I went to the local gas station/market today, and gas was $5.00 per gallon. We live in a very rural community, so the price of gas in our one-pump town is generally 40-50 cents more per gallon than in the city 50 miles away. As I walked into the store, I heard some people talking about how much the price of gas has gone up in such a short time. Tell me about it. I only go to town when I have to. The days of a spur of the moment trip to town for fun have long gone.
I spoke with the owner of the store, and suggested that she put up a hitching post so that people could ride their horses to town in order to save on gas. She took me around to the side of the store and pointed out a tree and a fence post that would be suitable to tie my horse to. She was all for it. She feels bad about the price of gas, but what can she do?
When I got home, I checked my e-mail and found the following article from Carolyn Baker’s e-mailing. I think I will take this very seriously. Having once been in the truck dispatching business, I know how the cost of fuel affects the price of goods. With truckers looking at $5.00+ per gallon diesel prices, you don’t have to be an economics major to see the end result – exorbitant food prices, not to mention shortages.
Our nation has been led down the garden path of dependency on cheap transportation to deliver food from one side of the country to the other, and from one nation to the other. It has taken many years, but this dependency is now taking its toll. We are reaping what we have sown. Our addiction to oil has brought us to the brink of change, and since we cannot seem to curb this dependency on our own, it looks like nature is going to do it for us whether we like it or not.
Here is the article by Michael Savage:
Article Reprinted from UK INDEPENDENT
Aberdeen heliport is heaving. Dozens of rig men are waiting to board helicopters and begin a two-week stint in the middle of the North Sea. It appears that business out on the rigs, known simply as “the job” in these parts, is booming. Eventually, it’s our turn to board a cramped chopper, shoulder to shoulder with the solidly built workers who sit silently, psyching themselves up for a fortnight surrounded by cold, crashing waves.
Two hours later, we land at a rusting rig named Alwyn, 440 kilometres off the coast of Aberdeen. Ollie Bradshaw, the rig’s burly production supervisor, meets the new arrivals.
“What’s life like offshore? Busy. Very busy,” he says. He’s not joking. As we traipse around the rig’s two platforms, perched 200 feet above the (thankfully) calm waters of the North Sea, we navigate between the numerous piles of scaffolding, timber and new equipment that take up almost every last square inch of space. The on-board population has swollen to 250 people lately. In some cases, three men are having to share a room, while new digs are built next to the rig’s busy helipad, where several flights land and take off each day, delivering a conveyer belt of fresh workers – from painters and decorators to extra scaffolders and, of course, the men whose expertise lies in harvesting fossil fuels from beneath the sea bed.
Even in the common room, no one is standing idle – not around the television, nor the snooker table. The on-board gym is empty. In the canteen, a few men grab bacon rolls before heading off to start their 4pm shift. Those on an earlier shift have just had their lunch – there’s been a run on lemon tart. Yet the hive of activity that Alwyn has become of late is not down to all the oil it is producing. Far from it.
“Alwyn started out as an oil well and platform more than two decades ago. As oil production has fallen, it has been adapted and changed,” says Bradshaw, a man who seems devoted to his life here in the middle of nowhere. The rig’s expanding team is having to work harder than ever to keep it going. A vast network of underground pipes has linked it to new pockets of oil and gas – some of the neighbouring platforms seem like they are just touching distance away. New techniques have been used to boost the quality of the last dregs of oil coming out of the ground. Empty reservoirs are being drained of natural gas. Now, a major discovery of a field of natural gas has meant that, after 21 years of work, Alwyn’s creaking infrastructure is being given a facelift to keep going for another 20 years. But it will also mean its conversion from the oil platform it once was will be complete.
The end of Alwyn’s oil well days is a familiar story in the North Sea. The rig men may be working as hard as ever, but UK oil production has been falling rapidly ever since 1999. In the past, that hasn’t been such a problem – other producers around the world have always been able to produce more of the black stuff to keep the wheels of world industry lubricated. But according to some, that may be about to change. Oil prices are so high – $137 a barrel – and predicted by Alexey Miller, head of Gazprom, the Russian state energy giant, to rise as high as $250 a barrel – that social tensions have begun to emerge, while the world’s leaders have been going cap in hand to oil producers, asking them to squeeze a few more barrels out of their wells. And as prices have kept on breaking records, an ever-growing worry looms in the background, the elephant in the room of the oil price rise: what if they can’t produce any more? What if, this ti me, the oil taps really are running dry?
Worryingly, for a world reliant on the dirt-cheap energy that oil provided throughout the last century, the idea that oil production in all nations may soon start to decline just as in the North Sea has been seeping into the mainstream. The “peak oil” theory – that oil production has reached its maximum and will soon begin its decline, bringing potentially catastrophic consequences to the modern world – no longer just comes from internet crackpots and conspiracy theorists; now geologists, market analysts and oil prospectors believe that this scenario is becoming reality. And within the past year, there have been signs that the major oil companies are admitting this themselves. If they are right, high petrol prices could be the least of the world’s problems.
The idea is simple enough. Those warning against an imminent peak oil crisis – the “peakists” – say that while the world will not totally run out of oil, all of the oil that is easy to reach has been all but used up, meaning that producing enough oil to meet the growing world demand is becoming an ever harder task. Worse, we now stand at the high water mark of oil production. That means that not only will we never be able to produce much more oil than the 87 million barrels a day we now consume, but world oil production will actually begin to fall very soon, causing not only ever higher prices, but also creating the prospect of shortages, industrial upheaval, battles over ever-depleting resources, and even an end to the modern world built upon the assumption of a plentiful supply of cheap oil.
“A lot of people keep talking about ‘this peak oil theory’ – but there’s nothing theoretical about it. It’s just a very obvious fact of nature,” says Colin Campbell, a geologist who searched for oil on behalf of several oil companies, and is the high priest of the peakists. “Oil is formed in the geological past. That means it’s a finite resource. That means production begins and ends, and passes a peak in between. So the fact that there is a peak is beyond dispute. We’ve had the first half of the age of oil, which has changed the world in every conceivable way. We now face a decline.”
Campbell is in no doubt that the world’s oil production is as high as it is ever going to get. “The result of the latest update I made using industry data was that the regular, conventional oil peaked in 2005 and if you put all the other types in – the heavy oils, the gas liquids, the Arctic oil, the deep water projects – I have it this year,” he says, in a softly spoken, matter-of-fact tone. “That’s not cast in stone. It could slip a year or two. But I’m absolutely confident that it’s in the right area.”
Whereas Campbell’s fears once branded him a wacky radical, as the years have gone by he has been joined by a growing band of industry experts who have reached a similarly grim conclusion. One of those was an American investment banker examining “flow rates” – the speed at which oil was being taken out of the ground. After being asked to advise Donald Rumsfeld and George Bush on energy policy during the 2000 election campaign, Matthew Simmons found that more and more oil fields had begun to decline. That was because, though new technology was helping to extract oil faster than ever before, it was also causing the fields to run dry more quickly, too. “All of a sudden there were fields that were declining by as much as 30 per cent per year,” he says. “But I didn’t call it ‘peak oil’ – I didn’t even know what that was back then.”
Simmons came across peak oil in 2002, when he attended the first meeting of a new group founded by Colin Campbell. Only around 45 people showed up to the first meeting of the Association for the Study of Peak Oil (Aspo), but since then, its findings have convinced a lot more people around the world. Aspo now has branches in 36 countries, with Kuwait the latest wanting to found one. And some serious analysts have also made the mental journey from dissenters to peak-oil prophets.
“I’ve been on that journey,” says Chris Skrebowski, who spent half his career in the oil industry and now edits the UK oil industry’s publication of record, Petroleum Review. He admits to having been dismissive of the idea that the world’s wells were running dry. It was a visit from Campbell in 1996 that made him change his mind. “I didn’t quite believe him, but I didn’t think he was the average nutter,” he says. Skrebowski began to take a look at the issue himself. The numbers told a clear story. “You can just about struggle through to 2011, if everything goes to plan – which, of course, it won’t – but after that, the numbers don’t add up. And that’s taking a reasonably conservative rate of decline. If you wind it up to a 5 or 6 per cent annual decline, then you are at this peak or plateau now.”
One man who believes that could be the real rate of decline is the archetypal US oilman, T Boone Pickens, otherwise known as the “Oracle of Oil”. Having made a fortune in the oil industry, Pickens now invests heavily in the oil alternatives he believes will be necessary to fill the gap left by falling oil production.
From the window of helicopter, flying above the uninviting waves of the North Sea, it seems hard to believe that the world could really be running low on easy oil. Dozens of rigs pepper the vast expanse of water, their burning flares making them look like floating candles. Spiralling wisps of smoke fill the North Sea sky – a reminder that there is still oil churning around. Despite the pedigree of the peakists, it’s hard not to think we’ve heard it all before, that it’s just the usual doomsayers predicting that the oilfields would run out, and that more will be found somewhere. But for the peakists, the North Sea is a great case study. Its rapid decline has come despite all the advantages the modern world could throw at it.
“The North Sea has the benefit of all the investment anybody could need,” says Campbell. “It’s got the most modern technology, and it’s got a political environment that’s stable. There’s no reason why it would be producing less oil than is possible, yet it has been declining at a rate of 7 per cent a year.” Perhaps even more worryingly, the last year has seen major oil companies begin to make more noises about potential problems ahead. Foremost among them has been head of the French oil company Total, Christophe de Margerie, who has declared that world production will never exceed 100 billion barrels a day, a level of demand expected in less than a decade. “The oil companies are changing their tune,” says Campbell. “They can’t quite say ‘peak’ in so many words. They don’t want to rock the boat.”
Back on dry land, in a seafood restaurant in Aberdeen, a senior oil executive talks freely about a future. “We can try to slow the decline, but we will never stop it,” he says casually, over a plate of scallops. “All we can do is get as much oil out of the ground as possible.” Meanwhile, Colin Campbell is flirting with official approval. He is already advising a Norwegian oil firm, and has recently been invited to give informal presentations to executives from two of the world’s biggest oil companies. A clear momentum has been built up around peak oil fears. For Simmons, it is the peak oil deniers that are now the ones sounding shrill. “I daily read these shrill sounding experts who still believe that oil should be at $40 a barrel,” he says. “It’s just unbelievable. It’s still cheap.”
Not everyone is convinced by the peak oil theory, though. This week, The Independent reported that, according to Richard Pike, a former oil industry man, now chief executive of the Royal Society of Chemistry, there is more than twice as much oil in the ground than producers claim. But the most notable peak oil refusnik is the International Energy Agency (IEA), the oil supply watchdog set up by the world’s richest nations. It has said that not only is the world not running out of oil, but that production will continue to match the 135 million barrels a day that is forecast to be needed by 2050. It says that while conventional sources of oil may only provide around 92 million barrels a day of that, investment in Saudi Arabia’s fields and the growth of new sources of oil will provide the rest.
To the peakists, these standard oil industry ripostes are starting to wear a little thin, and have been damaged by the crashing and burning of some great white hopes. Not a single barrel of commercially viable shale oil, made from oil-rich sedimentary rock, has yet been produced. Oil made from tar sands found in northern Canada is near the top of the list of innovative sources of oil, but even the oil companies themselves admit that the amount of energy currently needed to produce a single barrel of it makes it very inefficient. And while drilling into ever-deeper waters might keep world production on its current plateau, the peakists say the days of “easy oil” are over.
As for the comforting idea that Saudi Arabia could simply turn up its taps and produce far more oil if it felt like it – the preferred belief of President Bush and Gordon Brown – the peakists have some pretty big problems with that, too. “The one thing that made peak oil a bogus issue was the supposedly proven fact that in the Middle East, we had 200 years of oil supply,” says Simmons. “Because of that, we obviously couldn’t have peaked. I’d just assumed it had to be true. Then I started doing my research.” After poring over more than 200 technical papers, he made the grim conclusion that, just like elsewhere, production in Saudi Arabia was either at or very near its peak.
And even the conservative estimates of the IEA have not been unaffected by the spectre of peak oil. It has decided to review how it sources its data on oil reserves, which is widely expected to lead to a lowering of its predictions of future oil supplies when it publishes its overview of the industry in November. If it, too, reveals that the days of free flowing oil could be over, the halls of power might begin to take notice.
None of this will make any difference to life on the Alwyn rig in the near future. For the next 20 years, it will be producing natural gas, and making low-grade oil from some of it. “We’ll be here until every last drop of oil is out of the ground,” Ollie Bradshaw reassures me.
But unlike Alwyn, more rigs will be decommissioned than refurbished if the peak oil theorists turn out to be right – and they warn that the effects on the world could be dramatic.
A world without plentiful oil, as described by the peakists, looks very different from today’s. The peakists are in no doubt about the aspect of modern living that would have to change. With transport soaking up the vast majority of the world’s oil, they maintain that our addiction to the car will have to go. According to Chris Skrebowski, large-scale electrification will be needed in all vehicles, perhaps with pylons placed down motorways to provide power. Diesel-powered public transport needs to be replaced with electric trains, trams, and trolley buses. That would create breathing space to make more profound societal changes, such as a growth of working from home. Matthew Simmons also sees the current global economy soon becoming unsustainable. “Local farms are now coming back,” he says. “We have all the technology in place to do that.”
That’s just for starters. According to Campbell, a wholesale change in the western lifestyle will be needed a little further down the road. “Cities will face massive challenges,” he says. “By the end of the century, when there really isn’t very much oil left, the world will be a very different one – much more rural, probably with fewer people. It’s a sort of doomsday message, but in some ways, it’s just a change from the modern mindset. There are people in the world who live a simple life like that and are very happy.” But that’s nothing compared with what could happen if we attempt to carry on regardless with ever-growing oil consumption. “If we don’t make changes, we’re going to have a resource war and blow ourselves up,” says Simmons. “I think that would be a really inconvenient way to end the world.”
So will the end of the oil age herald in a new dark age? Are we doomed to go back to sheltering in mud huts and living off a diet of turnips and water? Not necessarily. Thankfully, other peakists are optimistic that we can cope with a world without such vast quantities of cheap oil – if we act now. “Humanity is very ingenious,” says Skrebowski. “But at the moment, it doesn’t yet see a crisis. We’re just acting like a spoilt child who has had its lollipop taken away. At some point, some politician has got to come out and state clearly that the world is going to be different. It’s not the end of the world, but we’re all going to have to change the way we do things. And the sooner we get on with it, the better. The anticipation is probably worse than the reality.”
Let’s hope he’s right.