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Don't make the economists' mistake of thinking of peak oil
primarily in terms of the price of oil. They refuse to
think of it except in terms of price because they believe as
a matter of professional ideology that the supply of
individual resources cannot limit economic activity. They
believe in the fungibility of everything. The classic
economist's comment is "Peak oil does not matter because
energy is much smaller proportion of GDP than it used to
be." The innocents who say this do not understand that
*nothing* happens without energy, and that decreasing energy
supplies mean a contracting economy no matter what fraction
energy, as such, is of the economy.
As to the rate of the decline of oil production: ASPO
projects a relatively constant rate (absolute rate, not
percentage) decline of "all liquids", which includes
"heavy
oil" and the tar sands and natural gas liquids, of about 1.4
million barrels per day per year, or about 100
gigawatts/year thermal. They project this relatively constant
rate of decline to last for about 40 years before it starts
to tail off into ordinary exponential decline. This may turn out to be
an
extremely conservative estimate for several reasons. We
will find out very quickly by watching the Cantarell field
in Mexico. This field's production is exceeded in the whole
world only by the Ghawar field of Saudi Arabia. It has now
started into decline. We will find out in, say, 3 years
the implications of the advanced recovery methods to which this field
(and all old giants) have been subjected. Many
experts believe that these methods have *already* postponed
the peak of most of the world's old giant and super giant fields
that produce half of all the oil, and that, as a consequence, we are due
for
a rapid collapse of each of each of these old giants once its eventual
decline starts.
This is an apocalyptic projection. it could mean a decline of 5%
per year or more within ten years.
But suppose ASPO's moderate decline projection (about 2% per year)
is valid. This is a deficit of about 4% per year between supply
and the requirements of a growing economy.. This is hardly less
apocalyptic when you consider its economic effects. There is no
way for humans to escape a contraction of everything they do in
the face of such a contraction of the oil supply. The question
then
becomes whether our global culture can keep working when
its growth ethos is forcibly removed. In principle, adaptation
to a slow decline of economic activity seems possible, at
least on the basis of purely physical questions. But when
you look at how economic growth is built into the foundation
of every large human institution, you have to think that we are in
for much bigger problems than mere adaptation to new physical
circumstances. It seems that the foundation institutions of
our global cultural may stop working suddenly, in the space
of a year or two, as the motivations that sustain them are
seen to have disappeared--banking, capitalism, social peace
and democracy based on the expectation of bigger pies.
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