The Collapse of Civilization — Part 3

Is "Peak Oil" Here?

Keith Akers

Deffeyes, Kenneth S. Beyond Oil: The View from Hubbert’s Peak. New York: Hill and Wang, 2005.

Simmons, Matthew R. Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy. Hoboken: John Wiley and Sons, 2005.

"Peak oil" does not refer to the time when we run out of oil, but when we are halfway through our oil supplies. The halfway point is important because the total world production of oil will likely fit a standard bell-shaped curve: it will slowly rise year by year, reach a peak, and then decline. This is basically what has happened with U. S. oil production, with oil production in other countries, and in many individual oil fields. Two new books, both by experts in petroleum geology, suggest that for all intents and purposes "peak oil" for the entire world is here — perhaps in a few years, perhaps as early as this fall. Beyond Oil and Twilight in the Desert are both about the fact of oil depletion, not about the economics of the aftermath of oil depletion (despite the subtitle to Simmons’ book, there is little discussion of the world economy).

The ramifications of a decline in oil supplies is enormous. Cheap energy underlies much of our economy, including the whole structure of our car culture based on suburbs, distant shopping centers, and an agriculture which is heavily oil-dependent. If oil supplies go down, the supply of everything which depends on oil will become problematic — very problematic. The only recent historical analogy is the oil shocks of 1973 and 1979; but unlike the 1970's, this time the decrease in oil supplies would be permanent. A global depression, or worse, is entirely possible. Unlike other environmental problems, this has barely appeared on the political radar screen and the world is almost completely unprepared.

But wait! Not everyone thinks "peak oil" is here. The U. S. Geological Survey has estimated that we will discover 674 billion barrels of oil between 1995 and 2025.   Most people using these figures thinks that oil will peak in about 2036 — three decades hence — during which time world oil production will continue to increase (though the USGS itself has made no estimate as to when oil will peak). "I can see no peak for the next 20 or 30 years," says energy consultant Michael Lynch, who criticizes early-peak advocates such as Deffeyes. 

If these critics are right, we have plenty of time to drive SUVs, fly around the globe, and so forth, and still have plenty of time to ramp up alternative energy sources at a leisurely pace for the eventual decline of oil some generations hence. Daniel Yergin, a Pulitzer prize winner who has written about oil, says that oil will peak after 2020. Well, how do we know that the USGS, Lynch, or Yergin, aren’t right after all? Is it time to panic yet?

Beyond Oil is very helpful in addressing these questions. Kenneth Deffeyes approaches the question from an analytical point of view, explaining the methods of H. King Hubbert, the "patron saint" of all the peak oil theorists. According to the "Hubbertians," a peak in world oil supplies is very close. It was Hubbert who, in the 1950's, successfully predicted that U. S. oil production would peak around the year 1970. Hubbert’s prediction was greeted with complete disbelief when it was first made, but events proved him right. Hubbert then predicted that world oil production would peak in the mid-1990's or in the year 2000 — something which did not happen, though Deffeyes argues that Hubbert wasn’t wrong by that much, and further that Hubbert’s underlying methodology was valid.

So what is the basis of Hubbert’s method? Was it just luck, an educated guess, or what? The genius of Beyond Oil is that Deffeyes is able to explain very elegantly both the mathematics and the underlying assumptions behind Hubbert’s ideas. Moreover, he does it in a single chapter — chapter 3 — which alone makes the book worth buying.

Hubbert’s original work involved some serious and complex mathematics — "impenetrable to many observers" is how one writer put it. But Deffeyes found an alternative way of explaining it which requires no more than a few simple algebraic equations. Let’s put it this way: what I got in eighth-grade algebra was sufficient, and I could actually understand the mathematics myself, and I am not exactly "Mr. Mathematical Genius." If it’s been a few years since you’ve done algebra, you may need to sharpen your pencil and try to work the equations out for yourself, but you can do it and it’s worth the effort and you will know more about the subject than the leaders of the free world. (I had forgotten what the "slope" of a line is, but I found the answer in a dictionary: change in "x" value divided by change in "y" value.)

The underlying assumption of Hubbert’s mathematics is simply this: the ability to produce oil is primarily based on the fraction of the oil that remains unproduced. Likewise, the ability to discover oil is primarily based on the fraction of the oil that remains undiscovered. As Deffeyes puts it: "The ease of catching fish depends mostly on how many fish remain in the pond." This of course is a hypothesis. Others might argue that the ability to produce oil depends chiefly on the price of oil, or the kind of fancy high-tech equipment you’ve got. But the Hubbert hypothesis seems to explain the rise and decline of U. S. oil production, the rise and decline of oil production in other countries, and even the rise and decline of oil production in individual oil fields. This is not to say that the price of oil and equipment doesn’t matter, just that it doesn’t seem to matter that much.

Deffeyes does not stop with oil, but goes on to explain the advantages and drawbacks of natural gas, tar sands, coal, uranium, gas hydrates, and hydrogen, surveying the entire energy "scene." All of these have problems and they cannot be easily and quickly be used to substitute for missing oil supplies. We actually do not face an "energy crisis" per se — we’ve got plenty of coal and uranium, for example, at least for the time being — but a "liquid fuels crisis." Electricity won’t work in cars (electric cars have too many problems with batteries and such), and fuel cells (which could use hydrogen that has been created by electricity) are years away from being practical. We need something liquid to put in our gas tanks that will make our cars and trucks run. Thus, the problem of going "beyond oil."

Twilight in the Desert addresses a small but important question of detail in the "peak oil" theory — the small detail of oil in Saudi Arabia, which has more oil than any other country in the world. A key objection to Hubbert’s methodology is that Saudi oil reserves are much greater than the "Hubbertians" have assumed. Saudi Arabia has enough announced oil reserves to postpone the peak of oil production for many years. But therein lies a tale, which Matthew Simmons tells in loving detail.

After 1979, when Saudi nationals took over management of Saudi oil, Saudi oil reserves shot up dramatically — from 100 billion barrels of oil to 260 billion barrels in a little more than a decade. Yet there’s a quite a bit of secretiveness over the Saudi reserve estimates, which have not been independently confirmed — and there were no dramatic announcements of earth-shaking new discoveries during this time. Most "Hubbertians" have dismissed the Saudi oil reserve estimates as politically motivated — perhaps having more to do with the fact that the allowed OPEC production was pegged to oil reserves.

So how much oil do the Saudis really have? We’d like just a little more detail here, and this is where Simmons steps in. He tells a pretty convincing story that Saudi oil production is pretty close to its peak, if it didn’t pass it in the early 1980's when the Saudis stretched their production to the maximum during the Iranian oil crisis. Simmons starts at the very beginning, explaining the fascinating story of the origins of the modern Saudi state, the discovery of oil in the 1930's, the involvement of foreign oil corporations, the OPEC oil embargo of 1973, the takeover of the Saudi oil industry by Saudi nationals in 1979, and goes into some detail about the "veil of secrecy" around the Saudi oil reserves.

But then, towards the middle of the book, he launches into a detailed, pretty technical examination of each individual Saudi oil field. Simmons will probably lose a lot of general readers when they get to this section. On the other hand, all the experts out there — all the petroleum geologists and their graduate students out at the Colorado School of Mines, for example — were probably yawning during the first half of the book, and will probably find this detailed technical section to be the most interesting. It’s good that Simmons has dished out something for everyone here, and it also means that even the non-experts can judge the book based on how the petroleum geologists out there react to this second part.

But even his more technical discussions raised several interesting points that I was not aware of which are germane to the discussion of peak oil, and I will mention them here.

1. Overproduction. Before I read Simmons’ book I was not aware that such a thing was even possible. An oil field can be "overproduced"; if you draw oil out of it too rapidly, you will damage the field, with the result that for a temporary gain in output, you will actually recover less total oil in the long run; some oil will be left in the ground. Simmons thinks that this may very well have happened when the Saudis greatly increased their output from 1978-1981 during the Iranian crisis, so we may actually recover less Middle East oil as a consequence.

2. Mature oil fields. An oil field does not just one day stop producing. At first the oil will come out of the ground under its own pressure, then later you have to pump water into the oil field to increase the pressure, then the "water cut" increases, and so forth. Simmons makes a strong case that the Saudi fields are "mature" fields in this sense, they are well along in their "lifespan."

3. New discovery of Saudi oil. Well, maybe there’s more oil in Saudi Arabia that our new, fancier, high-tech equipment might discover? Simmons considers this but concludes: "The real history of Saudi Arabian oil exploration has been rather different than conventional wisdom has assumed. The lack of additional great finds since the late 1960's was not due to a lack of effort. The effort was there. The oil was not."

The upshot of Simmons’ book is carefully stated. He readily countenances the fact that it is possible, possible that there is more oil in Saudi Arabia than we think. But he has read and understands all the Saudi technical papers that have been published. The evidence that the official Saudi oil reserves are anywhere close to accurate is just not there, and the evidence further suggests that the oil fields which are there are getting old. When the giant Saudi oil fields begin their inevitable decline, there will be a major oil shock.

Here is the one point on which I would wish that Simmons had provided a bit more information — not of the technical, but of the political, variety. Granted that the Saudi technical reports of all the problems they’ve been having belie their official line that there’s plenty of oil left, the question still remains — why? Wouldn’t it be in their best interest to admit that they can’t sustain their production much longer? Wouldn’t that admission send oil prices skyrocketing, resulting in even greater profits?

Simmons’ book suggests some possible answers. The Saudis did wield their "oil sword" once before, in 1973, and the results were not good. Demand for oil fell, and so did their income. Unlike the Kuwaitis, the Saudis have a large and increasing population, more dependent on their oil wealth than ever before. They may not want to admit, even to themselves, that the source of their wealth is about to enter an irreversible decline. They may find it easy to be misled by all their sophisticated computer models, overlooking that these models can only be as good as the assumptions underlying them.

After reading these books, there is little doubt that we have a serious problem. The burden of proof is now on those maintaining that there’s a lot more oil in the ground (e. g., Daniel Yergin) to give us some evidence as to why the Hubbert model — which seem to have quite a bit of empirical backing — should not be accepted. If "peak oil" is not here yet, it would be reasonable to assume that it is not more than a decade away.

There is so little visibility of the problem of "peak oil" among either political or intellectual leaders that we literally have no idea of what "peak oil" means in economic terms for a world in which everyone’s plans have confidently assumed the existence of plentiful and increasing oil supplies. Recession, depression, massive unemployment, a stock market crash, war, famine, and disease, may all be more likely than not. Obviously to fully answer the question "what now?" would be another book, or several books. I would suggest that this question requires answering two further questions: (1) How did this happen, that "peak oil" is here with so little warning? (2) What kind of a society will we live in, and should we work for, in light of "peak oil"?

We need to answer both questions together. Coming up with an ideal society requires, at least, fixing the social "warning lights" which failed to go off and tell us about this problem in the first place. If "peak oil" does arrive later this year, as Deffeyes thinks probable, it will be an almost complete surprise. It will be a surprise not only to the political leaders and the public, but even to the dissident factions in society whom we’d ordinarily look to for warning about such things. Because it is so totally unanticipated, this question is still not on the radar screen of the vast preponderance even of the informed public. If we’re lucky, we may yet have a few years to get our act together. The day is coming — and it could be soon — when this question will be at the top of everyone’s queue, and no one will really be prepared, even we ourselves who sit down typing out missives sounding the alarm.

"The scientists were warning us, but we didn’t listen." This is part of the explanation, but it isn’t the whole answer. Most scientists (e. g. psychologists and biochemists) don’t have anything to say about "peak oil" at all. Indeed, economists are still mostly in denial about "peak oil" — they’re the ones (like Yergin) who are claiming it will be a couple of decades hence. We’ll need their help to sort out this mess, so let’s not everyone rush out and burn them at the stake. What happens when the price of oil goes up to two, three, or ten times its current cost, with no substitutes around? An economist probably holds the answer, if we can just get his or her attention.

"The environmentalists were warning us, but we didn’t listen." This, too, is part of the explanation, but it also isn’t the whole answer. Environmentalists aren’t talking about "peak oil" that much. The July / August 2005 issue of WorldWatch, about as enlightened a source as we’re likely to get, has discussions on diesels versus hybrids, solar energy on Lakota reservations, clean water, and Antarctic melting. WorldWatch’s Vital Signs 2005 states that fossil fuel use surged in 2005, and notes briefly, "a growing number of geologists question whether oil reserves are sufficient to keep production rising." The Summer 2005 Peak and Prairie (local Sierra Club newsletter) features wind power and recycling. Certainly much of this will be relevant in a post-peak oil world, but there’s no discussion of "peak oil" as such. It’s interesting, too, that the petroleum geologists who are now raising this issue are not part of any "social movements" as we understand them — they’re just scientists and engineers doing their job.

A key part of the answer has to do with economics. Many economists view the problem as a technical one: as the price of energy goes up, the incentive to find a solution will increase, and if demand exceeds supply the condition will continue until finally there will be enough money on the table so that huge resources can be brought to bear on the problem and find a solution. The economists should be raising the alarm, because the way we’re going to feel this crisis — at least at first — will be economic; but they’re not. One Hubbertian (I can’t locate the quote now) derisively said, "They think that if you show up at the cashier’s window with enough money, that God is going to put more oil in the ground."

Nor are politicians — those creatures exquisitely attuned to the public eye — entirely to blame, either. I would urge people who just want to say "Bush did it! Impeach the bastard!" to take a closer look at the reality of the scientific community itself and the dissident elements within our society. The scientific community, the informed public, and the dissident groups within it, are not really talking with each other. Example: the current issue of VegNews, an excellent vegetarian / vegan publication, advertises itself as the "Vegetarian Travel Issue." Even at this late date and rising oil prices, the idea that there is a problem with "travel" is pretty new, even among groups that are very much against the status quo. It’s like the blind men and the elephant; they all have part of the solution.

Just as we don’t fully understand the problem, we also don’t fully understand the solution. We need to remake science and society in a different mold, and while tremendous changes are in store for the next generation, it may take more than one generation to do the job. We can’t completely ditch economics — there’s something to be said about free enterprise versus standing in lines under the weight of a state bureaucracy which apportions things badly, as in the late Soviet Union. On the other hand, the "economic" way of viewing things covers up areas of the common good which should be regulated and aren’t, in the name of glorious free enterprise. Key among these public goods are the soil, energy, water, and air. It’s going to be more than just tweaking a few taxes here and there.

It is not even the large corporations which are to blame, but the economic ideology which permeates them and our own minds as well. This ideology controls many more "cultural" factors than we are aware of: it does not simply sit back and set prices in response to supply and demand. Who decreed that we should have a car culture? Who decreed that we should work ever longer hours for an ever greater accumulation of stuff? Who decreed that we have to kill creatures, lots of creatures in a very bloody and cruel fashion, in order to eat? That has been the paradigm of industrial civilization and the paradigm of most of the dissidents as well as the leaders. At best some people see part of the problem (e. g. vegetarians) and try to cope with that.

I can’t fully outline and defend a solution in this short essay, but I can summarize the beginning here. Two things which have to change are our car culture and the desire for endless increasing consumption. When we spell out what this means, it will probably mean that government is the employer of last resort, that national service is a higher ideal than private enterprise, that protection and regulation of the environment trumps just about everything else in the economy, that agriculture and science will command considerably more respect than they do now, and that vegetarianism and riding bicycles will become the norm.

Kenneth Deffeyes summarizes the task for all of the smart people in the world (that’s YOU if you’re reading this article and have gotten this far):

"Business as usual is not in the cards. Muddling through is not strong enough medicine. Whether we like it or not, there will be major re-arrangements in the world economy. It would be more orderly if we were to generate a blueprint for a society constrained by the availability of resources. Then we need a noncatastrophic pathway that takes us from here to that blueprint. Welcome to the post-Hubbert world, the world beyond oil."

So sharpen your pencils and put on your thinking caps. Peak oil may not be here this month or next month, but the planet will need all the help it can get when it does, and we’d better get ready.

(updated Dec. 1, 2005)

Related articles on "The Collapse of Civilization":

Part 1: Collapse -- Coming Soon to a Civilization Near You!
A review of books by Jared Diamond, J. R. McNeill, and Joseph Tainter, on the collapse of civilizations and the current state of our own.

Part 2: Reviews of Better Off and The Long Emergency
Reviews of two books by James Kunstler and Eric Brende which offer alternative visions of possible futures.

Part 3: Is Peak Oil Here?, reviews of books by Ken Deffeys and Matt Simmons on peak oil.

Part 4: Five More Good Books on the Collapse of Civilization!  Reviews of books by Jeremy Legget, Lindsey Grant, Ronald Wright, John Howe, and Julian Darley. 

Part 5: Decline and Fall, a review of Are We Rome?

Part 6: Peak Oil at the Movies, a review of A Crude Awakening, Crude Impact, and What a Way to Go.