Like Henry George’s theory of land taxation, Peak Oil seems to be one of those ideas, reasonable enough in itself, and modest in scope, that attracts a cult following in which it becomes the answer to all kinds of questions. This piece in Salon gives a tour of some of the wilder fringes (apparently serious people suggesting we are going back to the 13th century for example), and indicates the need for a correction.
The basic idea is simple enough, and reasonably plausible. Oil is a finite resource and sooner or later, extractions of oil must reach a peak. Application of a fairly simple model, with some previous successes to its credit, the Hubbert Curve, suggests that we are now at or near this peak, though lots of others disagree. Even if we are at the peak, it’s arguable that increasing prices will drive improvements in efficiency and reductions in demand sufficient to allow us to continue relying on oil in its main use (fuel for cars) for a long time to come, even as aggregate consumption declines gradually.
Suppose though, that availabilty of oil is going to decline to levels far below those of today. The question is, so what? A decline in the availability of oil would have a significant impact on various activities, but the availability and relative price of different goods change all the time. The increase in the cost of health care, for example, is much more significant than anything that has happened to oil or is likely to happen. Where do the Peak Oil crowed get their predictions of disaster?
The trick in the argument is to equate oil with fossil fuels in general. This is plausible enough for natural gas, which commonly occurs in the same places as oil, and is also in fairly limited supply. But the elephant in the corner in these arguments is coal. The US has enough easily accessible coal to supply hundreds of years of consumption at current rates, and the same is true of the rest of the world.
The Salon article mentions coal only a couple of times in passing. Yet coal and coal-fired electricity already compete directly with oil in all major uses except personal transport. If current oil prices are sustained for long, we can expect to see electricity displacing oil in home heating, and electrification of rail transport at the expense of diesel, reversing the trend of recent decades when diesel has been cheap. This is already happening.
As for cars, there are at least three well-established ways in which they could be fuelled by coal. First, there are electric cars. Second, there is coal liquefication, used on a large scale by South Africa in the sanctions period. Third, gasification could be used to replace liquid petroleum gas. All of these options have problems, but none are insurmountable given a high enough price; they might be competitive if oil stays above $60 a barrel long enough, and they would certainly be competitive at $150/barrel. Then there are more exotic options, like fuel cells using coal-based methanol.
The real problem with fossil fuels is not that we have too little but that we have too much. If we keep on burning them at current rates, we’ll cause highly damaging climate change. If we burned enough coal to run seriously short, we’d risk setting off a runaway greenhouse effect and making the planet uninhabitable. If Peak Oil is coming, it’s probably a good thing.
John Quiggin 
Smiths:
“can anyone explain to me,
if biotic oil theory is right,
why it is that the vast majority of biological material necessary for this theory was concentrated in one region of earth (middle east/caspian), intensively over a huge period of time,
surely that doesnt make sense”
Smiths it makes more sense that a biological process would be focused in particular areas than it does that methane upwelling from the Earth’s core ala Gold would be so focussed.
Funny isn’t how when we excavate tunnels and mine for mineral oils in non-sedimentary areas we never turn up the oil fields which the abiotic theory predicts should be there.
One of the Senate committees is sort of looking at this question – “Australia’s future oil supply and alternative transport fuelsâ€?. There have been over 160 submissions http://www.aph.gov.au/Senate/committee/rrat_ctte/oil_supply/submissions/sublist.htm from quite a wide range of people and organizations, a number of whom come from a peak oil perspective. It should be interesting to see what comes out of the final report though I would expect the response of the Liberals to be fairly muted or dismissive (some of Labor seems to at least have realised it is an issue).
On the question of coal the bloggers at the Oil Drum http://www.theoildrum.com/ have a good piece on the Governor of Montana’s proposal to go big in coal to liquid http://www.theoildrum.com/story/2005/10/17/153632/95) (They are a good site for general reading on this issue as are the newsletters of ASPO http://peakoil.net/).
In regards to biofuels – another Monbiot article on the subject makes the important point of its effects on biodiversity – i.e. Palm oil plantations have come at the expense of important ecosystems. And in the last six years, only in 2004 did the world produce more cereals than it utilized (see FAO and Heinberg). That doesn’t indicate a whole lot of excess land to grow your crops to produce your biofuels or your oils for feedstock for chemicals, plastics, etc.
P M Lawrence – ‘Low EROI issues only count if the fuel feedstock is expensive or if you wilfully use the fuel as part of producing the feedstock (the criticism of using sugar cane for ethanol)”
No EROI is the critical factor that does matter the most and is most often neglected. If you have nothing else you have to use the fuel you produce to produce the feedstock for the fuel lowering the net energy out. At the moment we use a high EROI fuel oil to produce biofuels so the process works.
BTW HTP is less toxic than hydrazine as it breaks down to water however I agree it is very nasty is you get it on your skin. Australia’s only satellite that was launched from Woomera used 85% HTP and RP5.
Crispin Bennett. You’re welcome.
HAL 9000. I meant, of course, heavier-than-air. Thanks for spotting it.
smiths Says: “why it is that the vast majority of biological material necessary for this theory was concentrated in one region of earth (middle east/caspian), intensively over a huge period of time, surely that doesnt make sense”
At the relevant time there was, literally, only one region of earth – the continent called Pangaea.
The current locations of the remnants of Pangaea are where the oil is now found.
You’re quite wrong to suggest that there was a concentration in the “middle east/caspian”. There’s oil all over the place wherever Pangaea used to be.
It’s more easily extracted in some places, however, and that relates to subsequent geological events. In some places, a nice cap of relatively impervious material formed, which trapped the oil and gas under it. The oil and gas, being lighter than the other material trapped under the cap, floats to the top and forms a nice reserviour ready to be tapped.
In other places, no cap formed, and so the oil is still mixed with the clay and sand. The Wikipedia article estimates that 66% of the world’s oil is like this.
So there’s absolutely nothing magical about middle eastern oil that makes abiotic theories plausible. It’s just the way the subsequent geology played out.
SJ, add in also the fact that coal is the result of very similar processes which was simply subjected to different amounts of heat and pressure once buried.
Ender, your second paragraph describes precisely the EROI-driven problems if you use the output fuel in the production process. The point I was getting at is that you don;t have to do it that way.
I’ll spell it out a bit. Take biodiesel. If your farm and production machinery works on fossil fuels, you only have a small energy gain. If you switch them to run on biodiesel as well, you hardly gain at all, because EROI feeds back exponentially. But if you revert to older labour intensive methods, or if you use entirely different energy inputs for farm machinery like tractors running off producer gas, you avoid these issues. Instead of biodiesel EROI being an exponential factor, it’s a one off multiplier and the problems come down to the cost of the feedstock for the gas producers, allowing for the EROI on that – and there’s no material exponential feedback there.
In many parts of the world, including Australia, this is a very practical approach.
To all you Candides and Pollyannas out there (and I would never have guessed that there were so many of you), have a look at The Oil Drum’s “Why peak oil is probably about now” at http://www.theoildrum.com/storyonly/2006/3/1/3402/63420 . Do not neglect the 378 comments.
Joe, no-one here (I think) is disputing the likelihood that we are at or near the peak for oil. The question, is, what does that mean for fossil fuels in general?
P.M.Lawrence – “But if you revert to older labour intensive methods, or if you use entirely different energy inputs for farm machinery like tractors running off producer gas, you avoid these issues.”
Where do you get the producer gas from? How much energy does it take to produce? Who feeds the labourers?
EROI is not exponential at all. I think that you mean diminishing returns. It does not matter where the energy comes from, energy is energy. The EROI calculation sums up the energy inputs and sums up the energy produced and returns the ratio of input to output. Producer gas, biodiesel, external to the farm it does not matter.
Ender’s right – why does it matter that you use a fraction of your biodiesel output to run the process that produces it? It takes energy to produce coal and oil supplies as well but people don’t usually quibble about the source of that energy. It obviously becomes an issue when the fraction of output energy that’s required as an input becomes “large”, and it’s also obvious that it’s hard to beat an oil well for cheap flows of energy. But that kind of thing is all very last millennium and tired by now. What we need is renewable energy sources – ones which are as efficient as possible in EROI terms of course. This is more challenging than digging stuff up and burning it (naturally), but considering us as a species – challenges are what we’ve proven to be good at.
One of the points that never seems to be addressed in discussions of this type is the relationship between oil supply and the stable, long term price of oil.
Discussions about Peak Oil generally fail to be precise about their terms. What I think the Peak Oil advocates are REALLY saying is that reserves of sweet, easily won crude that turns a healthy profit at an oil price of US$20 per bble are running out.
Anybody who knows anything about the subject knows that in fact there are simply huge resources of hydrocarbons on the planet, probably enough to last for hundreds of years if not more.
There are coal deposits (black coal, brown coal, lignite), tar sands, bitumen sands, oil shales etc etc. There is also the residual oil in oilfields where the easily won crude has been depleted, but remaining oil can be recovered by secondary and tertiary recovery techniques. As well, there are substantial resources in places like Siberia that are yet to be developed.
It is demonstrated that there is technology available to recover petroleum products from many of these sources, and at prices less than current.
The real issue is that these projects are inevitably capital intensive, especially if the very real environmental issues related to their development are properly addressed. The projects also need to be at large scale in order to access scale economies.
The main concern of financiers, especially debt providers (but also equity providers) is the reliability of the revenue stream. Cost streams are relatively easily established, but how can one decide what a 20 year forecast for the POO will be when over the past ten years alone the price has ranged from a low of US$10.73 per bbl in December 1998 to a high of US$69.81 in August 2005. I venture to suggest that ample financing would be available to develop these projects if a way could be found to provide a US$40 per barrel price on a reliable and sustainable basis for a financing period of say 20 years.
Surely it is not beyond the wit of man to develop mechanisms by which this could be achieved. Certainly the costs of doing so would, I think, be rather less than the costs that would be associated with invading countries to assure oil supply (in case someone, somewhere is considering that as a possible strategy – I am not suggesting that that has happened.)
bruce – “Anybody who knows anything about the subject knows that in fact there are simply huge resources of hydrocarbons on the planet, probably enough to last for hundreds of years if not more.”
OK 2 things wrong with this.
1. The reserves of hydrocarbons though large are not infinite. The heavy tars and oils are lower in EROI and some are close to 1:1 making it totally uneconomical to produce no matter what the price even if the energy was available to process them which in some case it is not. Coal, if used to substitute for oil, will start running short around 2050 or so and be gone a few years later.
2. Using all the hydrocarbons on the planet will increase atmospheric CO2 to possibly 500 or 600ppm or even higher. This is the level that most scientists agree could trigger climate change with totally unpredictable effects on our society.
Ender, I know that you don’t get exponentials when calculating EROI. It’s just that if you apply the same fuel source to producing the fuel, the EROI then turns up inside an exponential expression. With biodiesel, this is material, and with ethanol it gets ridiculous – which is the answer to Frankis’s point too, since what counts isn’t the energy needed to produce the fuel output but whether you have breakeven and, if so, whether you have enough non-energy input resources like land to provide the necessary inputs.
Producer gas uses whatever scrap material is around, and making it doesn’t need a further cycle with its own exponential expression; it’s just inefficient, so you need cheap and plentiful feedstock for it. In Australia, it does not need special cultivation to get enough producer gas feedstock to fuel other agriculture.
Likewise, if you were foolish enough to revert to unpleasant labour intensive methods of farming, Australia could do it by bringing more land into cultivation for the new peasant class (with its corresponding drop in lifestyle). It would not present an engineering obstacle, the way it would in the USA or third world countries (for slightly different reasons).
I’m not an expert, just a mum & part time with a keen interest these issues. I also heard John Quiggin speak at the Brisbane Hilton last year, when Prof. Kjell Aleklett of Upsalla University (Sweden), gave a presentation on Peak Oil. May I suggest something? I think John should read Richard Heinberg’s book, “The Party’s Over.� It clarified many things for me, not the least being “EROEI,� and the inherent viability of many “alternative� fuels. Here’s a link to a short pdf booklet summary of Heinberg’s publication:-
Click to access EndOfOilBooklet_0.pdf
And here’s me crossing swords (so to speak), with Federal Australian Resources Minister, Ian McFarlane (just recently), in relation to so called “Alternatives� (coal liquefaction amongst them). Here’s his reply to me, and my further answer (widely circulated, as you’ll see):-
http://www.kimspages.org/ianmcfarlane.htm
“Point 3� (scroll down, it’s on the right hand side of the page), is my answer to McFarlane on this point (coal liquefaction). Also, as a qualified and practising psychiatric nurse of over 30 years experience, I’d like to say that phrases like “Cult following� – in relation to peak oil – are cheap shots that substitute for reasoned debate. It smears and denigrates, something like the term “Loony left� was used to put people beyond the pale. Richard Heinberg (for instance), is one of the coollest, most reasoned and most meticulous writers I’ve ever read. Neither do I think people like Bruce Robinson (ASPO Australia), Colin Campbell, Prof Kjell Aleklett and Matt Simmons (for example), are wild-eyed, irrational people (and I’ve met a few over the years). In fact, they’re frighteningly sane, sober and well reasoned. Come on John, I’m not a Professor – and I can grasp these things, and so can another Brisbane economist that comes to mind, Richard Sanders.
Wrong on every count Quiggin. Resign for Pete’s sakes.
1. Georges land tax ideas are valid. But just not at 100%. It would be very much an improvement to substitute to land tax but only up to a point. You have not refuted it. Don’t pretend you have.
2. Peak Oil is also an extremely good predictive model. And it will be a great source of stress since the substitution rate away from the main energy source is always painfully slow. There is so much capital imbedded in doing things the way we do them now. Of course its not going to worry you since you are a tax-eater and not a tax-payer. But the stress will fall on those who actually have to earn money to survive and carry you lot as well.
3. The natural tendency is towards glaciation. CO2 is free fertiliser. So your Global warming take is another case of Wrong-Way Corriganism writ large.
Wrong on all counts.
Resign.
[…] Obviously my first instinct was to consult wikipedia, but the local blogosphere proved more enlightening. John Quiggin has a couple of useful posts, “Is Peak Oil here already” and “Carbon: too much not too little“. […]