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Thursday, March 23, 2006 CE

Nature versus Man Number 4:Thoughts about Peak Oil


This is part of a series which is intended to show that we are not necessarily the architecs of our future. Sometimes, unexpected events shape our history in ways that we cannot imagine.

Oil is a natural resource. It exists deep in the Earth's crust, unevenly distributed in the world. It is a dark fluid that has a very high energy density, therefore, is ideal as cheap fuel. It is also ideal to form polymers, such as plastics and to obtain fertilizers, pesticides, electricity, etc.

Oil is the foundation of the Western civilization and of the other civilizations that adopt Western ways of living. However, oil has not been an important part of our lives until well into the 19th century C.E. Once the Industrial Revolution could not sustain itself with coal, oil derivatives became the most important fuel. Nowadays, oil is everywhere in our lives. Transportation, agriculture, and hardware in general are just examples.

Oil is a fossil fuel. So, by definition, it cannot be replaced. It took hundreds of millions of years for dead organic matter to become oil. Being oil a limited resource, I always wondered when we would run out of it and what would happen to our way of life.

I did some research into the topic. I am not an environmental fundamentalist, but I understand that we need a better relationship with nature. I looked into many sources and always found the same answer: We are approaching a critical point in the history of this civilization. Some people argue that that point will arrive in 5 years other in 30 years. Some say that societies will disintegrate and everything will end up in nuclear war, others say that we will start a slow downward slope towards a new dark age.

I must accept that it is the first time in many years that I felt true anxiety about something I was reading. It was not the knowledge that oil will finish because I knew that. It was the fact that events seem to be so close in our future and the fact that there is nothing we can do to avoid it. Even if we stop using SUV's and we switch to ethanol-powered vehicles. The food we eat travels 1500 miles before reaching us and, in order to grow sugar cane to form ethanol, we need fertilizers and pesticides, i.e. oil. What about the plastics? What about electricity? Some will say nuclear energy is the answer. Well, to obtain nuclear energy we need uranium. Uranium is not abundant, and, so as to extract it, we need to drill, and to blow up mountains, i.e. oil. What about solar and wind power? Too low energy density, too intermittent of a supply.

The conclusions are pretty much obvious. Our current population is unsustainable. Some time in the course of this or the next generation we will experience economic- cultural-demographic decline in a planetary level. Nations and ethnic groups will fight for resources. States will fail to provide basic needs like security, education and healthcare. We will stabilize at a level which could be comparable to a pre-industrial society. How pre-industrial? I do not know the answer to that. The most pessimistic analysts say Stone Age, the most optimistic say Middle Ages. After all, it took between 1200 and 1300 years for Europe to recover Roman standards of living.

My sincere wishes are that, after everything happens and we start to develop again, we become a species that lives in more harmony with nature. I am an atheist, but I would understand much more a polytheistic, nature-based, supernatural mythology than an intolerant nature-serving-man monotheistic folly. I also wish that knowledge is preserved. The great tragedy of the 4th till the 7th century C.E. was the systematic destruction of knowledge due to religious intolerance. We should preserve everything we can to make this transition less painful.

Nature sometimes works in ways we cannot predict.

Further reading

http://lifeaftertheoilcrash.net/
http://en.wikipedia.org/wiki/Peak_oil
http://www.csmonitor.com/2004/0129/p14s01-wogi.html
http://www.timesonline.co.uk/article/0,,2099-1813695_1,00.html

29 Comments:

Anonymous Anonymous said...

Marco,

Take a deep breath and relax.

I know the strategic planner for Shell Energy (formerly Shell Oil). We discussed this topic over lunch a few months ago.

North America has so much shale oil that it makes the Middle East oil supplies look like spit in an ocean.

It is very accesible. But, the Middle East oil is "relatively" easy to get to and is therefore more economically viable. To quote my acquaintence from Shell, LONG before the US can build a nuclear power plant (with latest regs up to 30 years) shale oil will be the primary source of oil for the world. Estimates taking into account population growth (only India is still growing - for all others the rate of growth is declining source: Global Futures Forum) is that shale oil supplies will last 400 years. Plenty of time for us to wipe out the water supply or something else.

Then there is coal. Another 400 year supply for the whole world in North America alone. Plus coal power plants now have damn near zero - ZERO - emmissions.

So chill.

By the way. This same guy from Shell briefs the White House quarterly. US leadership sees all the data. In addition, he is leading an effort funded by Shell to do a global water study for the United Nations.

Seems like a pretty credible source of information to me. Ditto the GFF. Look who contributes to that.

Q

9:59 AM  
Blogger Foilwoman said...

Q:

Of course, Shell is a completely unbiased source for energy data on political perspective, so I can see why you accept his data (links?) without any question. What will be the environmental cost of obtaining all this incredibly plentiful shale oil? I'm assuming the shale is located in the Western U.S. What will that landscape look like once Shell and the rest of big oil is done with it (assuming, just for the purposes of this question that ShellShill's data and position are correct, which otherwise I do not assume).

5:12 PM  
Blogger Doctor Marco said...

Q:

I really wish to believe what you are saying, because not believing it means that we believe in the end of this type of civilization. To be honest with you the information I have regarding the oils shale is that it is extremely expensive. We would have to invest almost the same amount of oil that we are going to obtain (i.e. to obtain 1.5 barrels of oil we would have to invest 1, an EROEI ratio of 1.5). There are also the Canadian tsar sands
As I said I wish that what you are saying is true. But, I have a question for you: What if the oil shale or the Canadian tsar sands are not realistic options and your Shell friend is wrong? By the way I agree with Foilwoman in which that person is biased. He will never tell you that his industry will eventually fail.

Take a look at this article from 2004, when the oil price was 34 dollars per barrel.

7:49 PM  
Anonymous Anonymous said...

Foilwoman,

Believe what you want to believe. I know the Man. I consider him to be extremely credible. When we last met I wasn't aware that he was manipulating me with his "political pespectives". In fact, I thought we were exchanging techniques for getting the Presidents and Chiefs at our respective companies past their "blind spots". You see, we both do corporate competitive intelligence, strategic planning, and strategic forecasting. I do it for a Fortune 200 financial services company. The stories I shared with him weren't designed to manipulate him with my "political perspective". But I suppose it is possible that he knew one day that Marco was going to have this post and he set me up so I could manipulate you indirectly with his "political perspective". Austrians are famous for that you know and he is Austrian...

Marco,

Cost is always relative. I met the director of the Global Futures Forum and he had just come from an event where several Global 1000 CEO's had met to forecast mega trends. He told me that in one of their exercises they concluded that a gallon of gasoline should cost $300. The Saudis and Kuwaitis have kept the price down in support of the US. Of course, they are all just biased. But not your sources... They are all unbiased. This is very unlike you Marco.

Q

10:43 PM  
Anonymous Anonymous said...

FoilWoman,

I don't know what it will look like after we extract the shale oil. Do you? Will it look worse than cutting down trees to make fire? Will it look worse than strip mining for coal? Will it look worse than nuclear power plants? Will it look worse than hundres of square miles of solar panels, or hundreds of thousands of wind mills? What is your suggested alternative for harvesting energy?

Q

10:49 PM  
Anonymous Anonymous said...

Marco,

Followed your links. The first thing I noticed was Matt Simons "independent analyst". I've been working for Fortune 500 companies now for 30 years. THERE AIN'T NO SUCH THING AS AN INDEPENDENT ANALYST. "Independent Analysts" get paid to tell somebody what they want to hear. A common saying in the business world is that "indpendent consultants" take your watch (their compensation) to tell you what time it is. If you believe that think tanks and independent analysts are unbiased you really need to get out more.

Q

10:55 PM  
Anonymous Anonymous said...

Marco,

One last thing on this. Foilwoman might be interested as well. My Father in law (a "well patented" retired chemist that made rocket fuels for Morton Thicol - that should eliminate all of his credibilty here since it seems that only academians and "chicken littles" can be trusted to be unbiased - gag me!!) can't sit still even in retirement. So, He is building a bio-diesel plant (about the size of a 2,000 square foot house) that makes about 12,000 gallons/year of low emission fuel from grease (he gets it free from local restaruants) and husks/chaff (cotton, soy, and corn).

This was not a viable source of energy until oil hit $60/barrel. It seems to be a rising industry in the rural US. Of course, I'm completely biased against negativity (and even if I wasn't I wouldn't tell the truth because I work in corporate America where only whistle blowers can be trusted. So, sadly, I and can't be counted on to provide any rational thoughts or data. In fact, what I've posted probably proves that the world is already out of energy. In fact, we are probably all dead already and this is just the remnants of thoughts traveling across the universe dispersing into oblivian.

Q

Q

11:11 PM  
Blogger Truth Seeker said...

Marco,

I just created a blog.

http://truthissimple.blogspot.com/

I reference your blog because I respect you. Its that simple for me. I'll remove the link i you desire.

Q

2:06 PM  
Blogger udonman said...

Dr Marco worry not my friend more and more people are wising up to these oil companies and hopefully many more people will start reducing the impact on the environment by reducing there nonrenewable resource consumption such as recycled plastics or bio-polymers like those made with cornstarch and soy bean oil or by buying vehicles
that not only use less fuel but are capable of using alternative fuels like bio-diesel and e85 ethanol

5:40 AM  
Blogger CyberKitten said...

Not to worry Marco... Climate disaster brought on by Global Warming will finish us off long before the oil runs out. [grin]

But on a serious point (just for a moment)I think as a species we're pretty stupid - but not stupid enough to let 'business as usual' destroy our civilisation. There are many bright people out there who will help us dig ourselves out of the hole we've made for ourselves. The next 50 years are sure going to be 'interesting' and I think that a whole lot of people are going to die... but we will prevail.

7:23 AM  
Blogger Doctor Marco said...

Q

Thanks for the link on your newly created blog. I will always visit and I will add a link to yours in my blog (if you do not mind)

It is true, I am biased. I do not want the Western civilization to disappear. I might want to see some changes, but I do not want to see the next generations sinking into dark ages.

In my previous comment I asked you a question. I am interested in your answer.

10:52 PM  
Blogger Doctor Marco said...

Udonman:

I wish I can be as optimistic as you are.

10:54 PM  
Blogger Doctor Marco said...

Cyberkitten:

You said that we will prevail, but under what conditions? Does "we" mean the human race or Western civilization?

10:56 PM  
Blogger Kunstem√¶cker said...

I thoroughly enjoyed your contemplations. I have spent some time pondering about the effects of oil disappearing from our economy too.

When it comes to transport I believe solutions are at hand already. About the plastic we make, well we can recycle that. Someone has even found a way to derive oil from plastic again. So that's cool too.

Some things will shift. Now, 'space' is the most precious thing, I believe 'how to travel large distances' might become more important.

7:43 AM  
Blogger Truth Seeker said...

Marco,

Sorry about not ansering your question. I thought my coal comment and bio-fuel comment addressed it.

IF Shell Energy is wrong we can use coal, bio-fuels, or nuclear fuels to generate electricity. We will be forced to use more mass transportation, more electric vehicles, more bicycles, and our feet (like when I was growing up in San Antonio - we walked to the grocery store, park, laundry mat, movie, etc.).

There would be economic impact for certain, but everything has economic impact. Companies in the oil business would lose jobs (just like people that made buggy whips and horse shoes), but industries that make trains, subways, electric vehicles, coal filters, coal plants, nuclear plants, etc. would grow dramatically.

In the long haul running out oil sooner might be best for the environment, depending on how we implement the replacement energies.

In addition, I've read US Dept. of Energy reports that indicate cold fusion (endless supply of energy) is not a dream, its not viable today, but it will become viable before 2020.

This answer above is predicated on the oil companies (Shell Energy) being wrong about the oil supplies. I don't think they are wrong.

So assume Shell is right. If they are right, then supply is not the real issue.

Segue:
There is a lot of oil. There is nothing to speculate about. The oil companies have known about these supplies a very long time.
I worked for a Haliburton subsidiary (1978 - 1982) and we were starting a multi-billion "shale" oil project for Exxon circa 1980 because of fears that oil exports from the Middle East could not be counted on. In other words the anticipated oil shortages made "shale" oil economically viable. The US (under Jimmy Carter) cut a deal with the Saudi's, Kuwaiti's, and probably others to control Iran, Iraq, and others to keep the oil flowing and Exxon shut down the project.

My point! This isn't about the "shale" oil supply or the technological viability of extraction, it is about economic viability.

Did I answer your question?
Do you buy any of my answers?

Q

PS - Marco, when I was in school (before humans discovered fire) I was taught that the world population would fill the entire planet by 2000. No space for anybody. Guess what, didn't come true. You know something? It wasn't even a new idea. The book "The Wordly Philosophers" details a whole 1850's cult that thought the world would over populate by 1900. They were building a private strong hold to keep the others out.

Since then we've managed to survive "acid rain", "nuclear winter", "no more fish" (just saw that again today in the San Antonio Express News), "comet crashing into Earth", "robots take over", and let's not forget "year 2000 end of all mankind", and global warming.

I say this too you. One day one of these doomsday predictions will be right - sadly. But until then, replace all negative thoughts with positive thoughts.

Don't get sucked into the pool of despair.

- - - - -

Here's something to consider. We are in the "Age of Information". Right?

In the 60's and 70's data (raw numbers) became a commodity. Easy to get and ubiquitous. The information became more valuable than data.

In the 80's and 90's information (data about the data. example: the numbers show that more women are entering the workforce) became a commodity.

Now knowledge (what to do with the data. example: sell financial plans to more women) is becoming a commodity.

If you are in the news industry or if you are a futurist (think tanks and independent analysts), how do you survive in an era when data, information, and knowledge are commodities?

Answer:
YOU MAKE EVERYTHING EMOTIONAL!!!

Watch Hannity and Combs, Bill O'Reilly, the BBC blogs, The New York Times Headlines, the LA Times Headlines, the NBC Nightly News, CNN, and tell me they aren't doing this.

11:31 AM  
Blogger Truth Seeker said...

Marco,

Thanks for letting me reference your blog and for referencing mine.

Q

11:58 AM  
Blogger CyberKitten said...

Dr Marco asked: You said that we will prevail, but under what conditions? Does "we" mean the human race or Western civilization?

The conditions will depend on when we recognise that there actually is a problem and how much we do about it. He who hesitates and all that. The 'We' comment was mainly aimed at humanity but some form of Western Civilisation will survive even through a worst case scenario.

12:36 PM  
Blogger Doctor Marco said...

I see a lot of optimism among the commentators. It is healthy, and, hopefully, correct.

6:51 PM  
Blogger Kristine said...

Great post! Great blog! I'm in agreement--this situation is unsustainable. For a while, I felt like a lunatic, not having a car. No longer! Thanks.

5:36 PM  
Blogger Doctor Marco said...

It is pretty brave of you to not to have a car. You are doing your part. Lets hope it helps for buying time until we develop "something" that "might" save the civilization.

9:54 PM  
Blogger Alanita said...

THOUGHT YOU MIGHT ENJOY THIS BLOG IN RESPECT TO YOUR TOPIC AND OPINION: http://peakoildebunked.blogspot.com/

11:40 AM  
Blogger Doctor Marco said...

I saw that site. It is just a blog. It criticizes the people who is worried with the future of energy and does not address the issue that demand is exceeding supply at a rate that high oil prices are not able to stop. Before posting my article I read quite extensively about alternative energy sources and new and unexploted oil resources. None of the sites that believe that Peak Oil is junk have addressed the issue that the peak oil production per capita was already achieved in 1979 and that we are already on the right side of the curve.

12:29 AM  
Blogger Nog said...

There are always substitutes. There are things out there that would serve very well in producing energy for electricity and transportation. We just haven't discovered it yet.

Governments spend gobs of money funding their PR friendly "energy sources of the future" projects. I'm betting that when we find an oil/coal replacement, it wont be one that was found with government research dollars.

It may be cold fusion.It may be some previously undiscovered subatomic entity. It may be antimater. We might even be able to harness gravitational energy.

If oil is going to be the last stop in mankind's quest for energy (which , of course it wont be, we all might as well go kill ourselves.

And why are we betting on the human race being stuck on this space rock in several hundred years?

11:02 PM  
Blogger Doctor Marco said...

This comment appeared in the comment section of another post, so I am redirecting it to here

Marco,

Found this in a Treasury & Risk magazine. Thought it might interest you.

TALK ABOUT ALTERNATIVE ENERGY ISN'T JUST HOT AIR ANYMORE

The entire article may be viewed at http://www.treasuryandrisk.com/issues/2006_03/risk_management/506-1.html
March 2006
By Duncan Wood

Here's the thing. There are people on both sides of every topic. You have to decide which ones you trust. I prefer my source from Shell because I know him personnaly. I've had the chance to look him in the eye when I ask my questions and he answered them. Doesn't prove a thing. But better than most...

Q

11:15 PM  
Blogger Doctor Marco said...

Nog

I agree with you regarding the fact that another energy source will be found sometime. The problem is "when". If it takes too long, we might have to sink into a period of darkness before emerging again, fossil fuel-free.

11:19 PM  
Blogger Doctor Marco said...

Q:

I took a look at the site. I wish that all those sources of energy mentioned there (and new ones if possible) become able to replace oil in our oil-based economy (if indeed we are running out of it).

11:26 PM  
Blogger Nog said...

Marco,

When is definitely the issue for most people. We cannot see the future. We do not know what will replace fossil fuels because fossil fuels have not yet been replaced.
But when I view history in retrospect, I am comforted. It is a very rare occurance for faith in humanity to be misplaced. I find it highly doubtful that the fossil fuel situation will ever go totally south.
The buggy makers were probably complaining just as hard about how they "lost" "their" jobs (forever and would never get another one) when cars were invented. It was nothing but fear of the necessarily uncertian future.
I can assume with a high degree of certainty, that the repacement for oil will be cheaper, more durable, more portable, more effifient, more abundant, and cleaner.

History will prove me right.

5:03 PM  
Blogger Doctor Marco said...

I really would like history to prove you right

9:38 PM  
Anonymous Brock Tice said...

E85 fuel (85% ethanol) is looking like a pretty good replacement. It doesn't take much modification to the engine, many cars already support it, and it uses 15% as much gasoline as a fully gas-powered vehicle.

And, if you get it without the gasoline mixed in, you can drink it :)

9:08 AM  

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