Saturday, February 21, 2009

The Oil Crisis Is One Of Insanity

“The definition of insanity is doing the same thing over and over again and expecting different results”. Albert Einstein

M. King Hubbert created and first used the models behind peak oil in 1956 to accurately predict that United States oil production would peak between 1965 and 1970. His logistic model, now called Hubbert peak theory, and its variants have described with reasonable accuracy the peak and decline of production from oil wells, fields, regions, and countries, and has also proved useful in other limited-resource production-domains. According to the Hubbert model, the production rate of a limited resource will follow a roughly symmetrical bell-shaped curve based on the limits of exploitability and market pressures. Various modified versions of his original logistic model are used, using more complex functions to allow for real world factors. While each version is applied to a specific domain, the central features of the Hubbert curve (that production stops rising, flattens and then declines) remain unchanged, albeit with different profiles.

At first his prediction received much criticism, for the most part because many other predictions of oil capacity had been made over the preceding half century, but these had been based purely on reserve and production, data rather than past discovery trends, and had proven false. Needless to say, it became a classic case of "I told you so".

Between October 17, 1973, and March 1974, the Organization of Petroleum Exporting Countries (OPEC) ceased shipments of petroleum to the United States, causing what has been called the 1973 energy crisis. In 1975, with the United States still suffering from high petroleum prices, the National Academy of Sciences confirmed their acceptance of Hubbert's calculations on oil and natural gas depletion, and acknowledged that their earlier, more optimistic estimates had been incorrect.

According to the Energy Information Administration, U.S. Petroleum Consumption is 20,680,000 barrels/day while U.S. Motor Gasoline Consumption is 9,286,000 barrels/day (390 million gallons/day). We import 10,031,000 barrels/day. So in essence, we import about 50% of the oil we use. 50 years ago, the United States was the world's largest oil exporter.
This diagram gives the overall picture as of 2007
. The Total World Production as of 2006 was 82,433,000 barrels/day while Total World Petroleum Consumption was 84,979,000 barrels/day. The law of supply and demand dictates in a situation where the demand is greater than the supply, price go up.

This is not a political issue. It is simply a fact of life. Trying to cheat the laws of economics is just as troubling as passing a law that bans hurricanes or gravity. Sadly, the people who make decisions for the world these days play on our emotions with power and instant gratification being the primarily motives. Whenever you are making decisions about economics, money, science, etc..., logic is the way to go. One of the main reasons housing is so unaffordable is in addition to having a phony monetary system, housing prices have in large part been based on just whatever the seller felt like pricing it at instead of relying on logic.

There are ways to address this issue. The biggest challenge is adjusting our mindsets and our daily way of lives to compensate. Innovative thinking about transportation, our daily habits and what not will go a long way towards addressing this issue. Sadly, we are creatures of habit and we are stubborn to change our ways. In the downtown areas, people will live and work there. What's the point of driving if your place of work is just a mile or two away? Not to mention parking downtown is usually a hassle anyways. Buses and trains ought to be considered.
It will vary from city to city.

I think the suburbs over time will cease to exist to a large extent. As the price of gasoline goes up and stays there, many of the trucking companies will either go under or simply change their routes in order to survive. Food production which should be done locally anyways will be going back to that. Food co-ops and farmer's markets will be way to go. In rural areas, they will find a way to mix the use of conventional technologies with old ways like the horse.

This problem we have is largely a problem of convenience for convenience sake and combined with the lack of foresight, we have what we have. We are suffering because of it and we will for the foreseeable future. But we either change our ways or die. Sadly, I think in combination with the instability in the job market, geo-politics, and many other areas, tensions will boil over to the point of it being of no return at least in the short-term. I think it will be a combination of the Road Warrior and Star Wars as the situation goes from massive unemployment, tax protests, sit-ins to literal violence as the power-brokers are removed. It will take another revolution to remove them. It may take another generation, the ones who are children today to figure things out after they are removed. We are mostly 20th century animals doing things in a 20th century way, but clearly those ways are becoming obseolete. What we haven't figure out or mastered yet is what does work in the 21st century? Only time will tell. In any event, I'm ready for anything.

1 comment:

Thabang Motsei said...

"This problem we have is largely a problem of convenience for convenience sake and combined with the lack of foresight, we have what we have. We are suffering because of it and we will for the foreseeable future." Youa re right there, if we all don't start changing our ways, the future will look a lot worse than what it does at the moment.

I enjoyed this piece. BS