The end of oil?

According to a recent story in the Canadian National Post, it’s a doomsday cult heralding the end of civilisation. To others, it’s an advance group of industry figures who have broken ranks to warn us of major changes ahead if we keep going down the same fossil fuel path. In recent years it has come to be known as the peak oil movement.

While oil depletion has yet to register on the public’s radar, for the past few years this issue has grabbed the attention of numerous experts. Oil is generally considered a non-renewable fuel and every day we’re consuming 82 million barrels (13 billion litres) of it. Alarm bells are starting to ring. Without a change of direction, we will eventually run out, and long before then, oil scarcity may cause great damage to global and national economies.

Oil is the end product of anaerobic decomposition of aquatic organisms that took place millions of years ago. A dissenting "abiotic" theory holds that reserves are not as limited as we believe, arguing that oil is created deep within the earth where rocks have been exposed to extremes of temperature and pressure. However, regardless of which model is ultimately correct, the world is still heading for an oil shortage – unless we find and implement alternatives.

Although the first oil well is believed to have been drilled in China during the 4th century AD, the modern oil era commenced in 1859 when the first US well was sunk in Pennsylvania. Initially, oil was processed into kerosene, but following competition from the electric light bulb (invented in 1878), the industry entered a recession, from which it emerged in 1886 with the arrival of the automobile. The oil era had arrived.

Over the intervening century or so, most of the world has been reorganised around the availability of cheap and abundant oil, bringing comfort, leisure and prosperity, albeit at a high cost to society and the environment. Today, the scale of our dependence is hard to underestimate. Aside from the transport sector (petrol, diesel and LPG), nearly all the food we eat owes its existence to oil and its derivatives; key areas of reliance include chemical fertiliser, tractors, irrigation and transportation. Oil is a key raw material for petrochemicals, pharmaceuticals, pesticides, clothing and carpets. An estimated four per cent is used for plastics and around six per cent feeds the voracious global aviation industry.

Finite reserves

Measured on an evolutionary timescale, the oil era is no more than a blip that will end some time during the present century. The rate of new oilfield discoveries peaked in the 1960s and has since steeply declined. Fields being discovered today are far smaller than the finds of earlier decades. Production growth is levelling off and many believe the graph line will soon start to point downwards, indicating a production peak.

Dr M King Hubbert was an American geophysicist whose career spanned several decades of the 20th century, and a world authority on energy resources and exploitation. Around 1956, he made the startling prediction that US oil production would peak in the early 1970s. Although this was ridiculed at the time, it later turned out to be correct when production fell after 1970. A bell-shaped graph showing a steep rise and fall in oil output is today known as the Hubbert Curve.

Nobody can say with certainty when the global peak will occur, although some guesses have been made. Most of the world’s oil production is concentrated in the Middle East, and a production peak for the largest producer, Saudi Arabia, would almost certainly signify a global peak. Awareness of this event can only emerge belatedly when figures from two consecutive years are compared.

The president of the Association for the Study of Peak Oil&Gas (ASPO), Dr Colin Campbell, has revised his estimate from 2010 to 2008. Princeton University geologist Kenneth Deffeyes predicts 2005. More cautious commentators are inclined towards some time between 2010 and 2020.

At the other end of the scale, researchers from the US Energy Information Administration believe a peak is still decades away and have their eyes on 2037. For the time being, the inter-governmental International Energy Agency appears keen to fend off the idea of a peak arriving before 2030. Both these estimates have come under criticism from within the industry for trying to instill a dangerous false sense of security.

Unfortunately, there is often only a hazy idea of what is in the ground, as much data is surrounded by government secrecy. If accurate statistics were available, the work of researchers would be greatly simplified. Over the past two decades, members of the Organization of the Petroleum Exporting Countries (OPEC) such as Iraq and Venezuela have exaggerated reserves to justify ramping up production. Moreover, last year, following earlier exaggerated estimates, oil giant Royal Dutch/Shell downgraded its estimated proven reserves by 22 per cent.

The image of a final barrel of oil being extracted is a misleading one, as the end of the oil era will be a gradual process that takes decades. As the most accessible supplies are exhausted, spiralling costs and sobering logistical challenges will render extraction increasingly economically unviable. Synthetic crude oil can be extracted from shale and tar sand, as in Canada, but both require more processing. Originally in a bitumen-like consistency, tar sand requires large quantities of natural gas (a tar sand mining byproduct) and water in the extraction process. A further disadvantage is the greenhouse emissions are four times higher than those associated with developing conventional oil reserves and may conflict with Canada’s obligations under the Kyoto Protocol.

While claims of a peak oil news blackout are inaccurate, the media generally steers clear of the topic and, where coverage gets out, it avoids alerting us to the possible extent of social and economic impacts. Consequently, the issue has so far failed to percolate into mainstream consciousness. As with news of global warming a few years ago, the purported need for "balance" requires that equal attention is paid to debunkers, and the public, caught in the cognitive dissonance between two opposing viewpoints, doesn’t quite know what to believe.

If what is known as the "hard landing" scenario is correct, there will be no substitute technologies or fuels capable of replacing oil, and we can only prepare for wrenching changes ahead. This Chicken Little syndrome is somewhat reminiscent of the ominous warnings circulating before the Y2K date changeover. A "soft landing" would involve a smooth transition away from oil, and while this is a reassuring future vision, it’s seen by some as unrealistic. Probably the best approach is to hope for a gentle landing while simultaneously being prepared for a rougher ride.

Oil depletion and the economy

The global economy has linked its fate to oil to such a degree that in the event of supply disruptions, sharp oil price rises would ensure a severe economic recession. Although efficiency gains and the economic trend from manufacturing towards service industries have resulted in a significantly lower oil consumption per unit of Gross Domestic Product (GDP), a hard landing would spell the end of globalisation and consumerism, leaving us to obtain most necessities from within our locality. Economic fallout coupled with the logistical difficulties in getting to work would result in job losses.

While some dismiss peak oil by quoting the laws of economics, others believe economic forces are part of the problem. They see an urgent need to reform the global economy in line with ecological realities and finite fossil fuel reserves. Economic growth, the mantra of modern times, can only be maintained using an ever-increasing supply of fuel, and a no-growth "steady-state" economy might be more suited to diminishing oil. Remarkably, M King Hubbert himself was one advocate of such an economic model.

Those countries whose economies are most at risk include the US, which with five per cent of the world’s population burns 25 per cent of its oil. Since the early 1970s domestic oil peak, it has relied on imports, and the vulnerability of such an arrangement was highlighted in 1973-4 when Arab nations conducted an oil embargo against America, resulting in inflation and an economic recession. Many believe a key goal of the US Government’s War on Terror is to secure its current share of a diminishing oil supply.

A second economic hotspot is Asia, where the oil intensity per unit of GDP is roughly double that of the developed world. Several East Asian economies are growing quickly, and in China this has meant increased oil demand and higher prices. China first imported oil to supplement its domestic production only in 1993, and consumption in recent years has jumped exponentially, aided by the trend from pushbikes to cars as a mode of transport.

In particular, the airline industry, operating on tight profits, would be badly impacted by a future oil shortage, and air transport might become a thing of the past. Following a rise in the cost of jet fuel last year, airlines resorted to such measures as carrying less water for the toilets and switching to lighter cutlery.

Food supply issues

Central to the understanding of oil issues and their potential impact on food production is the concept of "food miles", essentially the distance food has travelled to arrive on a plate. While the current globalisation-driven trend is towards increasing food miles, this is oil-intensive and contributes unnecessarily to global warming; we need to be looking in the opposite direction towards localisation of our food requirements.

Roughly speaking, in developed countries, about 10 calories of hydrocarbon energy is required to produce one calorie of food energy at the point of purchase. Obviously, these figures vary enormously, and a meat diet is far more energy-intensive than a vegetarian one. Being highly unsustainable, such inefficiencies will have to change, either through new approaches to agriculture, technological innovation or a fossil fuel crisis.

Fuel scarcity would increase food prices, signify an imminent shift away from farm chemical use, and strongly encourage a shift towards labour-intensive decentralised food production. Home gardening would become more attractive, as would permaculture and the use of low-input perennial crops such as those researched for many years by Wes Jackson of The Land Institute in Kansas.

Vehicle efficiency and oil conservation

Unlike the US, which mandates minimum vehicle efficiency standards, Australia prefers a voluntary agreement with the auto industry: the National Average Fuel Consumption. Since 2001, this voluntary figure has stood at 8.32 litres per 100 kilometres (about 12 kilometres per litre). Applying only to petrol vehicles, it has a limited scope and compliance is optional.

In European countries, where fuel prices are usually 50 to 100 per cent higher than in Australia, cars are more efficient and far more diesel vehicles share the highways. Unlike in Australia, an estimated one-third of new cars sold in Western Europe run on diesel, an economical fuel that’s slowly shedding its dirty reputation. Perhaps the best solution here is to avoid fossil diesel altogether and run such vehicles more cleanly on renewable biodiesel sourced from waste vegetable oil.

Compared with Europe, fuel efficiency is lagging in the US, where a high proportion of new vehicle sales are guzzling 4WD Sports Utility Vehicles (SUVs). The minimum standards, set at 10.3 litres per 100km for light cars (about 10km per litre), have not been updated for some years. This is justified on the basis that fuel-efficient cars are apparently less safe on the road – presumably when they collide with an SUV!

To achieve greater "energy security", so far unsuccessful moves have been made to drill for oil and gas in such ecologically vulnerable areas as the Rocky Mountains and Alaska’s Arctic National Wildlife Refuge.* Another option would be to raise the minimum fuel efficiency, enabling a cut in oil imports. Best of all would be to raise US petrol taxes to European levels, but politically this would be very unpopular.

*The US Senate has since voted in favour of an energy plan that will open up the Alaskan wildlife refuge to oil drilling.

Low-carbon fuel solutions

Energy from sunlight hitting the earth in one day exceeds the output from all the oil that has been, and ever will be, burnt. From this perspective, the notion of an anticipated fuel shortage can seem a little strange.

In a post-carbon world, decentralised renewables such as solar, wind and small-scale hydro would probably replace coal and oil as the primary energy sources. Air travel would be greatly curtailed. Cycling and push lawnmowers would enter the mainstream. Rail would be used for longer trips and for transporting the goods that today travel by road.

New technologies offer promise, but some have their critics. Hydrogen fuel cells are a form of energy storage that, according to Wolfgang Lohbeck of Greenpeace Germany, requires three times as much energy as it delivers. Aside from fuel cell technology, a hydrogen engine developed by Andrija Puharich uses water as a fuel and utilises resonant frequencies in place of thermal energy to split the hydrogen-oxygen bonds. Another hydrogen device utilising water was built by Bolivian inventor Francisco Pacheco and was used to power a boat.

Biodiesel is an attractive interim oil alternative, but has its drawbacks. As consumption increases beyond a certain point, the supply of waste vegetable oil would be exhausted and supplies of new virgin vegetable oil would be needed to meet demand. A shift from recycling a waste product to cultivation will require additional agricultural resources for oilseed crops, competing with land for growing food, and will fall victim to the energy inefficiencies of modern broadscale agriculture.

In Europe, the MDI company plans to sell cars that run on compressed air, and it envisages a network of renewable energy fuelling stations. Out on the fringes are numerous purported free energy devices that make use of "zero point energy". These include the Kawai overunity magnetic motor, Tom Bearden’s Motionless Electromagnetic Generator, and, closer to home, the Lutec 1000, developed in Cairns, Queensland.

However, under the "hard landing" scenario, if we wait too long to develop workable alternatives, escape routes may eventually be closed off if the quantity of oil needed to create another infrastructure no longer exists.

The low-carbon society

In the 1920s, an American car company set out to run down the country’s streetcar system, at that time the biggest obstacle to mass car ownership. Within three decades it had largely succeeded in its goal, setting the scene for the mass construction of highways and sprawling suburban development characterised by car dependency. Similarly, in Australia, in all centres except Melbourne, trams were replaced by buses during the 1950s and ’60s.

Gregory Green, director of the hard-hitting documentary The End of Suburbia, believes that in a "post-carbon" world lacking in fuel, the suburbs will no longer be desirable places to live. The first sign of difficulties would be dramatic oil price rises, leading people to place responsibility at the door of an oil industry whose hands will be tied.

Today, several alternatives to suburbia exist, such as co-housing and the medium-density urban ecology developments underway in Adelaide. The New Urbanism movement, which began in the US in the late 1980s, focuses on planning for pedestrians in addition to the car, and achieving a high quality of life.

Sprawl is slowly on its way out in Australia. Sydney has recently announced plans for urban villages on its western fringes. Melbourne has set an urban boundary, and southeast Queensland has set aside a large swathe of the region for nature protection. All these decisions will inevitably result in a move towards medium-density development in place of suburbia and hopefully we can start creating communities rather than more housing estates.

In Australia’s individualistic privacy-orientated society, neighbours are often strangers. This would change radically in a post-carbon scenario. Alongside the potential for social breakdown, we would see an upsurge in local economies, community groups, mutual aid and networks of cooperation similar to LETS. Working from home would largely replace commuting and life skills such as growing food and low-technology healing would be quickly learnt. Consumerism would be replaced by community.

The Chinese character for "crisis" contains the sense of both danger and opportunity. In addition to the attendant risks, such a cooperative future has the potential to be enjoyable and fulfilling.

Association for the Study of Peak Oil&Gas
Biodiesel Association of Australia
Changing World Technologies
Hubbert Peak of Oil Production
Post Carbon Institute
Urban Ecology Australia
World Carfree Network


Martin Oliver is a writer and researcher based in Lismore, northern New South Wales.

Martin Oliver

Martin Oliver

Martin Oliver writes for several Australian holistic publications including WellBeing on a range of topics, including environmental issues. He believes that the world is going through a major transition and he is keen to help birth a peaceful, cooperative and sustainable reality.

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