Created Tuesday 27 March 2018
Proof of Peak Oil in Numbers
The truth about Peak Oil is hiding in plain view in the figures presented by the British Petroleum Statistical Review of World Energy (2011).
The table contains a list of all oil producing countries and regions in the world, along with the production status of each, ordered by year of peak production. The data was originally posted by Praveen Ghanta on The Oil Drum, a comprehensive website on discussing Peak Oil. You can find this updated list on Praveen’s blog at [LINK]
The table shows that 41 of the 53 oil producing nations in the world have reached Peak Oil production.
This means 78 % of the World’s Oil Producing Countries are well past their Peak Production and in steep decline.
Production numbers are quoted in thousands of barrels/day.
Take note of the figures in red in the % Off Peak column.
How much Oil is Left?
Only a few countries belonging to the Organization of the Petroleum Exporting Countries (OPEC) can actually increase oil production effectively. And the world is heavily relying on that. So obviously the big concern should be how much oil does OPEC say they have left? Given that the OPEC tends to be extremely covert regarding their oil data, we should be asking ourselves “How accurate, or how honest, are their reserve figures?”.
Colin J. Campbell, PhD Oxford, is a retired British petroleum geologist who predicted that oil production would peak by 2007. He has pointed to numerous discrepancies in estimates regarding Middle East reserves. The extent of reserves reported by each country remained amazingly constant from year to year and then jumped dramatically. The amazing thing is that the unexplainable surge occurred sometimes even in the total absence of exploration, strongly suggesting that OPEC’s reserves are overstated.
The chart on shown above is a chart of the history of reserves for each country (in Billions of Barrels of Oil). The yellow highlighted figures are the sudden unaccounted jumps in reserve figures.
Iraq started the trend in 1983 to be followed by Kuwait in 1985. In 1988, Abu Dhabi, Dubai, Iran, Iraq and Venezuela reported an increase of oil reserves by a factor of 2 to 3 times. Saudi Arabia followed suit 2 years later in 1990 and doubled its reserves from 170 billion barrels to 257.5 billion barrels! That is simply amazing, as a quick review of their prevailing history tells a different story.
This strange phenomenon is easily understood when we probe a little deeper.
Earlier, each OPEC nation was assigned a share of the oil market based on the country’s annual production capacity. In other words the more the production capacity of an OPEC country, the higher the quota of oil it was allowed to sell in the market. OPEC changed the rule in the 1980s to allot quota based not only on production capacity, but also on the oil reserves that the country claimed it had discovered below the ground.
Now, you can imagine what happens if each country in this cartel, called OPEC, wants to gain an edge over its other members and be allowed to sell more oil. Simple. Each country just claims that they have found more oil!
And sure enough, in the late 1980s there were huge and abrupt increases in the announced oil reserves for several OPEC nations. Obviously, it was in their interest to suddenly report amazing new finds of oil simply so each could sell a greater quota of oil as per the rules stated above.
The embellished reserves have been called “paper reserves” or “political reserves” by Dr. Campbell, who believes 30% of the estimated global oil reserves fall indeed within this category. Moreover, he also states that many of the resources claimed to be yet discovered should not be taken into account, given that they will never be available for cheap extraction.
Campbell points that once we remove “unrecoverable resources” and “political reserves”, we are left with a result of approximately 900 Gb (1 Gb= 1000,000,000 barrels) remaining. These remaining 900 Gb are found deeper and more difficult to extract and refine.
The Slow Breakdown of Denial
Reality is beginning to make its presence felt. And since 2005 we have had a series of admissions, open and covert, from across the fence. Here I list some in chronological order.
PROOF #1: The Hirsch Report – U.S. Dept. of Energy – Feb 2005
The Hirsch Report, officially called Peaking of World Oil Production: Impacts, Mitigation, and Risk Management, was created on request by the U.S. government for the U.S. Department of Energy and was published in February 2005. It is the first official document to take Peak Oil seriously, though at the time of it being commissioned, the government and the person heading the report, Robert Hirsch, were both unprepared for what they were going to uncover. Here is Robert Hirsch in his own words later.
“This problem is truly frightening. This problem is like nothing that I have ever seen in my lifetime, and the more you think about it and the more you look at the numbers, the more uneasy any observer gets. [...] And the risks to our economies and our civilization are enormous.” 1
Now that is a fairly candid bit of acknowledgment of Peak Oil. You can read the Hirsch Report at [LINK]
PROOF #2: International Energy Agency (I.E.A.) - 2007
This report estimates that the world’s existing oilfields would decline at around 3.7% per annum.
By 2008, the same agency doubled the forecast decline rate to 6.7% per annum.
Check page 84 of the 2007 report or page 45 of the 2008 report which you can find at the following links:
PROOF #3: U.S. Military Report – Sept 2010
The U.S. military is well aware of the problem. The 2010 Joint Operating Environment Report stated:
“By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 million barrels per day”.
You can find the details on page 29 of this document at: [LINK]
PROOF #4: Big Oil Companies Admit to Peak Oil
The world’s most important oil companies have always been opposed to the concept of peak oil and have insisted in reassuring the general public that there would be no oil deficit in sight until 2050.
The increasing evidence was however too obvious, and even though the companies started admitting to shortages they were careful to avoid the word “Peak”. Ron Oxburgh, who is the former chairman of Shell, has said:
“It is pretty clear that there is not much chance of finding any significant quantity of new cheap oil. Any new or unconventional oil is going to be expensive”. 2
Exxon is one of the world’s richest oil companies. Its official spokesman admitted:
“All the easy oil and gas in the world has pretty much been found. Now comes the harder work in finding and producing oil from more challenging environments and work areas”. 3
PROOF #5: OPEC Fails to Increase Output
In 2007, when oil prices were escalating and spare oil production capacity was sorely needed, the world pleaded and urged the OPEC to increase its oil production so that oil rates would stop rising uncontrollably. OPEC was unable to increase its oil output in spite of repeated attempts to reassure, until oil reached an unprecedented high of 146 dollars/barrel.
OPEC claimed that the issue was solely a supply shortage that could be countered through investment and technology solutions. The word “peak” was carefully avoided, as it would have equaled to admitting that Hubbert’s Law was a true threat that could apply to the powerful OPEC.
Summing up Peak Oil Denial
Honestly, whether any of these folks actually use the term “Peak Oil” or not is irrelevant, as we are presently experiencing the effects of what a peak of energy would feel like.
Each and every statistic points to the fact that we are well beyond the peak. The math of geology is well defined and we can no longer brush off the facts.
Therefore, I do not wish to labor a point that is already evident. What is more important and urgent is to examine what our responses for the future should be in the face of Peak Oil.
Peak Oil Impacts
Uniqueness of Oil - Running vs. Building
What part of our oil is running the world and what part is building it?
Energy Component: RUNNING
From 1 barrel of oil of 42 gallons, only 32 gallons of gasoline, diesel and jet fuel for transportation, etc. goes towards running our Modern Industrial World by moving our cars, trucks, trains, planes, machines etc.
Byproduct Component: BUILDING
The remaining 10 gallons per barrel are used to make products such as plastics, lubricants, bitumen, fertilizers, etc. that are crucial to building the fabric of the Modern Industrial World.
Please dwell a bit on the information above. The core point is easily missed when we think that oil is mainly a form of energy that moves things around or RUNS the world. Because in fact, about a third of each barrel of oil actually goes to BUILD and MAINTAIN the very fabric of our industrial world.
Yes, 33% of the barrel of oil goes into making unique oil-based products like bitumen, plastics, fertilizers, lubricants, pharmaceuticals, etc. that we cannot get from any other source of energy. Not solar, not windmills, not nuclear, nor anything else. In fact, all so-called alternative energy options are themselves built using oil energy and byproducts.
Besides, what do solar, windmills, nuclear, fuel cells, etc. give you in the end? Only electricity! None of them give you liquid fuels and the truth is that our world does not run on electricity but it runs on Liquid Fuels that come mainly from oil. We will elaborate on this later in Part III of this book on Alternative Energies.
The long and short of it is that the world RUNS on oil and the world is BUILT with oil. This cannot be said about any other source of energy. Oil is irreplaceable in the way we have built our Modern Industrial World.
The energy component of oil RUNS the manufacturing and transport of all kinds of goods, and helps to start and run businesses all around the globe. BUT it is bitumen, the byproduct component of oil, which is used to build the roads that all transportation networks need. No other source of energy can give us these byproducts.
The energy component of oil generates electricity BUT the byproduct component of oil provides insulators, plastics, a heavier grade of oil for cooling transformers, etc. that have built the electrical infrastructure and large parts of the electronic industry. No other source of energy can give us these byproducts.
With the energy component of oil, we shaped systems to grow excess food of all kinds, needed or not. This we did through aggressive and wasteful agricultural practices that required increasing the amount of oil used to grow, irrigate, and harvest, with an increasing number of machines and industrial methods. We then processed this food with oil energy in thousands of ways, healthy or not, and then transported the processed foods to far-flung corners of the globe. BUT the byproduct component of oil provided the fertilizers that made this kind of energy-intensive agriculture possible. No other source can give us fertilizers as byproducts so cheap and plentiful.
What we proudly dubbed the “green revolution” was nothing but industrial, fossil-fueled agriculture using mono-cropping techniques. To maintain present levels of food production, oil is needed right from plowing to spraying fertilizers and pesticides to cropping to thrashing to cleaning to packing to storing to transporting to refrigeration… till it reaches your neighborhood supermarket. Remove oil from this network and the complete food system will collapse.
The food we get today is grown with oil used for fertilizers, herbicides, pesticides, irrigation and harvesting. This food is then transported over an average of 1200 miles.
In the United States, about ten calories of hydrocarbon energy are required to produce one calorie of food.
The diagram above shows a comparison of oil energy that we put into growing our food (left bar) and the much lower energy that the food actually gives us (right bar). The ratio of energy put in against what you get out is 10:1. So you are eating petroleum not sunshine. The more advanced a country is in modern agriculture, the higher the ratio of petroleum energy to sunshine in your food.
And finally the killer effect! Because fossil fuels made intensive agriculture possible, excess food translated into increased population in an exponential manner, doubling ever faster till it reached 7 billion. The one simple ecological fact that most people don’t know is that it does not matter which species it is, the ecological rule is - more food means more population. And, at a core level, we humans also follow ecological rules, like all other living organisms.
If we were to only rely on bio-mass (blue graph), which is the sun’s energy converted to plants, the world population would be around 800 million. But then we discovered coal (green graph), the first fossil fuel to kickstart fossil-fuel based, intensive agriculture and therefore exponential growth of population. Then oil (yellow graph) and then natural gas (red graph) took the population to over 7 billion in 2011. This is exponential growth of population following exponential growth of fossil fuel energy used in our modern agricultural system.
Apart from burning fossil fuel, the growth of modern agriculture has usurped 40% of the Earth’s photosynthetic capacity by converting numerous natural ecosystems into farm land. This has seriously debilitated the ecological systems that are crucial for climate stability and has brought the heightened extinction of non-human species.
Several studies show that the U.S. is so dependent on fossil fuel for its agriculture, that it would be incapable of sustaining more than about two-thirds of its population today without fossil fuel. If we think about this at a global scale, only an estimated 2 billion people would be able to live in a world without fossil fuel.
Taking all of this into account, we see how a world based on oil-based agriculture that is facing Peak Oil would mean less food. And less food would bring a decrease in populatio
A.A. Bartlett, Prof. Emeritus of Physics, Univ. of Colorado, Boulder has rightfully said: “Modern agriculture is the use of land to convert petroleum into food”.
Dependency on Oil’s Byproducts
Check this list out. These are but a few of the 6000 items that are dependent on the byproducts of oil. (Source: Ranken-energy.com)
Complex Web of Oil Inter-Dependencies
Beyond the surface level of dependencies comes the more scary and dark reality of Inter-dependencies. How one product or facet of oil is connected to another and another and another in an ever-widening web of inter-dependencies. It opens a Pandora’s box.
But just for discussion’s sake, it could make a mind-boggling game.
So let us take a simple item like a ball point pen. How does oil feature in it? Well, for a start, all the plastic of the refill is a byproduct of oil. And then all the non-plastic components were extracted using oil based machinery, then transported using oil to factories that were built with oil. The ink is made using solvents, including toluene and propyl alcohol that are byproducts from coal and oil processing.
Now go to the next level. Where was the plastic refill made? In a factory, of course. And where were the machines in those factories made? In other factories. And each one has infrastructure and machines that were built using oil energy. The electricity for most of these places was generated by burning coal, which is again a fossil fuel, like oil.
And how do the people who run these factories come to work? In cars that run on oil. And how were those cars manufactured? In factories that run on oil of course. And what about the parts and machinery to make those factories? They came from other factories that are built with oil, of course.
And where do these people who work in these factories live? In houses that were built using…
Try playing this game seriously for as long as you can. You will realize that it is an ever-widening web of oil interdependencies so hard to unravel that you can forget about replacing oil with any alternative. The more complicated a gadget is, the more the industries and processes involved in fabricating it. Each industry and process is linked in complex ways to oil and its byproducts.
There is only one outcome if you do this honestly. You will realize why the Modern Industrial World is doomed at the slightest decline in oil production.
This is only a brief description of what it takes to maintain the Modern Industrial World. Every facet of it is an artifact of cheap and abundant petroleum energy and its byproducts. We are enmeshed in our dependency on oil and its byproducts to such a degree that it is frightening to even examine the subject in its totality.
Now that we have sufficient proof that peak oil is real beacon move on to understanding the Impacts of Peak Oil.