Oil crisis will sap global recovery

[Stuart Mackey]

NZ Herald

Oil crisis will sap global recovery: expert
4:00AM Tuesday Aug 04, 2009
By Steve Connor

The world is heading for a catastrophic energy crunch that could cripple a global economic recovery because most of the major oil fields have passed their peak production, a leading energy economist has warned.

Higher oil prices brought on by a rapid increase in demand and a stagnation, or even decline, in supply could blow any recovery off course, said Dr Fatih Birol, chief economist at the International Energy Agency (IEA) in Paris which is tasked with assessing future energy supplies by OECD countries.

Birol said the public and many governments appeared to be oblivious to the fact that the oil on which modern civilisation depends is running out far faster than previously predicted and global production is likely to peak in about 10 years - a decade earlier than most governments estimated.

But the first detailed assessment of more than 800 oil fields, covering three-quarters of global reserves, has found that most of the biggest fields have already peaked and the rate of decline in oil production is now running at nearly twice the pace calculated two years ago.

On top of this, there is chronic under-investment by oil-producing countries, a feature that is set to result in an "oil crunch" in the next five years which will jeopardise any hope of recovery from the recession, he said.

In a stark warning to Western powers, Birol said the market power of the few oil-producing countries that hold substantial reserves - mostly in the Middle East - would increase rapidly as the oil crisis began to grip after 2010.

"One day we will run out of oil, it is not today or tomorrow, but one day we will run out of oil and we have to leave oil before oil leaves us," he said.

"The earlier we start, the better, because all of our economic and social system is based on oil, so to change from that will take a lot of time and a lot of money and we should take this issue very seriously."

There is now a real risk of a crunch in the oil supply after next year when demand picks up because not enough is being done to build up new supplies to compensate for the rapid decline in existing fields.

The IEA estimates the decline in oil production is now running at 6.7 per cent a year compared with the 3.7 per cent decline it estimated in 2007.

"If we see a tightness of the markets, people in the street will see it in terms of higher prices, much higher than we see now. It will have an impact on the economy, definitely, especially if we see this tightness in the markets in the next few years.

"It will be especially important because the global economy will still be very fragile, very vulnerable. Many people think there will be a recovery in a few years' time but it will be a slow recovery and a fragile recovery and we will have the risk that the recovery will be strangled with higher oil prices."

Oil production has already peaked in non-Opec countries and the era of cheap oil has ended, the IEA warned.

In most fields, oil production has peaked, which means other sources of supply have to be found to meet existing demand.

Even if demand remained steady, the world would have to find the equivalent of four Saudi Arabias to maintain production, Birol said. Six Saudi Arabias would be needed to keep up with the expected increase in demand between now and 2030.

Environmentalists fear that as supplies of oil run out, governments will be forced to exploit dirtier alternatives, such as the massive reserves of tar sands in Alberta, Canada.

That would be immensely damaging to the environment because of the amount of energy needed to recover a barrel of tar-sand oil compared with the energy needed to collect crude oil.

"Shell and others want to turn to tar and extract oil from coal. But these are carbon-intensive processes and will deepen the climate problem," said Jeremy Leggett, a former oil-industry consultant now with Solar Century.

"What we need to do is accelerate the mobilisation of renewables, energy efficiency and alternative transport.

"We have to do this for global warming reasons anyway, but the imminent energy crisis redoubles the imperative."

- INDEPENDENT

Take from that what you will.

[PainRack]

So......... I guess investing for the future is out?

[Narkis]

Haven't they been saying that the oil fields are running out and the end is nigh for the past 30 years or so? Why is this guy more dependable than all those who've rung the bell of doom before him?

[Colonel Olrik]

Haven't they been saying that the oil fields are running out and the end is nigh for the past 30 years or so? Why is this guy more dependable than all those who've rung the bell of doom before him?

I advise you to do a forum search on the subject. It has been discussed before to great length and the majority of the people here are quite vocal about it, as you'll quickly find out.

[GrandMasterTerwynn]

So......... I guess investing for the future is out?

Invest in renewable energy. Invest in nuclear power. Both of these will make a killing when the fossil fuel monopoly dinosaur finally shows the average slack-jaw just how ill it really is.

Haven't they been saying that the oil fields are running out and the end is nigh for the past 30 years or so? Why is this guy more dependable than all those who've rung the bell of doom before him?

Yes, they have, in fact, stated that the peak of oil production is approaching. Nothing fundamentally wrong with this assertion. In fact, the bulk of 'peak oil' estimates (going back several decades) pegged the peak to occur sometime between 2000 and 2030.

Which is to say that things are running, more or less, on-schedule. What makes this estimate worth listening to is that it was produced out of a survey of 3/4ths of the planet's known oil reserves, and is produced by the IEA, which is an agency which has been quite conservative in its outlook regarding "peak oil." This is a change from what the agency has been saying in decades past.

[Themightytom]

Oh Snap! I'm gonna buy up all oil I can, how long does it take oil to expire?

Seriously this just supports the necessity of alternative energy sources, we have been making predictions like this for a long time, but have sidelining the issue. We're within a few decades of "Screwed the pooch" time.

[Qwerty 42]

It's important, Mr. Obama, to take advantage of the current economic situation to develop alternative and nuclear power sources under a TVA-type program.

[Singular Intellect]

It strikes me that even the most deluded attempts to be exceptionally optimistic about the peak oil event are still writing on the wall "We are totally fucked".

I can't say I've seen a single example of alternate energy sources that we can realistically switch to; even a large bundle of them working together are grossly inadaquate.

[FireNexus]

I can't say I've seen a single example of alternate energy sources that we can realistically switch to; even a large bundle of them working together are grossly inadaquate.

If we're willing, in the short term, to give up certain luxuries afforded us by oil, nuclear is a perfectly acceptable option. It would require us to hurry the fuck up, and it's far too late for us to reach the oil peak unscathed using nuclear power, but it is an economical, almost inexhaustible alternative energy source. Most renewables are certainly a pipe dream, but there is a glowing, green 800 lb energy gorilla available.

[Bellator]

I'm wondering, other than environmental concerns, what would be the problem to massively crank up the use of coal to cope with a decreased supply of oil?

[The Spartan]

I'm wondering, other than environmental concerns, what would be the problem to massively crank up the use of coal to cope with a decreased supply of oil?

Well for starters we're already approaching peak coal. Some models suggest we're already there, too.

[Mr Flibble]

Well for starters we're already approaching peak coal. Some models suggest we're already there, too.

At current usage we have enough coal to last around a century iirc. Also coal to liquids techniques can exploit coal which is not economical to mine for traditional coal uses. The big problem with coal is the masses of extra pollution this would cause.

It does seem likely that we are near peak oil, which means there should be plenty of work for me. One of the neglected consequences of the financial crisis is the collapse in the oil price. This has lead to large cut backs in spending on oil exploration, which will hurt future production if the economy picks up again soon, which will naturally lead to a spike in oil prices. Personally I hope we start the switch to nuclear, as we really should have been cutting back on our fossil fuel usage a long time ago.

[Broomstick]

I fully support looking into renewables, even knowing that it is impossible for them to replace oil. For one thing, in certain locations and applications they do make sense and will become more and more economical as petroleum gets scarcer. Secondly, although they can't replace oil they can ease the transition off oil IF done properly (a big if, yes). Third, part of the reason we're in this mess is over-reliance on one, primary source of energy: petroleum. In the future, we'd do better to utilize multiple sources of energy just so an interruption in supply doesn't bring civilization to a halt (or a screaming disaster)

Another important point, which I keep repeating, is that there are too many people on the planet. Now, I would not like to go through a massive die-off of humanity (either as survivor or victim), nor could I ever condone setting one in motion. However, it is undeniable that there'd be a whole lot more to go around for everyone, and much less wreckage of the environment, if the human population dropped to 1 billion or even 500 million. I expect we could maintain our current tech level with those numbers, and the resource problems would be a LOT less urgent.

[The Duchess of Zeon]

I fully support looking into renewables, even knowing that it is impossible for them to replace oil. For one thing, in certain locations and applications they do make sense and will become more and more economical as petroleum gets scarcer. Secondly, although they can't replace oil they can ease the transition off oil IF done properly (a big if, yes). Third, part of the reason we're in this mess is over-reliance on one, primary source of energy: petroleum. In the future, we'd do better to utilize multiple sources of energy just so an interruption in supply doesn't bring civilization to a halt (or a screaming disaster)

Another important point, which I keep repeating, is that there are too many people on the planet. Now, I would not like to go through a massive die-off of humanity (either as survivor or victim), nor could I ever condone setting one in motion. However, it is undeniable that there'd be a whole lot more to go around for everyone, and much less wreckage of the environment, if the human population dropped to 1 billion or even 500 million. I expect we could maintain our current tech level with those numbers, and the resource problems would be a LOT less urgent.

Nonindustrial society can actually support a population of 2 billion humans on this Earth, so you're being quite pessimistic.

[Broomstick]

I'm looking for a long-term sustainable "post-industrial" society with a very comfortable lifestyle and sufficient resources to get us started with going off planet. Just because the world can support 2 billion doesn't mean it has to.

[Starglider]

I'm looking for a long-term sustainable "post-industrial" society with a very comfortable lifestyle and sufficient resources to get us started with going off planet. Just because the world can support 2 billion doesn't mean it has to.

You know the planet can support a lot more individuals if they're all (or nearly all) immobile in Matrix-style VR pods fed by synthetic protein gruel, and the 'comfortable lifestyle' is a VR simulation. For the majority of people that would be a huge improvement in effective quality of life.

Just saying.

[Broomstick]

Ugh.

And a lot of people would be "happier" if you just shot them full of heroin every 6 hours around the clock, but I won't advocate that, either.

[Starglider]

And a lot of people would be "happier" if you just shot them full of heroin every 6 hours around the clock, but I won't advocate that, either.

I just recently had a transhumanist trying to convince me that the only truly moral course of action is to 'maximise pleasure'. This means covering every planet we can reach in buildings full of human brains in jars, all wired to experience constant, mindless pleasure (equivalent to the most powerful possible euphoric drug, but implemented via direct stimulation, so no acclimitisation). Obviously existing humans would have to be done away with as they might interfere; the whole plan would need to be implemented by self-replicating robots. He expressed sincere regret that hardly anyone else was prepared to 'do what needed to be done'.

[The Spartan]

Well for starters we're already approaching peak coal. Some models suggest we're already there, too.

At current usage we have enough coal to last around a century iirc. Also coal to liquids techniques can exploit coal which is not economical to mine for traditional coal uses. The big problem with coal is the masses of extra pollution this would cause.

Aren't those the optimistic predictions though?

Regardless, if we ramp up coal use to offset oil, again leaving aside the environmental impact, all we'd be doing is trading one problem for an identical one.

[Pelranius]

Isn't peak coal talking about the depletion of known and readily accessible reserves?

I got the impression talking from people in the energy sector that there hadn't been much exploration for new coal (their words, not mine).

[Broomstick]

Well, I suppose if the Greenland and Antarctic ice caps do finish melting we can always look there for oil and coal....

Seriously, how much of the planet do you think remains unlooked at?

[Darth Lucifer]

DRILL BABY DRILL

This was a right wing republitard bumper sticker I saw next to I LIKE HER IIRC, this is in reference to drilling up in ANWR...that's the answer to everything. I'm just waiting to hear right wing talk radio spout that off in response.

And corn. Can't forget the corn.

[The Duchess of Zeon]

I'm looking for a long-term sustainable "post-industrial" society with a very comfortable lifestyle and sufficient resources to get us started with going off planet. Just because the world can support 2 billion doesn't mean it has to.

Actually having an industrial society increases the Earth's carrying capacity, not reduces it. For everyone to have an American standard of living on the Earth, permanently sustainable, with modern technology, the population could be up to 4 billions. Not even half of the humans presently alive have to die for this to take place.

[Pelranius]

Well, I suppose if the Greenland and Antarctic ice caps do finish melting we can always look there for oil and coal....

Seriously, how much of the planet do you think remains unlooked at?

Well, there are rough estimates of reserves in place and then there are actual surveys which provide a reasonable summary of what's actually in the ground. For instance, there are rough estimates made of coal in Xinjiang, China for the official record and then when they actually want to dig the coal out of the ground, they send in another team to do a more specific survey.

Someone with actual knowledge of geological surveying should probably clarify this, since I know I'm grossly oversimplifying it.

[Mr Flibble]

Well, I suppose if the Greenland and Antarctic ice caps do finish melting we can always look there for oil and coal....

Seriously, how much of the planet do you think remains unlooked at?

Not much, but more than you would expect. There is actually a lot of coal out there. As I said there are coal to liquids methods that can access coal that is deeper than coal that can be economically mined, as they just need to drill a well to the coal, and pump down chemicals (remember I said it was environmentally nasty). This greatly increases the amount of coal available for use, that doesn't mean I think we should do so, just that we do have a reasonable amount of coal for current uses, and can even expand usage.

We do in fact know there is Antarctic coal, it has been discovered already, of course like a lot of coal we know about, it is currently uneconomical to mine.

To give you some idea of how much coal there is, last decade in my city they were building retractable lights for a stadium (don't ask why they needed to retract, it is a long story). They had a lot of problems building them because they discovered a 10m thick coal seam below the city. This is in the CBD. It continues at least on the other side of the river, under the university, where the petroleum school drilled a training well. Until they were building those lights the coal underneath the city had been completely unknown. There is plenty of coal out there in known reserves, or not being mined because it is currently uneconomical to mine, we will use it up eventually of course, especially if we start using it to replace oil but coal running out is much less of a concern than oil.