Peak oil may show up this time....

Today's post: Wednesday, 6-23-2010

We need an 80% reduction in fossil fuel use by 2050 to avoid the worst global warming effects. And, practically speaking, we need to also double our electricity generation and double the useful work done per unit of electricity & other energy sources as well during that same time to have a decent economy.

At some point, the oil that we’ve been using to power much of our economy will begin to run low enough that our world economy will shrink due to lack of supply or excessive costs or both.

And, once the demand for oil picks up again with the apparent economic recovery or supply begins to plateau or drop, the prices will again go back up. That will cause more hard times economically unless we have enough alternative sources of energy to turn to.

Further, it’s extremely clear that the most supported and economically beneficial solution to add energy that does not use oil nor burn fossil fuels to release more CO2 into air that already has too much is to build massive amounts of new renewable energy production, particularly those that generate electricity & to dramatically increase energy efficiency and reduce the amount of energy that is now wasted.

And, of those, the more important long range solution is to build massive amounts of new renewable energy generation.

Today’s post:

There are three key reasons to suspect that peak oil may be showing up soon.

1. The people who are in a position to know the real reserves of oil in the key countries in the Middle East are the scientists and other energy experts in Kuwait.

Earlier this year they published saying their current estimate is that peak oil will happen in 2014. That’s now less than 4 years from now.

After that, no matter how much the price is bid up, each year there will be less oil and the price will rise in two ways.

As more countries develop economically and population rises, in the near term there will be more demand for oil. So with greater demand and slightly reducing supplies, prices will go up. Before the recent credit crash added to it and caused global economic slowing, our economy had been slowing from this rising demand impacting our current prices since oil was not becoming more available that fast.

Once peak oil hits, that will return even if the recovery from the global recession is weak. And, the price run up of oil will be greater if the recovery has been better.

Second, there are ways of getting more oil but which are not in use now because they cost more than the oil is now selling for. Once peak oil hits and the effects begin, this will initially slow the increase in prices due to the small increase in oil this will make available. But, it will also increase the cost of the oil itself which will then be passed along to the users after that.

2. Despite the recession, both economic growth in developing countries and growth in population worldwide will continue. That will gradually increase the demand for energy for transport which is now provided mostly by oil.

3. Despite some promising beginnings, electric cars; plug in hybrids; truly widespread increases in energy efficiency, electricity from solar photovoltaic, solar thermal, and wind, will not yet be ready for prime time for us to switch to fast enough to compensate for the slowing effect of peak oil. Nor do we yet have cost or energy efficient production of biofuels in real quantity.

This means that if we fail to dramatically accelerate those alternatives to oil, within the next 5 to 10 years, we will have serious slowing of the economy due to very steep increases in the cost of oil.

My hope is that the efforts now being made to get the United States congress to pass helpful legislation work well enough to get us moving fast enough to minimize the impact -- by both dramatically increasing the rate at which we are building these alternatives and by slightly increasing the costs of gasoline and diesel now to help fund that and to incentivized people to choose those alternatives.

The concept is a bit like the shock absorbing cans of water now on some freeways so that cars that are about to run into large concrete bridge supports will have significant but survivable crashes instead of the almost always fatal results of the crashes 20 times worse from running into the bridge supports without that initial slowing.

Certainly causing expensive cosmetic damage to your car if it runs into the shock absorbing cans of water is no fun to experience. But when you survive unhurt, you can overcome the problem. Conversely, without those shock absorbing cans of water, if you collide directly with the concrete bridge supports, you are dead and the game is lost.

Do we slow the use of oil now by making gasoline 25 to 75 cents a gallon more expensive and go to fairly decent supplies of $6 to $8 dollars a gallon gasoline later because there are beginning to be large scale alternatives available?

Or, do we decide we can’t afford to do that just now and then get to experience gasoline costing twice that much, $12 to $16 dollars a gallon or more -- and only half as much is available?

Will our now functioning economy and food delivery systems survive that hit? They might not.

That to me is the key question.

It’s why I think the people are fools who argue for permanently postponing California’s AB32 or for not supporting a National energy bill that gradually limits the use of carbon fuels with some near term cost increases involved.

Unfortunately, a recent poll found that the majority of Americans have heard we need to switch away from oil but also are unwilling to support paying a bit more now for gasoline to speed up that process.

Ultimately, unless those Americans and their representatives learn WHY we are in desperate trouble unless we do just that, we may not act fast enough to dodge the disastrous effects of peak oil once it arrives.

Over the next few weeks and months, we will see how it goes. But if it goes badly -- and it might, may God be merciful on us. We will need it.