It is a peculiar combination of technological, economic and geopolitical factors that has led to the present crash in oil prices, lulling many observers into dismissing peak oil. Through it all, the fact remains that the production of ‘conventional oil’, drawn mostly from established oil wells, has not gone up since its peak in 2008.
Economics of oil
With the production of ‘conventional oil’ having reached a plateau and fossil fuels in general under attack for their impact on the climate and the environment, the global oil industry is undergoing an unprecedented upheaval. Oil being the very lifeblood of all industrial societies, the geopolitical and economic consequences of these changes are already being felt.
Nafeez Ahmed writes: An extensive new analysis says that proved conventional oil reserves as detailed in industry sources are likely “overstated” by half. According to standard sources, the world contains 1.7 trillion barrels of proved conventional reserves. However, according to the new study, this official figure is almost double the real size of world reserves.
The physics of energy and the economy evokes some trepidation. An economy seems to be a dissipative system, but what does this really mean? Not many people understand dissipative systems, and very few understand how an economy operates. The combination leads to an awfully lot of false beliefs about the energy needs of an economy.
Gail Tverberg writes: We are experiencing a world economy that seems to be reaching limits, but the symptoms are not what peak oil groups warned about. Instead of high prices and lack of supply, we are facing indirect problems brought on by our high consumption of energy products. I have called it a double pump problem.
Gail Tverberg writes: Economists have put together models of how an economy works, but these models were developed years ago, when the world economy was far from limits. These models may have been reasonably adequate when they were developed, but there is increasing evidence that they don’t work in an economy that is reaching limits.
Virtually everything in our homes, everything in our stores, got there on a truck. Prior to that, 90 percent of those items were transported on a ship and/or a train. If trucks, trains, and ships stopped running, our global economy and way of life would stop too. Alice Friedemann’s new book examines precisely this prospect.
We are hitting something similar to “Peak Oil” right now, but the major symptoms are unexpected. There is a glut of supply, and prices are far below the cost of production. Perhaps we should call it “Limits to Growth,” rather than “Peak Oil,” because it is a different type of problem than most people expected.
John Michael Greer writes: While the standard peak oil scenario did not happen, quite a bit of the economic, political, and social turmoil we’ve seen since 2005 or so was in fact driven by the impact of peak oil—but that impact didn’t follow the linear model that most peak oil writers expected it to follow.
Financial bubbles arise when asset prices inflate above what incomes can sustain. The mathematical reality is that the current over $200 trillion in debt and perhaps another $500 trillion of un(der)funded liabilities really cannot ever be paid back under current terms. In order for these obligations to be reset to a reality-based level, something has to give.
Oil prices drive not just economics, but geopolitics. Alliances rise and fall over petroleum. For these reasons and more, the collapsing value of oil will have profound consequences, with the potential to destabilize regimes, remake regions and alter the global economy in lasting and unforeseen ways. Fifteen experts tell Politico what that means for the world.
New coal plants ‘most urgent’ threat to the planet, warns OECD head The Guardian UK Governments must rethink plans for new coal-fired power plants around the world, as these are now the “most urgent” threat to the future of the planet, the head of the OECD has warned. In unusually strong terms for the organisation
(Editor’s Note: Some of the most important academic research into mankind’s present and future is being conducted at the Melbourne Sustainability Society Institute at the University of Melbourne. Here are links to some of their most important papers) Is Global Collapse Imminent? by Graham Turner. Dr Turner gathered data from the UN (its department of economic and social