Tuesday, March 15, 2005

It's official! (And worrisome)

The U.S. Department of Energy commissioned a report on mitigating the effects of world peak oil production which recently came to light. Consultants who wrote the report were blunt. Ignoring peak world oil production could mean deep economic problems for the United States and the world. Preparing for such an event would take a crash program over 20 years. The authors do not attempt to project a date for peak production, but they do mention the possibility that it may be happening now. Below are some of their conclusions:

•Waiting until world oil production peaks before taking crash program action leaves the world with a significant liquid fuel deficit for more than two decades.
• Initiating a mitigation crash program 10 years before world oil peaking helps considerably but still leaves a liquid fuels shortfall roughly a decade after the time that oil would have peaked.
• Initiating a mitigation crash program 20 years before peaking appears to offer the possibility of avoiding a world liquid fuels shortfall for the forecast period.

The obvious conclusion from this analysis is that with adequate, timely mitigation, the costs of peaking can be minimized. If mitigation were to be too little, too late, world supply/demand balance will be achieved through massive demand destruction (shortages), which would translate to significant economic hardship.

It is possible that peaking may not occur for several decades, but it is also possible that peaking may occur in the near future. We are thus faced with a daunting risk management problem:

• On the one hand, mitigation initiated soon would be premature if peaking is still several decades away.
• On the other hand, if peaking is imminent, failure to initiate mitigation quickly will have significant economic and social costs to the U.S. and the world.

The two risks are asymmetric:

• Mitigation actions initiated prematurely will be costly and could result in a poor use of resources.
• Late initiation of mitigation may result in severe consequences. The world has never confronted a problem like this, and the failure to act on a timely basis could have debilitating impacts on the world economy. Risk minimization requires the implementation of mitigation measures well prior to peaking. Since it is uncertain when peaking will occur, the challenge is indeed significant....

...The world has never faced a problem like this. Without massive mitigation more than a decade before the fact, the problem will be pervasive and will not be temporary. Previous energy transitions (wood to coal and coal to oil) were gradual and evolutionary; oil peaking will be abrupt and revolutionary.

Oil peaking represents a liquid fuels problem, not an "energy crisis" in the sense that term has been used. Motor vehicles, aircraft, trains, and ships simply have no ready alternative to liquid fuels. Non-hydrocarbon-based energy sources, such as solar, wind, photovoltaics, nuclear power, geothermal, fusion, etc. produce electricity, not liquid fuels, so their widespread use in transportation is at best decades away. Accordingly, mitigation of declining world oil production must be narrowly focused.
The implications of this last paragraph are staggering. An early peak with no alternative, cheap liquid fuels will mean a collapse of global trade which is based on cheap transportation. If that collapse is prolonged, it will affect a complete reorganization of society, a relocalization of practically every important economic function. That is what James Howard Kunstler among many others believes we are in for.

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