The Crash Course - Chris Martenson [80]
In March of 2009, the International Energy Agency (IEA) estimated world oil demand for that year at “84.4 million barrels a day—1.5 percent lower than a year earlier.”7 While a 1.5 percent drop is among the largest ever recorded, it’s a fraction of the decline recorded in other areas of economic consumption. Oil consumption is “sticky.” In the United States, petroleum consumption fell by only 4.1 percent from its peak in 2008 to 2010. Certainly this is a very large drop by historical standards for the United States, but it’s not all that drastic and leaves petroleum demand above where it was in 2003, indicating that oil consumption is perhaps a more essential feature of the economic landscape than many realize.
Or perhaps we could go further and say that oil is a nonnegotiable element of our lives. Where most of us can fairly easily and rapidly cut back on dining out or buying a new house or importing clothing, we cannot simply or quickly do the same thing with gasoline. It is quite difficult to pare back the number of miles driven to and from work or to school, for example, and such changes, if made at all, tend to happen quite slowly. This gives oil consumption its stickiness.
If oil demand is relatively robust and somewhat insensitive to economic difficulties, then what about oil production?
Oil Production
In November of 2008, the IEA released its World Energy Outlook (WEO) for 2008,8 and in it produced the single most startling piece of information that I had yet seen on the subject of Peak Oil. In every prior year, the IEA provided an estimate of future oil availability that was generated after first consulting with economists about likely levels of global growth in GDP in future years. In other words, they modeled oil supply on the basis of what they thought the economy might require, not what could realistically be produced. In 2008, a new methodology was used. It incorporated all the world’s major oil fields, over 800 of them, into a single database, and then asked a very different question: “How much oil can be produced?”
The answer, as it turned out, was a lot lower than any of the prior estimates. Where IEA estimates of oil production once topped out at 130 million barrels per day by 2030, the 2008 WEO report pegged that number at just 106 million barrels per day—a whopping 19 percent decline. Nearly 1 in 5 barrels of oil that were once thought would be available in 2030 suddenly vanished. Even more important, the report broke down oil supply by its various subcomponents, such as “conventional” and “deep water,” and revealed that oil from currently producing fields has been in decline since 2005.
Why is this statement a ground-shaking one? Because “oil from currently producing fields” is a euphemism for “cheap and easy oil” or “high net-energy oil”—the stuff that gives us the large gray territory on the bottom of the energy cliff graphs. With this stark admission that cheap and easy oil has already peaked, the IEA admitted that we’re already on the down slope of the same exact type of oil that has fueled the past several decades of economic growth. This earth-shattering news should have been on the front page of every major newspaper, but it wasn’t—we might ask ourselves why not—although it did circulate widely in the blogosphere.
Another revelation from report was that the bulk of all new oil-supply growth from here on out is going to come from fields “yet to be developed or discovered,” with some relatively minor contributions from “nonconventional oil,” which primarily refers to the tar sands of Canada and similar deposits. Neither of these sources can reasonably be expected to offer anything close to the same net energy