Say Goodbye to Peak Oil
Now that the world’s credit markets are suffering the equivalent of a cardiac arrest, one can confidently say that the peak in global oil production is behind us. With demand for oil declining (because of global recession), OPEC will want to constrain production. With investment capital disappearing in a deflationary bonfire, oil companies will have difficulty financing new projects (even if they have full governmental go-ahead to drill, baby, drill). Thus even though the peak might have been delayed for another year or five if the credit crunch hadn’t intervened, that time cushion is now effectively gone.
This is not to say that Peak Oil should no longer to be considered to be of importance. In the larger, longer view of things, the energy decline will be the determining factor in the fate of our civilization—not a money or credit crisis.
When the world finally begins to recover from its financial turmoil (and this could take a few years), and oil demand picks back up again, the economy will bump up against oil supply constraints and petroleum prices will skyrocket, undermining the economic recovery.
Even though oil demand will have been constrained in the intervening years, depletion of existing fields will have continued, so that new production projects (when the industry finally gets around to financing them) will have that much more of a decline rate to offset.
We are in the Hirsch Report’s worst-case scenario—only it’s worse.
The only choice remaining for policy makers is whether to shift all of our collective societal efforts toward building new infrastructure for the low-energy future, or to try vainly just to prop up the credit markets, losing what will probably be the last opportunity to salvage industrial economies.
The amount of time left for dithering—if indeed there still is any—can perhaps be measured in only months.
The silver lining is this: Policy makers now are starting to realize that they must do something dramatic. Timid moves are showing themselves woefully insufficient to deal with the scale of the unfolding economic collapse. Thus a change of direction toward a true energy transition is no longer to be ruled out simply because of the boldness and scale of effort required. The single barrier that remains is the decision-makers’ lack of understanding of the real problem confronting them—and us.
Yes, a sea change has occurred and most people don't understand why it is happening. The credit crisis was caused partially by a misallocation of funds and resources to build an environment based on cheap energy and transportation. The era of abundant and cheap energy has ended. The current built environment does not scale very well with the new reality.
Its frustrating, especially in the South where I live, that city planners only consider a future of cars and trucks. Getting them to even consider alternative transportation and walkability is difficult at best. We need bike paths, sidewalks, light rail, bus and other forms of public transit. The city planners only talk of building more and more streets and roads with more lanes and turning lanes. Turning lanes? What do they think will be "turning" in the future when gas, if available at all, may cost tens of dollars a gallon?
When we ask about having a simple bike path placed along an existing two lane road or street the city planners say "they will 'consider' this request whenever that particular street or road is widened". Until then, no way. So, the only way to get any bike path and/or sidewalk is to widen the road? This is pathetic. It's like, cars come first and then as a side note we may or may not add another sorely needed means to get around. In the mean time, time and funding are running out.
I still see subdivisions being built farther and farther out from the town center and along with them more strip mall type retail centers and big boxers. How may I ask, in ten years time, are people going to get from those remote places to work or school? No thought is given to a light rail system or anything else than more roads.
Soon, as the tax revenues dry up and the cost of asphalt and almost every other transport-related commodity goes through the roof, we'll probably see most of this road construction stop. People will lose their jobs and there will be few alternatives for employment.
If an alternative energy and transport plan were made a top priority by the next administration and the allocation of funds was shifted accordingly that would be a step in the right direction. Until then, we are on the wrong path, a path that leads to a bleak future. A grass roots effort is needed to get the wheels of government and industry rolling in the right direction. And that requires more people to know about peak oil and its implications.
D. Draffen
As was predicted 3 years ago, peak oil would be masked by a housing and financial crisis. It was engineered with awe-inspiring precision. As we are stampeded into WWIII, few will ever have known what the real cause of it was.
There is a chance that we can have an economic recovery even against the backdrop of peak oil. I have laid out a plan for a new highway grid that can eliminate all imported oil, create 10 million jobs. And this new grid would pay for itself after just 5 years of operation. Just click on my homepage link.
Richard, it is a pleasure to read your smooth concise and thoughtful prose and your books have changed many lives including my own.I did not understand what you meant the we are in a worse scenario than Hirsch's worst scenario. I have assumed that one of the few good things about this financial Black Swan is that we may attenuate the descent curve of peak oil and will in fact maybe buy a little time. Am I missing something? Regards, Hugh in Jackson Hole
I fear with a world population of 6.7 billion and still growing, it's now too late for a 'gentle' power down.
Governments continue to 'plan' for yesterday, and restrict access to birth control, sex education and discouraging reproduction. Instead, the more kids you have,the larger those tax breaks.
I see growing hunger,sickness, declining farmland and food production, then food riots, government violence against it's own citizens and rising deaths from lack of adequate food, water, sanitation and health care.
In the end, the hordes of desperate humans will strip the earth of what ever resources remain to feed themselves for one more day before dying and leaving most of our planet a trashed wasteland.
Yes, there will be survivors here and there but the population will be much smaller than now, and pity those poor survivors for they will inherit a ravaged planet.
In my opinion, the credit crisis IS an oil crisis. It is hidden.
Since peak oil is basically infinite risk, the impact is being felt throughout the financial system in the form of artifacts, or tremors. It is simply like a wrecking ball to the economy.
Forcing people into liquidation, raising widely, then suddenly dropping in price perhaps shooting up again, back and forth, until it "forces" people to stop using it.
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