Peak Oil Happened

[Are_grits_groceries]

The folks at the excellent energy blog The Oil Drum are calling it: peak oil happened in mid-2008 at 81.73 million barrels per day. That means production is falling from here on out.

There have been, and will continue to be, disagreements about the exact date, but The Oil Drum is no I Can Has Cheezburger—they’re wonks and I’d trust them more than most media outlets on this issue.

If you’re not an expert but want to wade through the exhaustive (and exhausting) post that accompanies the chart, this glossary from the Energy Information Administration might come in handy.

http://www.good.is/?p=16354

Peak Oil we hardly knew ye....

[phantom power]

1. Perhaps it is brown trousers time.

:hide:

[Delphinus]

4. What does that mean?

I've never heard that term before.

[phantom power]

9. It comes from this old naval joke:

Standing on the deck of HMS Victory, Lord Nelson glanced up at a lookout high in the rigging and called, "Keep a keen eye out for Spanish sail, my lad. For today, I feel like a fight." Soon, the lookout cried, "Sail ho, off the starboard bow!"

Nelson pointed his spyglass in the direction indicated, and - sure enough - there were two Spanish frigates off the starboard bow. Realizing that his ship was in for a tough fight, Lord Nelson turned to a young officer. "Ensign, fetch my red coat!"

A few minutes later, the Ensign returned with the coat. As he held it out for his Admiral to wear, he said, "Begging your pardon, My Lord, but why do you need your red coat?"

Nelson smiled grimly. "There'll be much blood spilled today, Son. And some of it might well be mine. If it should happen that I am wounded, my red coat will hide the blood. Then, our own men will take heart from seeing their commander apparently untouched, and our enemies will fear my invincibility."

The Ensign nodded, seeing at once the wisdom of the Admiral's reasoning. The battle was long and difficult, but Nelson eventually won the day.

A few days later, a lookout shouted down, "Sail ho, off the port beam!"

Nelson pointed his spyglass in the direction indicated, and found himself staring at the entire Spanish Armada. Hundreds of ships bearing down on his lone ship like angels of death.

Anticipating his Admiral's next order, the young Ensign said, "Shall I fetch your red coat, Sir?"

Nelson nodded. "Do that, Son. And while you're at it, fetch me my brown trousers!"

[Delphinus]

10. Ha-ha!

Thanks for the story! :)

[XemaSab]

13. .

:D

[bbinacan]

2. Does this assume no

development of known reserves?

[phantom power]

3. Their projections assume a projection of known (and unknown) reserve development

[AlecBGreen]

5. could this be a function of falling demand b/c the worldwide recession?

[hunter]

8. Post peak it becomes one and the same thing.

With high prices demand drops.

With low prices extraction rates drop while the economic capacity to extract the most difficult oils rots away.

Post peak we're in a no win / no win situation -- whatever the price of oil extraction rates continue to decline, as do the many industries that depend upon oil.

The more difficult oils will never be extracted for either of two reasons: we will greatly reduce this civilization's dependence upon oil by the thoughtful use of other energy resources, or billions of oil consumers will simply die.

Peak oil was inevitable. It happened in the U.S. in the 1970's. Now it's happened world wide.

It would be very nice to be wrong... or maybe not... climate change caused by our use of fossil fuels may be even worse than peak oil.

[Nederland]

17. Yes

It could be a function of the global recession, or it may not be. See my post #16 below.

[customerserviceguy]

6. On the other hand

2008 saw the highest prices ever for oil and gas, and it was inevitable that producers would sell all they could unload at those rates. Of course, it tanked the economy, so there's a sudden dropoff of demand. A set of guesses, educated or otherwise, extrapolating production from July 2008 to now, and out four years doesn't mean we've hit peak oil.

If you took the 2005 to 2007 line, and extrapolated it in the same direction, you'd have been wrong, too.

[hunter]

11. Nobody is extrapolating production from any chart.

That's the sort of witchcraft done by the "retention bonus" geniuses of the financial industry...

The physical reality of peak oil is that it is becoming increasingly difficult to extract what oil remains. This has to be entirely obvious, otherwise nobody would even think of building ultra deep sea oil platforms, tar sand plants, and all the other complex, dirty, and/or inefficient technologies we've had to resort to. If big producers like Saudi Arabia or Russia had been able to simply turn up the taps when oil prices were high it's almost certain one of them would bolted and undercut their competitors in order to grab a greater share of the market. But despite all the posturing it didn't happen, and the world economy hit the ceiling and crashed, exposing the fragile and utterly corrupt financial frameworks that held it all together.



It used to be you could drill a simple hole in the ground in California and so much oil came out you could supply all the cars in the state and have plenty left over to export.

But oil production in the U.S. peaked a long time ago, and now there is plenty of physical evidence that it has peaked worldwide.

It had to happen sometime.

[Gregorian]

7. I welcome it with open arms.

The sooner we feel the pinch, the sooner we'll begin to change. Of course, I preferred doing it the comfortable way. But that didn't happen.

Seismic research, ease of extraction, quality of extraction.

It's like an infection that is at it's fullest activity. Hopefully there will be recovery soon thereafter.

And if one looks at even very small amounts of growth, it becomes apparent that all of the oil that is left in the ground, even if easily extractable, would not satisfy the amount we would use.

It could be very ugly.

[Terry in Austin]

14. Word

We've been basically at peak -- a plateau -- since 2005. It doesn't take a rocket scientist to understand the shape of the overall curve, and where we are on it -- poised for the long downhill slide.

Meanwhile, there's a whole lotta denial going on, because we're so hooked on the stuff.

Sooner we detox, the better off we'll be. Lotta shakes, lotta ugly, but no avoiding it.

[Nihil]

15. Agreed.

(With all of your points.)

[Bigmack]

12. Thanks for the Oil Drum post -

I've been haunting that site for several years, and it is indeed EXCELLENT. I saw that peak oil post.....and felt a shiver. Why oh why did this supposedly "rational" species ignore the inevitable???? Even if oil HASN'T peaked yet, it inevitably will..... Seems to me like we should have LONG SINCE erred on the side of caution. Ms Bigmack

[Nederland]

16. Interesting choice of date ranges

I can see why they wouldn't want to use a longer time span:



As this chart with a longer time frame shows, we've been here before. In the late 1970's oil hit record highs, demand slackened, and production plummeted as the world dipped into recession. I'm not saying that we haven't hit peak oil at this point, I'm just saying that the data to support that assertion does not exist yet. The Oil Drum, as usual, is a little premature in its pronouncements.

[Bread and Circus]

18. Point well taken, now look at this...

What tends to happen at the top of a bell curve?

A: the curve tends to flatten.

So, you have to ask yourself, barring the spike and dip in the late 70's and early 80's, what is the overall trend of the curve.

To me, it looks like it is flattening considerably.

[hunter]

20. The sleight of hand in your chart are the redefinitions of "oil" along the way.

Your simple chart turns more and more hydrocarbons into "oil" in exactly the same way bankers turned risky loans ("sub-prime") into "mortgage backed securities.

In the case of oil, the economic consequences will be worse.

[GliderGuider]

21. Here's a breakdown of the liquid types over that time

Something to keep in mind is that the other liquids tend to have both a lower EROI than C&C and a lower energy content per barrel, so their net contribution to the energy supply is a lot smaller than it looks. I'd suggest it's about half to two thirds of the actual barrel count.

The curve from 2003 or so looks like a plateau to me, and there is no associated overarching geopolitical event as there was in 1973 and 1979. While a frank decline has not yet manifested, I remain convinced that we're there.

[Pullo]

19. love The Oil Drum

[happyslug]

22. While I accept the concept of Peak Oil, the recent drop may be do to the Recession

This recession and Peak Oil may be related, as we neared Peak oil, the increase in the price of oil caused people to convert their income (and borrowed money) from buying items to buying Gasoline. This pushed the price of oil up and up, till people stop buying gasoline and any other items. This reduction in buying (Both Oil AND other items) lead to a drop in International Trade, which lead to less demand for oil as the need to transport items from exporting countries to the US dried up with the drop in US Demand. This lead to the current recession, which in turned is tied in with a drop in demand for oil and thus its price.

Thus which occurred first? Peak oil or the recession caused by the price increase tied in with approaching peak oil? I would like to say Peal oil, but the above increase in the price leading to a Recession that saw a drastic drop in demand may be what happened instead. True Peak Oil may not yet have occurred, but may never occur. A similar situation occurred in the Steel Industry during WWI, Sometime between 1916 and 1918 US steel production peaked, and dropped (Except for WWII and Korea Wars) ever since. When did peak peacetime steel production occur? No one knows, for it incurred during WWI, when steel demand was War driven. If it was NOT for WWI, peak production should have peaked in 1917, but do to the demands of WWII increased even in 1918 (And again during WWII and Korea). The second factor of WWI Steel production covered up the true peak steel production. The same with this recession, true Peak Oil may have occurred in 2008, but do to this recession and the subsequent drop in demand do to this recession, production is DOWN in 2009 when it may have gone up if the recession had not occurred, This may even be true of 2010 (i.e. if no recession had occurred, increase production even in 2010). I do NOT believe so, but my belief is NOT a fact. We have to keep an open mind on this subject, while at the same time preparing ourselves and this country for Peak Oil. Peak Oil either has occurred or will occur soon, all this report says is world wide oil production has dropped, it may be do to Peak Oil, it may be do to the price increase tied in with Peak Oil which caused this recession. We can NOT say at the present time, we may be able to say in three to five years, but not right now.

Having said the above, lets remember, Peak Oil will Occur and what has happened since the Summer of 2008 I foresee as the "Norm" for the next 10 years as we hit Peak Oil and start on the down slope of the production graph. Price starts low, then goes up as demand for oil goes up as the economy kicks into gear. AS the price of Oil goes up, the price sooner or later gets to high for low income people to buy, they drop out of the workforce (Can't afford to drive to work). This leads to a drop in pay for this group WHILE their employers try to keep them getting to work any way the employer can. The problem is the best way is to increase wages, but that leads to a further demand for oil which leads to further price increase of oil and more people looking for ways to pay for the oil to get to work, even if that means cutting back on other things they buy. Sooner of later you get to a situation where employers refuse to increase wages and people stop working do to the increase in the price of oil (One reason is many employers will see addition increase it the items they sell do to the price of oil, thus most employers will NOT have the money to pay employees so the employees can drive to work). Sooner or later the price of oil will get so high the economy will do what it did last Summer, collapse. With that Collapse the demand for oil will drop like a rock, like it did last fall. The subsequent Recession will see low price for oil and then the whole cycle will start all over again. Thus we will be looking at recessions after recessions as we ride the roller coaster of the down side Slope of Peak Oil.

Now sooner or later we will have to make long term decisions to end the roller coaster ride. I do NOT see this till at least another cycle, for no one is proposing any solution to Peak Oil, in fact they are denying the existence of Peak Oil. As long as that is the case, we will be on this Roller Coaster. Now as soon as our Leaders (and only after most Americans also accept that Peak Oil is the Problem) accept that Peak Oil is the problem, then and only then will solution be proposed and passed. These include funding for mass transit, Amtrak and Bike Trails, all means to reduce US Oil usage. I even foresee an excise tax on Oil so that these items can be paid for. I foresee the US pulling out of Iraq and Afghanistan and other foreign bases, more to divert the money to US programs to end oil dependency then any other reason. The Federal Government will also try to get local and State Government to do things to reduce oil usage, improving rural roads and bridges (So people do NOT have to travel as far), provide more train stops in such rural areas so people can drive to the train and then to the big city (when rural people have to) instead of driving into the city. Suburban growth will die, but this is more the product of oil prices then any Government Action. To save some of Suburbia I foresee the Parking lots near Suburban Malls be built over for low income housing, so the Mall can have their low income employees when Gasoline gets so high that such employees can no longer drive to work (again this will be more the work of the Suburban Malls response to high Gasoline prices then any Government action except in Local Government approval of such low income housing).

Notice it will be an interaction of people (and Companies) reacting to the increase in the price of Gasoline, the Local Government efforts to reduce the cost of the price of Gasoline on its residents (Including the Local Mall shops), The State Governments addressing the needs of transportation of its Rural and Suburban residents, the Federal Government trying to reduce Oil usage no matter how, and inner cities handling the increase in the use of Bicycles of its residents as while as interacting with the Suburbs as to Light Rail systems connecting the Malls with the old urban core and thus connecting the Malls with each other and suburb residents (I foresee a move back to the city, but that will take at least till the next generation as this generation is still committed to Suburban living, as had their parents and Grandparents).

Just a comment on short term affect of Peak Oil and Long Term Affect of Peak Oil once we are on the down hill slope of the production Curve. We are probably as that point right now, but the evidence to that is still NOT available. We will know ONLY three to five years after it happened (Like how the US did NOT accept it had hit lower 48 state peak oil in 1969 till the mid 1970s and by that time we were hopelessly addicted to foreign oil).