TEOTWAWKI 5: Peak Oil (2017 Podcast Transcript)


Hello and welcome to physical attraction — the TEOTWAWKI specials. This is the show that explores the ways the world might end — one apocalypse at a time.

Now for the favourite of many a rugged survivalist camped out in the deep forests, or busy making new improvements to their underground bunker and restocking with tinned supplies: peak oil. This is really a special case of the Malthusian catastrophe that we dealt with in episode 7 — but I think it deserves special attention partly for the degree of attention that it’s received, and partly because I think it’s more likely than a “classic” Malthusian crisis. You’ll remember that Malthus was concerned that we’d run out of food, specifically: in my view, our agricultural resources have a greater potential to be developed than our ability to extract fossil fuels from the ground, although I could be wrong on that front. Also, it gives me an opportunity to have a rant about renewable energy, which I just selfishly want to do anyway.

So what is peak oil? It’s very simple. Fossil fuels, as we know, are just the fossilised remains of dead plants and animals, buried in the ground. There can only be a finite amount of fossil fuels. Eventually, production of oil, coal, and natural gas is going to hit a peak and then decline, as the remaining fossil fuel reserves are harder and harder to mine, and more and more costly. When this decline is observed, and people begin to realize that we’re running out of the fossil fuels that have driven our electricity supplies and economy for so long — the result will be a spike in the prices of fossil fuels, economic collapse and general catastrophe. Tensions in already wonderfully politically-stable regions such as the Middle East will rise, and the potential for war will increase: general destruction and devastation.

But not everyone sees things this way. One of the most chilling statements I’ve ever read is from Dr Christoph Ruhl, who was the chief economist of BP, and therefore has no financial interest in dispelling rumours of peak oil. He said:

“Physical peak oil, which I have no reason to accept as a valid statement either on theoretical, scientific or ideological grounds, would be insensitive to prices. … In fact the whole hypothesis of peak oil — which is that there is a certain amount of oil in the ground, consumed at a certain rate, and then it’s finished — does not react to anything … Therefore there will never be a moment when the world runs out of oil because there will always be a price at which the last drop of oil can clear the market. And you can turn anything into oil into if you are willing to pay the financial and environmental price … (Global Warming) is likely to be more of a natural limit than all these peak oil theories combined. … Peak oil has been predicted for 150 years. It has never happened, and it will stay this way.”

I’ve read this statement dozens of times and I still can’t get my head around what he’s saying here. The whole hypothesis that there is a certain amount of oil in the ground doesn’t react to anything? Well, no, but the whole hypothesis that water is wet doesn’t react to anything. At first he seems to be saying that when there’s one drop of oil left, the price will be infinite — and so somehow this will be equivalent to never running out of oil — and then, the scary, Bond Villain statement that you can turn anything into oil if you’re willing to pay the price. Which sounds so much like Soylent Green is people that I’m kind of afraid of it. However, I will give Christof Ruhl credit for acknowledging that climate change is probably going to be the limiting factor in terms of our consumption of fossil fuels. It still doesn’t change the fact that, at some point, there’s going to be a transition, and if we haven’t figured out how to reduce our dependence on fossil fuels, it could be a very bumpy one.

But okay, I accept that there are new technologies that allow previously untapped reserves to be turned into oil; hydrocarbon fracking, etc. But if these processes are more costly and more time-consuming than ever before — as they likely will be compared to the good old days where you could drill into the ground and get flattened by a massive torrent of oil, like in that one Simpsons episode — then you haven’t really addressed the problem of declining production and spiking price. The idea that there will be one, infinitely valuable barrel of oil — or that we can just process dead people, animals, and the food crops we need to live into oil — neither is a particularly comforting prospect for peak oil doomers.

This is a very difficult topic to research because the politics of it is so fraught, and it runs the gamut from people who are convinced that peak oil is impossible — and will never be reached — and people who are convinced that peak oil has already occurred, and we just haven’t realized it yet. Issues arise because obviously the production of oil doesn’t follow a neat curve, with an obvious peak. There are plateaus — and, most of the time, when the production plateaus, people predict that peak oil has occurred. This happened as far back as 1915, and predictions have been frequent in the decades since. The original model, the Hubbert model of peak oil, suggests a simple curve of rise and decline as you’d expect for the exploitation of a finite resource; and while it fits the data better than some other models, none of the models have proved especially good at predicting when the peak will happen. Oil production from individual countries often follows a decent Hubbert peak. But, obviously, in a globalised world, this doesn’t necessarily mean all that much: maybe production just declines because they’re being outcompeted by other nations, rather than necessarily that the reserves have run dry.

The other major issue is that there are plenty of different statistics you can use which relate to oil. So, for example, the amount of oilfields being newly discovered peaked a long time ago in the 1960s, when they found 55 billion barrels of new reserves a year. The rate of discovery in the modern era is around 10–15 billion barrels a year, although it seems pretty stable at that. We’re currently producing around 35 billion barrels a year. But sometimes ‘discovery’ gets confused between new oilfields and old oilfields; they’re constantly exploiting older oilfields in new ways and extracting more oil from them. And estimates for the total amount of proven reserves — the oil that can be accessed — keeps rising. The proved reserves according to OPEC are now nearly 1.5 trillion barrels, which — assuming no more is discovered, but that our consumption doesn’t rise either — gives us a minimum of 40 years until we run out. Yet lots of people have disputed these OPEC figures; the ambiguity arises in what you consider to be oil that can be extracted, and what you don’t consider can be extracted. And all of this assumes that people are being honest about what’s available, which is highly dubious given the amount of money that can be made out of oil. You can see graphs where sudden jumps in the “reserves” reported by countries — basically because they’ve reclassified a whole bunch of potential oil as extractable — seem to come out of nowhere. The result is that a hell of a lot of figures are flying around, and, after a while, you start to doubt that any of them is truly reliable. Which is maybe exactly what people on both sides of the political divide want; after all, when the facts are less certain, people fall back on their gut feelings, and that’s good for politics.

Most people agree that there is far more oil in “unconventional reserves”, i.e. not traditional oil wells — so we’re talking about tar sands, fracking for natural gas, this kind of unconventional reserve — than there is remaining in the conventional reserves. But whether unconventional reserves can ever replace their more conventional cousins is also a source of considerable debate. For a start, more drilling effort is required — and it’s more energy-intensive to purify these reserves for actual use. Way back in 1900, much less energy was required to extract the oil than was gained from burning it. The ratio used to be around 100:1. Now it’s closer to 20:1, and for oil from tar sands, 3:1. It may well reach a point where we can’t obtain decent returns on extracting these unconventional forms of fossil fuel — it might actually require more energy than we can gain from burning the oil, and they’ll have to remain in the ground. Yet, at least recently, the US has taken over again as the lead producer of oil due to its ability to tap these unconventional reserves. So it is really, really difficult to see where we are. For every ‘expert’ who tells you that peak oil will never arrive, you can find others who will tell you that it will happen in the next twenty years, or that it has already occurred. It’s infuriating.

But regardless of how infuriating it is, it seems clear to me that fossil fuel production is in a similar “Malthusian race” to the production of other types of resource like we talked about in the previous episode. It is going to be necessary for new innovations to outstrip the rate of change of demand if we want to avoid a peak-oil style catastrophe. And whether that’s possible is very much in the balance — both of the rate of change of human innovation, and in subtle questions of the economic demands of new methods of production. There are almost too many unknowns to make predictions — and yet you’ll find plenty of people making confident predictions either way.

Personally — I think this is all a little overwrought. Technological developments will change things. But it’s really just a matter of decades. In the grand scheme of things, we cannot go on using fossil fuels forever. The fossil fuel era is going to be a tiny fraction of human history. Now, as Dr Ruhl points out, you could feasibly imagine a future driven by oil where biofuels have essentially replaced all of the functions that oil once had. But at some point — whether it’s driven by a scarcity of resources, or other economic factors — more likely a confluence of everything — we’re not going to be digging up fossils to burn any more.

Will we be able to reduce our dependence on fossil fuels in time? Renewable energy currently accounts for around 8% of world electricity production. You can see people quote statistics like renewable sources of energy accounting for a quarter of energy consumption. Yes, that might be true by some definition — but usually this includes biomass as a large fraction. Essentially, people who still burn wood on fires to keep warm, things like that. Which is indeed a renewable source of energy, and I suppose shouldn’t be discounted, but it’s hard to see how this could replace fossil fuels in an environmentally sound way. So we are still very, very deeply dependent on fossil fuels. Nuclear fission power is not a solution, because Uranium is also a finite resource — although it might buy us some time, especially if it looks like peak oil is drawing near. Again, you have to be careful of weasel-ways of defining these things.

Can we replace our entire energy infrastructure with renewable energy? This is maybe the biggest question facing the species in the medium-to-long term. A brilliant resource for this is Sustainable Energy Without the Hot Air, which you can download for free online, by the late David Mackay FRS — he explains what Britain would look like if we attempted to supply all of our energy demands with renewables that were generated in this country. I cannot recommend this book highly enough — it’s pitched just perfectly. It explains how different forms of renewable energy work, and how they might be implemented. Anyone can read it and understand it; and yet there are simple, practical insights that are refreshingly unbiased by political concerns. It’s probably the best book I’ve read on the subject — completely fact-driven. And while Mackay — like anyone reasonable — shows his hand a little with the dedication “To those who will not have the benefit of two billion years of accumulate energy reserves” — he’s motivated by the science, and the numbers, and a desire to cut down on the confusion of figures that has frustrated me when I’ve been trying to look into peak oil predictions for this episode. With simple mathematics he illustrates the scale of the challenge that’s facing us. Okay. I’ll stop gushing. Please read it.

The challenge is that we need a lot of renewable power; covering every reasonable surface in solar panels still might not cut the mustard. To power the UK by solar alone, he estimated we’d need to blanket 20% of the country in solar panels. Which could be tricky, to say the least. Of course, other sources like wind and hydroelectric power can help out. In reality, our renewable future — should we ever manage to get there — is going to depend on a complex mix of power sources that allow us to compensate for issues like the variability of power output from solar and wind: possibly with a focus on battery storage.

So covering 20% of the country in solar panels, or 10% in solar panels and 10% of wind farms — this kind of thing is fantastical. Offshore wind farms can help more — and, actually, currently, they’re the cheapest electricity supplies to install in the UK by some margin — but you’d still need a hell of a lot of them. And solar panels are already reaching theoretical limits of efficiency, although some very clever scientists are looking to get around them — I wrote an article on that, in case anyone’s interested, I’d be more than happy to do a mini-episode about it.

People might hear these figures and throw their hands up in despair. I take them as evidence that we’re not doing enough. The solutions may eventually need to be more radical. But they need not necessarily involve a massive reduction in consumption — although any reduction in consumption will help.

The point needs to be made: the UK is not a fantastic place to put solar panels. If you’re going to blanket a huge area in solar panels, what about the Sahara Desert? This is one of the areas where the sunlight intensity is consistently strongest. Global electricity consumption is 17.3 Terrawatts of power. That is, every second, we consume 17.3 million million joules of energy. A joule is about the energy required to lift an apple from the floor onto a table. If you had an area of around 43,000 square miles covered in solar panels, it would supply the world’s energy needs. That’s just 1.2% of the Sahara desert. I mean, okay, the Sahara desert is vast and huge and massive and it’s the equivalent of an area bigger than the entire United Kingdom, but… If you’re a dreamer, it can be done. And it seems more feasible to me than blanketing 20% of a nation like the UK with solar panels.

The issues arise from the cost of initially building this massive power plant — some $5trn estimated by Forbes and I see it rising much higher than that because this type of project inevitably does. Yet if we take $5trn at face value, what is that? The Iraq war cost $2trn. If you believe that peak oil is going to happen and more, similar wars will be necessary for securing the oil supply, then maybe it’s worthwhile — although, let’s be honest here, if energy security was the real aim of Iraq they could have spent the money in far, far better ways. $5trn is around ¼ of the US National Debt. Less than the wealth of the 2,000 richest people. And it’s not like this money is going into a black hole. Energy expenditures account for roughly $6trn a year, 10% of the world’s GDP. You’d make your money back in no time.

Obviously I’m being flippant. There are still huge, huge channels for large-scale solar panels like this — not least energy storage, which is still really in its infancy compared to where it would need to be for this to be viable — and in transportation. Although developments in high-voltage cables that can transport power across long distances are developing. And then there’s the security issue of having the entire global energy supply in one place, and who gets the profits etc. — if you’re going to insist that natural resources can be owned by people, then, really, it’s exploiting Africa all over again. So all of these things that are ruined by human nature and our lack of desire/ability to cooperate fairly with each other, it’s really tragic. And we should point out that it was this, amongst other concerns, that led to the first really large-scale effort towards actually getting this done — DESERTEC — to be broadly abandoned back in 2013. Investors pulled out of the project, which they’d hoped would supply up to 15% of Europe’s power supplies via electricity wired in from the Sahara desert. The political and practical concerns were too much for them. The truth is that you need a huge capital outlay — in strengthening the infrastructure as well as building the plant. Now, large-scale transmission of power between nations does happen — in fact, here in the UK, surges in demand are met by an undersea cable that can import masses of power from France (for a price) — but the technology has not yet been fully developed yet. The storage, to deal with the intermittency problem, is a much bigger concern. But, since we’re in the realm of dreams already, why limit yourself to just one desert? Solar panels in the world’s deserts needn’t be focused on the Sahara. The sun’s always shining somewhere. And, if you combined this with other forms of electricity that can be turned off and on more readily — like hydroelectric power, or pumped-storage where water is pumped uphill during times of excess production and released downhill through turbines when it’s needed — you might just be in with a shot at meeting demand. Denmark and Norway, which generate vast amounts of their power via renewable energy — up to 59% — cope with the intermittency problem by trading power with each other. And, since for this to work we’re kind of assuming that the grid goes global and country’s power supplies become more deeply interconnected, it’s not impossible to imagine that this could be scaled up.

There is, at least, no physical reason why this couldn’t happen. Write to your local politicians and demand solar panels in the Sahara!

I’m being a little bit tongue-in-cheek, but the truth is, as David Mackay points out, little changes are not going to cut it. If we are really going to supply our energy needs with renewables, the change is going to have to be big, and it’s going to have to be radical. You might look at something like the Sahara plan and think that it’s completely ridiculous. You can look at the depressing facts about just how much further renewables have to go before they can supply our energy needs and throw up your hands in despair. Or you can view it as a challenge that we have to face. Unless we can develop nuclear fusion reactors, or some other source of energy that hasn’t even been considered yet — something like this is going to be necessary, at some point, if we want to continue to consume energy the way we do right now, and if we want to extend the rights to the same level of consumption that we enjoy to the rest of the world. You may believe that the international collaboration alone is too much to ask of the species. I hope that it is not.

Some good news is that solar panels have been decreasing in price incredibly quickly. Again, some of the statistics are prone to manipulation and exaggeration; and we have to remember that good sites for solar panels are also a finite resource. At the moment, we’re waaay off saturation, so it’s going to be much cheaper to invest in solar compared to mature, saturating technologies like fossil fuels. Even with these caveats, it’s striking how fast the price has been coming down. Estimating prices is tricky; It’s already cheaper than coal — so, regardless of the political efforts you might make, you’re not going to beat the free market when an energy executive is deciding which type of power plant it makes the most financial sense to install.

One subtlety in this argument that I’ve missed out so far is that, obviously, for any of this to work — we need to say goodbye to petrol-driven cars. And, on this front, we are at least finally making progress. Tesla — although they’re only a small part of the market share at the moment — have proved the concept. People are driving around in electric cars. You’re beginning to see, in some places, car-charging points alongside car parks. So there is hope, on this front, that we can eventually shift most of the transportation network onto electrical power; and then, if this can be generated renewably, we can eliminate our dependence on fossil fuels entirely. The added bonus is that electric cars will likely be much more efficient than traditional petrol-powered cars.

Shifting the global energy economy towards renewables is going to be a huge challenge. It can be done; the resources are there. I can dream of a future — maybe in a hundred years, maybe in two hundred — where we no longer need fossil fuels. As to whether we’ll manage to achieve it before things go badly wrong, and we run out of fossil fuels long before sufficient renewable capacity is built — or we burn so many fossil fuels that irreversible climate change becomes the limiting factor, like Dr Ruhl said it would — I can’t know. I really, really hope so, though. And if peak oil does manifest itself, and the price starts shooting up… providing we can avert the apocalypse in the meantime, it might just give us the kick-start we need to stop pretending that we can dig these fuels up forever. Hopefully we will be too smart, and too prudent to allow a peak oil catastrophe to wreck civilization. I wouldn’t bank on it.

Thank you for listening to this TEOTWAWKI special of Physical Attraction.