Saturday, 28 June 2008

Peak Oil and Climate Change

Peak oil is increasingly on people's minds as they refuel, watch air travel costs escalate, and wonder why no one warned them it would happen. Possibly, just possibly, this is the wake-up call that will liberate us from shorty-term politics, and focus everyone on long-term solutions.

But should this have been such a surprise?

For starters, let's look at where the oil price is. As I write this, it's already gone off this chart (source: WikiPedia; sorry about the caption with the error in the start year: that was how it was on WikiPedia) to over $140 a barrel. Some of course are saying this is just a bubble, that speculators are driving the price up. This seems unlikely since the last time we had these conditions in a bad way (instability in the Middle East encouraging speculators), around the end of 1979, the price spiked to $39, about $100 in today's money, and we've already exceeded that level by 40%.

There are two new factors since 1979: new demand from developing economies, especially China, and the threat of a decline in production as we hit peak oil. With BP chief executive Tony Hayward declaring an end to the era of cheap energy, we have to sit up and take notice. No energy company would talk up the long-term price if they weren't sure, because doing so increases the push for alternatives.

So what is peak oil theory? In 1956, Shell oil geoscientist M. King Hubbert made the observation that since oil extraction lagged discovery by a specific period of years, oil production in the USA would peak somewhere around 1971. This picture (source: WikiPedia) illustrates his model (blue line) and reality (black dots). He was ridiculed in 1956; by the mid-1970s, we should have been basing future planning on his model.

What about the worldwide peak? That's more difficult. In the USA, once cheap sources of oil were depleted, there was the option to move to the rest of the world. Once oil extraction has gone worldwide, we don't have another planet to move to, so depletion of cheaper resources leads to a switch to more expensive resources.The picture therefore in recent times (source: WikiPedia) is blurred, with predictions ranging roughly around 2008-2016, but some putting the peak way out into the future.

Wherever the exact peak, we've had warning of this for decades. Aside from the very obvious risks or relying heavily on one commodity, the source of which may not always be politically stable, the threat of a sudden price spike as we are experiencing today is nothing new. So why aren't we throwing out politicians who have failed to work on long-term solutions? In some parts of the world, notably Europe and Japan, there are alternatives to cars, trucks and planes in the form of high-speed intercity rail and good urban public transport networks. Countries like the USA and Australia, on the other hand, are terribly positioned for expensive oil. Many of their cities have developed unplanned urban sprawl, and their inter-city rail networks are decrepit.

For further thoughts on what Australian politicians deserve, see my views at the Australian ABC's QandA web site.

But back to the main topic.

What, you may ask, are some of these more expensive forms of oil extraction? Some are obvious, like deep sea wells. Others include tar sands and oil shale. Pushing these to the limit some claim is available starts to touch on an aspect of practicality: net energy. Some of the more extreme claims of available oil do not take into account that the energy cost of processing some of the less viable forms of oil exceeds the energy you could extract.

The "more expensive to extract" option that I find most fascinating though is the notion that it is now becoming possible to drill for oil in the Arctic. Could it be something to do with this I wonder? Look at NASA's temperature trend since 1880 (source: NASA GISS) – not that different to graphs published by others. It shows a distinct upwards trend.

Now, there are people out there claiming that climate change is a hoax. A fair number (though I will not argue all or even a majority) are funded by oil interests. Could those taking oil dollars please tell us how, if climate change is a hoax, it has suddenly become possible to drill for oil in the Arctic?

For the more visual, I also talk about this at YouTube; go there to rate the video or post a comment on it (or if lazy, just view it here).

No comments: