Minnesotans For Sustainability©

 

Sustainable:  A society that balances the environment, other life forms, and human interactions over an indefinite time period.

 

 

 

The Oil & Gas Crash and You

Bruce Thompson*
November 22, 2003

 

Summary
Inadequacy of expected solutions
How it will affect us

Why Public Warning is so Late
What You Can Do
More Information and Contacts


 

Oil & Gas Shortages Soon, Final Emptying of Wells


 

Summary


This document reveals that in this decade:

  • After a hundred years of exploration and extraction very little new oil and gas is being found. See graph.  Today, for every barrel of oil discovered, the world consumes four barrels.
  • When energy get scarcer and dearer there is very serious disruption of transport, industry, business, government and private life.

Serious shortages and disruptions

  • Globally, 90% of transport (road/rail/air/sea) depends on oil. So does industrial & farm equipment (food).
  • Much natural gas is used by power generating stations to generate electricity. Gas shortages can therefore trigger grid outages that disable computers, communications and electronic control equipment.
  • More than 500,000 oil & gas-based products will also become scarcer and dearer: plastics, clothing, asphalt, tyres, medicines, sealants, inks.

Alternative energy sources cannot compensate

  • Hydrogen is not the answer because it is actually made from natural gas, which itself is running out.
  • Hydroelectricity, coal, nuclear, windmills, solar etc. cannot be increased sufficiently in time to prevent seriously disruptive shortages of energy.

Difficulties adapting

  • Changeovers take years. Our immense existing infrastructure was built assuming plentiful fuels. (Cars, globalization, suburbs, arctic/tropical cities.)
  • Changeovers demand fuels to implement them too.
  • Coal, nuclear, oilsands etc involve serious pollution of air/water/soil. They use oil/gas/electricity to exploit them.
  • The energy decline is strange, unwelcome news to the public. There is confusion, resistance and delay.

Evidence of decline of oil and gas

Some people still say oil and gas are abundant, and that money and technology will meet needs for decades. But oil and gas industry data show:

  • A clear, 40-year trend of less and less discovery of oil. (See graph at top of this page.)
  • In regions including USA, the North Sea, Norway, New Zealand there is obvious decline of oil and gas.
  • Global oil supply is 70% from pre-1972 wells
  • Steadily decreasing output from the existing wells.
  • Big military takeovers of oil & gas resources.

Timing and severity

  • North America’s gas supply: Start of decline: about 2003 - 2004. Electricity is 20% gas-powered. Grid blackouts, brownouts in North American workplaces, cities, homes, Internet system, economy. Importing gas is seriously constricted by lack of ships and suitable port equipment.
  • Global oil supply:Conventional’ (easy-to-extract) oil: Decline from about 2005 on. Expect higher prices not only for fuels, but all goods and services because all require energy to create and deliver them.
    Unconventional oil’ (Expensive deep sea, polar, etc): Decline about 3% a year  from 2009 on.
  • Competition: Prices are affected by fierce global competition for oil and gas. Scarcity for one kind of energy also raises the price of the other forms, such as electricity or coal.
  • Duration of decline: Forever. Oil and gas took millions of years to form, in extremely rare conditions. Regeneration rate is practically zero.

World now consumes four barrels of oil for each barrel discovered

  • Barrels consumed globally/year: 28 billion (2002).
  • Barrels discovered globally per year: 6 billion of “conventional” plus 8 billion deep sea, oil sands etc. Discovery of oil fluctuates each year, but peaked in the 1960s, and has declined at an average of about 9 billion barrels per year over the past 40 years.
  • Pre-1973-discovered oil in use today: More than 70% of present global supply. We've mostly just been using up huge old oil fields.
     

 

Discovered

Extracted

Consumed

USA during the 15years
from 1977-1991

5 billion barrels

45 billion
(40 billion barrels more than discovered)

92 billion (47 billion were imported)

World during the 10years
from 1982-1991

91billion barrels

221 billion
(130 billion barrels more than discovered

221 billion
(equal to all extracted)

Those figures, & the above graph of discoveries are at:< http://dieoff.org/page85.htm and http://dieoff.org/page90.htm >.

Proportion of global energy provided by oil

  • In developed countries 40% (1997)


Inadequacy of Expected Solutions


The "invest more to find it" idea

Yet-to-be located oil, globally

After a century of exploration, the earth's geology and oil resources are generally well known. When the fields are emptying, money only helps to scrape out the hard-to-reach remainder. There are 210 billion barrels left to discover and 1000 billion barrels left to extract. This is indicated by the 40-year decline in discovery of oil. No amount of money will create oil that simply isn't there.

Number of oil wells already in world/USA

More than 500,000. In USA, 80% of the wells now produce less than three barrels a day.

Percentage of oil recovered from a typical oil well

20% to 60%. It relates primarily to the viscosity of the oil. You get less from a heavy oil than a light one because it sticks in the reservoir.

"Technology will solve it" idea

Challenge to technology

To compensate for the expected 3% oil decline (at today's 28 billion barrels a year), create and install, by year 2009, permanent supplies of portable energy, equivalent to 840 million barrels of oil a year. Then as oil keeps declining forever, increase this new energy it until it replaces 40% of the world's oil  supply (22 billion barrels a year) OR reduce energy demand equivalently as the global population increases by almost a quarter million people every day.

The "better efficiency" idea

Increases in efficiency usually fail to reduce consumption (more m.p.g. just causes people to travel more or buy two cars, or other goods) unless they are personally determined to reduce energy consumption.


What about nuclear power?

Nuclear supplies 16% of the world’s electricity. Its ability to soften the oil and gas crash is problematic:

·  Past accidents. Risk of more, and terrorism.

·  Many more reactors would be needed, at huge cost, against local opposition.

·  Tons of radioactive materials to transport at risk to public.

·  Nuclear waste disposal is still the major, unresolved problem, especially breeder reactors producing plutonium - a nuclear weapon/terrorist raw material, half-life contamination is 24,000 years.

·  All abandoned reactors are radioactive for decades or millennia.

·  Nuclear is not directly suitable for aircraft and vehicles.

·  Adapting nuclear to make hydrogen or other fuels would be a huge, and energy-expensive project.

·  Nuclear fusion is still not available, after 40 years' research and billions of dollars invested.


Natural gas

Proportion of global energy provided by gas

20% of global energy supply (1997).

Natural gas is also running short

Demand in North America is already outstripping supply, especially as power utilities take the remaining gas to generate electricity. Later in this web page there is a graph suggesting important effects of gas decline on the electricity used for computers, communications and control equipment.

Gas is not suited for existing jet aircraft, ships, vehicles, and equipment for agriculture and other products. Conversion consumes large amounts of energy and money. Natural gas also does not provide the huge array of chemical by-products that we currently get from oil.


Hydro-electric

Present use: 2.3% of global energy supply (1997). Many rivers are already exploited.

As a replacement for oil:

Very minor compared with 40% provided at present by oil. Unsuitable for aircraft and the present 800 million existing fuel-powered cars.


Coal

Current global use

24% of global energy supply.

As a replacement for oil

Is 50% to 200% heavier than oil per energy unit. Bulky and dirty. Expansion of coal mining, causes land ruin, and increases greenhouse gas emissions.

Hard to fine-control the rate of burn

Tuning the rate of burn of oil and gas fuels is easy, but coal is different. It is therefore is used in power stations to make electricity, wasting half of its energy content.

Coal mining operations run on oil fuels

Present coal-mining machinery and transportation runs not on coal, but on oil-based fuels.

Pollution

A single coal-fired station can produce a million tons of solid waste each year. Burning coal in homes pollutes air with acrid smog containing acid gases and particles. (Smog, greenhouse gases, and acid rain).

Liquid fuels from coal

Very inefficient, and huge amounts of water required.


Solar and wind

Global solar use

  • Is about 0.006% of global energy supply. Energy varies constantly with weather or day/night. Not storable or portable energy like oil or natural gas so unsuited for present vehicles and industry. Batteries bulky, expensive, wear out in 5-10 years.
  • Photovoltaic solar equipment (US$4/watt) is about 15% efficient, giving about 100 watts of the 1 kW per square meter exposed to bright sunshine (enough for one light bulb). A typical solar water panel array can deliver 50% to 85% of a home's hot water though.
  • Using some of our precious remaining crude oil as fuel to manufacture solar & wind equipment may be wise.

Global wind power use

0.07% of 1990 global energy supply. As with solar, energy varies greatly with weather, and is not portable or storable like oil and gas. Each wind turbine from Denmark produces an average of 698 kW averaged over a year.


Hydrogen

Current global use

US (only) 1998 consumption is 0.01% of global energy.

As a replacement for oil

  • Hydrogen is currently manufactured as from natural gas, which is running short. It is therefore an energy "carrier" not a source.
  • It can be produced in other ways, such as electrolysis, but always with a loss of the energy needed  to do that. Usually it is better to simply use the original energy directly.


Other sources of energy

Options

Shale, tar sand, coalbed methane, ethanol, biomass (from vegetation), etc.

Effectiveness as replacements for oil

  • Huge investment in research and infrastructure to exploit them, plus large amounts of now-expiring oil supply.
  • A major problem is that they cannot be exploited before the oil shocks cripple attempts to bring them on line, and the rate of extraction is far too slow to meet the huge global energy demand.


How It Will Affect Us


Food supply

Food production & delivery depends on oil

Food grains now contain between 4 and 10 calories of fossil fuel for every 1 calorie of solar energy. Example: 4% of USAs energy budget is used to grow food, while 10 to 13 percent is needed to process it and transport it onto plates.

Fertilizers are made from natural gas. Grain yield without fossil fuel support can fall from 130 bushels/acre down to 30 bushels/acre. The worsening fuel shortages will make agriculture increasingly expensive and land-needy. Localizing agriculture closer to cities will help, as will more-vegetarian diets.

Percentage of US grain used to feed cattle

70%

Efficiency

The meat feeds 1/5 as many people as the grain could.

Number of cats & dogs in USA

131 million

Food given to pets

North American pet food business is $30 billion/yr, and is growing.

"Future food" being consumed by using gasoline in vehicles

Gasoline consumed 'now' will deprive future agriculture of energy for producing food. Below are examples of how much "future food" a 30 mile-per-gallon vehicle is "eating" now. Also shown is the heavy physical labor humans will have to do in future when gasoline is unavailable for farm/industrial/office/home machinery:

  • Bread, 1 kg loaf = 6 miles = one slice per 422 yards That 1/5 gallon = human heavy farm labor for 23 hrs.
  • Beef, 1 kg = consumed by driving 76.2 miles That 2.5 gallon = human heavy farm labor 300 hrs.
  • Canned corn 1 kg = consumed by driving 5.4 miles Again, 1/5 gallon = human heavy farm labor 20 hrs.


Transportation, Business, Globalization

Oil for transportation

  • Automobiles, globally: 722 million
  • Automobiles, USA: 132 million
  • Trucks (all types) in USA: 1.5 million (all types) in USA:
  • Buses: (all types) in USA:: more than 654,000
  • Locomotives: USA: 26,000
  • World aircraft fleet: 11,000 aircraft of more than 100 passengers. All 11,000 designed for oil-based fuel.
  • World shipping: 85,000 ships in world.
  • Decked fishing boats in the world: 1.2 million

Globalization

Will end. (Fuel costs & scarcity).

Oil for industry

Construction industry example: Energy to build an energy-efficient home is equivalent to 6,500 gallons of gasoline.

Number of by-products of oil

Over 500,000 including fertilizers, medicines, lubricants, plastics (computers, phones, shower curtains, disposables, toys, etc.), asphalt (roading and roofs), insulation, glues/paints/ caulking, (modern synthetic rubber) tires and boots, carpets, synthetic fabrics/clothing, stockings, insect repellent.


Government Services, Economy

City drinking water, government services

  • Number of cities in the world: over 55,000
  • Services to consider: Water supply pumping, sewage disposal, garbage disposal, street/park maintenance, hospitals & health systems, police, fire services. National defense (land, sea, air).
  • Possibility of wars over remaining oil.

Economy and employment

  • International oil import costs: Sharp rises (increasing global competition for dwindling oil & gas of five Middle-Eastern countries and former Soviet Union. International tensions.
  • National debt, inflation: Money goes out of country, to oil producers. Money gets scarce. Interest/mortgages rise. Government prints more money to pay overseas energy bills. Money devalues. Inflation. Prices rise.
  • Poverty: Public, and businesses become poorer paying higher energy costs. Less spending, less sales. Layoffs. Unemployment.
  • Welfare costs up, taxes up. Therefore taxes up. Pensions for aging/disabled reduced or discontinued, and devalued by inflation.

Migration

  • People will migrate away from hardship into less uncomfortable areas. Locally, regionally, globally.

Other serious quality-of-life aspects

  • Heating and cooling: In cold regions oil heats buildings (burned as fuel in homes or in oil-fired electric power stations). In hot areas oil power provides air conditioning. As natural gas is substituted for oil, the gas price will rise too.
  • Smog: Energy price and shortages will increase wood and coal burning in homes, increasing city smog.


Why Public Warning is so Late


Normal business and political posturing

For business and political reasons, there have been very misleading reports of sizes of stocks of oil:

(a) By firstly understating discoveries, and then later overstating discoveries, oil companies have given the false, but pleasing impression of an increasing discovery trend. Investors respond accordingly, and finance more exploration.

(b) The seven major oil-extracting countries have for years reported unchanged reserves (even though they were extracting and selling billions of barrels of oil, and that the reserves would therefore be less each year). See table of "spurious reserve revisions" shown below.

(c) In 1988 five of those countries claimed they each had about twice as much reserve oil as in 1987. See graph below, based on tables from < http://www.hubbertpeak.com/campbell/images/com12.gif >.

(d)

 


The table's green areas show where countries reported that their oil stocks were "not declining", even though oil was being taken out, steadily emptying the wells.

The red areas show where countries spectacularly increased the reported quantities of oil in stock, so that OPEC would recognize them as bigger suppliers and allow them to export more, increasing revenues. They were desperately competing with each other to make up their revenue by having a bigger slice of market share, because the price per barrel had plunged to about $12 per barrel. The history graph of the prices is at < http://www.eia.doe.gov/emeu/cabs/chron.html >.

(d) We, the public have enjoyed using up the gasoline, heating oil, plastics, and countless other oil products for decades. The oil kept flowing generously. We "looked on the bright side" and mostly ignored warnings by environmentalists that fossil fuels would run out. Media constantly announced new oil discoveries, and increasing stocks of oil. Emptying wells seemed decades in the future. Nobody planned for it. Now they really are running empty.

(e) OPEC countries need to earn as much oil revenue as possible to support rapidly growing populations where the public health care, education and other services are provided free, from oil revenues, not by taxes. They seem especially frightened of alternative energy sources, even though when examined closely, those alternative sources are drastically too small to compensate for oil. "As a group of fossil fuel exporters, OPEC stands to lose more than most from any proposals that threatens to cut oil consumption," - Rilwanu Lukman, the Secretary General of OPEC, speaking at the 16th World Petroleum Congress, Calgary, 2000. (Globe & Mail Newspaper, June 5, 2000.)

Economic theory says exhausted resources always replaced

Economists have taught us the illusory theory that market demand will always generate suitable solutions. This ignores any physical limitations of the earth, human resourcefulness, or time needed. Example quote:

"Minerals are inexhaustible and will never be depleted. A stream of investment creates additions to proved reserves, a very large in-ground inventory, constantly renewed as it is extracted… How much was in the ground at the start and how much will be left at the end are unknown and irrelevant."

That is from Professor of Economics, Emeritus, Morry Adelman, who has long been one of the world's foremost energy and resource economists and a leading analyst of international oil and gas markets. The quote is on page xi of his book, The Economics of Petroleum Supply, M.A. Adelman, published 1993.


What You Can Do


Personal preparations

Reduce energy dependence of family, home, lifestyle. The less fuels and goods you consume, the less affected you will be..

Workplace

Observe, reduce energy need. Talk with friends, workmates, neighborhood, city, governments. The ideal use for remaining oil and mineral reserves is into industries that create inexhaustible alternative energy equipment like windmills, solar water heaters, biomass (vegetation that creates fuels), etc.

Share your feeling with others

Try to stay positive and active rather than ignore it or blame people for it. Where there's life there's hope, especially if we all collaborate and are creative.

"It's not that new". Humans have always faced hardships, and many among us do so constantly now. Learn from them.

Possible emergency measures to consider

  • Alert the public so people understand the energy decline and cooperate to adapt to it. This includes alerting your city council and local media, the government. Everyone needs to collaborate, at all levels.
  • Prepare the community for conserving and rationing of dwindling fuels & oil/gas-derived products.
  • Discontinue projects that assume abundant fuel, such as road widening, overseas trade
  • Re-localize life, business. Un-globalize
  • Relocate food production nearer to cities
  • Population control to prevent children being born into extremely harsh conditions that seem likely, and to conserve soon-scarce resources for those already alive.
  • Reconsider immigration, which adds load.
  • Strengthen the police and army to deal with social chaos & to control distribution of  supplies.
  • Alert national leaders to organize well against this major threat that faces us all.


More Information and Contacts


Documented evidence

You can obtain two versions of this document “The Oil & Gas Crash and You”:

  • "Shorter Version", available as a two-sided, one-sheet handbill that you can give to other people (It contains most of the contents of this web page). < http://www.geocities.com/RunningOnEmptyNZ/_FactSheet.doc >.
  • "Full version", a 12-page resource for researchers and journalists, containing extra references and authorities, and more explanations and links. < http://www.geocities.com/RunningOnEmptyNZ/OCAY19.doc >.

Websites

  • < http://www.hubbertpeak.com/duncan/olduvai2000.htm > The Peak of World Oil Production and the Road to the Olduvai Gorge, by Richard C. Duncan, Ph.D. Pardee Keynote Symposia Geological Society of America Summit 2000 Reno, Nevada November 13, 2000.

This paper suggests that decline of natural gas may be the most disastrous event from year. 2007 (or sooner, see updates) because of resultant shortage of electricity for computers, communications and control equipment.

 

The following sites are conveniently keyword-searchable for research. They have lots of scientific and oil industry literature about energy resources and the ecology generally. They are heavily annotated with authoritative references and links:

  • < http://www.hubbertpeak.com/ > Named after the late Dr. M. King Hubbert, geophysicist, this website provides data, analysis and recommendations regarding the upcoming peak in the rate of global oil extraction.
  • < http://www.dieoff.org/ > This untidy, emotional site is nevertheless a very large, valuable resource. It's full of reputable energy-related and environment-related reports and papers, conveniently assembled in one place by researcher Jay Hanson.
  • < www.oilcrash.com > is a New Zealand activist website operated by Robert Atack. It is especially useful for downloading audio and video recordings of the world’s most prominent speakers as they notify the public about the decline of oil and gas, and the implications.

Discussion forum - Technical/scientific

< http://groups.yahoo.com/group/energyresources > (restricted membership at about 450, to prevent newcomers posting material already discussed, but there are ten thousand previous postings keyword searchable.)

Discussion forum - Implications, action

< http://groups.yahoo.com/group/RunningOnEmpty2 >..which is the current discussion group.

< http://groups.yahoo.com/group/RunningOnEmpty >...which is now closed, but there are ten thousand previous postings in the archives for researchers by keyword search. Monitored the energy decline by featuring news items about it, and discussed countless implications at personal and societal level. Membership by request to bthomson@e3.net.nz.

< http://groups.yahoo.com/group/RunningOnEmpty2OnEmpty2 > After 10,000 messages in RunningOnEmpty, this group has continued the discussion, reserving the original egroup as a VIP conference egroup, and as an archive.

< http://www.egroups.com/group/RunningOnEmptyNZ2 >is a small group for New Zealanders. It is a small spinoff from the International egroup.

Author of “The Oil & Gas Crash and You”

Bruce Thomson, who is a technical writer in Palmerston North, New Zealand. He moderated the original RunningOnEmpty group, and is the moderator of that RunningOnEmptyNZ2 internet forum. There is no institutional financial sponsoring or influence of this web page or the forum.

Some moral authority to expose the Convince Sheet to the public was gained. After weeks of debate (3,100 forum message) there was a poll of 280 members. We all knew the announcement would be disturbing, with possibly serious impacts on the public, the stock market and general business and personal confidence. Of those 280 polled, 62 members responded, and over 85% of them voted in favor of exposing the truth.

Perceived advantages of informing the public were

  • People might cooperate better with governments, instead of innocently demanding more energy or insisting on lower fuel taxes (As fuel imports cost more and more, cutting taxes will just impoverish governments, and cause cuts in services like health care, education and social welfare. A great deal of energy conservation is possible, and is a better solution.)
  • People can make correct decisions for themselves personally (to have less children, plan cheaper transport, safer jobs, pay off debts, consume less, conserve energy more, etc.
  • All the cleverest minds and wisest leaders of the world could work on the problem. With them helping, and an understanding public, we might fare better than if everyone continues innocently wasting the remaining energy and bringing the oil and gas crash to us faster and sooner.

You may copy freely to others...

There are no political or commercial allegiances associated with this document it was created as a personal enquiry, and in the public interest.

[MFS note: you, the visitor, thank you!, are at one of the United States and worlds' best sources for energy information.]
______
Used with permission of Bruce Thompson.
* This FactSheet can be printed in its entirety and distributed free-of-charge for informational and non-commercial purposes.

 

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