Transition Derby

The term Peak Oil refers to the maximum rate of world oil production. From that time on, less and less oil will come up out of the ground each year.  A peak in oil production may arise due to geological, infrastructural, and political/economic constraints. What Peak Oil refers to, then, is not "running out" of oil, but because there is a finite amount of oil in the ground, the world is going to hit a peak in production sooner or later. And when oil supply cannot meet world demand a price spike may be triggered, with major detrimental effects on our economy.

What is oil used for?

The discovery of abundant oil in the 19th century meant the industrial revolution progressed incredibly quickly. Today a forty litre tank of petrol equals around 8000 human labour hours, that’s about 4 years of a person’s labour at 40 hours a week! Oil therefore began to replace human labour as oil was dirt cheap in comparison. And now we use alot - about 85 million barrels a day! Or society is virtually addicted to it. Besides making a lot of very useful things from oil – plastics, chemicals, pharmaceuticals – oil supplies nearly all of the energy that moves things around.

Is oil a limited resource?

Yes. Oil was produced from the remains of prehistoric animals. (That’s why it’s called a “fossil” fuel.) Most oil was produced from organisms which lived between 100 and 150 million of years ago. Since there were only so many organisms living then, only so much oil could have been produced from them. Once it’s used up, there’s no more.

Are we going to run out of oil?

Being a limited resource we will run out one day, but that's not the important point. The important question is when will Oil production peak and then go into decline. At this point oil supply cannot meet demand and there will be major detrimental effects to our way of life. The UK Energy Research Council's recent review of over 500 studies, concludes there is a “significant risk” that the peak will come before 2020.

How much Oil is left?

Estimates of the total amount of oil left are hotly debated. The EIA estimates that there were originally between two and three and a half trillion recoverable barrels of conventional oil. So far, about 1.3 trillion barrels of oil – mostly the cheapest, easily accessible, highest quality oil – have been produced.

How much are we discovering?

The peak of oil discovery was passed in the 1960s and few big oil reserves have been found in recent decades. Oil companies must drill more wells in increasingly difficult and expensive locations to find the remaining undiscovered reserves. The IEA reports that Oil discovered per new well is declining. In 17 years between 1963 and 1980, 15,000 wells found nearly 1.5 trillion barrels of oil. In 22 years between 1980 and 2002, 60,000 more wells found half as much new oil. It now takes approximately 10 wells on average to discover the same quantity of reserves as a single well did 50 years ago.

The world started using more Oil than was found in 1981. The gap between discovery and production has widened since. We now consume roughly 5 barrels of oil for every one we discover.

Oil is rarely cheap to extract and is getting more expensive. New discoveries are typically in deep offshore reserves or unconventional deposits. These deposits are more expensive to extract  because they require additional inputs and special equipment. Refining oil from tar sands, for example, requires huge amounts of water and land, while deep sea drilling requires rigs worth over half a billion dollars each.

Why do Oil fields Peak?

An oil field is analogous to a shaken bottle of fizzy drink. Punch several holes in the top and the internal pressure will force the contents out at a rate determined by the number and size of the holes. But soon the falling internal pressure causes the flow to begin to slow until it eventually stops with much of the contents remaining in the bottle. Oil companies can restore pressure in oil fields by pumping down other material such as water to replace the oil that is extracted but this is  expensive and is only a partial solution. The bulk of the oil always remains in the ground and the extraction rate tails off at a predictable rate.

We could think of a region’s or the world’s oil reserves as a warehouse full of fizzy drink bottles of different sizes, pressure and ease of accessibility. The objective is to get as much fizzy drink coming out of the bottles at once as possible. Extraction logically starts with the biggest and best bottles, punching lots of holes to get the liquid flowing. As the flow from the first holes starts to ebb away, the obvious solution is to punch more holes in more bottles to make up for the slackening pressure coming from each. That means punching more holes in lower quality, less accessible bottles; working flat out just to maintain current production let alone increase it.

Eventually, the number of new holes that need to be punched and the declining quality of the remaining bottles mean it is not possible to make up for the reduced rate at which liquid is coming from the existing holes by making new ones. Total output will begin to drop.

Are many countries past their peak?

An International Energy Agency (IEA) study of the world’s 800 largest oil fields found that “most of the biggest fields have already peaked and that the rate of decline in oil production is now running at nearly twice the pace as calculated just two years ago".

Many countries, including some important producers, have been passed their peak for some time, suggesting that the global peak of production is now imminent.

There are currently 98 oil producing countries in the world, of which 64 are thought to have passed their production peak, and of those, 60 are in terminal production decline. A few countries such as Iran, Libya, and Peru are anomalous in that although they are thought to have passed their production peak, their output is growing at the moment. However they are not expected to regain their previously-established highs. Another 14 countries could peak within the next decade.

What does a peak and decline in oil production mean?

After the peak, we will have less of the cheap, easy oil on which Western civilization and our modern economy is based. For example, without cheap petrol from cheap oil, could we have suburbs? Low-density, spread-out suburban living is based on driving. If petrol prices stayed high all the time, could people afford to drive 40 miles each way to work, or 20 miles a day around town doing errands? Expensive petrol could result in people abandoning the suburbs and that’s just one possible effect. Whether it’s the use of oil to make asphalt or plastics, or the global interdependence of trade that requires goods to be shipped world-wide, our society is built on cheap oil. What this means for society is a sharp  eduction in availability of cheap energy.

Oil production from individual wells, fields, and even countries has been seen to peak, and then decline. Between 1997 – 2006, oil production in over twenty nations declined. In the UK North Sea Oil production peaked in 1999 and has since fallen by nearly 50 percent. Since “world oil” is nothing more than the sum of every nation’s oil and if individual wells, fields, and nations can peak and decline, that is evidence that world oil, too, will peak and decline.

The REALLY BIG QUESTION is, “What does a peak and decline in oil production mean?” As with the debate over the whether and when of the peak, there’s no agreement on what will happen next. Depending on your assumptions about human nature, society, and technology, predictions run the gamut from:

• A Malthusian crisis in which society collapses. People go cold and hungry, until they start eating each other and burning books for warmth. Think Mad Max, but less cheerful.
• A long-lasting global recession, in which society goes on, but economic opportunity and security are limited. It’s a stable but somewhat bleak and dystopian future. Think Blade Runner.
• Nothing much—as the price of oil rises, it encourages a combination of conservation, discovery of new fields, technological advances that make unconventional oil practical, and development of new energy sources. We meet the challenge, rise to it, and master it. Think Star Trek—no warp drive or transporters yet, but a sort of forward-looking, can-do world.

The fourth option that has not been told is the realistic positive vision that’s embodied in the transition movement. It’s about using this opportunity to create the healthy, sustainable happy world that we all want and know is possible.

While Peak Oil and Climate Change are understandably profoundly challenging, also inherent within them is the potential for an economic, cultural, and social renaissance the likes of which we have never seen. We will see a flourishing of local businesses, local skills and solutions, and a flowering of ingenuity and creativity. It is a Transition in which we will inevitably grow, and in which our evolution is a precondition for progress. Emerging at the other end, we will not be the same as we were: we will have become more humble, more connected to the natural world, fitter, leaner, more skilled, and ultimately, wiser.