in a debt-based global economy critically dependent on perpetual growth. But how do you finance growth when the total US debt now exceeds the combined GDP of all the other nations on earth?

Just as important, the theory suggested, was that this event would signal the near term peak in all liquids production. This was based on the belief that no ramp-up in secondary sources of oil such as deep water and tar sands, or the expansion of ethanol and other biofuels, could possibly offset the declines in conventional oil production.

US on-shore, conventional oil production, for example, peaked in 1970-71, just as M. King Hubbert had projected in 1956. Despite increases from large discoveries in Alaska, persistent development of off-shore oil in the gulf of Mexico, improved extraction and processing technology, a manic growth in stripper wells, production levels from all sources have never been able to offset the declines following the peak of conventional production in the lower 48. Each year sees the US become more dependent on oil imports from increasingly hostile sources. The US economy is now irreversibly tied to the volatile and ever-increasing global price of oil.

The pattern of optimistic promises has, unfortunately, also become entrenched in the energy sector, particularly in the oil industry. Minor discoveries of new fields are vigorously and blatantly heralded as promises of a bright energy future, as new North Seas or Prudhoe Bays. Alberta's tar sands and those in Venezuela are touted as the new Saudi Arabia, despite the reality that it is a mining operation where the extraction and processing costs per barrel are 10-20 times that of Saudi Arabian oil. Optimists claim that there may be more hydrocarbon reserves in Haiti than Venezuela. Others continue to point to rock-hard oil shale deposits in the western US claiming they contain more oil than the middle east. New discovery announcements focus on full estimated (usually overestimated) reserve size despite the reality that the average field will only yield 30% of its oil or less. This, of course, is all aimed at perpetuating the socially-bought-into myth of endless global oil reserves just waiting for the right technology.

We don't like bad news, particularly when it has very long term implications. Individually and collectively we tend to slip into denial mode, focus on diversions, become numbed to the reality of the situation, cling to anyone willing to assure us it just ain't so, that things are going to get better. You can't live your life in crisis mode.

Some very interesting studies were done on the lifelong impact on Vietnamese children born into and raised to adulthood in a constant state of crisis and war. Somehow, it seems, it is necessary to create a sense of normalcy and stability, no matter the environment around you. Often, the more extreme that environment the more separated from that reality is the sense of normalcy created.

We have, in recent decades, turned this into a political institution; the denial industry. The primary objective of the denial industry is not clarity but rather to create confusion and conflict in the minds of the public by creating the impression that there are legitimate differences of opinion between experts and scientists. It is a strategy honed and perfected around the issue of smoking, a strategy they have continued to use, often with the same players, on issue after issue and now dominating the debate over global warming and peak oil.

But it is a generational culture shift that has facilitated the success of the denial industry. With the growth in accessible information through the media, the internet, cell phones and more, people have abandoned seeking answers to their questions through independent thought and instead turn to various media for those answers. They have abdicated to others the right to tell them how and what they should think, to define truth. It has been a key part of the technological dumbing down of society, nowhere more obviously than in North America. As Marshall McLuhan first told us, "the medium is the message." You can take a janitor, apply some makeup, put him in a suit and sit him in front of a camera with a script and people will accept him as an expert. The denial industry succeeds not because of the strength and veracity of their message and argument but because of the power of media. If it's on TV it must be true.

So what, you say. It's just spin and hype, right? We get that twenty-four-seven. All claims are exaggerated. If we know that, what harm is all this doing us?

Because........ it's all a damned distraction. It's an argument of semantics, definitions, terminology. By keeping everyone focused on the supposed debate over peak oil it keeps them from focusing on their own needed response to and preparation for peak oil.

Most people do not understand that peak oil is something for which society must prepare well ahead of time. Moreso today than in any other past period. Global debt has now risen to levels well above GDP. The money supply, created through even more debt, must continue to grow to service the debt already on the books. We MUST HAVE perpetual economic growth just for the economy to survive. There have been a series of well-researched and well thought out articles and papers lately, as a result of the global financial meltdown, about whether growth is even possible in the future. And that is a very, very valid question.

Growth, of course, has always been dependent on a steady, reliable, growing supply of inexpensive energy, particularly that derived from oil. Energy is the fuel of economic growth. Take away the energy needed for that growth, like depriving a growing hurricane of the energy it derives from warm tropical waters, and the growth stops and the system begins to decline and falter.

We need, however, to take the question one step further. We must not only ask whether growth will be possible in the future. We must also ask, now more than ever before, is growth even desirable in the future. Sooner or later, despite the constant arguments of economists to the contrary, growth must and will stop. Perpetual growth is a statistical economic myth. The earth is finite. All of the earth's resources are finite. Growth consumes those resources so growth cannot be perpetual in a finite world. Not rocket science.

We can put it off, as we have been doing for decades. Resources aren't about to run out. They are just getting more scarce and, as a result, more expensive. But they might last through your lifetime. You may be able to get through without adjusting at all, leave the whole problem to your children and their children. But somebody at some time soon is going to have to bite the bullet. Is your continued comfort and wealth worth the lives of your children and grandchildren?

No matter how austere their lives may be they are going to need resources, resources that we are frivolously wasting in the pursuit of dreams we can never achieve. The middle class that grew out of the industrial revolution is already, thanks to capitalistic excesses that led to the global financial meltdown, is already rapidly disappearing. We are rapidly moving to a two class society, the very rich and the very poor. Suburbia is the new ghetto, the new face of poverty. The accumulated wealth of the middle class is being transferred to the uber wealthy. You can still aspire to that wealth but the chance of you achieving it is all but gone.

Wake up. Prepare. While you can.

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