Recently, the International Energy Agency’s Chief Economist Fatih Birol was quoted as saying,
In the next 10 years, more than 90% of the growth in global oil production needs to come from MENA [Middle East and North African] countries. There are major risks if this investment doesn’t come in a timely manner.
While I agree that we need more oil production, I think we are kidding ourselves if we expect that 90% of the needed growth in global oil production will come from MENA countries. In this post, I will explain seven reasons why I think we are kidding ourselves.
Reason 1. MENA’s oil production, as a percentage of world oil production, has not increased since the 1970s, suggesting that MENA really cannot easily ramp up production.
MENA’s oil production amounted to more that 40% of the world’s oil production back in the mid-1970s, but is now down to 36% of world oil supply. It is hard to see anything that looks like an upward trend in MENA’s share of world oil supply, even when high prices hit. OPEC talks big, but its actions do not correspond to what it says.
Reason 2. MENA claims huge oil reserves, but these reserves have not been audited, and there is little evidence that they can really be transformed into corresponding oil production in any reasonable time-frame.
Countries don’t all use the same standards when reporting oil reserves. Reserves of countries following SEC reporting requirements have historically been conservative, but Middle Eastern countries do not follow these standards. A small country with high oil reserves will appear rich to the rest of the world, and its leader will appear important in the eyes of local residents, so there can be a temptation to “stretch” the amount reported. There is no timeframe specified with respect to the stated reserves, either. If the oil is very heavy or difficult to extract, the expected extraction period could be hundreds of years.
Because of these issues, it does not necessarily follow that high oil reserves mean that with only a little effort, production can easily be increased. The Wall Street Journal published an article called Facing Up to End of ‘Easy Oil’ which talks about the lengths to which Saudi Arabia (with Chevron’s help) is going to develop techniques to steam out the Wafra field’s thick oil. If there were easier-to-obtain high-quality oil, Saudi Arabia would no doubt be working on the other sources, instead.
Reason 3. Saudi Arabia has said it does not intend to increase its capacity for oil production. According to the Oil and Gas Journal:
Birol’s comments [quoted above] came just days after Saudi Arabian Oil Co. Chief Executive Officer Khalid Al Falih told the Wall Street Journal that his country had no plans to increase oil production capacity to 15 million b/d [barrels a day], given the expansion plans of other producers such as Brazil and Iraq.
“There is no reason for Saudi Aramco to pursue 15 million b/d [of output capacity],” said Al-Falih, whose remarks ended speculation that arose in 2008 when Saudi Arabia’s Oil Minister Ali I. Al-Naimi said his country could boost its capacity by another 2.5 million b/d to 15 million b/d.
The excuse that Saudi Arabia gives is really strange (from same article):
“It is difficult to see [an increase in capacity] because there are too many variables happening,” Al-Falih said. “You’ve got too many announcements about massive capacity expansions coming out of countries like Brazil, coming out of countries like Iraq. The market demand is addressed by others.”
This is a strange statement to make; it is like General Motors saying it is not going to add automobile production, because Ford will be selling as many cars as buyers will want. If it is really making a profit on each barrel, why would it do this, unless it really is not capable of making the expansion it claims?
Reason 4. While Saudi Arabia claims current production capacity of 12.5 million barrels a day, this amount is not audited, and its actual capacity is quite possibly lower. Its highest recent production is 9.84 million barrels a day.
When Libya’s oil production was taken off line, Saudi Arabia was not able to make up for the loss with the type of oil that the market required. Recently, Saudi Arabia made a statement that it would ramp up production to 10 million barrels a day, its highest in 30 years. Saudi Arabia did manage to increase its crude oil production to 9.84 million barrels a day in July, 2011, an increase of 700,000 to 900,000 barrels a day over recent months’ production. But even with this big ramp up, MENA crude oil production has not made up for the shortfall in Libya production (Figure 3). And of course, Saudi production is still far short of the claimed 12.5 million barrel a day capacity.
Reason 5. MENA’s oil consumption is rising, so even if MENA’s production should rise, the rest of the world would not necessarily get much benefit from it.
The amount shown in green in Figure 4 is the amount of oil exports. These are declining, because consumption is rising, while production is flat. The above graphic is for the Middle East only, but MENA in total is showing a similar pattern of rising consumption leading to less exports.
Reason 6. Instability is a huge problem in the Middle East, leading to rising and falling oil production. This is especially the case for Iraq, a country which has planned large production increases.
Figure 5 shows the extent to which oil production has varied in Iraq since 1965, as a result of past instability. Overcoming this pattern will be difficult. Besides instability, there is a need to add a huge amount of new infrastructure–particularly additional port capacity to handle increased oil exports. Both the problems with instability and the need for new infrastructure will make it difficult to ramp up Iraq’s oil production quickly.
Iraq plans to increase its oil production to 6.5 million barrels a day by 2014, and to reach 12 million barrels a day by 2017. Neither of these targets will be possible without huge investment and political and economic stability. These targets are seen as unreasonably high by many.
Reason 7. High oil prices lead to high food prices, and a recent study shows that high food prices are associated with riots. So the high oil prices required to produce the difficult-to-extract oil are likely to sow the seeds of governmental overthrow (repeat of “Arab Spring”) and political instability in MENA countries.
Figure 6 shows the correlation between food and oil prices. A person would expect food and oil prices to be highly correlated because oil is used in the production and transport of food products. The FAO Food Index relates to imported food, such as is often used in MENA countries. Because this food is often transported long distances, a person would expect its cost to be especially affected by oil prices.
A recent academic study called The Food Crises and Political Instability in North Africa and the Middle East by M. Lagi, K. Bertrand, and Y. Bar-Yam shows this graph:
The authors show that there is a high correlation between high food prices and riots. They say, “If food prices remain high, there is likely to be persistent and increasingly global social disruption.” They also point to the possibility of the situation getting much worse, in the 2012-2013 timeframe, as a result of a continuing rise in food prices.
We saw in Figure 6 that rising oil prices are associated with rising food prices. Thus, the fact that oil prices are rising because the “Easy Oil” has mostly already been extracted, and we now are moving on the more expensive oil, could contribute to riots. This association is likely to make it more difficult for MENA to raise oil production, because riots lead to political instability, and without political stability, it is difficult to increase or even maintain current levels of production.
* * *
For all of these reasons, depending on MENA for 90% of the growth in global oil production between now and 2020 seems unwise. I have shown in previous posts that what the world really needs is a rising supply of low-priced oil, if we are to avoid long-term recession. But MENA is unlikely to supply this. The Middle East claims huge oil reserves and Iraq offers high production targets, but in the end, we are likely to be kidding ourselves, if we believe that these will fix world oil problems.
I have a comment, Gail writes “If it is really making a profit on each barrel, why would it do this, unless it really is not capable of making the expansion it claims?”. The reason would be that Saudi already has a trade surplus which they invest in paper assets, whose future value is questionable, given the implications of peak oil. Why would they swap oil in the ground for paper money in a bank? I am convinced a foreign politician at some time in the past, whispered in the king’s ear, that if you don’t accept this paper money in exchange for your oil, we will invade you, if you do accept it, we will let you stay in power. An offer you can’t refuse. But now things are different, they are aware that growth might not continue, and that keeping the oil in the ground is probably the best way to save for the future. If it’s possible to raise doubts, without actually admitting they can’t raise output, they can keep up the value of paper assets, while at the same time saving some more oil the ground. A difficult balance for sure…
I thought about raising the point about saving oil for the future, but decided that for the purpose of the post (which is going to quite a few folks who are not familiar with peak oil, as well as many who are), I thought it would be clearer if I didn’t raise the issue.
I think Saudi Arabia’s issue now is that it needs high oil prices, just to make current levels of subsidies to its citizens. According to this article,
With high food prices going along with high oil prices, I don’t think Arab countries really have the luxury of delaying production until future years.
Thanks! I was having trouble viewing this when your first posted it. One of the graphs looks familiar–and recent!
The credit is yours and what may I ask do you think of my video? I do enjoy reading your articles and am gretly influenced by them. My videos however have to be kept simple for viewership, but I try to educate in my own way.
You have pulled together a lot of interesting information and presented it in a different way. It seems like different approaches are needed for different people–and this is likely helpful for some.
Your photos are very nice. There were a few new ones I hadn’t seen before.
Gail says, “The big world-changing event I see is collapse of the financial system.”
You may well be right about this. However, we should remain clear (as I am sure you do) that the collapse of the financial system will be primarily a result, not a cause. (Although I do accept that the whole situation will become a bad feedback loop leading into a death-spiral.)
The collapse of the financial system will have three major contributing causes. Cause one will be the environmental complex of resource depletion (including cheap energy), species extinction and climate change. Cause two will be population overshoot taking us over our carrying capacity as the carrying capacity is degraded. Cause three will be the inappropriate management of the economy according to neoliberal, neoclassical economics.
I want to deal with cause three briefly as it does not get much a mention (understandably) in this blog. In the Keynesian era, circa 1945 – 1970, the economy performed well. There were many reasons of course including cheap, abundant energy. However, an important contributing cause was the willingness of governments to employ counter-cyclical spending or Keynesian economics. It was the rise of montarism which stuffed the financial system up basically. Government austerity become the order of the day, there were mass privataistions, eages were held back and provate debt skyrocketed.
I will come back to this as appropriate in a subsequent topic.
We live in a finite world. The financial system as it is currently set up requires growth, but this growth cannot go on forever.
Resource depletion is one outcome of attempted endless growth in a finite word; so is species extinction and climate change. In fact, so is pollution of many sorts, including ocean acidification.
I have not studied some of the things you write about to know what their contribution to keeping the system going might be. It might be that before we started hitting limits, counter-cyclical spending worked better as a solution. I have a hard time seeing where the counter-cyclical spending would come from, except more debt.
Just in case you would like to take a look at what kind of housing the Dancing Rabbit people are actually building:
An aside to your observations regarding the oil production potential of Iraq. It is likely that political stability in Iraq can only be achieved by either increasing the standard of living of the people living there, or by installing an effective totalitarian government.
A reasonable indicator of standard of living is the amount of oil consumed per capita. The most recent data I could find is for 2006-2007 but it should serve for the point that I am making. The average oil consumption per capita for a selection of reasonably stable, oil exporting, middle eastern states is 107 bbl/day per 1000 people [Qatar 132 / Kuwait 129 / Saudi Arabia 84 / UAE 82]. Iraq, by comparison, has a per capita oil consumption of only 11 bbl/day per 1000 people.
The current population of Iraq is 31.5 million, and the domestic oil consumption is 0.7 million bbl/day (2009). A 5x increase in domestic oil consumption would bring Iraq’s per capita oil consumption up to 55 bbl/day 1000 people – low equivalency with the stable oil exporting MENA states. However, this would also cause the domestic oil consumption to rise to 3.5 million bbl/day. If this amount is subtracted from the near term oil production goal (6.5 million bbl//day), then the amount available for export is only 3.0 million bbl/day.
This is not that much greater than the 1.8 million bbl/day exported in 2009.
As well, this analysis does not consider Iraq’s rapidly growing population (2.5%). Projecting this rate of growth gives a population of around 40 million by 2020. If we acknowledge that the claim to increase production to 6.5 million bbl/day by 2014 is fantasy, then an expectation of this level of production by 2020 is more reasonable – anything would be more reasonable! However, my projection for increased domestic oil consumption would then have to be increased by 33% to keep it in line with the population increase. This adjustment results in a domestic oil consumption of 4.7 million bbl/day (2020), which leaves only 1.8 million bbl/day for export – exactly where we are today.
Please note that I don’t believe we will see this projection come to pass. It is very unlikely that Iraq will be able to achieve the economic growth, growth in social infrastructure, and the concomitant stabilization of government, necessary to significantly increase oil production. China’s spectacular growth in the last decade was preceded by 30 years of a stable government that invested heavily in education. Iraq has not been so fortunate.
Very interesting observation! I hadn’t figured out how much oil Iraq would need to get to some reasonable standard of living.
It is the unfortunate function of my left hand brain to make models of reality. I refuse to defend any of my models.
And this is what It comes up with.
We are at a bi-farcation, cusp, a fork in the road. Or many forks if you must. If Rossi and Forcardi are successful, and the balance of probabilities is tilting in their favour, then we are off to the show. The singularity, another asymptotic exponential function, is in the cards.
If not, then we are in for a bigger event than the domestication of wheat. Professor James Lovelock prognosticates a few breeding couples in the high Arctic by the end of this century.
Either of these roads is poorly lit.
One thing I can claim with moderate certainty is that there is a change in the air.
Hi Don Stewart, Bicycle Dave, Dr House, Gail Tverberg:
Trying to look into the future is a largely hopeless task, yet it is one we must engage in. Reading the tea leaves is always a mixed bag, and the bag is no teabag. (Too many feedback loops.) Trend, like Past, is never destiny for very long. Still, I look back over the experiences of my lifetime (the same magnitude as for Don & Dave), and things have never worked out as well as they could have and should have, nor as badly as they jolly well might have, either. And what I heard from my grandparents is similar, in this regard. In their childhood, they all knew hardship and severe hunger, whether on the plains of Kansas during multi-year droughts or in the polders of Holland back when that country’s Gini coefficient G → 1. But they all spoke fondly of many wonderful experiences and joys. Back in the days when energy consumption per capita of even the fortunate was small indeed in comparison to that of Americans in the 1940’s & 1950’s, back when I was young.
Furthermore, skills that have passed away can be resurrected, particularly if they have been well described in media more stable than brain cells. For instance, an adolescent granddaughter of mine (a bit brainy, to put it mildly) took the WW2-surplus sextant my parents gave me for Christmas, plus the texts by Bowditch and by Dutton, and taught herself celestial navigation, partly for the fun of it (¡cierto!) and partly because she is already worried about the issues here under discussion. I suspect navigating by star and planetary readings will take longer, of course, and in the meanwhile she has her girl-stuff to do. But the point is, if she can learn celestial navigation, I am sure others can learn cordage, gardening, sewing, etc. Myself, I grew up sailing. And I was regularly amazed at how quickly novice sailors learned how to read the wind and the waves, and how to handle a tiller or wheel (most of us have more trouble learning this than reading the wind and the waves; I remember my Dad yelling, “You’re not winding your watch”).
In many cases, I suspect that new technologies will predominate in a society tumbling down the other side of Hubbert’s Peak. Like «digital» photography, as opposed to silver halide based photography. Folks could learn to take advantage of electricity when available, rather than bemoaning its «unreliability». And so forth.
And I anticipate horridly difficult times to come.
Thanks for your words of encouragement. It is easy to be pessimistic.
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Dear Gail and Bicycle Dave
I agree that most people will not make it through the trials. We will have our own version of the Black Death–one way or the other. I accepted that fact some time ago. Since I can’t do anything about that, I think more about how to get through to the other side alive (perhaps a joke at my age) and also how to emerge on the other side with the mental attitudes and skills which are suited to that world. My fatalism about the coming population crash was heavily influenced by reading Ellen LaConte’s book Nature Rules. http://www.ellenlaconte.com/
Thinking about the mental attitudes and skills suited to life on the other side has been influenced by many people. Orlov and Kunstler, of course, but also William Powers’ book Twelve by Twelve. ‘A One-Room Cabin Off the Grid and Beyond the American Dream’. Powers used my neighborhood as the physical setting for his book, and thus gives it a realism which resonates strongly with my experience.
Gail, as to your points about the master/slave relationship between technology and today’s workers. I was having some dental work done. Some work had been done and it was time to repair the damage, when the electricity failed. None of the young dentists had ever done the work without electrically powered equipment. So the owner (about my age) came in and did it by hand, grumbling about the poor quality of recent dental school graduates. So it CAN be done. I work at a farm which could have functioned very nicely in 1940 or 1910. This past Tuesday I spent several hours saving seed for next year. We harvest edible weeds. Interns 50 years my junior come there to learn.
As far as long columns of figures, you can forget them. Life is very immediate. Little scraps of paper and pencils sharpened with your knife are fine. Oil production in Saudi is irrelevant, while the prospects for rain (as determined by reading the clouds) is of vital significance.
As for medical stuff. Acute care is a wonderful development that I hope we don’t lose. Chronic disease care is a total waste and is bankrupting our country. For example, see this for a recent demonstration of just how easy it is to cure diabetes. People just don’t want to make the changes needed. http://www.ncbi.nlm.nih.gov/pubmed/21656330 Spending tax money to maintain people with chronic diseases is a fool’s errand.
When I moved here a dozen years ago, my doctor (now at a VA research institution) always read my fingernails first to assess my health. There are still pockets of intelligence in a brain dead world.
But if we start today, and are lucky enough to escape whatever form the Black Death assumes in the next couple of decades, we do have some advantages. We understand far better the advantages of perennial as opposed to annual crops–particularly in an erratic climate world. Wes Jackson will talk about this at the ASPO meeting. We understand how Mycelium are critical to the underground ecology. If we are able to preserve some plastic, we know how to make turtle tunnels to extend seasons and get the added nutritional value of fresh vegetables as opposed to the nutrient poor canned versions of our ancestors. Permaculture has taught us a lot about conserving water. And we understand the dangers of eating a monotonous diet and the advantages of eating a diverse diet. (Acutally, ‘we’ is the wrong word. A healthy minority of us understand it.)
I decided to stop grieving for the billions who are going to die and just get on with preparing for what I think is most likely to happen…Don Stewart
Hi Don, Good comment and thanks for the links. Yes, I suspect our age is a mixed bag: on one hand, we probably understand a bit more about our predicament and how to make the best of it; on the other hand, getting the old body to cooperated with bright ideas is getting more problematic.
Thanks for your thoughts! I think part of our problem is the fact that so many people assume the only way to solve our problems is through yet more technical advances (and yet more medical spending on care for those with chronic diseases, and maybe add in a little for those near death as well). It wouldn’t be all that difficult to figure out how to do things in 1940 or 1910, but no one would consider that relevant or helpful. Part of it too, is that customs need to change at the same time. Things like what students learn in school, and what role parents take in finding a spouse for their children.
As a medical doctor, obviously I spend a lot of time thinking about healthcare – both now and how it will look in the future. I wrote a guest essay on this topic at Nature Bats Last in April which generated quite a bit of discussion, as you can imagine. It can be found here: http://guymcpherson.com/2011/04/health-care-in-a-post-collapse-world/
Your assessment about chronic healthcare is fairly accurate. I suspect it won’t exist in any form in a few years, perhaps a little longer than that. But, don’t count on acute care either. Today’s medical system is 100% dependent on oil. Virtually every item in a doctor’s office or in a hospital is made from or produced with oil – including medicines. I don’t know personally a single doctor who is contemplating how to continue caring for patients without labs, medicines, electricity, running water, etc. Hell, most of them don’t know what to do if their SUV doesn’t start in the morning. I’m not trying to disparage others in my profession, but they are just as clueless as most of the rest of the world when it comes to resource depletion, climate change, and overpopulation. I’m sure that for most in the medical community, the fact that we have a shortage of over 200 medicines right now here in the U.S. is an odd inconvenience and in no way a reflection on the state of our fragile system.
I’m wondering if someone like you partners with an herbalist like my wife? Are they the pharmacists in the future, albiet with much reduced effectiveness? I see no real substitute for antibiotics in that space though. While I could produce the alcohol to clean your stainless steel reusable instruments from the 60’s, I would really hate to try to create a pain killer from opium poppy’s.
I am 71 years old. So born in 1940. If you look at a typical oil availability projection you find that oil will be about as plentiful in 2030 as it was in 1940. 1940 was not a bad year (in the US)–but it sure was different. About a quarter of the males were farmers and most all the females were part of the home economy. So if we, for simplicity, assume one male and one female adult plus children as a household, what we have is one household growing food feeding 3 other households. Today, that ratio in the developed world is more like 1 to 100. My assumption is that by 2030, we will once again have half the adults engaged in the household economy and a quarter or perhaps a third of the remainder making their living as farmers.
The ‘adaptations’ that I see as popular frequently involve replacing complex global organizations with complex local organizations. For example, instead of buying corporate bread, we buy bread from an artisan local baker. But I think it more likely that the ‘household economy’ member of the family will do the bread baking–just like 1940. Joseph Tainter points out that collapse generally involves the collapse of complexity. Part of the reason for that, I believe, is that the surplus produced by people working largely without fossil fuels will be small–as in the one farmer feeding two non-farmers. Therefore, the friction cost involved in market trading will loom much larger. The most economical production for many things will be production in the household. Taking in each other’s washing isn’t likely to work.
Heinberg comments (page 282) about the Dancing Rabbit Ecovillage in Missouri. He says ‘The future may not look exactly like Dancing Rabbit, but it’s easy to imagine worse outcomes and perhaps hard to think of much better ones.’ Most people would look with horror at the way of life at Dancing Rabbit. The houses are homemade–not slick Passiv Haus models from Germany. I imagine that the people who live there have managed to self-organize by trial and error. If communal bread baking makes sense, or having one artisanal baker serve the village, or having each family do it’s own baking makes the most sense, the people will probably figure it out pretty quickly. Country people extensively traded work in 1940, and people with farm animals still do it regularly with no money changing hands and no Federal Regulations or Laws.
If the world evolves (or crashes) to the condition I expect, then what makes the most sense for the individual is to learn the frugal skills of their homemaking great grandmother plus the food growing skills of modern Permaculture plus a little construction with available materials. The next most important thing is having the right attitude. ZeroHedge reported today that the real standard of living for working class employed people declined over 6 percent from a year ago. This continues and accelerates a decades long decline. Waiting for it to turn around as a result of some government action is likely to just spawn despair.
Of course, many, many things can go wrong, as Orlov and Kunstler remind us.
I have three problems with the typical projections:
1.Oil projections are based on some sort of symmetry, or based on expected depletion rates. I expect that the down-slope will occur much faster than this, because of financial and political disruption primarily, and because of other negative feedback loops.
2. There will be a lot more people in 2030 than in 1940. In 1940, there were 132 million people in the United States. Current projections are for 364 million in 2030. On a world basis, the difference is even greater–world population was something like 2.4 billion in 1940, and is projected to be over 8 billion in 2030 (but may not get there).
3. I am not convinced that there is a “reverse” or “less complexity” direction that it is possible to take the world in, in any reasonable time-frame. The system we have now, was gradually built up of a period of many years, Each person develops skills that fit in with the way society “works” today. New businesses are formed, to fit in with other businesses in existence today. Farming is done in particular ways, with particular equipment, and with particular types of seed, that are adapted to mechanized farming. The system can fairly easily adapt to a technical innovation, that allows some function that was done in the past to be done in a different way, but more efficiently.
The problem is that I don’t think that it is easy to adapt the other direction–in a downward direction. It is hard to explain this easily. For example, if we have developed a system that requires transmission lines for electricity, and we find we cannot get necessary replacement parts, we may suddenly have to do without electricity. It was quite possible to have banks and medical offices without electricity, years ago. At that time, workers were trained in appropriate procedures to deal with the situation. But to switch back now would be very painful. We could theoretically do the things as we did back in 1900, but people don’t know how, now, and we don’t have the tools and skills needed (pencil and paper, and ability to add long columns of numbers without a calculator or adding machine, and doctors who can diagnose illnesses without medical tests. If a loss of electricity occurred quickly, we might be missing things we really needed–such as what people’s bank balances were before the outage; what medications patients are currently taking; and prescriptions on file at the local pharmacy.
My father was a medical doctor who started practice in the 1940s. He learned a lot of skills that doctors today don’t have–how to diagnose illnesses without today’s medical tests; how to set bones, with limited supplies; how to deliver babies at home, without much in the way of equipment. He always felt that today’s doctors were lacking in needed skills, because they had not been trained for what you do without today’s modern equipment.
Sadly, very very true. The one exception on seeds, is pasture seeds. Getting pasture established from a readily available pasture mix is a good idea, clover makes up for a lot of sins. But only if you want to raise some goats and such, or prepare for that possability.
I guess being your senior by one year gives me license to weigh in on your perspective 🙂
I agree that life in the 40s & 50s was pretty good for many of us (but not all). Probably like you, I don’t recall thinking that we had a diminished quality of life because we didn’t have all of today’s gadgets, mobility, privileges and conveniences. I also agree that returning to the lifestyle of the 40s would not be a bad thing – given a little time to adapt.
But, I have serious doubts that the future will deliver this vision for most US citizens (not to mention the rest of the planet). Why? Because the planet as it existed in 1940 simply does not exist now. My family, like many others, could easily add wild game and fish to our diet. We could get veggies, eggs and meat from local gardens and farms. Apple trees were abundant. We didn’t have a freezer but mother canned a good deal and most folks had a place in the “cellar” for storing fruits, veggies and canned stuff. Clean water was not much of an issue. Getting rid of waste was pretty simple also. All of this was predicated on the idea that small groups of humans lived in close proximity to lots of unspoiled natural surroundings (forest, oceans, lakes, rivers, meadows, etc). Now:
Approx population of some metro areas:
NY Metro Area – 19 Million
LA Metro Area – 13 Million
Washington-Baltimore – 7 million
Chicago Metro Area – 10 Million
Mumbai Metro Area – 18 Million
New Delhi – 15 million
Mexico City Metro Area – 22 million
San Francisco-Oakland-San Jose – 7 million
Tokyo, Japan – 35 million
Sao Paulo, Brazil – 18 million
Moscow- 10 Million
Paris – 10 Million
Soul – 10 Million
7 billion humans (-> 9B) simply can’t all relive the 40s paradigm. There is not enough suitable land to support this number of people in the style to which you and I were accustomed. There is not enough fish, game, veggies, etc available in a world with 1940s production of fossil fuels to now support 7 to 9B humans. Since 1940 we have seriously depleted our natural resources and seriously degraded the biosphere. We are also heavily armed and trigger happy. As much as you and I might like to revisit the 40s – hard to see how this will happen for most folks.
Don, I agree with you that most people would cringe in horror with respect to dancing rabbits scenario. PassivHaus works (now) because of a long term effort by those Germans to create it when there was still oil, and lots of nuclear power. When I looked at the price of their heat exchanger it was north of $10,000, because it is much more sophisticated then the average american heat exchanger (air to air).
In some form of collapse, the Germans have to keep electricity going, which they may, and repair the passivHaus’s as they need to. whether that could build new ones (from the exchangers to the windows, to the insulation) would be another question. Regardless my hat is off to them.
I tend to think more like those “dancers”, what can i help my community retrofit into their situation that requires a much lower level of tech, and could even be salvaged from other (abandoned) houses. So I like woodstoves and rainwater (i live in the northeast). Like the Germans I think now is the time to acquire the pieces for “descent”, to minimize the pain or the die off if you prefer. Those pieces could be a woodstove, or they could be basic skills such as sustainable gardening.
I have privately argued to various next generation housing people, that they are simply wasting their time. At the current rate of new home builds (which is projected to go down again next year) there is no material impact, and in collapse or descent, no one will either be afford or organize the logistics for the home. The focus should be on extending worthy buildings in some modular fashion, ie. a set of designs to attach to a standard ranch house a modular extension with “descent” features (pv, grey water capture, wood stove, rain water capture, etc..). Or a workbook on how to demolish a standard home for its parts to be reused and what can’t be (hint PVC joins).
There is one exception on the “housing” front – earthbags. But I view it as a mixed housing/security issue.
I agree that we are going to have to mostly reuse existing homes, and I agree with your idea of retrofitting these homes.
At some point, we many need to build new homes closer to fields, but my guess is that they will be much simple and cheaper than today’s homes–perhaps not use electricity.
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Can you offer any comment on your expected trajectory?
When do we see material decline in global output?
Will this decline be driven by high price or lack of supply?
I am not sure how good my crystal ball is.
I am thinking that one of the big impacts is going to be the unwinding of the Euro, as it falls apart in Europe, probably in 2012. Countries will try going back to the old currencies, but some countries will not be able to buy the oil products they want with their new (old) currencies. This effect would tend to reduce demand for goods and services from around the world.
China is already stumbling. They need rapid growth, to keep up all of the debt repayment on all of the new infrastructure. I was reading today about a Brazilian slowdown, and how that is affecting Argentina as well. I expect all of this is related at least partially to the lack of growing supplies of cheap oil. In the case of China, they are also running into limits on the growth of cheap coal.
So I am thinking that we head into another major recession in 2012. The US is much weaker this time around, and it will be increasingly difficult to pile on more debt to pay for more stimulus, more unemployment compensation, and more bailouts. My guess is that all of these financial problems will force the price of oil and coal lower, and there will as a result be a big drop in fossil fuel production.
All of this will lead to a material decline in global output by 2013. By that time, debt defaults will be a major problem. Governments may be overthrown, or may simply disappear, and more local governments will take their place, in the 2013 to 2015 timeframe.
This is just a guess though. I usually tend to think things will happen sooner than they really do.
Arthur, I’ve heard the Saturn argument before. What can you really say, when faced with someone who sees science and technology as some sort of infinite and easy faerie magic? If they think that getting millions of barrels a day of fuel from Saturn in 2011 is a trivial problem, then it’s going to be impossible to discuss the earthly difficulties of extracting oil. After all, hand waving is also a legitimate form of magic for these folks.
We have a massive collision of crisis now, because cheap energy growth is no longer exponential. It’s exactly what we should expect to see when we pass the peak. Suddenly everything that used to be easy, becomes expensive and difficult. And the difficulties keep increasing. As Arthur has illustrated, our civilization’s blind spots and assumption of wisdom, based on the fact that we own microwave ovens and iPads, gives us a massive complex of hubris.
As a society, so many of our members are getting through the day with strange mixes of ignorance and misinformation. we know enough to do specialized jobs, wash clothes, buy groceries and order food from a fast food window. On the whole, we lack the educational background to understand much of how our society functions. The understanding I’ve gained, certainly wasn’t taught to me in school. It’s only my ongoing hunger for knowledge that made my understanding possible. If it weren’t for that, I’d probably know more about television shows and current events in sports, than how the world works, much like my peers do.
So on that note I find Heinberg to be more of a populist writer. It seems he’s writing to maximize books sales. He can’t afford to offend anyone by accurately painting the crisis that faces us. If he did, he probably wouldn’t get published in the mainstream press. The idea that we’re evolving to some sort of higher enlightenment is pollyanish. In Heinberg’s case, it may be driven by association. A writer like him will attract like minded people. It would be easy to begin to see the world as filled by people who are aware our problems. Many of the rest of us don’t have that perspective.
Yes, he is trying to sell books. Too much fear would reduce sales.
I have a friend who is a climate catastrophe and peak oil denier. He told me that Saturn is made of hydrocarbons! So all our problems are solved. It is only the greedy oil companies ripping us off that causes the artificial price increases.
But even he is a doomer. Somewhere down in his boots he knows there is something wrong. The point being that he and I have survived the same number of evolutionary iterations. Therefore it would be arrogant of me to assume superiority yet.
You discussed the internal problems countries have with rising oil and food prices. It seems to me the biggest wild card is how nations will act towards each other. I have a hard time believing that the US, China, Japan, the EU, India, all large oil importing countries with big militaries will do nothing as their populations become more and more impoverished.
Damien Perrotin @ energy bulletin argues that the reason zombie movies are popular is that since we can’t openly talk about the future being a lot worse, these movies are the only way we can express our subconscious thoughts that a lot of people are gonna suffer.
I agree. OPEC in recent times has shown a price, rather than volume, bias. Thus, given the choice between high volume / low price, and high price / low volume, OPEC seems to be going for higher prices. This is particularly true because a number of countries, including the Saudis, now have quite high budget requirements. Iraq will no doubt increase production over time. On paper, it should be able to rival the Saudis, but this may take many years. The passing of Chavez in Venezuela (his former doctor gives him two years) may also put Venezuela back on the map. We could see an increase of a couple mbd there over the course of a decade or so.
However, I think that looking to OPEC for salvation is being too optimistic. China, on a pro forma basis, is likely to be able to draw by itself as much as 2-3 mbpd / year in at least a few years of the coming decade. That’s very big incremental demand, well beyond any increase contemplated by OPEC.
On the other hand, should shales prove truly prolific (in Russia and China, not just the US), then OPEC may paradoxically increase production in a bid to maintain revenues. But that’s hard to see at the moment.
Interesting that oil producers need not only more revenue for their own populations (not forgetting payment for imported food), but also, physically, oil itself (not least for water desalination?). Perhaps explains some of the bias toward higher price?
Regarding shales; the old axiom of Peak Oil is that it is not ‘reserves’ that matter, it is ‘rate’? Can we really envisage a new GoM or Alaska-type ‘shoulder’ to the US decline; or a ‘North Sea effect’ in Europe?
In a way, saying that 90% of future oil production must come from MENA, is admitting that other oil producing countries simply cannot produce enough oil to maintain their own ‘growth.’ And yet, that’s all the politicians can talk about: returning to growth. BTW, Heinberg’s new book, ‘The End of Growth’ is a terrific must read.
I find Figure 7 very interesting. It looks like food prices / the global economy should decline from here till 2012, bottoming out with a food index of 185 or so before heading back up to another spike in 2013-14. Perhaps the next spike will include the names of several Western nations.
I’m surprised to hear you say that you find it ‘difficult’ to make some points in your posts. Are you concerned that some readers will find the message too alarmist? I sense that some of my other favorite researchers and writers ‘hold back’ when discussing the challenges ahead as well.
I understand the need for balance but think it’s a shame, really, because we need the truth to help us make important personal decisions. Maybe you could spell it all out for us in a single post?
The problem with posts is that readers have limited attention span. A person cannot introduce too many “new” ideas at one time.
Perhaps I can focus more on the limits issues in another post.
It is hard to say everything at once.
Thanks for the recommendation (put it on my Amazon Wish List). Amazon’s reviews were mostly very good. One review that was more critical (Owen Lloyd) made some interesting comments that are similar to your questions about the avoidance of being too alarmist.
I have a copy of Heinberg’s “End of Growth”. I have paged through it, but I haven’t really read it.
My impression of it is that I disagree with the majority of what Richard Heinberg has to say. The subtitle is, “Adapting to Our New Economic Reality”. I think the situation is not one that I would describe as “adapting to”. One of the chapters is “Managing contraction, redefining progress.” Another is “Life after Growth.” My impression is that he stays completely away from the “population problem”. He gives the impression that the future will be quite manageable. On page 284, in the “Life after Growth” chapter, he says,
None of this talks about real problems–just nice platitudes that sound good, if you don’t read them too closely, or think about it too hard. I think I am more of the Jim Kunstler and Dmitry Orlov schools of thought–there are real changes, and they are likely to be quite large changes, quite quickly. I see big political changes, besides financial changes happening.
If you start at the beginning of that chapter you’ll read his “Default Scenario” is for (p.232) “an abrupt, dramatic, and chaotic simplification as trade virtually ceases.” There are several references to complete economic collapse in the book but Heinberg, like others, expresses some hope that we can still avert catastrophe “…if the process is managed well.” (p.236). Since we don’t seem to have a track record for managing anything well, I am not optimistic.
I thoroughly enjoyed listening to Mr. Orlov’s recent talk in Orcas. Although he dismisses the idea of a ‘Mad Max’ or ‘Waterworld’ scenario, I have the sense that he knows the situation in parts of the US is likely to be chaotic and perhaps quite violent. Kunstler supports this with his own views in a recent interview with Heinberg on the KunstlerCast. http://kunstlercast.com/shows/KunstlerCast_171_Richard_Heinberg-Part-2.html
As Mr. Orlov notes, there was no Soviet style central planning for our largest population center: the North East. Without the means to feed millions and heat dwellings, many of the disenfranchised poor ( http://www.economic-undertow.com/2011/10/18/enter-mr-conduit/#comment-1897 ) will simply perish the first winter of economic collapse.
It’s heart renching watching life go on around me while wondering if anyone has any idea of the hardships ahead. Thanks.
I should probably read Heinberg’s book before I am too critical of it. I wrote about my view of a Steady State economy in a post last February (There is no steady state economy except at a very basic level.
If a person doesn’t describe what would happen in too much detail, the result is less distressing than if a person starts giving graphic detail about all the bad things that may happen.
You and Richard may actually have quite a bit in common. Here’s his latest on Energy Bulletin. http://www.energybulletin.net/stories/2011-10-21/course-review-or-why-daniel-yergin-needs-do-his-homework
A small sample…
“So how quickly does Peak Oil result in the death of the system?
The end of economic growth (due indirectly to the decline in net energy available to society) is causing the financial system to shudder and shake; the result could well be a rapid collapse that would deny essential monetary support to other necessary subsystems (agriculture, transportation, manufacturing, education)
So yes, Peak Oil—the peaking and decline of conventional oil and gas production—is real, it is happening, and it is a Big Deal.”
I’ve read the main books from Heinberg, Kunstler and Orlov and I read your blog religiously as well. It is my impression all 4 of you are speaking the same language and if you all got together you would find much you agree about!
Thanks for the great work. I am always waiting impatiently for your next posting! 🙂
We actually do get together, although perhaps not all four of us at the same time. I will be on a panel with Dmitry Orlov at the ASPO-USA meeting in November. I spoke at the same meeting as Jim Kunstler back in April, and got together with him afterward. I have talked with Richard Heinberg at ASPO-USA meetings, and have corresponded with him (in fact, with all three of them).
The differences are probably more of emphasis and how we say things than anything else. There aren’t too many people talking about “The End of Growth.” You almost have to tone down what you say a bit, to get people to read a book on the subject. Toning down can be done by just not giving too many details.
Ah! Glad to know you all are talking and sharing ideas. Yes, I understand the issue of not being able to say too much at once. I’m teaching a course on Climate Science at my school. Kids can only absorb small bits at a time or its too overwhelming, both content/concept-wise as well as discouragement-wise.
“Toning down can be done by just not giving too many details..”
On that note, Paul Gilding seems to be the most optimistic of all the prognosticators and he does this by doing just what you suggest… leaving out great swaths of details, particularly the negative ones, which he expects during his “great disruption.” He makes vague references to population reducing events.
The things we really don’t want to face in our collective future I believe will be: “violence, hunger and disease.” Those are the 3 buzzwords that keep echoing in my mind.
As the world viewed Gaddafi’s last moments on crude cell phone video, how many people recognized this scene as an illustration of how fragile indeed, is the thin veneer of civilization?
Gail, a very thorough and thoughtful essay, as is always the case. I appreciate your ability to present the data in a clear and meaningful way.
You mention twice that we need a rising supply of low-priced oil. I am wondering if you are stating that from a perspective of “continuing business as usual” or from some other viewpoint. From a longterm perspective, it seems to me what we need is much LESS carbon-based energy. Already we are feeling the effects of climate change – some very respected climate scientists think that we may have passed crucial tipping points already and that there may be no turning back from runaway global warming.
I’m not trying to be contrarian, but I just don’t see any way to avoid the three world-changing events all coming together at the same time: global warming, peak resources, and over population. It would seem to me that we need to end business as usual and take every action we can muster to prevent complete destruction of the planet and all life on it. If you see any way to avoid this “perfect storm”, I would sure appreciate reading your views on it (perhaps you’ve already written such an essay and I’ve missed it).
This is from a “continuing business as usual” point of view. I agree that in a finite world, it is pretty clear that we are reaching limits of many sorts. In one article, there are only so many battles that can be fought. Also, with my articles being picked up and posted on quite a number of web sites, it is hard to make some points that I would like to make, like “Limits to Growth” without “turning off” new readers who have problems with very basic points, like overstated oil reserves in the Middle East.
Okay, that certainly makes sense. Thanks!
Very well said. The fly in the ointment is getting any kind of consensus that BAU is an actual problem that requires taking “every action”.
The big world-changing event I see is collapse of the financial system, which is related to the other issues you mention. My concern is that everything may collapse at that point–food and water systems, in particular, but also electricity, sewer, and our ability to get oil to run things that run on oil.
I agree when you say, “The big world-changing event I see is collapse of the financial system….” Are there any parameters, (price of oil, debt to GDP ratio, energy to GDP ratio) which can be followed that would be a leading indicator of an imminent financial collapse. Similar to earthquakes or volcanoes, there must be some measurements that would indicate that a major collapse of the world financial system is imminent. What is the canary in the mine? Which of the dominoes would you predict to initiate the collapse — Greece, Italy, China. My general advice is to get out of debt, get out of the stock market and get out of banks. It would be nice to have a deeper understanding of when.
I think the collapse of the Euro is the next big step down. I don’t know precisely how this happens, but I don’t think that the various planned bail-outs will work. If one fails, it may be possible to come up with yet another scheme, until it is clear that too many countries are failing all at once, and that austerity measures just make the situation worse. I expect that some countries with debt problems will see overthrow of their governments–this could push toward the break up of the Euro. Historically, huge financial and a governmental problems have tended to lead to internal conflict as well–sometimes civil wars. If one or two European countries start having much more severe problems, this could lead to the breakup of the Euro.
The other problems around the world will go on in parallel, and will be exacerbated by Euro problems.
One of these is the fact that the US government is currently spending far more than it is taking in. This cannot continue indefinitely, but stopping the situation will put the US into deep recession. Cutting off unemployment coverage for those out of work for a long time could cause civil disorder. I don’t know what the timing of all of these issues will be. The “Select Committee” is to develop a set of proposals for reducing the deficit by November 23, to be voted up or down by December 23. One possibility is that no agreement will be reached. Another is that the agreement puts the country into severe recession, as it is implemented in 2012. If it also leads to riots, there could be repercussions affecting the new elections for 2013.
As you mentioned, the China situation is another. It needs economic growth, to keep up the debt model it has set up. This could start failing, as the rest of the world slows down.
There are so many things that can go wrong in this incredibly complex world we’ve created that it boggles the mind.
I present just two: 1) clean, potable water, and 2) nuclear power plants.
If we should have an extended, wide-spread disruption of the electric grid (there are numerous possible ways this could happen), combined with disruption of fuel supplies, then many tens of millions (if not hundreds of millions) of people in the U.S. alone would be dead within a few weeks.
The human body can last about 7 days without water. That’s it. And while pretty much everyone in the developed world is used to simply turning on the tap, very few have a clue how to obtain this absolutely essential element without the tap. Imagine living in New York City or any of the other megacities of the world and trying to find water from somewhere other than the water faucet. What lakes and ponds there might be in a city would be drained rapidly and/or polluted within a few days. The rivers through most of the world’s large cities are polluted to the point of being poisonous. Combine that with the piles of human feces that would quickly accumulate without the convenience of flushing, and death would be a certainty for the vast majority. Obviously, this would be a quick die-off given the right circumstances.
Nuclear power plants hold a horror all their own; specifically the waste cooling ponds. As I understand it, the water in these must be circulated continuously or they will eventually burn and spread radioactivity for hundreds, if not thousands, of miles. Given the situation mentioned in the paragraph above, ignoring the fact that workers might not be available or able to reach the power plant, the destruction that massive meltdown would wreak would be life-ending for most of the planet – not just human life, but almost all advanced species. There are more than 400 nuclear power plants in the world. Look at the destruction that single meltdowns have caused even in the presence of a fully functioning and capable response apparatus and you begin to get a taste of the potential destruction. This die-off would be slower.
The former scenario allows one to prepare. The prudent person would begin to make plans to capture rainwater or to dig a well. However, the later scenario is completely out of the control of the average person. No matter what preparations one might make, there can be no escaping radiation for any extended period of time.
It may be too late to do anything about nuclear power plants, I don’t know. But, my faith that the powers that be will realize this risk and start taking action to protect the planet, is virtually non-existent.
You have picked out two of the same things that I am concerned about. Water is the immediate issue. I haven’t made huge precautions, but I do have a 55 gallon drum filled with water, and a way to capture rain water.
I don’t know what we can do about the nuclear power plants.
if you are considered about nuclear fall out AND want to capture rain water, you need to capture it away from your house, and include a settling tank stage (5 gallone bucket buried in the ground) that the water delivered to your house runs through.
Put the waste in Yucca Mountain.