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Peak Oil Day
Posted Jul 3, 2009 by Richard Heinberg
On July 11, 2008, the price of a barrel of oil hit a record $147.27 in daily trading. That same month, world crude oil production achieved a record 74.8 million barrels per day.
For years prior to this, a growing legion of analysts had been arguing that world oil production would max out around the year 2010 and begin to decline for reasons having to do with geology (we have found and picked the world’s “low-hanging fruit” in terms of giant oilfields), as well as lack of drilling rigs and trained exploration geologists and engineers. “Peak Oil,” they insisted, would mark the end of the growth phase of industrial civilization, because economic expansion requires increasing amounts of high-quality energy.
During the period from 2005 to 2008, as oil’s price steadily rose, production remained stagnant. Though new sources of oil were coming on line, they barely made up for production declines in existing fields due to depletion. By mid-2008, as oil prices wafted to the stratosphere, every petroleum producer responded to the obvious incentive to pump every possible barrel. Production rates nudged upward for a couple of months, but then both prices and production fell as demand for oil collapsed.
Since then, with oil prices much lower, and with credit tight to unavailable, up to $150 billion of investments in the development of future petroleum production capacity have evaporated. This means that if a new record production level is to be achieved, further declines in production from existing fields have to be overcome, meaning that all of those canceled production projects, and many more in addition, will have to be quickly brought on-stream. It may not be physically possible to turn the tide at this point, given the fact that the new “plays” are technically demanding and therefore expensive to develop, and have limited productive potential.
On May 4 of this year, Raymond James Associates, a prominent brokerage specializing in energy investments, issued a report stating, “With OPEC oil production apparently having peaked in 1Q08, and non-OPEC even earlier in 2007, peak oil on a worldwide basis seems to have taken place in early 2008.” This conclusion is being echoed by a cadre of other analysts.
Maybe it’s a stretch to say that the production peak occurred at one identifiable moment, but attributing it to the day oil prices reached their high-water mark may be a useful way of fixing the event in our minds. So I suggest that we remember July 11, 2008 as Peak Oil Day.
We are now approaching the first-year anniversary of Peak Oil Day. Where are we now? The global economy is in tatters, yet oil prices have recovered somewhat (they’re now about half what they were in July 2008). World energy consumption is down, world trade is down, the airline industry is shrinking, and most of the world’s automakers are on life support.
It is too late to prepare for Peak Oil—a year too late, in fact. Now the name of the game is adaptation. We are in an entirely new economic environment, in which old assumptions about the inevitability of perpetual growth, and the usefulness of leveraging investments based on expectations of future growth, are crashing in flames. Even if economic activity picks up somewhat, this will occur in the context of an economy significantly smaller than the one that existed in July 2008, and energy scarcity will quickly cause most green shoots to wither.
It is impossible to say what will happen in the future with regard to oil prices. Clearly, very high prices kill demand by undercutting economic activity. Thus it is possible that the barrel price of petroleum may never break last year’s record. On the other hand, if the value of the dollar were to collapse, then the sky’s the limit for prices in dollars per barrel.
It is easier to forecast the oil supply trend: though we’ll see level-to-rising production temporarily from time to time, in general it’s down, down, downhill from now on.
Even though Peak Oil is now in the past, its annual commemoration on Peak Oil Day may serve an important purpose by reminding us why our economy is shrinking, and by focusing our thoughts on ways to facilitate the transition to a post-petroleum world.
What are some appropriate ways to commemorate Peak Oil Day? I’d suggest spending time in nature, engaging in a 24-hour oil fast, or organizing a neighborhood bicycle parade and solar-cooker bakeoff.
Mark your calendar. What will you be doing on July 11?
Help us "celebrate" Peak Oil Day by signing our petition.
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8 comments
Inspiring Video on YouTube
From: Ingemar, Jun 7, 2010 05:58 PM
Make sure you check this video out:
http://www.youtube.com/watch?v=btOi4sw8B5U
It is inspiring and tells you about our big elephant under the sofa.
Jim Kunstler says rehab US railway net to pre-freeway footprint
From: Gunnar Henrioulle, Jul 31, 2009 09:42 PM
Richard Heinberg concurs with James Howard Kunstler's admonitions on railway rehab & expansion in America. The task is very doable, ranging from adding load/unload container handling facilities enroute existing rail lines, to entire brand new routes across desert or mountain range. CalTrans' 1995 (unabridged) rail study for a new US50 TranSierra rail line is such a proposal. American river Hydropower is at hand...
Easiest first step is to learn the territory. Your hometown vicinity is in one of the "US Rail Map Atlas Volumes", get your respective region's rail map book from (spv.co.uk). Knowing where the mains are now, and relation to dormant and removed branchline corridor is useful when scoping ways to get the connections back to smaller towns and suburbs without rail service now.
Strategic approach (one size fits all) is to find out which rail branch line was closest to your State's National Guard Unit Headquarters, or a working military base will do as well. This proximity between a military facility and a dormant rail branchline will present opportunity for a Railway Operating And Maiontenance Battalion, who can then "adopt" the dormant rail line for their base connection. Many times, nearby rail branch actually did serve the base you are looking at. Are there some buildings or warehouses on base with apparent loading platforms or large doors spaced for rail freight load/unload?
A helpful booklet can be obtained from the Association Of American Railroads: "Rail Transport And The Winning Of Wars" by James A. VanFleet. Call the AAR Librarian (202 639-2100)or your State Library might have one you can make copies from. This dated but eerily prescient with comment about possible homeland attack, and "dangerous dependence on imported oil". US Army National Guard Railr4oad Battalions were most helpful as disaster recovery assets, from end of the Civl war, lasting 100 years, thru the Vietnam War Era. Notable by their absence during (still incomplete) cleanup effort for Louisiana and Mississippi Katrina disaster. It pained this writer deeply, to see unused rail lines in the areas devastated, with extended suffering after Katrina, when in my earlier days we would have seen the rail battalions in the middle of cleanup & salvage operations, much of it on rail equipment.
Railway equipment for the US branchline rehab will be as exists in the present operating fleet, but certain types of container and refrigerated cars will need expanded numbers. Railcars for passenger use will need to be added by the tens of thousands as well. Some lines into downtowns will use light rail or sreetcar types oir rail vehicles. Pacific Electric methodology for day passenger, night freight delivery of victuals downtown will be needed. People with initiative will see sites like Wal Marts, UPS terminals, manufacturing sites with, or former users of, rail connection. If built after the age of happy motoring, as most suburb commercial has been, then it gets more tricky, to ascertain path of least resistance to get the rails into the population nodes.
This is about staving off famine due to distribution problems. How bad will it be when trucks are not able to make dependable food and necessities of life trips? Better not to experiment with this result of motor fuel shortage. This may be within a year or two, but probably not more than 5 years out. Deliberate speed of scoping and prioritizing of rail branchline rehab & reconnect is crucial. Let Richard Heinberg tell you, anyone reading this can reach people in the PostCarbon or SustainUS leadership. My conclusion of the need for rail has been with me as long as the US was removing the network; for over fifty years this misplaced idea that progress equals taking out rail lines and loading docks has given me heartburn. This is an hour of lead, not gold, for me.
For background and other lines on this railway policy subject, please see (peakoil.net articles 374 and 1037. ASPO USA must get beyond the vanity approach to railway projects, i.e., High Speed Rail as an end-all & be-all. Better get a subcommittee to look at maintaining freight movement as trucking is stretched past the breaking point with diesel cost, then outright shortage/rationing. Get talking on the full rail matrix needed, not just the sexy High Speed Lines for political ribbon cutting...
This is just the beginning of what we could list here: when you watch a slow-motion transport policy disaster over a 50 year timespan, you get a pretty comprehensive list together to repair things. Those wishing an updated read on local railways, with renewable connection, please get a copy of Christopher C. Swan's "ELECTRIC WATER" (New Society Press, 2007). ASPO USA officials, why not have Mr. Swan as a featured speaker at the October meetings? ASPO seems rail challenged...
Petition
From: Tod Brilliant, Jul 18, 2009 11:38 AM
Maybe we get together, buy 1000 copies of "The Party's Over" and orchestrate a special delivery to the White House? I think the man (Obama) is willing to learn, he's simply surrounded himself with questionable teachers.
Peak Oil Day petition zip code issue
From: Graham Wells, Jul 7, 2009 09:44 AM
The Peak Oil Day petition cannot be signed by anyone who doesn't have a zip code in their address. Not everywhere is just the same as the US!
Not that another petition will make any difference, sadly. Seems Obama never got around to actually reading "The Party's Over." If he did, what the hell do he and Steven Chu think they're playing at? Doesn't Obama care about the world his daughters will live in? Seems like on this, as on so many issues, he won't do the right thing.
peak oil day
From: maclean, Jul 6, 2009 06:31 PM
i noticed that the number of hoped-for signatories of the peak oil day petition is 500. please tell me that you really expect much, much more than this number of respondents (!?)
Electric Vehicle Awareness Day
From: TimK, Jul 6, 2009 11:33 AM
Portland Oregon is holding their annual Electric Vehicle Awareness Day on July 11, 2009. Granted, tires and roads still use oil, but at least we can demonstrate cars that don't use oil for fuel. Cheers, Tim http://www.oeva.org