The end of cheap oil

This blog is retooled from a commentary that I've written for "Street Roots", a newspaper that is operated by and for Homeless people. Thanks to Rowan for her collaboration on the original article.

The news for 2005 has been dominated by headlines about oil and rising gas prices around the U.S.: barrel prices nearing $70; truckers striking over high costs, low wages, and inadequate fuel surcharge compensation; and increasing transportation costs and airline bankruptcies; and most recently, Hurricane Katrina damaged oil platforms, refineries and pipelines, causing gas shortages in the Atlanta suburbs.

Oil is such big news that an email was floating around calling for September 1 to be “BUY NO Gasoline Day”. Another email I recently received from two different friends calls for the boycott of Exxon and Mobile to bring the gas prices back down to $1.30 price range.

Although the ideas are nice, I doubt the effectiveness. It’s a matter of supply and demand. Demand is outstripping the supply.

According to the Energy Information Administration (EIA) Supply is 84.12 million barrels per day; demand is 84.38 million barrels per day.

There are 600 million total vehicles worldwide that run on oil; 200 million of these are in the U.S. The world currently consumes nearly four times as much oil as is discovered. With car use around the world (including in the U.S.) growing, the demand will only continue to grow beyond the finite supplies of oil.

U.S. oil production peaked in the 1970s, and every year we have to import more oil to make up for the shortfall in production. There is proof that other countries are reaching their peak. According to Chevron, oil production is in decline in 33 of the 48 major oil producing countries.

The era of cheap oil is dead. We have reached the era of Peak Oil.

"Peak Oil" is the most common term for the end of cheap and easily available oil resources. The "peak" refers to a model created by M. King Hubbert, a geologist for Shell Oil. Briefly, the "peak" is the point at which any given oil well, field, or global oil supply, reaches the production peak. After that point, the remaining oil becomes increasingly costly to extract and refine. Peak oil as a term generally refers to the global availability of oil. See my previous blog, "The End of Suburbia..." or check out Wikipedia (Hubbert's Peak), the Energy Bulletin's Peak Oil Primer, or Portland Peak Oil for further information.

It's not just cars that use petroleum/oil. Modern societies and the global economy are driven by cheap oil. It has fueled the rapid developments seen through the 20th century. Everything from food production (industrial agriculture), to plastics, to transportation, is linked to this one resource. Any process, activity, or product that utilizes petroleum will become increasingly more expensive the further past the global peak we move. The cost and availability of petroleum will, and is, driving up the prices on all of these areas. Since the various industries this crosses also involves millions of jobs, each of those are impacted as well. This is why national and global economic collapse frequently comes up in peak oil discussions and scenarios.

Oil executives, including Mike Bowlin, Chairman of ARCO, petroleum geologists like Colin Campbell (formerly of Texaco and Amoco), and energy consultant Matthew Simmons, who was an adviser on Vice President Cheney’s 2001 energy task force, all acknowledge the existence of Peak Oil.

Peak oil is not a partisan issue. It will affect people in every economic strata; although people in poverty will be disproportionately hit by an oil crash.

We are already being effected to some degree in the Portland-metro area.

In Portland, mass transit riders are feeling the pinch. Tri-Met raised its fares twice this year. Tri-Met adjusts prices for inflation every September; this year’s fare increase was 10 cents, with five cents for inflation and five cents for rising diesel costs. The five-cent increase in April’s five-cent increase was directly related to diesel prices, said Mary Fetsch, communications director.

One neighbor, who uses oil to heat her home, said her bill rose by nearly $200 this year. The Energy Information Administration data shows that Oregon’s average prices in 2004 for heating oil were $1.59/gallon. In May 2005, prices had risen to $2.02/gallon.

Census Bureau numbers show the number of Americans living in poverty has increased for the fourth year in a row. This means more people using food banks and other social services to help make ends meet. The Oregon Food Bank’s preliminary reports show about a 4 percent increase of the number of emergency food boxes distributed this year by their network of hunger-relief agencies. The Oregon Food Bank sends food items around the state. This could have horrible consequences for people who need a little extra help feeding their family, especially if they pay extra to fill up their car to get to work.

When will this peak happen? Many argue we may already have passed the "peak." Some feel that peak will be reached in 2005-2006. Others believe that the peak will happen somewhere between 2008 and 2030. The variation in dates is based on several issues. The first is accurate information about existing reserves. In the last two years, it has come out that oil producing nations and oil companies have overestimated their reserves. They have done this because it is profitable to do so. More oil in the ground means more collateral and longer production capacity. Another factor is calculating increasing demand. One can only estimate demand and the usual "estimate" is 2% growth per year. However, Asian nations are in a rapid development cycle (particularly China and India) and U.S. consumption alone is increasing at above 2%. Since we are likely to "overshoot" (continue increased usage past the peak without knowing we have done so) it is likely that we will be at some point beyond the peak before we know it has happened.

I'm not normally one to say "the end is nigh" but after watching the aftermath of Katrina, I feel like I'm watching the end of cheap oil and a new era in our U.S. culture.

We have to prepare ourselves.

Only conservation will delay the oil crash. Although there are currently no alternative energy sources that can replace oil at the amount that we currently use, a delay may give us time to develop new, renewable sources of energy. Car pool, use mass-transit, bike, walk or get a more fuel effecient vehicle or one that runs on biodiesel or even hybrid or electricity. If you have a diesel car, fill it with biodiesel (made from recycled vegetable oil). The cost of diesel is quickly catching up to the cost of biodiesel and soon may be more expensive. Our car actually runs better on biodiesel than it does on diesel.

Learn all you can. There are numerous books, published articles and an excellent documentary entitled “The End of Suburbia”. For a listing of books, articles, and websites, see this webpage.

Tell your friends, family, neighbors (get to know them, we're going to need them) and local governments. Working together we can decrease the effects of an oil crash and ensure that we are prepared with enough food, shelter, and other basic needs. Also, plan how you and your neighbors can help each other in an emergency.

Localize. Support local farmers, restaurants and businesses who use local ingredients and products that don’t need to be shipped long distances using costly fuel. Besides, locally grown foods taste better and can be less expensive (i.e. you pick, farmer’s markets.)

Learn or re-learn how to farm and garden, can and store foods, knit, and other old, sustainable ways of living.

Prepare yourself. Check out the document-in-progress that lists tips and steps for preparing for the oil crash. After the Katrina debacle, we can't expect the federal government to come galloping in and rescue us. Make sure you have extra food, water, candles, batteries, and blankets, in case.

If you're in the Portland area, come meet others who are concerned about the issue. Portland Peak Oil meets every Wednesday at 7 p.m. in the St. Francis Dining Hall (1182 SE Pine St.) Find out more about our group and the issue. We strive to build community, get the word out, live sustainably and prepare for Peak Oil.

If you live outside of Portland, go to the Post Carbon Institute and see if there is a group near you. You can also start your own group in your neighborhood, church, city, or region.

Will we decrease our dependence on oil or will we have to learn the hard way?