Crash Course Chapter 17a: Peak Oil

Energy is the lifeblood of any economy. But when an economy is based on an exponential debt-based money system that is itself based on exponentially increasing energy supplies, the supply of that energy deserves our very highest attention.

Oil is a miracle, working tirelessly in the background to make our lives easy beyond historical measure. Oil represents over 50% of US total yearly energy use, while oil and natural gas together represent over 75%. How easily could we replace the role of oil in our style of consumer-led, growth based economy? Not very.

Peak Oil is simply a fact. Peak Oil is NOT synonymous with “running out of oil.” At the moment an oil field peaks, somewhere around half of its oil still remains. But each barrel becomes more costly to extract, in terms of time, money, and energy. Eventually it costs more to extract a barrel of oil than it is worth, and the field is abandoned.

When world oil production will peak is a matter of some dispute, with estimates ranging from right now to some 30 years away. The most urgent issue before us does not lie with identifying the precise moment of Peak Oil. That is, truthfully, an academic distraction, because the economic dislocations will surely begin as soon as there is a gap between supply and demand. What we need to be most concerned with is the day that world petroleum demand outstrips available supply. It is at that moment that the oil markets will change forever - and probably quite suddenly.

What can we do? Biofuels and coal could potentially fill some of these functions, but certainly not without a massive reinvestment program, and not anytime soon. Transitioning from one fuel source to another is a devilishly expensive proposition, posing enormous challenges with respect to cost, scale and time. Our species transitioned over many years from wood to coal because coal was a better fuel source. And we transitioned over several decades from coal to oil for the same reason. Nobody has been able to advance any candidates as our next source of energy. Technology is not a source of energy – it may well help us to exploit our energy more efficiently – but it is a big mistake to confuse technology with energy sources. Unfortunately, there are no easy answers.