Re: SC78

http://energybulletin.net/node/46765

On the edge of the abyss

The backdrop of a financial crash on Wall Street cast a shadow over this year’s Association for the Study of Peak Oil – USA conference in Sacramento in late September. Speakers talked of an ominous parallel between the financial crisis and another graver crisis in the making – the coming rapid decline of worldwide oil production, which has stalled after reaching an all-time high more than three years ago.

Approaching production peaks of other fossil fuels were also examined while some speakers minimized the immediate importance of dealing with climate change compared to the urgency of peak oil. Solutions offered at the three-day, fourth annual conference, which drew 500 participants, focused largely on technological fixes and public policy changes while the need for massive energy curtailment and lifestyle changes received scant attention.

Robert Hirsch, author of a 2005 peak oil report for the Department of Energy, described the bailout crisis as “traumatic” and “downright frightening” then argued it would be prototypical of future events once peak oil is fully realized. Oil investment banker Matt Simmons warned that an energy crisis could be much worse than the paper-based financial crisis. If a national gasoline shortage happens, he said, “American’s food supply is in jeopardy within a week. The economy slows to a crawl and financial markets panic. This potentially is an American nightmare.”

Speakers displayed innumerable graphs and curves showing world oil production plateauing, new discoveries falling, and global demand soaring. The discussion was not focused as much on when we reach the peak – as there was much agreement that the world has been at the peak/plateau since mid-2005 – but on when production will fall over the edge and how quickly it will decline.

Simmons argued that a 15 – 20 percent worldwide decline per year in conventional oil production is likely, beginning in the next few years, and pointed out that production at the super giant Cantarell field in Mexico declined 32 percent last year. “For global depletion rates to be just 2 – 3%, there would have to be some fields that have a negative depletion rate, which is impossible. This is because there are too many fields depleting at 15 – 20 percent,” he said. Other speakers said they expect a 7 – 10 percent decline per year. These are disturbing predictions for an increasingly oil-dependent world with no one-to-one substitutes for oil on the horizon.

Economic predictions were just as grim. With oil consumption growth directly correlated to gross domestic product growth, a permanent oil decline may mean a permanent recession, according to Gail Tverberg, commentator on the Oil Drum website. Jim Puplava of Financial Sense imagined a time when each American family would get a ration of 20 gallons of gasoline per week. But Simmons said he thinks it’s too late to print the ration books.

Other fossil fuels face supply constraints too. Andy Weisman of Energy Business Watch predicted the doubling and tripling of natural gas and electricity prices within five years causing huge shocks to the US economy. Reasons include surging global demand for liquefied natural gas which we are becoming increasingly dependent upon, the recent cancellation of coal plants locking us into natural gas-fired electricity generation, and the lack of viable alternatives. Worldwide, natural gas production is expected to peak by 2020 with coal peaking between 2025 and 2030, according to projections made at the conference.

Speakers, or participants in conversations, mentioned a multitude of peaks: oil, natural gas, coal, credit, GDP, globalization, phosphorus, indium, roads, parking, democracy, capitalism, healthcare, food, and just-in-time delivery, to name a few, while there were no peaks in sight for debt, inflation, money creation, bank bailouts, American techno-triumphalism and war............

..............with peak oil looming the U.S. is still totally dependent upon five tankers of oil containing two million barrels each reaching its shores every day and no solutions that will significantly cut this dependence on foreign oil are in sight...........