A few months from now, this blog will complete its tenth
year of more-or-less-weekly publication. In words the Grateful Dead made
famous, it’s been a long strange trip:
much longer and stranger than I had any reason to expect, certainly,
when I typed up that first essay and got it posted on what was still, to me,
the alien landscape of the blogosphere.
Over the years since that first tentative post, the
conversations here have strayed into some remarkably odd territory: the history of apocalyptic ideas, the nature
of magic, the horror fiction of H.P. Lovecraft, and a good deal more. All through its vagaries, though, this blog’s
central focus remains what it has been since shortly after its 2006 launch: the
difficult but necessary task of facing up to the end of the arrival of hard limits to growth, and the
collapse of all those fantasies of perpetual progress that so many people today
still use to keep themselves from thinking about the future ahead of us.
That said, my longtime readers may be wondering about the
relative absence in recent posts of one of the core themes of this blog’s
earlier days. Yes, that would be peak oil.
For those who’ve come to this blog recently, it maybe
helpful to point out that this simple phrase refers to a complicated
concatenation of ideas. First, despite claims made by rap musician BoB and the
few other flat-earthers out there, I think most of us are aware that the Earth
is a sphere a little more than 7900 miles across. That means, among many other
things, that the Earth contains a finite amount of petroleum—and this in turn
means that each barrel of petroleum that gets pumped out of the ground brings
us closer to the point at which there’s no more left.
Second, getting oil out of the ground isn’t just a matter of
sticking an iron straw into a hydrocarbon milkshake. There aren’t big
underground lakes of oil; what you’ve got instead are cracks and pores in solid
rock through which oil oozes slowly. Thus production from an oil well usually
starts off slowly, rises to a steady flow, and then gradually dwindles away to
a trickle as the available oil runs out. Oil fields follow much the same curve:
the first successful wells bring up oil, many more wells get drilled, and then
you drill new wells to make up for declining production in the old ones, until
eventually there are no more places to drill and you’ve got a played-out field.
The point at which you can’t drill enough new wells to make up for declining
production from the old ones is the point at which the output from the field
peaks and begins to decline.
Third, the same thing is true of what geologists call oil
provinces—these are regions, such as the Marcellus shale, where you can find a
bunch of oil in a bunch of fields that all have more or less the same geology.
The reason’s the same: in an oil province, just as in an oil field, production
increases at first as new wells go in, then peaks and begins to decline as you
run out of enough places to drill new wells to make up for the depletion of the
old ones. Apply the same logic to entire countries, and to the whole Earth, and
it works just as well. The phrase “peak oil” is a label for the point at which
drilling new wells can’t keep up with the depletion of existing wells
worldwide, and the overall production of petroleum worldwide begins to decline.
That’s all very straightforward. Back in the late 1990s,
when a handful of researchers started to pay attention to the widening gap
between the rate at which oil was being pumped out of existing fields and the
rate at which new fields were being discovered, that straightforward logic led
most of them to equally linear conclusions.
At some point in the near future, they suggested, petroleum production
would peak and then tip over into irreversible decline, petroleum prices would
soar through the skylights, and a cascade of difficult consequences would
promptly follow.
That latter point was by no means an arbitrary assumption.
Petroleum then as now accounts for the largest share of global energy
consumption, amounting to roughly forty per cent of all energy, including
almost all the energy used in the transportation sector. Claims that petroleum
products could easily be replaced by other energy sources ignored the hard
reality that most other energy sources were already being used as fast as they
could be extracted. Claims that imminent technological breakthroughs would
surely keep any of these things from happening ignored the equally hard reality
that most of those supposed breakthroughs had been tried repeatedly in the past
and hadn’t worked.
All this had been discussed at great length back in the
1970s, when the United States hit its own all-time production peak and began
skidding down the far side. The issue of peak oil got swept under the rug
during the Reagan era and ignored by almost everyone thereafter; by the time
the alarm was finally sounded again in the late 1990s, it was painfully clear
that most of the time that would have been needed to get ready for peak oil had
already been wasted. The result, according to most serious peak oil researchers
at that time, would be a traumatic era of economic, political, and cultural
turmoil in which a global civilization used to depending on oceans of cheap
abundant crude oil got squeezed by steadily decreasing supplies at steadily
soaring prices. That was the peak oil standard scenario.
Those of my readers who know their way around the
apocalyptic end of the blogosophere, even if they weren’t paying attention at
the time, will have no problem figuring out exactly what happened from that
point on. Inevitably, the base case was turned into a launching pad for any
number of lurid prophecies of imminent doom. The common contemporary habit of
apocalypse machismo—“I can imagine a cataclysm more hideous and
all-encompassing than you can!”—kicked into gear, and the resulting predictions
interbred like hyperactive bunnies until the straightforward mathematics of
peak oil were all but buried under a vast tottering heap of giddy fantasy.
Now of course none of those lavishly imagined catastrophes
happened. That’s hardly surprising, as identical fantasies have been retailed
on every imaginable provocation for decades now—swap out the modern details for
their equivalents in previous eras, for that matter, and you can replace that
word “decades” with “centuries” and still be correct. What did manage to
surprise a good many people is that the standard scenario didn’t happen either.
That’s not to say that everything was fine and dandy; as we’ll see, quite a bit
of the economic, political, and social turmoil we’ve seen since 2005 or so was
in fact driven by the impact of peak oil—but that impact didn’t follow the
linear model that most peak oil writers expected it to follow
To understand what happened instead, it’s necessary to keep
two things in mind that were usually forgotten back when the peak oil scene was
at white heat, and still generally get forgotten today. The first is that while
the supply of petroleum is ultimately controlled by geology, the demand for it
is very powerfully influenced by market forces. Until 2004, petroleum
production worldwide had been rising steadily for decades as new wells were
brought on line fast enough to more than offset the depletion of existing
fields. In that year, depletion began to catch up with drilling, and the price
of oil began to rise steadily, and two things happened as a result.
The first of these was a massive flow of investment money
into anything that could make a profit off higher oil prices. That included a great
many boondoggles and quite a bit of outright fraud, but it also meant that
plenty of oil wells that couldn’t make a profit when oil was $15 a barrel
suddenly looked like paying propositions when the price rose to $55 a barrel.
The lag time necessary to bring oil from new fields onto the market meant that
the price of oil kept rising for a while, luring more investment money into the
oil industry and generating a surge in future supply.
The problem was that the same spike in oil prices that
brought all that new investment into the industry also had a potent impact on
the consumption side of the equation. That impact was demand destruction, which
can be neatly defined as the process by which those who can’t afford something
stop buying it. Demand destruction also has a lag time—when the price of oil
goes up, it takes a while for people to decide that higher prices are here to
stay and change their lifestyles accordingly
The result was a classic demonstration of one of the ways
that the “invisible hand” of the market is a good deal less benevolent than
devout economists like to pretend. Take the same economic stimulus—the rising
price of oil—and factor in lag times on its effects on both production and
consumption, and you get a surge in new supply landing right about the time
that demand starts dropping like a rock. That’s what happened in 2009, when the
price of oil plunged from around $140 a barrel to around $30 a barrel in a
matter of months. That’s also what happened in 2015, when prices lurched down by
comparable figures for the same reason: surging supply and plunging demand
hitting the oil market at the same time, after a long period when everyone
assumed that the sky was the limit.
Could the bloggers and researchers in the pre-2009 peak oil
scene have predicted all this in advance? Why, yes, and as a matter of fact
a
few of us did. The problem was
that we were very much in the minority. True believers in an imminent peak oil
apocalypse denounced the analysis just outlined with quite some heat, to be
sure, but I also quickly lost count of the number of earnest, intelligent,
well-informed people who tried to convince me that I had to be wrong and the
standard scenario had to be right.
The conventional wisdom in the peak oil scene missed
something else, though, and that’s had a huge impact on this most recent
boom-and-bust cycle. The convenient label “petroleum” actually covers many
different kinds of hydrocarbon goo, and these are found in many different kinds
of rock, scattered unevenly across the surface of the planet. Some kinds of goo
are cheap to extract and refine, but many more aren’t. Since oil companies are
in the business of making money, they quite sensibly started out by going after
the stuff that was cheap to extract and
refine. When that ran out, they went after the stuff that was a little
more expensive, and so on.
All this seems ordinary enough—after all, every other
mineral resource has gone through the same curve; the low-grade taconite that
goes into today’s iron smelters has a tiny fraction of the amount of iron per
ton of ore that the lowest grades of commercially mined iron ore had a century
ago. There’s a little problem here, though, which is that the difference in
concentration between today’s taconite and yesterday’s better ores is made up
by adding energy to the equation. It takes vastly more energy to make a steel
I-beam today than it did in 1916, and most of that is a function of the fact
that the lower the quality of ore, the more energy you have to invest in
getting out each pound of iron from it.
This is also true of petroleum—but there’s a catch, because
the point of extracting the petroleum in the first place is that you can get
energy out of it. It’s at this point that we start talking about net energy.
Net energy is to energy what profit is to income. To get,
let’s say, one barrel of oil equivalent (BOE) of energy, you have to invest a
certain amount of energy in the process of extracting and refining it, and the
amount you have to invest varies dramatically depending on what kind of
hydrocarbon goo we’re talking about. What oilmen call “light sweet crude”—that
is, petroleum that’s relatively high in light fractions, and free of sulfur and
other contaminants—from the sort of shallow wells that built the US oil
industry has a net energy of anything up to 200 to 1: in other words, less than
a quart out of each 42-gallon barrel of oil goes to paying off the energy cost
of extraction, and the rest is pure profit.
As you slide down the grades of hydrocarbon goo, though,
that pleasant equation gets replaced by figures considerably less genial. Your
average barrel of oil from a conventional US oilfield today has a net energy
around 30 to 1, meaning that just under a gallon and a half of the oil in each
barrel goes to pay off the energy cost of extraction. That’s still good, but
it’s nothing like as good.
The surge of new petroleum that hit the oil market just in
time to help drive the current crash of oil prices, though, didn’t come from
30-to-1 conventional oil wells, for the simple reason that every oil province
in North America capable of bringing in that kind of yield was prospected many
decades ago and is producing oil at ful tilt right now if it wasn’t drained to
the bare rock long ago. What produced the surge this time was a mix of tar
sands and hydrofractured shales, which are a very, very long way down
the goo curve.
Neither one of them, as it happens, actually yields petroleum.
From tar sands, as the name suggests, you get tar, which can be cut with
solvents and shipped to special refineries where, if you’re willing to spend
the money, you can break them down into the same things you can get much more
cheaply from conventional crude oil. From hydrofractured shales, you get mostly
very light hydrocarbons, the sort of thing that’s better suited to filling
disposable lighters than it is to fueling your car. Both of these still got
lumped in with conventional petroleum in the official statistics, which made it
much easier for the New York Times and other highbrow propaganda outlets
to pretend at the top of their lungs that peak oil doesn’t matter—there’s a
rant to this effect somewhere in the Times every couple of months, which
may suggest a certain basic insecurity at work, but that’s a theme for another
post.
The real difficulty with the goo you get from tar sands and
hydrofractured shales is that you have to put a lot more energy into getting
each BOE of energy out of the ground and into usable condition than you do with
conventional crude oil. The exact figures are a matter of dispute, and
factoring in every energy input is a fiendishly difficult process, but it’s
certainly much less than 30 to 1—and credible estimates put the net energy of
tar sands and hydrofractured shales well down into single digits.
Now ask yourself this: where is the energy that has to be
put into the extraction process coming from?
The answer, of course, is that it’s coming out of the same
global energy supply to which tar sands and hydrofractured shales are
supposedly contributing.
That’s the other half of the picture, as we stumble across
the unfamiliar landscape on the far side of peak oil. The jagged landscape of
booms and busts will doubtless continue for some time—it would not surprise me
at all if the busts kept on coming at something like the six-year interval
separating the 2009 and 2015 debacles—and each cycle will hammer the global
economy in an assortment of familiar and unfamiliar ways, spreading collateral
damage far and wide. Meanwhile the net energy of oil production will slide
unsteadily downhill as older resources are exhausted and newer ones, with much
steeper energy costs for extraction and refining, have to be brought on line to
replace them.
The decline in net energy won’t be visible in the places
you’d expect, either. As long as the hard facts of geology make it physically
possible to do so, large volumes of “petroleum,” in some sense of that
increasingly flexible word, will continue to be produced and consumed. With
each year that passes, though, a larger fraction of that output will have to
cycle right back into the extraction and refining process, leaving less and
less available for all other uses. Thus declining net energy promises to play
out over time in the form of creeping dysfunction throughout the economic
sphere, in the form of neglected and abandoned infrastructure, failing
institutions, a rising tide of permanent joblessness and homelessness, all
papered over with an increasingly brittle layer of propaganda spewed out with
equal enthusiam from the partisans of every officially acceptable point of
view. (If this doesn’t sound familiar to you, dear reader, you need to get out
more.)
That’s not going to reverse itself, either, because the
resources that would be needed to flood the world with cheap abundant energy
again don’t exist any more. We, ahem, burned them all. Again, the Earth is a
sphere a little more than 7900 miles across; it never held that much in the way
of concentrated energy resources in the first place, and our species squandered
everything in our reach in three centuries or so of wretched excess. The cycles of contraction and dysfunction
just outlined are part of the process by which that excess is going away,
leaving us with, at most, roughly the same sort of access to energy and its
products that our ancestors had before the Industrial Revolution.
We could have made that transition in a controlled and
intelligent way, and we didn’t—but that doesn’t excuse us from having to make
it anyway. It’s just that we’re being dragged kicking and screaming into the
future by forces we chose to ignore but can’t evade. Peak oil is one of those
forces; anthropogenic climate change, which has
been discussed here extensively already, is another—and it’s another
that has been bedeviled by the sort of overly linear thinking on the one hand,
and apocalyptic fantasy-spinning on the other, that crippled the peak oil
community’s capacity to anticipate the future.
