In the Shadow of Hubbert’s Peak
by Jason GodeskyThe good news is, Hurricane Rita is weakening. It’s down to a category III at the moment, and the eye wall is collapsing. Oil prices have dropped $2 already. Now for the bad news. Our relief at Rita’s weakening is almost certainly misplaced; it’s still a huge storm, doing an incredible amount of damage. An enormous amount of oil is already shut-in, and New Orleans is flooded again. Elsewhere in the world, even the Saudis are admitting that Iraq is dissolving, and Nigerian guerrillas are holding their country’s oil production hostage. Most of the sources I trust most tell me that global Peak Oil will be a fall 2005 event. I can’t help but think that all of this is the opening act. But then again, Toyota says that Katrina drove up hybrid sales, so it can’t be all bad, right? Right?
First, let’s take a look at what “Heading Out” had to say about the optimism around Rita’s weakening over at the Oil Drum:
There is a rather odd side to human nature. Take a problem, present it to the audience in its maximum horror and suggest it is about to happen, then ameliorate it a little, and tell everyone how the world is not nearly as bad as it is painted. And everyone agrees that things are looking up. But you are still facing a very bad situation - only the way the news has been presented makes it seem that there is no longer a problem.
Very true, and very relevant to Rita. Right now, the Gulf of Mexico’s fossil fuel infrastructure is, for all intents and purposes, off. It takes two weeks to turn a refinery back on–even if no damage is done by Rita at all. Katrina and Rita have already stopped some 5.531% of the yearly Gulf oil production. And let’s not even go into the nightmare scenario I heard on CNN last night, where one of the Houston area’s chemical plants is destroyed, and a toxic cloud is whipped about on hurricane force winds, killing everything it touches….
Yet, with Rita weakening, it seems she may not be the killing blow that was feared. With everyone focused on that near miss, Prince Saud al-Faisal got a chance to say something very true under the radar:
Prince Saud al-Faisal, the Saudi foreign minister, said Thursday that he had been warning the Bush administration in recent days that Iraq was hurtling toward disintegration, a development that he said could drag the region into war.
“There is no dynamic now pulling the nation together,” he said in a meeting with reporters at the Saudi Embassy here. “All the dynamics are pulling the country apart.” He said he was so concerned that he was carrying this message “to everyone who will listen” in the Bush administration.
Prince Saud’s statements, some of the most pessimistic public comments on Iraq by a Middle Eastern leader in recent months, were in stark contrast to the generally upbeat assessments that the White House and the Pentagon have been offering.
What’s still missing in this understanding is that Iraq is already in civil war. Simply because one side of the civil war wears police uniforms, and the other is called “terrorists” by the U.S. media does not change that fact. The Shi’ites have the advantage of numbers and materials–to say nothing of their Iranian backing. That is probably what the Saudis fear most. If (when?) the Shi’ites emerge victorious, as an Iranian satellite they will bring Iranian power to bear on Saudi Arabia’s very border. Faced with their own internal strife–and apparently, the peaking of the Ghawar super-field, the source of most of Saudi Arabia’s crude. It’s difficult to tell with the secretive kingdom, because they won’t allow anyone to know the actual numbers, but given the hard time they’ve had lately selling their heavy, sour crude certainly indicates they’re facing a “peak” problem of less desirable crude oil. With the economic lifeblood of the kingdom flagging, and a regional rival soon to arrive on their doorstep, the days of the House of Sa’ud may be numbered–and the chaos in Iraq may well seal their fate. This, I think, is the regional conflict al-Faisal fears: Iraq as the battleground between Iran and Saudi Arabia.
With guns from Iraq showing up in Saudi Arabia, and the increased power of al-Qa’ida in the region, it doesn’t seem terribly unreasonable to think that, in the event of such a conflict, al-Qa’ida may take the opportunity to fulfill its most dearly-held goal: to overthrow the kingdom of Saudi Arabia, and replace it with a caliphate over the holy cities of Mecca and Medinah.
Don’t forget that the House of Sa’ud sees the oil in their country as a gift to them from Mohammed–and has rigged explosives to destroy the entire country’s oil infrastructure if they are ever removed from power, to take that gift with them when they go.
Meanwhile, Nigera–the fifth-largest oil importer to the U.S., snuggled between Venezuela and Iraq–has captured Dokubo-Aasari, whom John Robb describes as, “a top guerrilla entrepreneur.” In retaliation, his followers have essentially taken Nigeria’s oil infrastructure hostage until their leader is released:
Alali Horsfall, Dokubo-Asari’s second-in-command in the Niger Delta People’s Volunteer Force, said by cell phone Thursday that he and a force of 6,000 men, armed with machetes and dynamite, had taken over 10 oil flow stations and would not abandon them until their leader was freed from custody. “We will kill every iota of oil operations in the Niger Delta. We will destroy anything and everything. We will challenge our enemies in our territory and feed them to the vultures,” the NDPVF said in a statement.
Rita and Katrina are excellent examples of how our problems compound one another: global warming (fueled by fossil fuels) is now serving as a catalyst to Peak Oil. But it seems that we’ll face Hubbert’s Peak very, very soon. The violence in Nigeria and Iraq is precisely the kind of Peak Oil-motivated warfare that we have expected for some time, and it only serves to accelerate the problem. The difference between depression and collapse will be determined by depletion rates.
Critics of Peak Oil say that it will be a minor event, because the market will correct for it. They are right, to a point. The market will correctly for it, but that does not mean it will be a “minor event.” The market might correct itself with some miraculous new fuel delivered into our hands just in the nick of time, like some deus ex machina. Such miracles are not unprecedented, but neither are they reliable. Then again, the market might correct itself with grisly cannibalism and the end of civilization. As Tainter took such pains to point out in Collapse of Complex Societies, civilizational collapse is, above all else, an economizing process.
Looks like the Nigerian crisis is resolved por ahora.
Comment by Jason Godesky — 28 September 2005 @ 1:26 PM
Some people think Peak happened shortly before Xmas ‘05. Others think it will happen shortly before Valentine’s or St. Patrick’s Day ‘08. Top o’ th’ day to ya, laddie!
Comment by Thomas Rondy — 4 September 2006 @ 11:56 AM
“Most of the sources I trust most tell me that global Peak Oil will be a fall 2005 event.”
http://www.worldoil.com/INFOCENTER/STATISTICS_DETAIL.asp?Statfile=_worldoilproduction
2004 Avg production = 82.75 mbpd
2005 Avg production = 84.18 mbpd
Sept 2006 production = 84.88 mbpd
Oct 2006 production = 84.94 mbpd
Currently there graph is still increasing oil production. A short period of decline in production still does not indicate a peak but if it is so clear that peak is right here (it can’t have happened already by definition since it has to actually be the “peak” in production to be the peak) you would expect to see some variability as we start to roll over on the graph and head for decline. Instead its an unbroken uptrend.
Might want to re-check those trusted sources.
Comment by Darin Anderson — 16 February 2007 @ 6:52 PM
Really? You’re cherry-picking your numbers–averages for 2004 and 2005, then Sept. and Oct. for 2006. You say the graph is showing increasing oil production–do you mean this graph?
Those are numbers from the EIA. The good folks at the Oil Drum have been covering this issue with far more depth and data, and they paint a very different scenario than you.
You wouldn’t expect a great deal of variability at peak. Actually, you’d expect to see record oil company profits and a general status quo attitude. When the lower 48 peaked in 1971, they were laughing at how wrong Hubbert was; after all, here they were in the year he’d predicted his peak, and they’d never enjoyed such huge production numbers before.
Stuart Staniford has already admirably made the case in “Why Peak Oil is Probably About Now.” All in all, I’d say you might want to re-check your sources.
Comment by Jason Godesky — 16 February 2007 @ 11:13 PM
I am sorry to be mixing numbers. Those were the only numbers I had access to.
Interestingly if I read the graph you posted correctly it does appear to show some variability and the chart does look “toppy” as if it wants to roll over. Although it appears to have done the same in 01-02 and then returned to greater production. I suppose 9/11 had an impact on that.
So is this chart saying current maximum production was in mid 2006? That is what it looks like to me if you take all the inputs.
I am certainly not as well versed as you and I understand that we will exhaust the oil supply. Are you convinced that production only goes down from here and does not still have more upside to it?
The EIA projects world production to head towards 123 mbpd by 2030. Clearly someone is very wrong. I am not nearly well versed enough to say who.
http://www.eia.doe.gov/oiaf/ieo/ieooil.html
EIA projects production at around 94 mbpd by 2010, so I guess in a few short years time will reveal who is correct if production doesn’t atleast head towards 90 mpbd
I did find on wikipedia that average production in 2006 was over 85 mpbd (if that is accurate). So the chart does still seem to be slowly climbing, but the flatness of it in the last 18 months is also a potential indicator that peak could be coming (although its also possible to be demand driven due to extremely high prices relative to recent history).
I guess what I am saying is that I am still trying to figure out if peak is so clearly imminent or not and it doesn’t seem clear to me that it is although there are some concerning signs too.
Why do you consider EIA to be unreliable in comparison to the Oil Drum (just out of curiosity)?
Comment by Darin Anderson — 19 February 2007 @ 11:18 AM
Not really–there was a significant increase from 2001 to 2002. We’ve been essentially flatlined since around 2005.
There will be starts and stops on the backside of Hubbert’s Peak, but by definition, production post-peak is generally down.
Nor am I, but I find this pretty convincing.
Really? Look at the previous part of that graph; is there any other slowdown like this? You need to go back to the 1970s to find parallels, when the U.S. oil supply peaked, and we had to switch gears to begin importing our oil. Moreover, prices aren’t simply assigned. They result from supply and demand. The increases in price reflect the difficulty in increasing production, which is itself because of peaking production.
For data, I think the EIA is perfectly reliable. You’ll note we’re using EIA figures here. Their projections, on the other hand, are unrealistically optimistic, according to their own data. The article from the Oil Drum linked above goes through all the reasons why. So, on a case-by-case basis, it’s because I find the Oil Drum’s arguments much more persuasive. How it is that a website populated by energy experts would be more reliable than a government bureaucracy is another matter entirely, and one we’ve discussed here previously: see thesis #14, specifically the section on information processing. Jeff Vail has also written quite a bit on this subject, so you might also want to see his “‘Span of Control’ and Inefficiency of Hierarchy,” or chapter 9 of A Theory of Power. In all, it’s not surprising at all that the Oil Drum would be more reliable than the EIA for data analysis.
Comment by Jason Godesky — 19 February 2007 @ 11:53 AM
Jason,
Thanks for the response.
Concerning the statement about 01-02 you said:
Not really–there was a significant increase from 2001 to 2002. We’ve been essentially flatlined since around 2005.
I was simply commenting on the chart you posted and how that chart shows a peak in 01 that declined into 02 and then increased again until 05.
As per supply and demand, I do think they work in tandem. Oil tends to be much more inelastic than other commodities but thats why I mentioned 9/11 as it appears a decrease in demand could have played into the decline shown on your chart in the 01-02 period.
But to sum up your position I gather that you think the production level of 85 mpbd is pretty much the highest level we will ever get. We might not go straight down but we won’t be going to 90 mpbd or higher. EIA numbers of 123 mbpd by 2030 are either wishful thinking or erroneous analysis in your view. Is that an accurate representation of what you expect?
Comment by Darin Anderson — 19 February 2007 @ 2:50 PM
Sure–there are ups and downs on both sides of the peak, that’s to be expected. There was another downturn in 1985, and take a look at 1980-1983, when we started recovering from the U.S. oil peak.
Essentially, yes, but it’s important to note that this isn’t just my expectation. I’ve been persuaded to this view by people who know much more about the situation than I do.
Comment by Jason Godesky — 19 February 2007 @ 3:19 PM