The Seventh Fold

Fellow folders,

It has been too long since my last post.  I apologize.  I have no valid excuse, other than the fact that my schedule has been incredibly overbooked.  Because I’ve been so busy, I feel justified in ‘double dipping’ with this particular post, which is in fact a short Peak Oil presentation that I just delivered to a group of Seattle City Council Members (Mike O’Brien and Tom Rasmussen), self-proclaimed transportation policy wonks, and representatives from some transportation special interest groups (bike advocates, rail advocates, etc.).  Both Mike O’Brien – Chair of Seattle’s Carbon Neutral Initiative – and Tom Rasumussen – Chair of the Transportation Committee – spoke briefly before I took the stage.

It is safe to say that outside an ASPO conference (Association for the Study of Peak Oil) one is never preaching to the choir when giving a Peak Oil presentation.  That said, I believe that this was one of the most friendly and receptive crowds yet.  So, without any further ado, here are my slides and a transcript of my short (10 min) talk.

Thank you, Craig, for the warm introduction.  As Craig mentioned, I am the President of Energy Transitions NW – a group comprised of university researchers, local business leaders, and citizens who are motivated by the urgent need to mitigate the negative economic, social, and environmental impacts of peak oil.

Smart energy policy starts with smart transportation policy,  and because we live in a finite world, smart transportation policy must consider resource limitations as well as the carrying capacity of the systems which provide free economic services – like carbon recycling.

At ETNW, we refer to oil as the master resource because our globalized economy relies on oil – and oil alone – to move people and ship goods around the world.  Oil quite literally fuels and lubricates the process of globalization.

Regarding resource limits, there exists a large body of work in which scientific principles and methods are used to model and predict oil production.  Most models produce a bell-shaped curve which can be broken into four phases.

In phase one, oil production increases at an increasing rate. In phase two, production continues to increase, but does so at a decreasing rate.  In phase three, oil production begins to decline and does so at an accelerating rate,  and in phase four, production continues to decline but the rate of decline progressively slows.

While none of these models is perfect, nearly all predict that a peak will occur sometime between twenty-oh-five and 2020, and a disturbing majority predict that oil production will peak in the next few years.

I am absolutely convinced that we need to embark on a serious liquid fuels conservation program TODAY, and I am not alone.

The UKERC is the UK’s pre-eminent energy research group, and its membership is comprised of industry experts and university researchers.

In March of 2009, the UKERC published a report on global oil depletion.  In it they conclude that,  “There is a significant risk of a peak before 2020,” and  “Given the lead times required to both develop substitute fuels and improve energy efficiency, this risk needs to be given serious consideration.”

Early this year, the U.S. Joint Forces Command – which is one of DoD’s ten combatant commands – released the latest civilian version of the Joint Operations Environment Report.  This report, which represents strategic thinking at the highest levels of military intelligence states clearly that:

“By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 million barrels per day”

In 2005, a team led by Dr. Robert Hirsch was commissioned by the U.S. Department of Energy to explore Peak Oil mitigation strategies.  Two of their findings bear on our conversation today.

Through their modeling efforts, Hirsch’s team concludes that,  “Initiating a crash mitigation program 10 years before the peak leaves a liquid fuels shortfall roughly a decade after the peak.”

So, according to the dozens of university researchers and oil industry experts that comprise the UKERC, there is a “significant risk of a peak before 2020”, and that is just 10 years away.  Yet we have not even begun to initiate a peak oil ‘mitigation program’ of any kind.

Turning to actual production data gives cause for even greater concern.  Recently the Brookings Institute published Dr. James Hamilton’s study titled “Causes and Consequences of the Oil Shock of 2007-2008”  In this peer-reviewed research paper, Dr. Hamilton – a UCSD Professor of economics – concludes that the oil price spike of 2008 was caused by constrained supply.

Hamilton also concludes that the price spike would have plunged the U.S. economy into a severe recession even if the mortgage crisis had never materialized.

The graph you see here was pulled from Dr. Hamilton’s study.  It shows that oil production reached a plateau in 2005, and despite a tripling of price between 2005 and 2008 production increased only 500,000 barrels per day.

Given that the Joint Operations Environment Report states that “to generate the energy required worldwide… would require us to find an additional 1.4 mbd every year,” this plateau should be very troubling, indeed.

That said, I find the next graph even more troubling.

In this graph we see that global oil exports – the amount of oil sold on the global market – peaked in 2006 and was lower in 2008 then it was 2004.  This means that oil importers, like the U.S. and China, have been forced to compete for a declining resource.

We simply cannot afford a transportation policy or an energy policy that ignores the evidence presented in these two graphs.

Turning back to the Hirsch Report, I am particularly troubled by their proposed mitigation strategies because they will accelerate GHG emissions.  As the production of conventional oil continues to decline, we will be forced to produce heavy oil and tar sands at ever increasing rates.  The production of heavy oil and tar sands is much more energy intensive than the production of conventional oil, and as a consequence these methods produce far more GHG emissions per barrel of oil than are produced per barrel of conventional oil.

The second mitigation strategy is to convert coal into liquid fuels that can be burned in our current fleet of Internal Combustion Engines.  The problem, of course, is that the conversion of coal to liquid fuels produces far more GHG’s than is emitted during the production of conventional oil.

The same critique can be leveled at the third peak oil mitigation strategy – converting natural gas to liquid fuels.

Thank you for your time.