"...industrial civilisation is over."

An answer in Somerset?

Not immediately, of course. But unless another source of energy, just as cheap, with just as high a ratio of "energy return on energy invested" (Eroei) is discovered or developed, there will be a gradual decline in our ability to generate the growth required to keep the debt-based financial system from collapsing.

I don't think so. But it makes a good story and raises general social anxiety and sells papers.

Everyone has something or some idea to sell. I've blogged on this "Running out of oil" issue before and so far as I can determine, the key issue is whether this assertion of mine is/will be true:

The downside of Hubbert's Curve is a slope, not a cliff.

One of the big promoters that the end is near is Jim Kunstler, whom I tweaked on this subject and who tweaked back cutely if cryptically (and very unpersuasively): Jim Kunstler responds:

David-- As usual, you draw the wrong conclusion. True, the oil depletion curve is a slope not a cliff. BUT, the systems breakdown occurs relative to tipping points, which are, in fact, cliff-like. Jim

Comments

[Jeff]

The slope is indeed the question to be answered. I heard T. Boone Pickens just this morning predicting an apocalyptic "cliff" between 2005-2008. Another expert stated that the slope will be flat enough to allow for a corresponding adjustment via the market.

[Bill Seitz]

In the Aug Harpers, Paul Roberts argues that, once prices really start to jump up, there will be economic incentives to ramp up discovery/production even faster, which will spread out the downside like a plateau for awhile.

But the result will be to use up the reservers even faster, resulting in a delayed but more cliff-like downside.

[David Sucher]

Bill,

1. Why will "prices really start to jump up?" Long term projections do NOT impact short term prices. And there is no short term issue.

2. Why would the reserves be used up if high prices bring out higher discovery/production?

I simply don't get your train of thought.

[Bill Seitz]

1. demand is growing, supply is not. Perhaps more importantly, many believe that reserve amounts are overstated by everyone, esp but not only the Saudis. If real data becomes available, or becomes implicit from the behaviors of these actors, then that could quickly change the projects.

2. I shouldn't have said "reserves" in that context because I really meant world inventory in the ground. (Which is of course fuzzy to measure since it's heavily dependent on the amount in the ground that is "economic" to pull out.) I think Roberts is saying that we're getting so good at getting the stuff out of the ground that when a previously non-economic source suddenly becomes economic because of rising prices, all that oil gets sucked out much faster than in the past. So it quickly meets short-term supply, but then it's gone.

(I'm still not completely convinced myself on the "cliff" model, just scratching...)

[JRoth]

I think the controversial ANWR proposal is instructive here. Right now, oil companies want 2 things: the right to explore/drill there, and subsidies to do so. The subsidies suggest that whatever is likely to be under the tundra is not yet economically extractible. But the other piece is the predicted value: 10 years to come online, then a relatively insignificant amount of oil (6 mos. worth of 2002 US usage), then gone. These are the fields that will be coming online in the future - smaller, less economical, and more quickly used up. That's Bill's rejoinder #2.

To flesh out Bill's #1, just think China & India. They've only just begun to impact the global oil market, and it's straining mightily - crude is so expensive right now partly due to Iraq instability, but mostly due to simple supply & demand, and OPEC's promise of 2bn additional barrels hardly made a dent, because we're up against a wall. No one is convinced right now that the physical, global capability exists to pump & refine what will be needed in just another couple years, and there are serious questions about just what is in the ground (see Royal Dutch Shell's admission that it lied - to the tune of 20% - about its in-ground reserves).

Remember, although pricier oil makes it economical to extract oil that's been left behind before (some of W. Canada's shale stuff, for instance), that doesn't mean that the end price is cheaper - it just means that we'll have expensive oil longer.

[TM Lutas]

At a certain point, other sources of energy become cheaper. Maybe the US solves 3rd world agriculture complaints by withdrawing from the export market, turning all that extra wheat and corn into ethanol and biodiesel. At a certain point, crop diversion to fuel purposes is going to happen. What's that price point? If your debating partners apocalyptic price projections exceed the existing price ceilings where we switch to something else, you know you're dealing with a chicken little.

Price ceilings have to be acknowledged. Alternative energy sources exist at higher prices. At what point do they kick in? That's the essential question.

[Brian Miller]

But, can these alternative energy sources provide the energy demanded by a voracious SUV-and-3000-square-foot-McMansion culture? Can we run an industrial civillization? Especially since the corn and other synthfuelds you mention require significant energy inputs to provide the yields (of corn or whatever) necessary? And-look around you-EVERYTHING-plastics, materials, food shipping, pharmaceuticals, agribusiness-requires huge inputs of fossil fuels.

[TM Lutas]

The key is to do the numbers. At a certain price point, oil will be reserved for plastics and chemicals use, not for energy. What's that price point? Can we run an industrial society at that price point? How fast is that price point (of switchover) dropping? The chicken littles will never have the answers and, most importantly, will not be very interested in efforts to find out the answers.