Peak Oil responds, “The report of my death was an exaggeration.”

A recent post entitled The Welcome Death of Peak Oil by George Koch on the Ludwig von Mises Institute of Canada website begins with the following optimistic comment: “Improved technology and more efficiency mean North America could eventually become an oil exporter.” [i]   The author goes on to argue that technology has placed the theory of Peak Oil in its grave and that energy independence for North America is just around the corner. That Peak Oil is a mistaken and buried theory has been argued recently elsewhere,[ii] and the idea of North American energy independence is one that has been and continues to be widely disseminated by the corporate media, the oil industry, and investment firms.[iii] There is one significant problem, however. The statement is based on an unsound foundation.

The notion that hydraulic fracturing will result in American energy independence appears to have been debunked.[iv] In fact, just recently Faith Birol, president of the International Energy Administration, has stated that the increase in American oil production is simply a surge, not a revolution.[v]  To put it simply: the bold assertion of energy independence is predicated on early production numbers of shale oil wells; unfortunately, these production rates cannot be sustained for very long except through an exponential increase in the number of wells drilled.[vi] This only serves, however, to increase the speed at which the resource deposit is drawn-down, quickening the arrival of the day that the wells will no longer be economically viable. It is interesting to note that a number of companies have already lost money investing in shale oil and others are actively looking to get out of the business.[vii]

If an argument’s underlying foundation is faulty, then it is axiomatic that the conclusion drawn from it is also flawed. To paraphrase that classic movie, Monty Python and The Holy Grail, Peak Oil is ‘not quite dead yet’. In fact, I would argue that it is alive and as pertinent as ever, perhaps more so. I offer the following evidence to support that view.

While the American government was not interested in the topic of Peak Oil when Marion King Hubbert first proposed the model for petroleum resource depletion in 1948, by 1974, shortly after his prediction of US oil production peaking became reality, Hubbert was asked to provide written testimony to a Congressional committee writing the National Energy Conservation Policy Act as to the impact of Peak Oil on the monetary system.[viii] Jimmy Carter’s administration was driven by the concept of finite resources, creating the Department of Energy and prompting the president to present the issues in a televised speech in 1977.[ix]

More recently, the secretive National Energy Policy Development Group (NEPDG)–that was created only ten days after George Bush defeated Al Gore for the 2001 presidency and placed under the direct authority of Vice President Dick Cheney–brainstormed for ten meetings over an nine week period from January to May 2001 about Peak Oil and other energy security issues; issues that would significantly shape American government policies for the next few years. Although agendas and minutes of the meetings have been classified, seven pages were released after two lawsuits. These pages show that the group was reviewing how much oil remained in the world, where it was located, and who controlled it.[x] The public report from the NEPDG made dozens of recommendations based on the underlying belief that oil resources were finite and securing them were in the national interest of the United States.[xi]

The picture has not changed. The shale oil ‘boom’ is a short-term blip in a long-term trend that has been known to the American government for decades. The fact is the previous American administration perceived the issue of energy security as one requiring immediate response by all levels of government. I think most would acknowledge that the geopolitical tensions and military interactions in the Middle East over the last several decades have been centred upon one main objective: control of the oil and gas in the region. The idea of Peak Oil was very much driving American policy, especially foreign policy, less than a decade ago and it’s naïve to believe it is no longer a driving force in the current administration’s geopolitical strategising. Despite assurances and rhetoric, the current administration has not drawn down the number of military personnel in the Middle East and has actually become involved in additional conflicts in the region (e.g. Libya, Syria).[xii]

Leaving North America for the moment. It was only three years ago that the Future Analysis Branch of the Bundeswher Transformation Centre, a branch of the German military,[xiii] carried out its initial study for the German government’s Federal Ministry of Defence on the impact of Peak Oil.[xiv] As taken from the report’s Forward: “…the purpose of security-related future analysis is to acquire knowledge precociously and scientifically based in order to refine conceptual specifications and objectives without making predictions…[and] to enable the Federal Ministry of Defence to identify long-term issues with relevance to security policy at an early stage...” That Germany focused this branch’s first research on the topic of Peak Oil and its security implications speaks volumes as to the seriousness of finite oil resources and how they will impact the globe.

But back to the idea that Peak Oil is dead and buried. Here is what the report has to say: “It is a fact, however, that oil is finite and that there is a peak oil. Since this study is mainly focused on understanding cause-effect relations following such a peak oil situation, it is not necessary to specify a precise point in time…. Depending on the development of globally relevant factors, we cannot rule out that peak oil could have serious security policy implications within the review period of the 30-year investigation perspective” (emphasis added). So, the German military and the German Federal Defence Department not only believe that Peak Oil exists, but that the country must begin to prepare for the implications of Peak Oil sooner rather than later.

I think one has to take a step back in temporal perspective to get a good view of Peak Oil and to understand it and its implications for our global, industrial world. After about 200,000 years of low energy existence, humans happened upon a one-time windfall of energy-intensive resources and it has taken us less than two centuries to reach the production peak of this resource bonanza. On the way up the curve we have used the easy-to-retrieve and highest energy-return-on-energy-invested (EROEI) resources first, leaving us the less energy efficient (lower EROEI) and much more difficult-to-retrieve and expensive dregs; much of which may never get extracted.

Small ‘successes’, such as that of the American shale oil industry’s, are seen as minor deviations or perturbations in the long-term picture that emerges. For example, discoveries at Prudhoe Bay, Alaska, bumped up American oil production for a few years in the late 1970s and early 1980s but by the mid- to late-1980s the country resumed its journey down the Hubbert curve that began in 1970. The same pattern seems to be emerging with the ‘shale boom;’ a slight blip in the production numbers for a couple of years beginning in late 2009 and then it will be back to the downward slide of Hubbert’s Peak in the not-too-distant future.

This is not just true of the U.S.. It is true of every oil-producing country. Peak Oil is factual and based upon geologic patterns observed in every finite resource extracted to date. In fact, M.K. Hubbert predated his work on petroleum resources by studying extraction rates for various minerals that mimic the Hubbert curve.[xv]

The implications of Peak Oil are sure to be extremely upsetting to many. They range from James Howard Kunstler and John Michael Greer’s argument that the transition from fossil fuels will be a rather gradual fall from grace that will take generations, with possible spits and spurts of crises[xvi], to Michael Ruppert’s more apocalyptic and quick-moving collapse scenario. The reality of it, however, cannot be denied. But denial, of course, is the first stage of the Kubler-Ross model, also known as the five stages of grief, that psychiatrist Elisabeth Kubler-Ross uses to argue that when faced with impending death or some other horrible fate, a person will experience a series of emotional stages: denial, anger, bargaining, depression and acceptance.[xvii]

We won’t know when we’ve actually passed the peak of the Hubbert Curve with respect to oil production except in retrospect, and there are not likely to be any apocalyptic scenarios emerging as a result when we do; the truth is we may have already passed the point–global production rates of conventional oil have not moved above the levels reached in 2005/06.[xviii] There are many who have learned to accept it as inevitable but there are also a great many people still in the denial stage about Peak Oil.

Until more people arrive at the last stage of acceptance, we are destined to hear and read more stories with the theme reflected in Koch’s post. That Peak Oil is dead, technology will continue to save the day, and it’s time to move along, there’s nothing to see here. Unfortunately, I believe that the longer we maintain policies based on a denial of its existence, the less likely we will be able to prepare ourselves adequately and the more dire of the consequences will emerge.

What will befall an energy-dependent society as it begins its trip down the global, post-peak curve of Hubbert’s model can only be imagined. Will it reflect the brutal world of the television show Revolution where the power grid has failed due to wayward nanites?[xix] While failure of the grid in this science fiction series is not the result of Peak Oil, grid failure is a real possibility in a post-Peak Oil world, as pointed out by Richard Duncan in his Olduvai Theory.[xx] Will there be a massive die-off of humans as some predict?[xxi] Nobody knows.

One thing is sure though.

Peak Oil is dead, long live Peak Oil.