Civilization as we know it is coming to an end soon.
This is not the wacky proclamation of a doomsday
cult, apocalypse bible prophecy sect, or conspiracy
theory society. Rather, it is the scientific
conclusion of the best paid, most widely-respected
in the world. These are rational, professional,
conservative individuals who are absolutely
terrified by a phenomenon known as global "Peak
we running out? I thought there was 40 Years
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
practical and considerably oversimplified terms,
this means that if 2000 was the year of global Peak
Oil, worldwide oil production in the year 2020 will
be the same as it was in 1980. However, the world’s
population in 2020 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
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 10-15 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.
That estimate comes from
not the least of which is Vice President Dick Cheney
In a 1999 speech
he gave while still CEO of Halliburton, Cheney
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 will need on the order of an
additional 50 million barrels a 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
within the next five years.
Unfortunately, many of these experts are no where
near as optimistic as Dick Cheney was in 1999.
Andrew Gould, CEO of the giant oil services firm
Schlumberger, for instance, recently explained the
global decline rate may be far higher than what
Cheney predicted seven years ago:
An accurate average decline rate is hard to
estimate, but an overall figure of 8% is not an
An 8% yearly decline would cut global oil production
by a whopping 50% in under nine years. If a 5% cut
in production caused prices to triple in the 1970s,
what do you think a 50% cut is going to do?
Other experts are predicting decline rates
as high as 10%-to-13%.
Some geologists expect
2005 to be the last year of
the cheap-oil bonanza,
while many estimates coming out of the oil industry
"a seemingly unbridgeable
supply-demand gap opening up after 2007,"
which will lead to major fuel shortages and
blackouts beginning around 2008-2012.
As we slide down the downslope slope of the global
oil production curve, we may find ourselves slipping
into what some scientists are calling the
"post-industrial stone age."
Dr. Richard Duncan:
The Peak of World Oil
Production and the Road to the Olduvai Gorge
the energy-intensive industrial age may be little
more than a blip in the course of human history:
Graph: The Energy Curve of History?
Peak Oil is also called
named for the Shell geologist
Dr. Marion King Hubbert.
In 1956, Hubbert accurately predicted that
US domestic oil production
would peak in 1970.
He also predicted global production would peak in
1995, which it would have had the politically
created oil shocks of the 1970s not delayed the peak
for about 10-15 years.
"Big deal. If gas prices get high, I’ll just
drive less. Why should I give a damn?"
Because petrochemicals are key components to much
more than just the gas in your car. As geologist
Dale Allen Pfeiffer points out in his article
"Eating Fossil Fuels,"
approximately 10 calories of fossil fuels are
required to produce every 1 calorie of food eaten in
The size of this ratio stems from the fact that
every step of modern food
production is fossil fuel and petrochemical powered:
1. Pesticides are made from oil;
2. Commercial fertilizers are made from ammonia,
which is made from natural gas,
which will peak about 10 years
after oil peaks;
3. With the exception of
a few experimental prototypes,
all farming implements such as tractors and trailers
are constructed and powered using oil;
4. Food storage systems such as refrigerators are
manufactured in oil-powered plants, distributed
across oil-powered transportation networks and
usually run on electricity, which most often comes
from natural gas or coal;
5. In the US, the average piece of food is
almost 1,500 miles before it
gets to your plate.
the average piece of food is
miles from where it is produced to where it is
people gobble oil like
It's not just transportation and agriculture that
are entirely dependent on abundant, cheap oil.
are each entirely powered by oil and petroleum
In addition to transportation, food, water, and
modern medicine, mass quantities of oil are required
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:
1. The construction of an average car consumes the
energy equivalent of
approximately 27-42 barrels,
which equates to 1,100-1,700 gallons, of oil.
Ultimately, the construction of a car will consume
an amount of fossil fuels equivalent
to twice the
2. 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
in addition to 70.5 pounds of water.
3. The construction of the average desktop computer
ten times its weight in fossil
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."
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. — rely on sophisticated
In fact, all electrical devices make use of silver,
copper, and/or platinum, each of which is
discovered, extracted, transported, and fashioned
using oil-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 equivalent of 17.8 barrels of oil. The
energy cost component of aluminum is twenty times
Nuclear energy requires uranium, which is also
discovered, extracted, and transported using
Most of the feedstock (soybeans, corn) for biofuels
such as biodiesel and ethanol are grown using the
high-tech, oil-powered industrial methods of
In short, the so called "alternatives" to oil are
actually "derivatives" of oil. Without an abundant
and reliable supply of oil, we have no way of
scaling these alternatives to the degree necessary
to power the modern world.
(Note: alternatives to oil are discussed in depth on
"Is the Modern Banking System
Entirely Dependent on Cheap Oil?"
The global financial system
is entirely dependent on a
supply of oil and natural gas.
The relationship between the supply of oil and
natural gas and the workings of the global financial
system is arguably the key issue to
understanding and dealing with Peak Oil, far more
important than alternative sources of energy, energy
conservation, or the development of new
technologies, all of which are discussed in detail
page two of this site.
Dr. Colin Campbell presents
an understandable model of
this complex (and often difficult to explain)
It is becoming evident that the financial and
investment community begins to accept the reality of
Peak Oil, which ends the first half of the age of
oil. They accept that banks created capital during
this epoch by lending more than they had on deposit,
being confident that tomorrow’s expansion, fuelled
by cheap oil-based energy, was adequate collateral
for today’s debt. The decline of oil, the principal
driver of economic growth, undermines the validity
of that collateral which in turn erodes the
valuation of most entities quoted on Stock
Exchanges. The investment community however faces a
dilemma. It desires to protect its own fortunes and
those of its privileged clients while at the same
time is reluctant to take action that might itself
trigger the meltdown. It is a closely knit community
so that it is hard for one to move without the
others becoming aware of his actions.
The scene is set for the Second Great Depression,
but the conservatism and outdated mindset of
institutional investors, together with the momentum
of the massive flows of institutional money they are
required to place, may help to diminish the sense of
panic that a vision of reality might impose. On the
other hand, the very momentum of the flow may cause
a greater deluge when the foundations of the dam
finally crumble. It is a situation without
Commentator Robert Wise explains
the connection between energy
and money as follows:
It's not physics, but it's true: money equals
energy. Real, liquid wealth represents usable
energy. It can be exchanged for fuel, for work, or
for something built by the work of humans or
fuel-powered machines. Real cost reflects the energy
cost of doing something; real value reflects the
energy expended to build something.
Nearly all the work done in the world economy -- all
the manufacturing, construction, and transportation
-- is done with energy derived from fuel. The actual
work done by human muscle power is miniscule by
comparison. And, the lion's share of that fuel comes
from oil and natural gas, the primary sources of the
In October 2005, the normally conservative London
Times acknowledged that the world's wealth may soon
evaporate as we enter a technological and economic
"Dark Age." In an article entitled "Waiting
for the Lights to Go Out"
Times reporter Bryan Appleyard wrote the following:
Oil is running out; the climate is changing at a
potentially catastrophic rate; wars over
scarce resources are brewing; finally, most shocking
of all, we don't seem to be having enough ideas
about how to fix any of these things.
Almost daily, new evidence is emerging that progress
can no longer be taken for granted, that a
new Dark Age is lying in wait for ourselves and our
. . . growth may be coming to an end. Since our
entire financial order — interest rates, pension
funds, insurance, stock markets — is predicated on
growth, the social and economic consequences
may be cataclysmic.
If you want to understand just how cataclysmic these
consequences might be, consider the current crisis
in the UK as a "preview of coming attractions." On
October 23, 2005
the London Telegraph reported:
The Government has admitted that
companies across Britain might be forced to close
this winter because of fuel shortages. "The balance
between supply and demand for energy is
uncomfortably tight. I think if we have a
colder-than-usual winter given the supply shortages,
certain industries could suffer real difficulties."
The admission was made after this newspaper revealed
that Britain could be paralyzed by energy shortages
if the winter is colder than average.
The Met Office says there is a 67 per cent
likelihood of prolonged cold this year after almost
a decade of mild winters. That, coupled with high
fuel prices, raises the fear that industry will not
be able to cope.
The severe consequences of these relatively small
shortfalls between supply and demand (less than 5%)
have prompted the UK government to look into
draconian energy conservation measures that would be
via house-to-house searches by
a force of "energy-police."
Parts of the US are facing similarly dire
possibilities. In December 2005, US News and World
published a six-page article
documenting some potentially nightmarish scenarios
about to descend on the US. According to the
normally conservative publication, people in the
northeastern US could be facing massive layoffs,
rotating blackouts, permanent industrial shutdowns,
and catastrophic breakdowns in public services this
winter as a result of shortages of heating oil and
This is happening despite the fact we are probably
at least a few years away from seeing the peak in
either oil or natural gas production. You have to
ask yourself, "what's going to happen when the 'real
problems' start showing up?"
"Are the Banks Aware of This
The central ones certainly are. (Those new
bankruptcy laws were passed for a reason.) On June
28, 2005, Gary Duncan, the economics editor for the
reported that the Bank of International Settlements
(BIS), aka "the central banker's central bank",
had issued the following
regarding the economic fallout of further rises in
the price of oil:
Oil prices may well remain high for a
prolonged period of time . . . Further rises — if
they materialize — may have more severe consequences
than currently anticipated . . .
needs to commit to some unpleasant compromises now,
in order to avoid even more unpleasant alternatives
in the future . . .
goes on to summarize
the bank's report as follows:
US current account deficit meant that a further
dollar was "almost inevitable", while the BIS
that the deficit could yet lead to "a disorderly
decline of the dollar, associated turmoil in other
financial markets, and even recession."
A bank as crucially
important to the world economy and as influential to
the markets as the BIS doesn't just casually toss
out terms like "unpleasant compromises", "severe
consequences", "even more unpleasant alternatives",
"turmoil," and "disorderly decline" in relation to
the oil markets and the dollar (which is
the reserve currency for all oil transactions in the
unless something very nasty is brewing in the
(Note: to read the
full text of the bank's report,
On a similar note,
Warren Buffet, the world's second richest man,
recently warned of
"mega-catastrophic risks" and "investment time
currently threatening the global economy. Add those
to a mix of
sky-high energy prices,
destabilizing resource wars,
less than inspiring leadership,
a possible currency collapse,
and well, the picture begins to look pretty grim,
"What Does All of This Mean for Me?"
What all of this
means, in short, is that
aftermath of Peak Oil will extend far beyond how
much you will pay for gas.
If you are focusing solely on the price at the pump,
more fuel-efficient forms of transportation, or
alternative sources of energy, you aren’t seeing the
"Is the Bush Administration Aware of
Of course they are.
Dick Cheney made the following statement in late
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 will need
on the order of an additional 50 million barrels a
To put Cheney’s statement in
perspective, remember that the oil producing nations
of the world are currently pumping at full capacity
but are struggling to produce much more than 84
million barrels per day. Cheney’s statement was a
tacit admission of the severity and imminence of
Peak Oil as the possibility of the world raising its
production by such a huge amount is borderline
A report commissioned
by Cheney and released in April 2001
was no less disturbing:
most significant difference between now and a decade
ago is the extraordinarily rapid erosion of spare
capacities at critical segments of energy chains.
Today, shortfalls appear to be endemic. Among the
most extraordinary of these losses of spare capacity
is in the oil arena.
George W. Bush has echoed Dick Cheney’s sentiments.
In May 2001, Bush stated,
"What people need to hear loud and clear is that
we’re running out of energy in America."
One of George W.
Bush's energy advisors, energy investment banker
has spoken at length about the
(Note: Although he
has advised Bush/Cheney, Simmons considers
himself strongly non-partisan on energy issues.
His writings are highly regarded amongst the energy
and banking community for their grounding in
nonpartisan, heavily documented, and virtually
infallible research & analysis.)
Simmons and Company International,
is considered the most reputable and reliable energy
investment bank in the world.
background, what he has to say about the situation
is truly terrifying. For instance,
an August 2003 interview
with From the Wilderness publisher Michael
Ruppert, Simmons was asked if it was time for Peak
Oil to become part of the public policy debate. He
is past time. As I have said, the experts and
have no Plan B to fall back on. If
energy peaks, particularly while 5 of the world’s
6.5 billion people have little or no us of
modern energy, it will be a tremendous jolt to ou economic
well-being and to our health — greater than anyone
could ever imagine.
When asked if there is a solution to
the impending natural gas crisis, Simmons responded:
don’t think there is one. The solution is to pray.
best of circumstances, if all prayers
are answered there will be no crisis for maybe two
years. After that it’s a certainty.
In May 2004,
Simmons explained that in order for demand to be
appropriately controlled, the price of oil
would have to reach $182 per barrel.
Simmons explained that with oil prices at $182 per
barrel, gas prices would likely rise to $7.00 per
are downright tame compared to what other analysts
in the world of investment banking are preparing
themselves for. For instance, in April 2005, French
investment bank Ixis-CIB warned,
"crude oil prices could touch $380 a
barrel by 2015."
If you want to
ponder just how devastating oil prices in the
$200-$400/barrel range will be for the US economy,
consider the fact that one of Osama Bin-Laden's
goals has been to force oil prices into the $200
Oil prices that far
north of $100/barrel would almost certainly trigger
massive, last-ditch global resource wars
as the industrialized nations of the world scramble
to grab what little of the black stuff is remaining.
This may explain why the director of the Selective
Service recently recommended
the military draft be expanded to include both
genders, ages 18-to-35.
A March 2005 report
prepared for the US Department of Energy confirmed
dire warnings of the investment banking community.
"The Mitigation of the Peaking of World Oil
the report observed:
timely mitigation, world supply/demand balance will
be achieved through massive demand destruction
(shortages), accompanied by huge oil price
increases, both of which would create a long period
of significant economic hardship worldwide.
until world conventional oil production peaks before
initiating crash program mitigation
leaves the world with a significant liquid fuel
deficit for two decades or longer.
The report went on to say:
problems associated with world oil production
will not be temporary, and past
'energy crisis' experience wil provide
relatively little guidance. The challenge of oil
peaking deserves immediate, serious attention, if
risks are to be fully understood and mitigation
begun on a timely basis.
. . the world has never faced a problem like this.
massive mitigation more than a decade
before the fact, the problem will be pervasive
and will not be temporary.
energy transitions were gradual and evolutionary.
Oil peaking will be abrupt and revolutionary.
As one commentator
recently observed, the reason our leaders are acting
is because we have a desperate situation on our
If you've been wondering why the Bush
administration has been spending money, cutting
social programs, and starting wars like there's no
tomorrow, now you have your answer: as far as they
are concerned, there is no tomorrow.
From a purely Machiavellian
standpoint, they are probably correct in their
"How Do I Know This Isn't Just Fear-
Mongering by Loony-Environmentalists?"
If you think what
you are reading on this page is the product of a
loony-left nut, consider what Representative Roscoe
Bartlett (Republican, Maryland) has had to say in
speeches to Congress
or what billionaire investor Richard Rainwater has
had to say in
the pages of Fortune Magazine.
On March 14, 2005
Bartlett gave an extremely thorough presentation to
Congress about the frightening ramifications of Peak
Oil. During his presentation Representative
who may be the most conservative member of Congress,
quoted from this site extensively, citing the author
(Matt Savinar) by name on numerous occasions,
while employing several analogies and examples
originally published on this site. You can read the
full congressional record of Representative
Bartlett's presentation by
You can view a video of Bartlett recommending the
article you are now reading to
Resources for the Future,
an extremely influential DC think tank, by
On April 19, 2005
Representative Bartlett was interviewed on national
he referenced the article you are now reading:
of the writers on this, by the way, starts his
saying, 'Dear Reader, Civilization as
we know it will end soon.' Now your first impulse is
to put down the article. This guy's a nut. But if
you don't put it down and read through the article,
you're hard-pressed to argue with his conclusions.
May 12, 2005 Representative Bartlett gave
about Peak Oil on the floor of the House of
Representatives, stating that this website
"galvanized" him. On July 19, 2005 he had the
following to say:
Speaker, if you go to your computer this evening and
do a Google search for peak oil, you will find there
a large assortment of articles and comments. Like
every issue, you will find a few people who are on
the extreme, but there will be a lot of mainstream
of the articles that you will find there was written
by Matt Savinar. Matt Savinar is not a technical
person. He is a lawyer, a good one, and he does what
lawyers do. He goes to the sources and builds his
Savinar could be correct when he said, "Dear Reader,
civilization as we know it is coming to an end
soon.'' I woul encourage
you, Mr. Speaker, to pull up his article and read
it. It is really very sobering.
speeches, Representative Bartlett read large
excerpts of this site verbatim
into the official US Congressional
According to the
December 26, 2005 issue of Fortune Magazine, Richard
Rainwater, a multi-billionaire investor and friend
of George W. Bush, reads this site regularly. In an
"Energy Prophet of Doom"
Fortune reporter Oliver Ryan writes:
the voice on the phone announces. "Now, type
L-A-T-O-C into Yahoo, and scroll down to the seventh
Rainwater doesn't use e-mail. Rather, he uses
rapid-fire phone calls to spread the gospel he
discovers every morning on the web. One day it might
be the decline of arable land in Malaysia. The next
it could be the Olduvai theory of per capita energy
consumption. "L-A-T-O-C" stands for
LifeAfterTheOilCrash.net, a blog edited by Matt
Savinar, 27, of Santa Rosa, Calif.
The article goes on
to quote Rainwater as saying:
world as we know it is unwinding with respect to
Social Security, pensions, Medicare. We're going to
have dramatically increased taxes in the U.S. I
believe we're goin into a
world where there's going to be more hostility. More
people are going to be asking, 'Why did God do this
God they worship. Alfred Sloan said it a long time ago at
General Motors, that we're giving these things
during good times. What happens in bad times? We're
going to have to take them back, and then everybody
will riot. And he's right.
Rainwater and Alfred Sloan aren't the only people
expecting large scale civil unrest in the
foreseeable future. In January 2006, the Department
of Homeland Security gave Halliiburton subsidiary
Kellog, Brown, & Root a $400 million dollar contract
vast new domestic detention camps.
While the camps are ostensibly being built to house
and process an "emergency influx of immigrants", one
can't help but suspect they will be used to house
domestic citizens who respond to the economic
fallout of declining oil production by taking to the
"How is the Oil Industry Reacting to
If you want to know
the harsh truth about the future of oil, simply look
at the actions of the oil industry. As
a recent article in M.I.T.'s
actions - rather than the words - of the oil
business's major players provide the best gauge of
how they see the future, then ponder the following.
Crude oil prices have doubled since 2001, but oil
companies have increased their budgets for exploring
new oil fields by only a small fraction.
U.S. refineries are working close to capacity, yet
no new refinery has been constructed since 1976. And
oil tankers are fully booked, but outdated ships are
being decommissioned faster than new ones are being
Some people believe
no new refineries have been built
due to the efforts of environmentalists. This belief
is silly when one considers how much money and
political influence the oil industry has compared to
the environmental movement. You really think Ronald
Reagan and George H. Bush were going to let a bunch
of pesky environmentalists get in the way of oil
refineries being built if the oil companies had
wanted to build them?
The real reason no new refineries
have been built for almost 30 years is simple: any
oil company that wants to stay profitable isn't
going to invest in new refineries when they know
there is going to be less and less oil to refine.
In addition to
lowering their investments in oil exploration and
oil companies have been merging as
though the industry is living on borrowed time
1998: BP and Amoco merge;
1999: BP-Amoco and Arco agree to merge;
1999: Exxon and Mobil merge;
2000: Chevron and Texaco agree to merge;
2001: Phillips and Conoco agree to merge;
2002: Shell acquires Penzoil-Quaker State;
2003: Frontier Oil and Holly agree to merge;
2004: Marathon acquires 40% of Ashland;
2004: Westport Resources acquires Kerr-McGee;
Analysts suggest BP and Shell merge;
Chevron-Texaco and Unocal merge;
Royal Dutch and Shell merge;
China begins trying to acquire Unocal
While many people
believe talk of a global oil shortage is simply a
conspiracy by "Big Oil" to drive up the prices and
create "artificial scarcity," the rash of mergers
listed above tells a different story.
Mergers and acquisitions
are the corporate world's version of cannibalism.
When any industry begins to contract/collapse, the
larger and more powerful companies will
cannibalize/seize the assets of the smaller, weaker
(Note: for recent examples of this
phenomenon outside the oil industry, see the airline
and automobile industries.)
If you suspect the oil companies are
conspiring amongst themselves to create artificial
scarcity and thereby artificially raise prices, ask
yourself the following questions:
Are the actions of the oil companies the actions of
friendly rivals who are conspiring
amongst each other to drive up prices and keep the
petroleum game going?
Are the actions of the oil companies the actions of
rival corporate desperados who, fully aware that
their source of income is rapidly dwindling, are now
preying upon each other in a game of
"last man standing"?
You don't have to
contemplate too much, as recent disclosures from oil
industry insiders indicate we are indeed
"damn close to peaking"
while independent industry analysts are now
large oil companies believe Peak Oil
is at our doorstep.
As the Bulletin of
Atomic Scientists recently observed, even ExxonMobil
is now "sounding
the silent Peak Oil alarm."
In their 2005 report entitled,
"The Outlook for Energy",
ExxonMobil suggests that increased demand be met
first through greater fuel efficiency. The fact that
ExxonMobil - one of the largest oil companies in the
world - is now recommending increased fuel
efficiency should tell you how imminent a crisis is
at this point.
Equally alarming is
the fact that Chevron has now
started a surprisingly candid campaign
to publicly address these issues. While the campaign
fails to mention "Peak Oil" or explain how a
drastically reduced oil supply will affect the
average person, it does acknowledge that, while it
took 125 years to burn through the first trillion
barrels of oil,
it will only take 30 years to burn through the next
"How Do I Know Peak Oil Isn't Big Oil
Propaganda That is Being Used To Create Artificial
Scarcity & Justify Gouging Us at the Pump"
If Peak Oil is "Big
(as some claim),
why did Sonoma State University's Project Censored
one of the most censored stories of 2003-2004?
Surely, if "Peak Oil is Big Oil propaganda", Big Oil
would have found a way to get it off the pages of
under-funded publications like
and onto the pages of the mainstream papers and into
the 24/7 cable news cycle years ago.
Likewise, if "Peak
Oil is a myth propagated by the greedy oil companies
to justify high prices", why didn't any of the
greedy oil company CEOs offer "the peaking of world
oil production" as a partial justification for high
gas prices when
testified before Congress about high gas prices?
Yet "Peak Oil" was never mentioned
during the hearings by either the executives or the
Senators questioning them. Given the obvious
importance of the issue, any reasonable person can't
help but to ask, "Why the heck not?"
The answer is simple: the true
consequences of Peak Oil cannot be acknowledged in
such a highly public forum without crashing the
financial markets or begging the obvious yet
politically-dangerous and "patriotically-incorrect"
war in Iraq really a war for the world's last
remaining significant sized deposits of oil?"
Although the answer
to this question
should be obvious,
broaching the issue in such a highly public forum
would bring more skeletons out of
Dick Cheney's energy task force closet
than any sane member of the Senate, Republican or
Democrat, would ever want to face. (Would you?)
What About Chevron's "Will You Join
while far more candid than
still does not come close to conveying the truth
about our situation or how it will affect the
average person. The campaign is likely an attempt at
controlling the parameters of the Peak Oil debate
and making sure the public does not panic. The
campaign appears geared towards keeping investors'
confidence high and public anxiety low by
acknowledging the (now obvious) problem but
reassuring all interested parties that things are
under control. Naturally, Chevron would much rather
you learn about Peak Oil from their team of public
relations experts (aka "spin miesters") than from
this site or
others like it.
That's probably why
Chevron hired the Madison Avenue public relations
Young and Rubicom,
the same firm
that handled the Bush/Cheney 2004 election
to produce the campaign.
Ironically, it's better for the oil
companies that you think you are being gouged than
to know the truth. If people knew the truth, they
would likely begin drastically curtailing their
consumption of oil, which would drive the price
down. Consumers are unlikely to take such actions so
long as they perceive the current price spikes as
just "more of the same old-same old" and are
confident about the future. The goal of Chevron's
campaign is to maintain this confidence as long as
"Can't We Just
Explore More for Oil?"
discovery peaked in 1962 and has declined to
virtually nothing in the past few years.
We now consume 6 barrels of oil for every barrel we
Oil Discovery: (3 Year Average, Past and Projected)
Association for the Study of Peak Oil
According to an
October 2004 New York Times article entitled
"Top Oil Groups Fail to Recoup
. . the top-10 oil groups spent about $8bn combined
exploration last year, but this only
led to commercial discoveries with a net present
value of slightly less than $4bn. The previous two
years show similar, though less dramatic,
In other words,
significant new oil discoveries are so scarce that
looking for them is a monetary loser. Consequently,
many major oil companies now find themselves
unable to replace their rapidly depleting reserves.
Take a look at the
above chart. During the 1960s, for instance, we
consumed about 6 billion barrels per year while
finding about 30-60 billion per year. Given those
numbers, it is easy to understand
why fears of "running out" were so
often dismissed as unfounded.
consumption/discovery ratios have nearly reversed
themselves in recent years. We now consume close to
30 billion barrels per year but find less than 4
billion per year.
In light of these
trends, it should come as little surprise that the
energy analysts at John C Herold Inc. - the firm
that that foretold Enron's demise -
recently confirmed industry rumors
that we are on the verge of an unprecedented crisis.
"How Can I Be Sure This Isn't Just
More 1970s Doom-and-Gloom?"
The oil shocks of the 1970s were
created by political events. In 1973, OPEC cut its
production in retaliation for US support of Israel.
In 1979, Iran cut its production in hopes of
crippling "the great Satan." In both cases, the US
was able to turn to other oil producing nations such
as Venezuela to alleviate the crisis. Once global
production peaks, there won't be anybody to turn
to. The crisis will just get worse and worse with
each passing year.
The evidence of an
imminent peak in global oil production
percent of the world's oil comes from 44 oil producing
nations. At least 24 of these nations are past their
peak and now in terminal decline.
entire world - with the exception of the Middle East
peaked in 1997. The US peaked in 1970, Russia in
1987, the UK in 1999. Even Saudi Arabia - the famed "producer
for all seasons"
may be on the
verge of seeing
production of conventional oil has essentially
plateaued since the year 2000.
As far as
"doom-and-gloom" consider what widely respected
Deutsche Bank had to say about Peak Oil in a recent
Energy Prospects After the Petroleum Age:
end-of-the-fossil-hydrocarbons scenario is not
a doom-and-gloom picture painted by
pessimistic end-of-the world prophets, but a view of
scarcity in the coming years and decades that must
be taken seriously.
Financial Review echoed the sentiments of Deutsche
Bank in a January 2005 article entitled,
"Staring Down the Barrel of a
world's oil production may be about to reach its
peak, forever. Such apocalyptic prophecies often
surface in the middle of the northern hemisphere
winter. What is unusual is that this time the
doomsday scenario has gained serious credibility
among respected analysts and commentators.
Given the credentials of those
sounding the alarm the loudest, it is extremely
unwise for you to causally dismiss this as just more
"1970s doom-and gloom."
"What About the Oil Sands in Canada
and the Oil Shale in the American West?"
The good news is that
we have a massive amount of untapped "non
conventional" oil located in
the oil sands up in Canada.
The bad news is
that, unlike conventional sources of oil, oil
derived from these oil sands
is extremely financially and energetically intensive
Whereas conventional oil has enjoyed a rate of
"energy return on energy invested"
(EROEI) of about 30 to 1, the oil sands rate of
return hovers around 1.5 to 1.
This means that we would have to
expend 20 times as much energy to generate the same
amount of oil from the oil sands as we do from
conventional sources of oil.
Where to find such
a huge amount of capital is largely a moot point
because, even with massive improvements in
extraction technology, the oil sands in Canada are
projected to only
produce a paltry 2.2 million barrels per day by
This doesn't even account for any
unexpected production decreases
both of which have been endemic to many of the oil
4 million barrels per day of oil coming from the oil
sands by 2020.
Even if the optimists are correct, 4 million barrels
per day much oil when you consider our colossal and
ever-growing demand in conjunction with the small
amount of time we have left before the global peak:
currently need 83.5 million barrels per day.
projected to need 120 million barrels per day by
will be losing over 1 million barrels per day of
production per year, every year, once we hit the
backside of the global oil production curve.
general consensus among
is that oil production will peak by 2010 at the
The huge reserves
of oil shale in the American west suffer from
similar problems. While Shell Oil has an
experimental oil shale program, even Steve Mut - the
CEO of their Unconventional Resources Unit - has
sounded less than optimistic when questioned about
the ability of oil shale to soften the coming crash.
According to journalist Stuart Staniford's coverage
of a recent conference on Peak Oil:
response to questions, Steve guesstimated that oil
shale production would still be pretty negligible by
2015, but might, if things go really well, get to
5mbpd by 2030.
observers are even less optimistic about oil shale.
Geologist Dr. Walter Youngquist points out:
average citizen . . . is led to believe that the
United States really has no oil supply problem when
oil shales hold "recoverable oil" equal to "more
than 64 percent of the world's total proven crude
oil reserves." Presumably the
States could tap into this great oil reserve at any
time. This is not true at all. All attempts to get
this "oil" out of
shale have failed economically. Furthermore, the
it is not oil as is crude oil, but this is not
stated) may be recoverable but the net energy
recovered may not equal the energy used to recover
it. If oil is "recovered" but at a net energy loss,
the operation is a failure.
This means any attempt to replace
conventional oil with oil shale will actually make
our situation worse as the project will consume more
energy than it will produce, regardless of how high
the price goes.
with oil shale
have been documented by economist Professor James
concluded it will be at least 12 years before
oil shale reaches the production growth phase. And
that is a technological assessment, not a reference
to the environmental review process. If it takes 15
years to get an oil refinery built and approved,
despite well known technology and well understood
environmental issues, viewing oil shale as something
that could make major contributions to world energy
supplies in the immediate future seems highly
Click Here to Go to Page Two of LATOC
Topics Covered on Page Two Include:
Abiotic Oil Theory, Drilling in ANWR, Laws of Supply
and Demand/Market Forces, Alternative Energy, Solar,
Wind, Geothermal, Wave, Hydrogen, Nuclear, Coal,
Ethanol, Biodiesel, Thermal Depolymerization,
Solar-Nanotechnology, Space-Based Solar Arrays,
Hybrid Vehicles, Conservation and Energy Efficiency,
Jevon's Paradox, Wars in Iraq, Iran, Syria, and
Venezuela, the Military Draft, Possible Solutions
and Ways to Prepare