Basic "Peak Oil" primer
the complex problem and the difficult choices

What is "Peak Oil?" To answer that question let's start at the beginning so you can get a big picture overview. Back in the 1950s geophysicist M. King Hubbert noted in general, gas and oil production in a field rose to a peak when half of a field had been extracted, upon reaching peak production the oil field would go into a production decline. From this basic observation about individual oil fields, Hubbert was able to create an idealized production model.

Few people think about it but before oil can be consumed, it first needs to be located. The time-lag between discovering where the oil field is located and production is due to infrastructure; it takes time to build the drill rigs, time to build the pipelines to carry oil to the oil refinery, etc.

What worries geologists, geophysicists and petroleum engineers who have studied the crude issue, is the worldwide implications of the Hubbert Curve used to model global oil production, along with the historical fact that worldwide discovery of oil fields peaked or a more accurate term would be plateaued between 1958 to 1963. After 1964 new fields that were discovered tended to be smaller and from a technical standpoint required more infrastructure to extract oil than those fields discovered prior to peak discovery. Another inconvenient fact is since about 1983 global oil consumption has grown faster than global oil discovery (basically since the 1980's mankind has been consuming oil at an unsustainable rate).

The Hubbert Curve is a logistic distribution curve and NOT a normal distribution curve, which appears similar. Some differences are that the density of a normal distribution approaches zero faster than a logistic distribution does.

One analogy that can be used to illustrate what concerns people who have studied the crude issue, is to imagine an oil field being akin to an orange grove and fruit pickers akin to oil wells. Its easy to pick off the low hanging fruit on the bottom half of the trees BUT to pick off all the fruit off the top parts of the trees, it gets more difficult and takes more time and effort. One last caveat about the orange grove example, unlike an orange tree which can produce more fruit each year, it takes millions of years for nature to make more oil. One aspect that should alarm individuals in the industrial world who have grow complacent to a consumer lifestyle is it takes 98 tons of prehistoric, buried plant material to produce each gallon of gasoline we burn in our cars, trucks and other transportation vehicles.

Given the large body of scientific evidence, it is inevitable that global oil production will inevitable peak! The only unknowns are: when will peak happen, what is the production decline rate after peak occurs, what is the demand rate after peak occurs and is the market going to be able to create economical substitutes for cheap oil. Unlike the problem of global terrorism, which can have momentary effects on the global economy, a decline in oil production is far more disruptive because crude and energy in general is the foundation on which the modern global economy is built.

Now that you hopefully have a basic understanding of Hubbert's theory and are aware of the questions that individuals have who have looked at the problem are concerned about, "Peak Oil" is the simple label used to describe the general problem of the peaking in global oil production. BTW the peak is not a sharply defined point, as Hubbert's idealized production model suggests; rather it will be period where history will show a some kind plateau in production, followed by downward trend. It is important to emphasize that "Peak Oil" does not mean oil is suddenly going to disappear, but the effect people will notice post peak, is the DRAMATIC increase in the price of oil.

What does "Peak Oil" mean?
the end of convenience and exuberance as we know it

To fully appreciate the intricacies of "Peak Oil" it is helpful to have basic knowledge and understanding in diverse areas of study: physics, political science, economics, engineering, urban planning, agriculture, anthropology, psychology, etc. since there are so many butterfly effects.

In a nutshell "Peak Oil" is an issue that will have profound affects on the structure of global civilization. Because oil is a finite natural resource the overall long term price trend is up; it is basic economics when the supply goes down the price goes up. The cascading result of rising oil prices is, the price of all basic commodities including water are also going to increase. Since oil and water are basic inputs to produce finished products such as computer chips, autos, etc., as well as all the food found in supermarkets, when there are price increases and natural resource scarcity, there are going to be inevitable conflicts.

The social effects of "Peak Oil" are going to vary depending upon where you live. In the third world "Peak Oil" is not going to change ones lifestyle very much at first because daily life there pretty much sucks to begin with; as a matter of fact "Peak Oil" means even less opportunity for upward mobility (which will affect most people in the so called american middle class).

Basically if the "Peak Oil" problem is not addressed, the general trend will most likely be, ever increasing prices for energy and regional shortages at first. Over time this will most likely escalate into wide spread shortages, and inability to buy petroluem at any price due to scarcity and hoarding. Unless vast new reserves are discovered in the Arctic region, oil resource depletion will play out over many decades. The break down will not play out uniformly from region to region or nation to nation; for example even though the Unites States and Mexico are next door neighbors, Mexico will suffer effects of "Peak Oil" much earlier than the USA because it lacks capital reserves and social infrastructure to adapt to world where the cost of crude is ever increasing.

In the United States where many people are dependent upon the car for basic transportation, "Peak Oil" will signal the end of convenience as we know it. As time marches on, many Americans are going to be even more frustrated with the upward price trend because many have come to believe that inexpensive gasoline is a birth right. The national obsession in the United States of watching prices at the pump and expecting low prices is due to the fact that for generations, gasoline costs were in the range of only about 2% of the wages of a typical worker. In years past because of inexpensive gasoline, consumers were able to afford to live far from their places of work and take "The Great American Road Trip" for granted. In a post "Peak Oil" world where transportation costs are ever increasing, individuals will have to sacrifice more of their personal living expenses to transportation if they wish to continue living far away from their places of work and who knows what will happen to the road trip tradition in the year 2065.


Ever increasing gasoline prices is an effect of "Peak Oil" that many Americans are going to see in their daily lives. The reason for ever increasing gasoline prices is basic economics; when the supply goes down the price goes up.

Most consumers of oil today are akin to a jobless person who has no savings, but does have a credit card and is living high on the hog; eventually there will be hell to pay (if the trend continues). IMHO use of oil by consumers prior to "Peak Oil" is in may ways similar to subprime lending and borrowing practices; imprudent actions grew over time which adversely affects the system as a whole, eventually the cumulative effects can cause the system to crash.

Basically no nation or group of people will escape the consequences, nor is there a simple and easy solution to "Peak Oil" because the problem is quite complex. Rather there are going to be incremental adaptations that people and societies can do to mitigate effects of "Peak Oil" but one should be aware that some solutions to relieve the symptoms will be not so well thought out. For example, when President Bush and the congress tried legislation to mandate ethanol usage as a supplement to gasoline usage to create more fuel, the result was it created problems of its own.

Increasing ethanol production had several unintended effects including rising global food prices. In addition agro business pretty much ignored the long term issues about consuming water resources. As I see it, legislation to mandate ethanol usage is basically all about political leaders kissing the ass of agro business, and voters who have a vested interest. The motive of Congress and the President pandering to all those voters from farm states (Iowa, Illinois, Nebraska and Minnesota, Ohio, Wisconsin, South Dakota, Michigan, Missouri, Kansas and Kentucky) where corn is grown should be self-evident. Thought I would point out politicians and many voters in Michigan also supported the ethanol approach, because its all about quid pro quo (POS vehicles such as SUVs, consume a POS alternative fuel).

live green, go yellow? So does this mean a bunch of politicians in Washington DC keep on taking indirect bribes from special interests and then piss on American public?

Call me a cynic but my personal take on the tag line "Live Green, Go Yellow" is a bunch of politicians in Washington DC keep on taking greenbacks from special interests (for their political campaigns) and then piss on American public (by setting policy that ignores unfavorable scientific and economic evidence).

BTW thought you should know that cheap gasoline and larger profit margins on truck and SUVs, made increasing average fuel economy standards a political hard sell in states like Michigan. So is it just a coincidence that politicians in farm states also resisted increasing average fuel economy standards? With so many political alliances is it no wonder, that a cornucopia of POS polices get widespread support in Washington DC.

Can alternative energy save the day?
not yet, because we are dependent upon liquid fuels for transportation

The well know renewable energy sources such as solar, wind, and geothermal produce electricity which is fine and dandy; BUT electricity cannot be used in internal combustion engines to propel cars, trucks, bulldozers, airplanes, etc. "Peak Oil" is a problem that cannot be solved by increasing alternative energy output or building more nuclear power plants because if ya look around, you will see that most of our current transportation system is designed to operate on some kind of liquid fuel such as gasoline, diesel or "Jet A."

In 2006, about 44.64 gallons of refined products were produced for every 42 gallon barrel of crude oil input into U.S. refineries.

A 42-gallon barrel of crude oil makes about 19½ gallons of gasoline, 9.2 gallons of fuel oil, 4.1 gallons of jet fuel, and 11 gallons of other products, including lubricants, kerosene, asphalt, and petrochemical feedstocks to make plastics. In 2006 because of "refinery gain" about 44.64 gallons of refined products were produced for every 42 gallon barrel of crude oil input into U.S. refineries.

The reason internal combustion engines are used in cars, trucks, bulldozers, airplanes, etc. is because a liquid fuel (such as gasoline, diesel or "Jet A") stores lots of energy in a very small volume. Battery packs to store electricity will work for cars; but in general cars of the future powered by electricity will not have as much range or power, because the energy density of a battery is much lower than the same volume taken up by gasoline or diesel. Large transport aircraft like the Boeing 747 would be impossible to power using electricity alone because the battery pack would be weigh so damn much. FYI the USAF did build an experimental bomber powered by a nuclear reactor, so its not impossible to fly an aircraft powered by electricity; but from an engineering and economic standpoint electrical propulsion for aircraft is not realistic.

Although alternative energy sources which produce electricity do not have much impact on the transportation sector (as of yet); alternative energy is one solution to produce electricity without the harmful byproduct CO2 a known a greenhouse gas.

"Peak Oil" psychology
panic and denial are normal human responses

The "Peak Oil" story can be very depressing to consumers because for the first time in the history of the modern global economy, future generation will not have "cheap" access to a basic resource that makes possible so many inexpensive consumer products, such as SUVs. Individuals might also have some anxiety about conflicts caused by various groups competing over the remaining oil. "Peak Oil" is not a matter of "if" but "when" and this anticipation can add lots additional apprehension in some people's minds. Or upon first reading about or hearing about "Peak Oil" your first reaction might be "Nah, That Can't Be Right!"

Whatever your reaction I'll be the first to admit there is nothing I can say or do that is magically going to make your hysteria about "Peak Oil" go away; or even convince you that "Peak Oil" is real. There are those individuals in the industrial world who are going wake up one day (perhaps that is why you are reading this page) and think "Peak Oil" is the end of the world. Before going any further, just thought I would mention that an apocalyptic world view is noting new the difference this time is science was used to point out a big problem that humanity will one day encounter. So if you're feeling a bit of apprehension about the topic, don't hit the panic button, it's not going to do you any damn good in the long run; rule number one in an emergency is don't panic, rule number two is assess the situation. If ya think I'm selling ya a load of BS about "Peak Oil" or the idea that you should not panic, then please post your own thoughts about "Peak Oil."

don't panic - easier said than done

Instead of hitting the panic button which can make the problem worst, admit to yourself that a problem does exists. When a you admit to having a problem, then you have a foundation to build on to reach a solution.

Acknowledging a problem does exist is the first step one needs to take to find a solution or ways to adapt. To find a solution or to treat the symptoms without causing more damage requires understanding the root cause of the problem. Basically people need to have an open mind and look at the "Peak Oil" issue from many points of view, because the problem is complex and a solution will require some form of global consensus and need global corporation.

As it stands many people around the world see ever increasing prices for food and oil as the problem. My POV is ever increasing prices for food and oil, are symptoms of a demand imbalance which exists with respect the environment. The symptoms of ever increasing prices for food and oil did not just appear out of nowhere, they are a result of the general public and elected officials who do not understand the basic idea that limits exist within the system.

As symptoms such as ever increasing prices for food and oil start to dramatically affect people and society as a whole, they will most likely start by looking for some culprit to blame instead of looking in the mirror (that's human nature). Economics, science or religion alone are not going to solve or relieve the symptoms of ever increasing prices for food and oil, because the fact of the matter is the system is returning in kind what humanity as a whole has put into the system. It is ironic that throughout history there have been simple reminders in all kind of literature for people to take care of a system; but humanity as whole seems to forget to put into practice this vital lesson.

As you sow so shall you reap
GALATIANS 6: 7-9 (King James Version)

GIGO
computer science abbreviation for "Garbage In, Garbage Out"

Like it or not "Culling the herd" by natural selection is the inevitable way an economic or environmental system out of wack (i.e. unsustainable) finds a new transatory equilibrium. So moral questions about fairness aside, the fact of the matter is "Peak Oil" will have the strong (physically, economically and intellectually) adapt and survive at higher rates than the physically weak, economically poor and intellectually challenged. Post "Peak Oil" is also going to make painfully obvious that certain life styles (suburbia for instance) is very difficult, if not impossible, to justify from a physical resource and financial cost standpoint.

Basically in a post "Peak Oil" USA, energy efficiency and natural resource conservation will be the norm; whereas in pre "Peak Oil" world, energy inefficiency along with wasteful use of natural resource has been the norm.

It would be nice if mankind was able to avoid the widespread pain and suffering caused by epoch events like the subprime crisis, "Peak Oil" and global warming. But the inconvenient truth is human beings by nature are short sighted and don't want to admit that a problem exists in the first place; so we as a species too often make the inevitable small problems into really big ones. So my last word on this subject is if you want to avoid the widespread suffering caused by human folly, then all ya have to do is practice constant vigilance and master the negative emotions of pride, ignorance, greed and fear. Not so simple eh!

Basic "Peak Oil" resources
to get a strategic understanding of the problem I suggest the following:

Crude - the incredible journey of oil: Australian Broadcasting Corporation presents this superbly crafted, 90 minute documentary spanning 160 million years of the Earth's history to reveal the story of oil. From the food on our tables to the fuel in our cars, crude oil seeps invisibly into almost every part of our modern lives. It is the energy source and raw material that drives transport and the economy. Yet many of us have little idea of the incredible journey it has made to reach our petrol tanks and plastic bags.

A Crude Awakening The Oil Crash, is the quintessential documentary about the central role of oil in our lives. As a data geek I especially liked the bonus material on the DVD which pulls no punches and offers lots of technical details...

End of suburbia, is a documentary that discusses the dwindling supply of cheap energy in the form of fossil fuels and its effect on society in the United States post World War II...

The Financial Sense Newshour (FSN) with Jim Puplava, is from my home town of San Diego. I find this PodCast interesting because Puplava interviews some of today's top financial thinkers and often times has discussions with "Peak Oil" luminaries such as Matt Simmons...

Global Public Media, bills itself as "Public Service Broadcasting For A Post Carbon World" and examines issues in historical, philosophical, political and social context...

End of Cheap Oil, a 1998 article in Scientific American by Geologist Dr Colin Campbell...

End of Cheap Oil: It's inevitable! But just how soon will the vital fuel become so scarce and expensive that we're forced to make hard choices about how we live? 2004 article in National Geographic...

Kuwaiti study: Conventional oil to peak in 2014

Kuwati scientists update Hubbert model and say that global oil production will peak in 2014. One earlier model by Swedish researchers suggested that oil would peak sometime between 2008 and 2018. And other researchers have argued there are decades to go before oil production goes into irreversible decline.