Vol. 22, No. 5,514 - The American Reporter - September 7, 2016

by Robert Gelfand
American Reporter Correspondent
San Pedro, Calif
April 18, 2005
On Media

Back to home page

Printable version of this story

LOS ANGELES -- The term "peak oil" is barely mentioned in the mainstream media, yet it may be the most ominous term to face our civilization since plague or H-Bomb. At the least, it means a complete reorganization of every industrial economy and the need for vastly decreased expectations about economic growth. A slightly worse scenario involves, to a large extent, the end of civilization as we know it, followed by the evolution of some new, downsized way of life.

The concept, first introduced in the 1950s, was discussed at length by Garrett Hardin in his 1993 book "Living Within Limits: Ecology, Economics and Population Taboos." The book was well-reviewed and was read by a relatively small contingent of population worry-warts, but failed to create the massive paradigm change that it might have.

Others have written persuasively about the problem in recent years but to little public or media notice. Recently, Kevin Drum has been using his www.washingtonmonthly.com blog to popularize the notion. (Running a search on the term "oil peak" on that web site will yield links to several discussions of the topic.)

The concept is fairly straightforward. It was developed by a geologist working for Shell, Dr. Marion King Hubbert, and presented to a meeting of the American Petroleum Institute in 1956. (This is the standard biographical sketch of Dr. Hubbert, but it seriously understates his talent and accomplishments. He earned his undergraduate and Ph.D. degrees from the University of Chicago, was elected to the National Academy of Sciences, and served on the faculties of Stanford and Berkeley at various times. He is usually referred to as Dr. M. King Hubbert.)

The basic idea is that for oil, as for any natural resource, production will follow a bell-shaped curve over the course of time. The peak should occur when half the total world reserve has been used up. After that point, world oil production will fall, so that the downward shape will look like a mirror image of the upward slope.

According to this model, the pattern holds for any country's production as well as for world production as a whole.

When we look at the available data, we find that Hubbert's thesis appears to have been correct. He predicted that America's domestic oil production would peak around 1970 and then decline. He was criticized at the time, but the prediction was accurate. American domestic production peaked in the early 1970s as predicted, and has since dropped by half.

The underlying concept is simple. As a country begins to search for petroleum deposits, it finds the largest fields first. It's like throwing darts at a wall filled with different sized targets -- you are more likely to hit the biggest ones, so they are found first. As you run out of big targets, you toss more and more darts towards the smaller and smaller ones that are left. Meanwhile, you are pumping the oil out of the bigger targets, even as your search for new sources gets harder and harder. The early exploration phase is very productive, so the curve rises higher and higher. Eventually the larger oil fields are drained, as meanwhile the search continues for the remaining smaller and smaller pools. This is the downward slope.

Eventually, you have found and pumped dry practically every economically viable source of petroleum in the region.

The point at which production reaches its peak value has been named "Hubbert's Peak." It is a term we will be hearing more and more of in future years. Garrett Hardin referred to the entire curve as "Hubbert's Pimple," suggesting that the oil age is just one small bump in the history of mankind, barely more than a century in length.

The problem we now face as a civilization is that we may already be at, or very nearly at, the world peak for oil production and beginning to face the downward slide. Hubbert estimated the peak occurring around 1995. Other theorists now tend to agree with Hubbert's overall model and argue that the peak year is right around now. The data generally point in that direction. Total world production is slightly more than 80 million barrels of oil per day and hasn't increased much of late. Discovery of giant oil fields has been a thing of the past for almost half a century now.

Human intervention can affect the way the Hubbert curve shapes out, but American motorists will tend to find the process annoying. Intentionally holding back production, as OPEC occasionally threatens, can prolong the "peak" into more of a plateau: Instead of pumping 100 million barrels a day for a shorter period of time, the world's oil producers can conserve their supplies and pump 85 million barrels per day a little bit longer.

There is an immediate economic problem associated with this strategy, and it is a problem we seem to be encountering at the moment. Economic growth is linked to increasing energy usage. Holding petroleum production down hits at all levels of this economic tree. In a world where there has been strongly increasing demand for oil in recent years, the failure to provide for that increase has grave fiscal consequences.

To take it more directly, let's think about the effect of limited oil supplies coupled with increasing world demand and consider General Motors, a topic we treated with a certain amount of mirth last week. Recall that GM is sparring with the Los Angeles Times over advertising, the ostensible reason being remarks a Times columnist made about GM's strategy of designing gas-guzzlers.

While this has been going on, gasoline prices have surpassed $2.50 a gallon in Los Angeles. The media have been treating this price increase as another bubble that will burst one of these days, perhaps when those pesky OPEC countries (and occupied Iraq) get their systems in order and the oil flows at ever higher rates.

Well, what if it doesn't happen? Suppose we are actually at or near "peak oil" as defined by Hubbert. In that case, prices aren't going to get any better. That's when the economic problems accelerate.

Increasing demand from industrializing nations such as China will drive the price through the current ceiling and instead of $50 a barrel, it could hit $65, or $80, or $110. The price of gasoline will go up accordingly.

And there go the sales of those gigantosauruses, the Tahoe and the large pickup trucks. Sales will drop through the floor, and with them will go the prospect of a good year for GM. And with those declining prospects will go the part of GM's stock price that is based on the expectation of corporate growth.

Other companies that sell aftermarket products to SUV owners will watch their sales decline, as will the finance companies that lend to SUV buyers. The owners of SUV's will take a hit when it comes to trade-in time. The result is that from this one sector of the economy alone, there will be substantial economic hurt.

There are many other sectors that will likewise be hurt. Even the ability of the real estate market to maintain housing prices in suburbs that are situated far from the workplaces will be hit, as people start to consider the costs of commuting in their home purchase calculations.

And this is just the short term effect of a modest increase in gasoline prices on our suburban economy.

What about when it starts to get really bad, when you can't purchase gasoline or home heating fuel at a price that a middle-income earner can afford? What happens when it costs more to grow crops and move them to city markets than people can afford to pay? What happens when the fuel to run tractors and combines becomes so expensive that it is prohibitive to use them?

The predictable result of the end of affordable oil is a substantial reordering of our civilization. Will it happen over the next twenty years, or not for perhaps thirty-five years, or, if luck isn't with us, perhaps start its inexorable slide a decade from now? Nobody is quite sure of the exact timing, but it is hard to find any serious person who thinks we have even half a century left for our current level of oil gluttony. Children in school today will have to deal with the effects at a level we probably can't imagine.

In writing this modest introduction to a very big topic, I am reminded of how our daily newspapers function as the enablers of our gasoline addiction, even as television advertising portrays cars as vehicles of antisocial conduct and infantile rebellion. Advertising aside, the editorial and analytic sides of newspapers leave much to be desired when it comes to energy issues.

The contrast between the mass media and the world of serious thought is about as dramatic as it is possible to be when it comes to energy issues. If an authoritative voice is what you want, consider the esteemed California Institute of Technology physicist and science educator David Goodstein, who has written the book "Out of Gas: The End of the Age of Oil."

For a more extreme depiction of the problem, see http://lifeaftertheoilcrash.net/. The author Matt Savinar argues fairly convincingly that there is no easy solution, no simple fix, and the strong likelihood that the end of the oil economy means the end of civilization as we know it. He suggests that there can be a post-petroleum civilization, but that it will be a much different one. Savinar argues that the U.S. government has been considering the problem for decades and is stuck with one plan only, "Go to War to Get Oil." This claim, one might observe, is consistent with present day experience.

After considering the sorts of minor dislocations that will come from gasoline at $4 a gallon, try to imagine the effects when gasoline is not available at any price, when companies stop building internal combustion engine tractors and cars, when the price of fertilizer (currently a petroleum product for the most part) goes sky high.

These are the kinds of problems our offspring will have to face and conquer if they are to maintain civilization. It may be unsurprising that the political class have avoided talking about the topic, but it is time that serious media take up the discussion.

Copyright 2016 Joe Shea The American Reporter. All Rights Reserved.

Site Meter