We have taken our lifestyles and the cheap & abundant supply of oil all for granted. We expect the pumps will run to supply us with fuel to drive our SUV’s to run around town, work and school and we cannot accept an alternate future. But when oil becomes more scarce, it is very likely that these pumps will be the first to run dry, because they are at the end of the supply chain. But implications will be much worse than that.

It is not a question if but when the world economy will be confronted with a major shock that will stunt economic growth, increase inflation, and potentially destabilize the Middle East. It will make the Great Second Depression look like a dress rehearsal and may change the world as we know it today.

It is a coming crisis that few understand but with far reaching implications. Nations will fight over the remaining oil. Without hydrocarbons, this planet can only produce enough food to sustain a population of 2.5 billion. The current world population is in excess of 6 billion and growing (UN projection: 7.3 billion by 2050). In the US, without industrial agriculture, it is estimated that only 2/3's of the current population can be fed (D. Preiffer). Fossil fuels effectively temporarily raised the carrying capacity of the earth (see page 3).

Economic Growth 

The main worry is not the present levels of resource use and ecological impact. It is the levels we will rise to given the obsession with constantly increasing production and consumption. The supreme goal in all countries is to raise incomes, “living standards” and the GDP as much as possible, constantly and without any notion of a limit.

If all the world’s people would have the same “living standards” as people in the rich world by 2070,  given 4% growth until then, the total volume of world economic output would be 120 times as great as it is now. Even if we assume only 3% growth in rich countries and the Third World rising only to the present “living standards” of the rich countries, the multiple is 14. 

Economists' view is that the market will solve all of our problems. They assure us that pollution, resource depletion, the collapse of ecosystems and the failure of agriculture will produce economic stimulus which will spur the discovery of new resources and the development of new technologies. The market would maintain equilibrium no matter how much people and the environment have to suffer as a consequence. But we must avoid any movement towards regulations which might restrict economic growth. They have no clue how economic growth can be maintained with a shrinking energy base.

The present levels of production and consumption are grossly unsustainable. The determination to have a continual increase in income and economic output is simply unattainable. Yet it is impossible to get people or governments to even address this issue.  

The fallacy of Alternatives

The public, business leaders and politicians are all under the false assumption that oil depletion is a straightforward engineering problem of exactly the kind that technology and human ingenuity have so successfully solved before. Technology itself has become a kind of supernatural force, although in reality it is just the hardware and programming for running that fuel, and governed by the basic laws of physics and thermodynamics. Much of our existing technology simply won't work without an abundant underlying fossil fuel base. In addition, physicist Jonathan Huebner has concluded in The History of Science and Technology that the rate of innovation in the US peaked in 1873, and the current rate of innovation is about the same as it was in 1600. According to Huebner, by 2024 it will have slumped to the same level as it was in the Dark Ages. Hence, without sufficient innovation and a comfortable surplus of fossil fuels, we may simply lack the tools to move forward. 

With this energy base dwindling, there is simply not enough time to replace a fluid so cheap, abundant and versatile. It is rich in energy, easy to use, store, and transport. Nothing has the bang for the buck of oil, and nothing can replace it in time - either separately or in combination. Wind, waves and other renewables are all pretty marginal and also take a lot of energy to construct and require a petroleum platform to work off. 

Natural gas is a diminishing resource as well and cannot satisfy the growing demand for energy. US Gas supplies were so low in 2003 after a harsh winter that to preserve life and property supplies were close to being cut off to manufacturers, electric plants and lastly homes.  

Ethanol has a net energy value of zero (not accounting for soil and water damage and other costs due to unsustainable agricultural practices) - it is subsidized as a boon to agribusiness and would have a negligible effect (Prindle, ACEEE).  

Solar energy produces marginal net energy, but are still decades away at best from being a viable substitute given the recent rate of progress in efficiency and costs (averaging about five percent a year) and is nowhere ready to meet the world's energy needs. More importantly, solar photovoltaic cells (PVC) are built from hydrocarbon feed stocks and therefore require excess resources. It is estimated that a global solar energy system would take a century to build and would consume a major portion of world iron production (Foreign Affairs, Rhodes). 

The widespread belief that hydrogen is going to save the day is a good example of how delusional people have become. Hydrogen fuel cells are not an energy source at all, but are more properly termed a form of energy storage. Free hydrogen does not exist on this planet. It requires more energy to break a hydrogen bond than will ever be garnered from that free hydrogen. The current source of hydrogen is natural gas - that is, a hydrocarbon. In the envisioned system of solar PVC & hydrogen fuel cells, every major component of the system, from the PVC to the fuel cells themselves will require hydrocarbon energy and feedstocks. The oil age will never be replaced by a hydrogen fuel-cell economy. 

Coal is abundant, but its net energy profile is poor compared to oil and its conversion process to synthetic fuels is very efficient. Coal would have to be mined at much higher rates to replace declining oil field. In addition, coal production is extremely harmful to the environment. One large coal burning electric plant releases enough radioactive material in a year to build two atomic bombs, apart from emitting more greenhouse gases than any other fuels.  Coal is implicated in mercury pollution that causes 60.000 cases of brain damage in newborn children every year in the USA. Resorting to coal would be a very big step backwards and what we may face then may be more like the Dim Ages. More importantly,  coal is distributed very unevenly with the top three countries (China, USA, USSR) possessing almost 70% of total. Much of the current oil  and gas supply is in low-population countries, such as Saudi Arabia, that cannot possibly use all of the production for themselves.  They are hence quite willing, indeed eager, to sell it to other countries.  When oil and gas are gone, and only coal remains, and the few (large-population) countries that possess it need all of it for their own populations, it will be interesting to see how much is offered for sale to other countries.

Obtaining usable oil from tar sands requires huge amounts of energy, as it has to be mined and washed with super hot water. From an energy balance, it takes the equivalence of two barrels of oil to produce three, which is still positive but poor in terms of energy economics. In the early days of conventional oil, this ratio used to be one to thirty. 

Nuclear power plants are simply too expensive and take ten years to build, relying on a fossil fuel platform for all stages of construction, maintenance, and extracting & processing nuclear fuels. Additionally, uranium is also a rare and finite source with its own production peak. Since 2006, the uranium price has already more than doubled.

Nuclear fusion is the kind of energy that the world needs. However, mastering it has been 25 years away for the past 50 years, and still is... 

Fossil fuels allowed us to operate highly complex systems at gigantic scales. Renewables are simply incompatible in this context and the new fuels and technologies required would simply take a lot more time to develop than available and require access to abundant supplies of cheap fossil fuels, putting the industrial adventure out of business.

In a recent interview with The Times, Shell CEO Jeroen van der Veer calls for a “reality check” and warns that the world’s energy crisis cannot be solved by renewables. “Contrary to public perceptions, renewable energy is not the silver bullet that will soon solve all our problems. Just when energy demand is surging, many of the world’s conventional oilfields are going into decline. The world is blinding itself to the reality of its energy problems, ignoring the scale of growth in demand from developing countries and placing too much faith in renewable sources of power”, according to van der Veer.

Alternative energies will never replace fossil fuels at the scale, rate and manner at which the world currently consumes them, and humankind's ingenuity will simply not overcome the facts of geology & physics.  

Current Global Energy Production: No substitutes can replace fossil fuels at the same scale & rate at which the world currently use them

Peak Oil & the 'War on Terror'

If we had to actually reform the way that people live, or let go of some of it, the losses would be politically untenable. No politician, whether it is the gallant John Kerry or George W. Bush, will go near the issue at the consumer level. They know that if the suburban-sprawl economy is challenged there isn't a whole lot left behind it. 

“America is still in denial about the energy problem and few politicians are prepared to accept painful solutions” (J. Cooper, congressman Tennessee, July 2005).

So unwilling to address the demand side of the problem, they have desperately attempted to protect and stabilize the supply side. 

No sooner had President Bush and Vice-President Cheney settled into their official residences in January 2001, than they set out to rewrite their nation’s energy policy. A report was produced warning that the US faced ‘the most serious energy shortage since the oil embargoes of the 1970’s”. America had become dangerously dependent on imports and if overall energy demand continued to outstrip supply, it warned, the imbalance would “inevitably undermine our economy, our standard of living and our national security”. (FT, Jul ’05).

"Let's look at it simply.  The most important difference between North Korea and Iraq is that economically, we just had no choice in Iraq. The country swims on a sea of oil."  

  "...for reasons that have a lot to do with the US government bureaucracy, we settled on the one issue that everyone could agree on: weapons of mass destruction."   

(Paul Wolfowitz, US deputy Defence Secretary, 2003)  

Michael Rupert, investigative reporter, also concludes that the so-called ”war on terrorism” is nothing but a war to control the last remaining oil reserves of the planet. It is not a coincidence that Iraq, Kuwait and Iran with the second (114 billion), third (98 billion) and fourth (94 billion) largest oil reserves in the world, have been so important to the United States (see BP Statistical Review 2005)

The Iraq war is not hard to understand. It wasn't an attempt to steal Iraq's oil. If that was the case, it would have been an uneconomic venture spending hundreds of billions of dollars occupying the place, not to mention the lives lost. It was not a matter of stealing the oil; it simply was a desperate attempt to retain access to it. It was an attempt to stabilize the region of the world that holds two-thirds of the remaining oil, namely, the Middle East.

Iran has been the latest target of the Bush administration, warning of possible military action, while the UN nuclear watchdog is preparing to publish evidence that Iran is not engaged in a nuclear weapons programme. 

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