As all the world’s current problems and entanglements become more tightlyÂ bound together in a kind ofÂ Gordian knot, one item seems to be fading from any public discourse — the end of oil.
Although there’s a lot of deniers out there — especially the current GOP crowd of “Drill, drill, drill” — more than 95 percent of all recoverable oil has now been found.
Peak oil doesn’t meanÂ the world is running out of oil, but producing high-quality cheap and economically extractable oil on demand is gone forever.
Oil production in 33 out of 48 out countries has now peaked, including Kuwait, Russia and Mexico.
As REM says: “It’s the end of the world as we know it (But I feel fine)”
(Illustration found here).
Earlier this week, an interview was posted atÂ The Oil Drum with Dr. Colin Campbell, founder and Honorary Chairman of the Association for the Study of Peak Oil and Gas, and the gist of the message isn’t pretty:
Peak Oil is a turning point for mankind. It is a big subject.
In short, the population only doubled over the first 17 centuries of the last millennium.
But then came coal followed by oil and gas, and the population increased six-fold.
These new energy sources, especially oil, the easiest, allowed the rapid expansion of industry, transport, trade and agriculture allowing the economy to expand greatly.
It was accompanied by the growth of financial capital as banks lent more than they had on deposit, confident that Tomorrow’s Expansion was collateral for Today’s Debt.
But now we face the dawn of the Second Half of the Age of Oil when supply declines from natural depletion, meaning that debt goes bad (as is already happening) and the economy contracts.
Today’s oil supply support 6.7 billion people, but by 2050 the supply will be enough to support no more than about 2.5 billion in their present way of life.
So the challenges of using less and finding other energy sources is great.
But what about technology?
I don’t think new technologies will have any impact on the date of peak, which I estimate to have been passed in 2008 (“all liquids”), but they can of course ameliorate the subsequent decline.
I think most of the necessary technologies are already well known, so the issue is more about applying them than inventing a magic wand.
And the financial markets?
But perhaps more important was the flood of petrodollars that the high prices delivered to the governments and royal families of the Middle East, where it still costs $10-15 to produce oil.
They probably sent the surplus to western banks who promptly loaned it out on ever less sure collateral. The petrodollars were not really money in the sense of representing work or barter, but simply profiteering from shortage.
The whole flimsy financial edifice has now crashed, and some of the sillier governments are now pumping yet more fictional money into the system to encourage new consumption.
Such policies may briefly succeed, but will only make the subsequent crash worse.
We enter a new world, as the principal energy that drove the anomalous past two centuries heads into decline from natural depletion.
This is not necessarily a doomsday message.
I have known many simple people in different parts of the world who smiled and laughed not being part of the consumer society.
We can foil the oil problem by not consuming — Yeah, right!
And from REM: “It’s time I had some time alone.”