Today, I will answer the question of, “What is peak oil?” My goal is to look at the peak oil theory to explain why it is not a peak oil myth. Hopefully by the end of it, we will have tied it into our oil dependency in the country. This is part 7 of Largest Natural & Human Disasters and it looks as though this series is nearly completed. I do have one coming us soon that EVERYONE will enjoy.
Peak oil is a relatively simple concept that has actually been over-complicated and demonized with all of the graphs and charts, talking heads, and “experts” out there. I really don’t know when people will stop listening to some of them.
Peak oil can be looked at two ways: supply and demand, and the quantity stored. We can look at it in reference to the quantity we can provide at a time, or flow, or we can look at it in terms of having a big holding tank or reservoir.
With looking at flow for our definition, we say that we can only supply a certain amount. When we find new reservoirs, we can tap into them and provide more flow of oil. Supply goes up. As supply goes up, demand will go up to match it. Demand will go up easier than down. As demand continues to climb, or as a few reservoirs start to become depleted, our production capability lowers, so price goes up.
Now consider the reservoir. We tap the reservoir and start extracting the oil. Once we have extracted and used half of the reservoir, that one reservoir is in peak both in sheer quantity, and in the flow it can produce.
This being said, we can look at the fact that oil is a non-renewable resource and say that the theory of peak oil is a fact, not a myth. Every reservoir has experienced or will experience peak oil.
Supply of oil is like a bell curve, or for you math types it is a parabolic function with hyperbolic depletion. What happens is that oil was discovered for use, and supply slowly begins. As time goes on, it quickly starts to climb up and subsequently level off. Where it levels off is the peak of the bell-curve. Then supply will be slowly reduced, and then have a very rapid reduction, until it very slowly tapers off at the end.
The peak of that bell curve is peak oil. Everyone says that this is a catastrophic time, but I disagree. The peak-oil crisis that most people speak of is not at the peak of the bell curve but slightly to the right of the peak, when supply has already started going down and is about to his a swift decent. Why will it be at this time? This is a point that I call peak-realization. Everyone has opened their eyes to what has happened.
There are currently several examples of peak oil today:
- Saudi Arabia has told us that they are at max capacity and cannot produce more for us, as have several of our main producers.
- Production of oil has been relatively constant since 2005.
- One of our other main producers, Mexico, has been in declined production since 2003
- Oil discovery, not production, has declined since the 1930s
What is the crisis that everyone speaks of? Well, our economy is already not as strong as people used to think it was. When we had this last “recession” and it subsequently “recovered” it really hasn’t done so well. People are just weary this time around. Confidence is low.
Peak-oil will just make it worse. Lots of things will have to change. As with every one of the “big disasters” that I have been talking about, there will be people that will cease to exist, so don’t think that for some people this won’t have a really big impact. But in general, we can get through peak oil. Our biggest threat is economic, which I already covered in this series in the post “Global Economic Collapse, 2008 Financial Crisis, Great Depression Effects: Largest Natural & Human Disasters P3“.
It is not unlikely that at some point the price of gasoline would reach $10/gallon. That is only 3 times what it is currently. In the last 15-20 years it has rose from a buck to almost four per gallon. In the next 15 years, it is extremely likely that the trend could continue. At some point, people have to stop driving so much. They will stop going to as many vacation spots. They will have to work closer to home. People will have to look at all of their energy costs. Comfort will go down.
It is essentially going to be an economic issue, like I already said. What makes it worse is the fact that a couple of our largest population countries are starting to buy mopeds and things. When a million people get mopeds that adds a million gallons a day demand. That’s a huge demand hike just due to the economical method of getting around. Now think about all the people in China or India that are doing just that.
Along with the economic impacts, we will also finally see people take alternative energy seriously, and this will be a big factor in our ability to get through the issues. More research will be done. More technologies and products will come out. We already have some minor research happening because just a few people understand the concept, but it isn’t really going anywhere because everyone isn’t taking it seriously. When they do, it will happen.
But for those of us that are getting ready for it, what can we do to make it easier on us? We can convert our vehicles to bio-diesel, natural gas, and learn to make our own ethanol fuel. We can dampen the blow by running about a 50/50 mix of gasoline and ethanol. We have our home tied to natural gas and the grid for backup, but we can look into alternative energy production at our homes. Start gardens and farm small animals.
What this is doing is #1 reducing our dependence on the oil and #2 reducing our expenses, so we can soak up the price gouge a little easier for what little we do use.
Peak oil is a reality and will have a significant impact on us, but we will get through it with hard work, determination, and ingenuity. This being said, don’t be the person that hears that we will be fine as a people, and think that you will be fine as an individual. If you are one of the unprepared, you are more likely to be one of those hit hardest.
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