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Peak Oil / Peak Everything

The World economy and most societies are based on oil and other fossil fuels. Peak oil is not an Internet conspiracy theory or an urban legend or myth. It is fact. If one accepts that oil is a finite resource – that there is a certain amount of it in the earth, and more cannot be produced without millions of years – then it follows that one must also accept that the production of oil will peak at some point. All that is therefore questionable is the date when oil will peak and whether or not alternatives are possible. Oil geologists predict a peak before 2015, possibly sooner; scientists are currently failing to find a viable alternative, or even something close. It is quite possible – given the nature of energy – that an alternative does not exist. It must also be accepted that there is also peak gas, peak coal, peak uranium, peak plutonium, peak energy, peak almost everything.

We need oil for the manufacture of all plastics, most paints, fertilizers, pesticides, soaps, shampoo, cosmetics and a whole host of other commodities, that does not include the oil and other fossil fuels needed to produce the electricity to power the manufacturing process. It takes 7 gallons of oil to produce one tyre, and hundreds in the production of a car.

Almost all modes of transport run on oil derivatives, oil is needed to make solar panels, wind turbines and to produce hydrogen as a fuel. Powering cars on batteries or hydrogen is not the answer, you still need oil to make the car, the tyres, the batteries or the hydrogen. Almost every manufacturing process requires electricity, even if its just to power a light bulb. Traditional crafts under daylight being a possible exception.

For every calorie of food consumed (excluding home grown) it is estimated 10 calories have been used, based on harvesting, shipping, packaging and storage. Due to the fact it is a finite resource, and the Law of Entropy this cannot continue. In 2008 the International Energy Agency (IEA) announced a 9% global decline rate in oil production, which relates to about 8 million barrels of oil less per day. This suggests we have reached and exceeded peak oil, which does not necessarily mean 50%, it depends on accessibility and cost of extraction. If we think petrol is expensive now, boy are we in for a rude awakening, possibly within years.

During the previous millennium the worldwide population was very stable at just over 1 billion, this gradually began to rise in the early 19th century with the advent of steam and then coal and the industrial revolution. Only towards the end of the 19th and into the 20th Century did the population go into exponential growth, coinciding with the discovery and increased use of oil. It is therefore no stretch of the imagination to suggest that 80% of the current World population of around 7 billion is due totally to oil, and furthermore that group’s survival is dependent upon perpetual oil, or else something to replace it.

In the 1960’s a report was released called “Report from Iron Mountain”, which among other subjects covered the touchy subject of population reduction (Eugenics). A recommendation from that report suggested the World’s human population should be sustained at between 500 million and 1 billion people; it did not go into detail on how 5 to 6 billion would be “culled”.

The Georgia Guidestones is a large granite monument in Elbert County, Georgia, USA. A message comprising ten guides is inscribed on the structure in eight modern languages, and a shorter message is inscribed at the top of the structure in four ancient languages’ scripts: Babylonian, Classical Greek, Sanskrit, and Egyptian hieroglyphs. In June 1979, an unknown person or persons under the pseudonym R. C. Christian hired Elberton Granite Finishing Company to build the structure.

Nicknamed the American Stonehenge, here are the ten rules (new commandments?):

1. Maintain humanity under 500,000,000 in perpetual balance with nature
2. Guide reproduction wisely – improving fitness and diversity.
3. Unite humanity with a living new language.
4. Rule passion – faith – tradition – and all things with tempered reason.
5. Protect people and nations with fair laws and just courts.
6. Let all nations rule internally resolving external disputes in a world court.
7. Avoid petty laws and useless officials.
8. Balance personal rights with social duties.
9. Prize truth – beauty – love – seeking harmony with the infinite.
10. Be not a cancer on the earth – Leave room for nature – Leave room for nature.

In 1963 the World Health Organisation (WHO) released the Codex Alimentarius directive, suggests a worldwide population reduction, to around 500 million to 1 billion, with recommendations on achieving those figures. Codex will be covered under the section on food and health.

Supporters of the NWO concept also support similar population figures. Who decides who that billion are? Or should that be WHO decides?

Oil will not just “run out” because all oil production follows a bell curve. This is true whether we’re talking about an individual field, a country, or on the planet as a whole.

Oil is increasingly plentiful on the upslope of the bell curve, increasingly scarce and expensive on the down slope. The peak of the curve coincides with the point at which the endowment of oil has been 50 percent depleted. Once the peak is passed, oil production begins to go down while cost begins to go up.

In practical and considerably oversimplified terms, this means that if 2005 was the year of global Peak Oil, worldwide oil production in the year 2030 will be the same as it was in 1980. However, the world’s population in 2030 will be both much larger (approximately twice) and much more industrialized (oil-dependent) than it was in 1980. Consequently, worldwide demand for oil will outpace worldwide production of oil by a significant margin. As a result, the price will skyrocket, oil dependant economies will crumble, and resource wars will explode.

The issue is not one of “running out” so much as it is not having enough to keep our economy running. In this regard, the ramifications of Peak Oil for our civilization are similar to the ramifications of dehydration for the human body. The human body is 70 percent water. The body of a 200 pound man thus holds 140 pounds of water. Because water is so crucial to everything the human body does, the man doesn’t need to lose all 140 pounds of water weight before collapsing due to dehydration. A loss of as little as 10-15 pounds of water may be enough to kill him. In a similar sense, an oil based economy such as ours doesn’t need to deplete its entire reserve of oil before it begins to collapse. A shortfall between demand and supply as little as 10 to 15 percent is enough to wholly shatter an oil-dependent economy and reduce its citizenry to poverty. The effects of even a small drop in production can be devastating. For instance, during the 1970s oil shocks, shortfalls in production as small as 5% caused the price of oil to nearly quadruple. The same thing happened in California a few years ago with natural gas: a production drop of less than 5% caused prices to skyrocket by 400%. Fortunately, those price shocks were only temporary.

The coming oil shocks won’t be so short lived. They represent the onset of “a new, permanent condition”. Once the decline gets under way, production will drop (conservatively) by 3% per year, every year. War, terrorism, extreme weather and other “above ground” geopolitical factors will likely push the effective decline rate past 10% per year, thus cutting the total supply by 50% in 7 years.

These estimates come from numerous sources, not the least of which is former Vice President Dick Cheney himself. In a 1999 speech he gave while still CEO of Halliburton, Cheney stated:

By some estimates, there will be an average of two-percent annual growth in global oil demand over the years ahead, along with, conservatively, a three-percent natural decline in production from existing reserves. That means by 2010 we’ll need an additional 50 million barrels per day.

Cheney’s assessment is supported by the estimates of numerous non-political, retired, and now disinterested scientists, many of whom believe global oil production will peak and go into terminal decline within the next five years, if it hasn’t already.

Many industry insiders think the decline rate will far higher than Cheney anticipated in 1999. Andrew Gould, CEO of the giant oil services firm Schlumberger, for instance, recently stated that “An accurate average decline rate of 8% is not an unreasonable assumption.” Some industry analysts are anticipating decline rates as high as 13% per year. A 13% yearly decline rate would cause global production to drop by 75% in less than 11 years. If a 5% drop in production caused prices to triple in the 1970s, what do you think a 50% or 75% drop is going to do?

Estimates coming out of the oil industry indicate that this drop in production has already begun. The consequences of this are almost unimaginable. As we slide down the downslope slope of the global oil production curve, we may find ourselves slipping into something best described as a “post industrial stone age.“



It’s not just transportation and agriculture that are entirely dependent on abundant, cheap oil. Modern medicine, water distribution, and national defence are each entirely powered by oil and petroleum derived chemicals.

In addition to transportation, food, water, and modern medicine, mass quantities of oil are required for all plastics, all computers and all high-tech devices. Some specific examples may help illustrate the degree to which our technological base is dependent on fossil fuels:

The construction of an average car consumes the energy equivalent of approximately 20 barrels (840 gallons) of oil. Ultimately, the construction of a car will consume an amount of fossil fuels equivalent to twice the car’s final weight.
It’s also worth noting that the construction of an average car consumes almost 120,000 gallons of fresh water. Fresh water is also rapidly depleting and happens to be absolutely essential to the petroleum refining process as each gallon of petrol requires almost two gallons of fresh water for refining.

The construction of the average desktop computer consumes ten times its weight in fossil fuels.

The production of one gram of microchips consumes 630 grams of fossil fuels. According to the American Chemical Society, the construction of single 32 megabyte DRAM chip requires 3.5 pounds of fossil fuels in addition to 70.5 pounds of water. The Environmental Literacy Council tells us that due to the “purity and sophistication of materials (needed for) a microchip, . . . the energy used in producing nine or ten computers is enough to produce an automobile.

The Internet:
Contrary to popular belief, the internet consumes tremendous amounts of energy. Recent estimates indicate the infrastructure necessary to support the internet consumes 10% of all the electricity produced in the United States. The overwhelming majority of this electricity is produced using coal or natural gas, both of which, are also near their global production peaks.


Concrete, Asphalt, Highways, and Modern Cities:
The manufacture of one ton of cement requires 4.7 million BTUs of energy, which is the amount contained in about 45 gallons of oil or 420 pounds of coal.


When considering the role of oil in the production of modern technology, remember that most alternative systems of energy – including solar panels/solar-nanotechnology, windmills, hydrogen fuel cells, biodiesel production facilities, nuclear power plants, etc. all rely on sophisticated technology and energy-intensive forms of metallurgy.

In fact, all electrical devices make use of silver, copper, aluminium and platinum, each of which is discovered, extracted and fashioned using oil or natural gas powered machinery. For instance, in his book, The Lean Years: Politics of Scarcity, author Richard J. Barnet writes:

To produce a ton of copper requires 112 million BTU’s or the equal of 17.8 barrels of oil. The energy cost component of aluminium is 20 times higher.

Author Joel Garreau, in his book “The Nine Nations of North America” explains how energy-intensive the manufacture of aluminium is:
The manufacturing of aluminium requires inexpensive energy as its most important raw material. It takes twelve times as much power to create a pound of aluminium as it does to make a pound of iron. A good sized aluminium plant uses as much power as a city of 175,000 people.

Nuclear energy requires uranium, which is also discovered, extracted, and transported using oil powered machinery.

Most of the feedstock (soybeans, corn) for biofuels such as biodiesel and ethanol are grown using the high-tech, oil-powered industrial methods of agriculture.

In short, the so called “alternatives” to oil are actually “derivatives” of oil. Analyst John Michael Greer offers the following rather lucid explanation of this often over-looked relationship:

. . . every other energy source currently used in modern societies gets a substantial “energy subsidy” from oil. The energy used in uranium mining and reactor construction, for example, comes from diesel rather than nuclear power, just as sunlight doesn’t make solar panels. What rarely seems to have been noticed is the way these “energy subsidies” intersect with the challenges of declining petroleum production to [pre-emptively sabotage] the future of alternative energy production in industrial societies.

Without an affordable supply of oil coupled with healthy and robust financial markets to capitalize the transition, a non-chaotic adaptation phase is unlikely as the raw materials and investment capital necessary to fuel such a large-scale transition will have evaporated.


Peak Oil & Finance

The relationship between the supply of oil and natural gas and the workings of the global financial system is arguably the key issue to dealing with Peak Oil as robust and smoothly functioning global capital markets must exist in order to power an orderly (or semi-orderly) transition process. In fact this relationship is far more important than alternative sources of energy, energy conservation, or the development of new energy Technologies.

In short, the global financial system is entirely dependent on a constantly increasing supply of oil and natural gas.

To illustrate, if home and business loans are issued with interest rates in the 7% range, the assumption underlying the loans is that the monetary supply will increase (on average) by 7% per year. But if that 7% yearly increase in the monetary supply is not matched by a 7% yearly increase in the amount of economic activity (goods and services), the result is hyper-inflation. The key is this: in order for there to be an increase in the amount of economic activity taking place, there must be an increase in the amount of net-energy (i.e. the net-number of BTUs) available to fuel those activities. As no alternative source or combination of sources comes even remotely close to the energy density of oil (125,000 BTUs per gallon, the equivalent of 150-500 hours of human labour), a decline or even plateau in the supply of oil carries such overwhelming consequences for the financial system.

What can be done?

If we are at or near peak oil, or have already passed it. What we should do, and very soon is take steps to reduce our energy requirements and reliance on fossil fuels. Maybe if petrol and diesel prices were increased to two or three times what they are now, and only public transport, hauliers …

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