I’ve been thinking for quite a while about how to start a meaningful family conversation about our futures, the nation’s future, and the world’s future. In the past 2 years, I’ve been learning about some very worrying things, things that keep me awake at night. Things that make me fear deeply for jaime’s and Ranya’s and Kelsey’s, Daniel’s and Jason’s futures. It has taken me all 2 years to absorb what the potential risks are and to be able to take it seriously enough to think that maybe taking action now is the thing to do.
The looming problem that is keeping me up at nights is known as “Peak Oil”. We’ve all heard various predictions that say we’ll run out of oil in 30 years, in 50 years, in 100 years. Predictions from long ago that we should already have run out. Unfortunately, such predictions are silly things made by people who didn’t have a rigorous understanding of the issue, or who were just trying to simplify the problem down into an 8-word soundbite. The phrase “Peak Oil” refers to a peak in oil production, and then a decline thereafter. The world’s problems don’t start when oil runs out - they start when oil production can no longer be increased. The reasons for this are somewhat complicated, but have to do with our reliance on fiat currency which depends on a growth model. Our economies grow mostly because each year, we use more energy than we did previously, and thus we produce more. When there isn’t more energy to be had, growth stops, and when growth stops, we can’t pay back our mortages, and our economy goes in the tank.
You can see the outlines of this enormous problem of a growth-dependent economy in the current housing bubble, in the rapid expansion of the money supply by the federal reserve, and by the amount of debt carried by the federal government, by all the state governments, and by all the individuals in the US, whose average savings rate dropped below 0% in 2005.
Of course, the problem is made worse by the fact that oil production doesn’t peak and then stabilize - it peaks and then declines, meaning we have a shrinking economy. And it never stops shrinking - it goes on shrinking and shrinking until we’ve stopped producing all our “discretionary” things, and continues shrinking even after we’ve started cutting into “non-discretionary” things, like food (which we basically grow using oil as fertilizer), and then people start dying.
Peak Oil isn’t a question of if, it’s a question of when. It’s a fairly conclusive fact that oil is a limited resource, and it’s an empirically verified truth (verified many times over) that the rate of production of oil declines after we’ve produced about half what was originally there. For instance, US oil production peaked in 1970 and has declined ever since. The North Sea oil production peaked in 1999. Most countries of the world are confirmed to be “post-peak” in their oil production. Mexico’s Canterall field has begun a steep decline in production, which will have a major impact on Mexico’s overall production, and therefore on the US economy, as they are our #2 foreign source of oil. The Canterall oil field is one of the 3 largest fields in the world, and with it’s now apparent decline, all oil fields in the world that produced more than 1 mbpd (million-barrels-per-day) but one are in decline. The one exception is Ghawar, which is the world’s largest oil field, is in Saudi Arabia, and no one can really know what’s going on there because Saudi Arabia does not make public information on it’s production specifics. However, many people who watch these things have found reasons to believe Ghawar is also in decline, and that Saudi Arabia is potentially post-peak too.
If Saudi Arabia is post-peak, then the world is post-peak, as there is no producer in the world capable of filling Saudi Arabia’s shoes - nor even a 5% yearly decline of Saudi Arabia’s shoes.
As of right now, world and Saudi Arabia peak oil production occurred in early 2005 - the world has produced less oil each month than it did in May of that year (I think it was May, I may be off a month). Saudi Arabia’s oil production has declined by an apparent 8% for the past two years.
That alone does not mean that peak oil is here (and passed), because there have always been ups and downs in oil production, which leads most people to point out that an oil peak can never be recognized except in hindsight - and so we’re waiting to see how world oil production behaves in the next few years, especially in the context of an historically high and possibly rising price for oil. Saudi Arabia claims it’s declines have been voluntary and motivated by a desire to prop up oil prices. Everyone has different opinions on this - some accept the explanation, some question it based on the fact that oil prices are higher than their stated price range preference ($25-30/barrel), and the fact that there are now countries in the world starving for oil because they’ve been priced out of the market (mostly countries in Africa that are now experiencing energy shortages).
I lean toward thinking peak oil is here now, mostly because of the price and the Africa situation. However, the up-and-coming summer driving season will be very telling. Demand will increase - already global oil stocks are falling (stored up reserves), and the question will be put to Saudi Arabia - can it increase production to meet the demand, or will demand outstrip supply and send oil prices up and up, possibly to $80, even $100/barrel by the end of the year.
When put in terms of price, the problem seems manageable - oil at $100/barrel, ok, we just have to tighten our belts a little, make fewer trips, rebudget a little here, a little there so we can buy our $4/gallon gas. But that’s not the problem. The problem is if we are at peak, this problem is only going to get worse each year, and it won’t stop getting worse just because people can no longer find anything else to cut from their budgets. When I lose my job because Lazer is no longer profitable, I won’t be able to find another one. And I won’t be able to fall back on my savings for a year or two and wait for the economy to pick up again - there will be no rebound, it’ll only get worse.
The optimistic peak oilers think peak oil will happen around 2010-2012. The most wildly optimistic peak-oil deniers say we’re good until 2030. The irony is that 23 years is probably still too short an amount of time for us as a society to adjust away from oil. There is no substitute for it in our transportation system. Energy-wise, solutions are expensive and not taken seriously right now. We could build nuclear power plants and run electric cars, but when you look at the numbers, it requires some ridiculous crash-course of plant building, like 1 new nuclear power plant per week between now and 2030 to do the job - which is unlikely to happen. Right now the plan involves more coal plants and coal-fueled ethanol plants, which are a disaster in and of themselves.
The difference between peak oil now and peak oil 2010 is hardly worth considering, except a date of 2010 gives individuals like us more time to prepare for our own destiny. If it’s now, I’m not sure there’s much we can do. But I want to talk about it as a family. As a family we have the most options, the best chance to survive by working together (yes, I am talking survival, not merely suffering). Also, when things get rough, people turn to their families. We all live a long long ways from each other, and we all have “friends”. Maybe even good friends. But when the shit really hits the fan, I know most of those friends will disappear as they turn to their families.
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