Peak Oil
Life & the Peak
Oil Crash

Thanks and Disclaimer: This article is taken from "Life After The Oil Crash". We are aware that the solutions of L.A.T.O.C. are more "self-sufficiency"oriented, rather than with building solidarity and community, which we believe is crucial to the success of "operation planet", but for clarity of facts and for showing up attitudes, this info seems excellent. See original for more source references. See also the Energy Bulletin which has the most uptodate, widely-sourced information, and the Post Carbon Institute which also looks at creative responses and has developed the Oil Depletion Protocol. See also the Interactive Oil Depletion Atlas.


Dear Reader

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 scientists, writers, bankers, and investors in the world. These are rational, professional, conservative individuals who are [deeply shocked] by a phenomenon known as global "Peak Oil."

Peak Oil is also called "Hubbert's Peak," 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 done, had the politically created oil shocks of the 1970s not delayed the peak for about 10-15 years.

"Are We 'Running Out'? I Thought There Was 40 Years of the Stuff Left"

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 up.

In considerably oversimplified terms, this means that if 2005 was the year of global Peak Oil, worldwide oil production in the year 2030 should be the same as it was in 1980. However, the world’s population in 2030 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 are liable to crumble, and resource wars are liable to 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. Because water is so crucial to everything the human body does, the average man doesn't need to lose all his 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.

As with dehydration, an oil based economy doesn't need to deplete its entire reserve of oil before it begins to collapse. A shortfall between demand and supply of as little as 10 to 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.

Those 1970's price shocks were only temporary. But 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. War, terrorism, extreme weather and other "above ground" geopolitical factors will likely push the effective decline rate past 10% per year, thus cutting the total supply by 50% in 7 years. Source

These estimate comes from numerous sources, not least of which is Vice President Dick Cheney himself... (article expands)

"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 entitled, "Eating Fossil Fuels," approximately 10 calories of fossil fuels are required to produce every 1 calorie of food eaten in the US. This is because every step of our food production is fossil fuel and petrochemical powered:

  • Pesticides are made from oil;
  • Commercial fertilizers are made from ammonia, which is made from natural gas, which will peak about 10 year after oil peaks;
  • With the exception of a few experimental prototypes, all farming implements such as tractors and trailers are constructed and powered using oil;
  • 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;
  • In the US, the average piece of food is transported almost 1,500 miles before it gets to your plate. In Canada, the average piece of food is transported 5,000 miles from where it is produced to where it is consumed.
  • According to the Organic Trade Association, the production of one pair of regular cotton jeans takes three-quarters of a pound of fertilizers and pesticides.

For more information, see:
Will the end of oil be the end of the end of food?
How will we grow food after Peak Oil?
Hungering for natural gas

"Are all forms of modern technology actually petroleum products?"

Yes. It's not just transportation and agriculture that are entirely dependent on abundant, cheap oil. Modern medicine, water distribution, and national defense are each entirely powered by oil and petroleum derived chemicals.

In addition to transportation, food, water, and modern medicine, mass quantities of oil are required for all plastics, 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:

Automobiles: The construction of an average car consumes the energy equivalent of approximately 20 barrels of oil, which equates to 840 gallons, of oil. Ultimately, the construction of a car will consume an amount of fossil fuels equivalent to twice the car’s final weight. It's also worth nothing that the construction of an average car consumes almost 120,000 gallons of fresh water, which is also rapidly depleting and happens to be crucial to the petroleum refining process. Source

Microchips: 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 fuels in addition to 70.5 pounds of water. The 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."

Computers:The construction of the average desktop computer consumes ten times its weight in fossil fuels.

"What about alternative energy systems like solar panels and wind turbines? Are they also manufactured using petroleum and petroleum derived resources?"

Yes. 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. all rely on sophisticated technology and mettalurgy.

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 higher".

Nuclear energy requires uranium, which is also discovered, extracted, and transported using oil powered machinery.

For more information on metals shortages see:
Scarcity of aluminum, copper threaten solar installments
Dwindling supply of rare metals imperils innovation
World faces copper shortage

Most of the feedstock (soybeans, corn) for biofuels such as biodiesel and ethanol are grown using the high-tech, oil-powered industrial methods of agriculture described above. 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 here (orig. article page 2)

"Is the modern banking system entirely dependent on cheap oil?"

Yes. The global financial system is entirely dependent on a constantly increasing 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. In fact this relationship is far more important than alternative sources of energy, energy conservation, or the development of new energy technologies, all of which are discussed in detail on page two of the original site.

Dr. Colin Campbell presents an understandable model of this complex (and often difficult to explain) relationship as follows:

"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 withou precedent". Source

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 columnist Bryan Appleyard reported:

"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 children . . . growth may be coming to an end. Since our entire financial order from interest rates, pension funds, insurance, to stock markets is predicated on growth, the social and economic consequences may be cataclysmic". Source

In May 2007 the London Times published excerpts from a study about the future of Britain's electrical grid. According to the study, fears of a catastrophic energy crisis occuring within the next 10 years can no longer be dismissed as "apocalyptic fantasies", emphasis added:

"Across Britain, cities are plunged into darkness. In London, the Underground grinds to a halt, leaving panicked commuters stranded in oppressively hot carriages. In office blocks, lifts stop operating and the air-conditioning shuts down. Employees swelter in stifling conditions. This is not the postapocalyptic vision of some film-maker, but a realistic scenario as Britain grapples with a looming energy crisis. The statistics are frightening. In only eight years, demand for energy could outstrip supply by 23% at peak times, according to a study by the consultant Logica CMG. The loss to the economy could be £108 billion each year". Source

"What does all of this mean for me?"

Journalist Jonathan Gatehouse summarized the conclusions of Oxford trained geologist Jeremy Leggett, author of The Empty Tank: Oil, Gas, Hot Air, and the Coming Financial Catastrophe, in a 2006 Macleans article as follows, emphasis added:

"... ... when the truth can no longer be obscured, the price will spike, the economy nosedive, and the underpinnings of our civilization will start tumbling like dominos. The price of houses will collapse. Stock markets will crash. Within a short period, human wealth -- little more than a pile of paper at the best of times, even with the confidence about the future high among traders -- will shrivel. There will be emergency summits, diplomatic initiatives, urgent exploration efforts, but the turmoil will not subside. Thousands of companies will go bankrupt, and millions will be unemployed. Once affluent cities with street cafés will have queues at soup kitchens and armies of beggars. The crime rate will soar. The earth has always been a dangerous place, but now it will become a tinderbox.

By 2010, predicts Leggett, democracy will be on the run. . . . economic hardship will bring out the worst in people. Fascists will rise, feeding on the anger of the newly poor and whipping up support. These new rulers will find the tools of repression -- emergency laws, prison camps, a relaxed attitude toward torture -- already in place, courtesy of the war on terror. And if that scenario isn't nightmarish enough, Leggett predicts that "Big Oversight Number One" -- climate change -- will be simultaneously making its presence felt "with a vengeance." On the heels of their rapid financial ruin, people "will now watch aghast as their food and water supplies dwindle in the face of a climate seemingly going awry." Prolonged droughts will spread, decimating harvests". Source

In other words, if you are focusing solely on the price at the pump, buying a hybrid car, or getting some of those energy efficient light bulbs, you aren’t seeing the bigger picture.

For more information, see:
Peak Oil: The biggest event of the century is now upon us
The most important thing you don't know about "Peak Oil"
A permanent energy crisis is rapidly developing

"Is the Bush administration aware of this?"

Of course they are.... One of George W. Bush's energy advisors, energy investment banker Matthew Simmons, has spoken at length about the impending crisis. For instance, in an August 2003 interview Simmons was asked if it was time for Peak Oil to become part of the public policy debate. He responded: "It is past time. As I have said, the experts and politicians 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 use of modern energy, it will be a tremendous jolt to our 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: "I don’t think there is one. The solution is to pray. Under the 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 gallon. If you want to ponder just how devastating oil prices in the $200/barrel range will be for the US economy, consider the fact that one of Osama Bin-Laden's primary goals has been to force oil prices into the $200 range. 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 whatever oil 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.

As one commentator recently observed, the reason our leaders are acting like desperados is because we have a desperate situation on our hands. 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.  For what it's worth, Bush's Crawford ranch is completely off-the-grid and equipped with the latest in energy saving and renewable power systems. It has been described as an "environmentalist's dream home." The fact a man as steeped in the petroleum industry as Bush would own such a home should tell you something. On a similar note, Dick Cheney's personal investments indicate he (or more accurately, whoever handles his money) is expecting economic collapse.

"How do I know this isn't just fear mongering by loony-environmentalists and 'the end is nigh' types?"

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. On March 14, 2005 Bartlett gave an extremely thorough presentation to Congress about the frightening ramifications of Peak Oil. During his presentation Representative Bartlett, 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 view a video of Bartlett recommending the article you are now reading to Resources for the Future, an extremely influential DC think tank, by clicking here.

On April 19, 2005 Representative Bartlett was interviewed on national television. Again, he referenced the article you are now reading: "One of the writers on this starts his article by 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." On May 12, 2005 Representative Bartlett gave another presentation about Peak Oil on the floor of the House of Representatives, stating that this website "galvanized" him.

"Are Western governments preparing for the effects of this?"

Yes. In January 2006, the Department of Homeland Security gave Halliiburton subsidiary Kellog, Brown, & Root a $400 million dollar contract to build vast new domestic detention camps within the United States. The camps are ostensibly being built to house and process an "emergency influx of immigrants", which is exactly what the U.S. will be facing between 2008 and 2012 as Mexico's oil production collapses.

In June 2007, the UK Register reported that the Pentagon has been running "war games on the grandest scale" to simulate how billions of people will react to food and fuel shortages, including shortages on the US homeland: ". . . the US Department of Defense may already be creating a copy of you in an alternate reality to see how long you can go without food or water, or how you will respond to televised propaganda...." Source

The British government appears to be making similar preparations behind the scenes. According to a British military report leaked to the press in April 2007, the British government is preparing to control middle class citizen "flash mobs" as the economy collapses under the combined pressures of resource shortages and climate change... Source

"How is the oil industry reacting to this?"

If you want to know the truth about the future of oil, simply look at the actions of the oil industry... In addition to lowering their investments in oil exploration and refinery expansion, oil companies have been merging:

December 1998: BP and Amoco merge;
April 1999: BP-Amoco and Arco agree to merge;
December 1999: Exxon and Mobil merge;
October 2000: Chevron and Texaco agree to merge;
November 2001: Phillips and Conoco agree to merge;
September 2002: Shell acquires Penzoil-Quaker State;
February 2003: Frontier Oil and Holly agree to merge;
March 2004: Marathon acquires 40% of Ashland;
April 2004: Westport Resources acquires Kerr-McGee;
July 2004: Analysts suggest BP and Shell merge;
April 2005: Chevron-Texaco and Unocal merge;
June 2005: Royal Dutch and Shell merge;
July 2005: China begins trying to acquire Unocal
June 2006: Andarko proposes buying Kerr McGee
July 2007: BP-Shell "Mega Merger" rumored

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 companies. The Big Oil companies have also been (quitely) buying back their own stock at an alarming rate....

"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 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 they 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" question: "Is the war in Iraq really a war for the world's last remaining significant sized deposits of oil?" ... ... ...

If Peak Oil was just "Big Oil" propaganda ask yourself:A. Why is Exxon Mobil spending millions of dollars to convince
people there is no such thing as Peak Oil? See Exxon's anti-Peak-Oil advertising campaign. B. Why is its CEO, Rex Tillerson, going on MSNBC and denying Peak Oil? C. Why is Shell doing likewise?

The answers to these questions are simple if you understand how publicly traded oil companies work. An oil company's share value is dictated first and foremost not by the price of oil but by how much oil that company reports having in reserve. A company can't admit its reserves are peaking or it risks seeing its share price drop relative to other companies who report more abundant reserves. Big Oil companies are thus motivated to over - not under - report how much oil they have in reserve....

For more information, read the full original article page 1 here and "alternatives to oil" on page 2 here


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