Academy of Economic Studies

Project – Microeconomics

OIL DEPLETION

Bucharest, 2011
 Content

1. Introduction
2. Resource availability
3. Depletion all over the world – causes and development –

4. Production decline models

4.1. Oil well production decline

4.2 .Oil field production decline

4.3. Multi-field production decline

4.4 .United States production decline

4.5 .World oil production

5. Implications of a world peak

5.1. Catastrophe

5.2. Rising food prices

6. Facing the future

7. Conclusions

8. References
 Peak Oil: an Outlook on Crude Oil Depletion

"If you don't deal with reality, reality will deal with you"

1. Introduction

Peak oil is a turning point for Mankind. The economic prosperity of the 20th
Century was driven by cheap, oil-based energy. Everyone had the equivalent of
several unpaid and unfed slaves to do his work for him, but now these slaves are
getting old and won't work much longer. We have an urgent need to find how to live
without them.
It is stressed that we are not facing a re-run of the Oil Shocks of the 1970s.
They were like the tremors before an earthquake, although serious enough, tipping
the World into recession. Now, we face the earthquake itself. This shock is very
different. It is driven by resource constraints, not politics - although of course politics
do enter into it. It is not a temporary interruption but the onset of a permanent new
condition. The warning signals have been flying for a long time. They have been plain
to see, but the world turned a blind eye, and failed to read the message.
Our lack of preparedness is itself amazing, given the importance of oil to our lives.
The warnings were rejected and discredited as if they were words of soothsayers and
prophets. But the warning was not prophecy - it simply recognised two undeniable
facts:
 You have to find oil before you can produce it
 Production has to mirror discovery after a time lag

As we move into an era of oil depletion and energy constraint, everything from
transportation to medicine to food to climate change response strategies will be
affected. Almost everything we do is dependent on oil.
Depletion is an easy concept to grasp. Think of an Irish pub full of happy people.
Think of their pleasure at the first sip from a full glass. Think of the frowns that begin
to cross their faces when their glasses are half-empty. They know they have drunk
more than is left. It is the turning point. Watch them savour the last drops. While they
can order another round of drinks, they know in the back of their minds that
eventually closing time will come when there are no more to be had. That is the
meaning of depletion. We need to know how big each glass - or oilfield - is, and we
need to think of closing time, and judge how many oilfields are left to find.

2. Resource availability

Oil reserves are the quantities of crude oil estimated to be commercially

recoverable by application of development projects to known accumulations from a
given date forward under defined conditions. To qualify as a reserve, they must be
discovered, commercially recoverable, and still remaining. Reserves are further
categorized by the level of certainty associated with the estimates. This is contrasted
with contingent resources, which are those quantities of petroleum estimated, as of a
given date, to be potentially recoverable from known accumulations.

Figure 1

We may start by asking two simple questions:

o How much oil has been found? and
o When was it found?

They sound simple, but they are difficult to answer because the data are weak.
There is no consistency in what is reported. There is a large range even for
production, which is simply reading the meter. Reserve estimates are still less
reliable. The treatment of gas liquids ranges widely.
The industry is required to furnish estimates of so-called Proved Reserves in
its financial reports to governments and the stock-exchanges. These estimates relate
to what the wells in the current stage of development are expected to produce, but
say little about what the field as a whole may eventually deliver. The industry has
accordingly systematically under-reported the size of discovery. It has good
commercial reasons for doing so rather than booking all their reserves up front
because it smoothes their assets, presenting a better image.
By no means all economists believe in a flat-earth. There are enlightened
economists who now relate economics with resources, and they are coming to the
fore. Financial institutions too are beginning to understand the inevitable reality of the
depletion of oil.

Many countries maintain government-controlled oil reserves for both economic

and national security reasons. According to the United States Energy Information
Administration, approximately 4.1 billion barrels (650,000,000 m 3) of oil are held in
strategic reserves, of which 1.4 billion is government-controlled. These reserves are
generally not counted when computing a nation's oil reserves.

3. Depletion all over the world – causes and development –

A few examples illustrate the nature of depletion. Remember that the peak of
discovery has to be followed by the peak of production, which generally comes close
to the midpoint of depletion when half the total has been used.

Figure 2

Let us start with the US-48, the most mature oil country of all. It had plenty of
money, every incentive with the oil rights in private hands and soaring imports, and it
had a large prospective territory. We can be sure that if more could have been found,
it would have been found. So what did Nature deliver? Discovery, shown in green,
peaked in 1930 at the edge of the chart. Production peaked 40 years later. It is the
same pattern in the North Sea (UK, Norway and Denmark), which peaked in 2001.
Advances in technology have reduced the time lag from peak discovery in 1974 to 27
years. We are getting better at depleting our resources.

Figure 3

Figure 3 shows the World as a whole. The oil shocks of the 1970s cut demand
so that the actual peak came later and lower than would otherwise have been the
case. It means that the decline is less steep than it would otherwise have been. It
reminds us that if we produce less today, there is more left for tomorrow. It is a lesson
we need to relearn as a matter of urgency.

Figure 4
 This shows the distribution of oil. Note how North America has consumed
most of its oil, and how the Middle East has most of what is left. It introduces the
notion of Swing Share. The five Middle East major producers countries have been
forced into a certain swing role around peak, whereby for a certain limited period,
they can - at least in resource terms - make up the difference between world demand
and what the rest of the world can produce. Swing Share was 38% in 1973 at the
time of the first oil shock. It had fallen to 18% by 1985 because new provinces in the
North Sea, Alaska and elsewhere started to deliver flush production from their giant
fields, which are usually found first. It is stressed that these new provinces had been
found before the shock and were not a consequence of it, as is so often claimed by
flat-earth economists. Swing share reached 29% in 2000, before falling to 25% in
2001 in response to falling demand. Under the new scenario, discussed below, it is
set to reach 40% by 2010, which will likely represent the limit of capacity. Unlike in
the 1970s, this time there are no new major provinces waiting to deliver, or even in
sight.

Figure 5

This shows the depletion of the Middle East swing countries. Production
matched the theoretical unconstrained model well until the shocks of the 1970s when
it was artificially restricted by OPEC quota. Actual production has been far below
what was possible. Even though World demand is assumed to be flat under the 2001
Scenario, discussed below, the Middle East swing countries will be under pressure to
increase their production rapidly to offset the decline elsewhere. The scenario
assumes that they can reach 24 Mb/d by 2010 but it may prove to be beyond their
ability, given that weak prices for the next few years curb incentive.
 It is worth digressing briefly to explain the impact of expropriation. It started
with BP in Iran in 1951 but had spread to the other main producers by the 1970s. The
major companies lost their main sources of supply. Had they remained in control,
they would have produced the cheap and easy oil before turning to the expensive
and difficult, offshore and in remote areas. It would have given a gradual transition as
depletion began to grip. But when they lost their main supplies, they moved to the
expensive and difficult areas and they worked flat out. The main OPEC governments
were left with the cheap and easy stuff. It was contrary to normal economic practice
and one of the causes of the impending crisis.

4. Production decline models

This shows the effect of proper backdating. The discovery trend shown in
yellow is falling not rising.
You will hear many claims for technology. No one disputes the huge
technological advances of the industry. But, what has been the impact? In
exploration, it shows better both where oil is and where it is NOT - thus allowing
better estimates of the potential to be made. In production, it keeps production rate
higher for longer, but has little impact on the reserves themselves. Note that much of
the oil in a reservoir cannot be extracted because it is held there by capillary forces
and natural constrictions. The percentage recovered can be improved in some cases
by injecting steam and other well-tried methods, but by no means all fields are
susceptible to treatment. Most modern fields are produced to maximum efficiency
from the outset.
Oil production decline occurs in a predictable manner based on geological
circumstances, governmental policies, and engineering practices. The shape of the
decline curve varies depending upon whether one considers a well, a field, a set of
fields, or the world.

4.1. Oil well production decline

Oil well production curves typically end in an

exponential decline. At natural rates, oil well
production curves appear similar to a bell
curve, a phenomenon known as the Hubbert
curve. The typical decline is a rapid drop in
production, and eventually a leveling off to a
point at which they no longer produce
profitable amounts. Such wells are referred to
as marginal or stripper wells.

The shape of production curve of an oil well

can be affected by a number of factors:
 Well may be restricted by choice by lack of market demand or government
regulation. This flattens the peak of the curve, but will not change the well's total
production significantly.
 Hydraulic fracturing (fracing) or acidizing may be used to cause a sharp spike in
production, and may increase the recoverable reserves of a given well.
 The field may undergo a secondary or tertiary recovery project, discussed in the
next section.
 4.2. Oil field production decline

Each individual oil well is a portion of a larger

fixed area oil field. As with individual wells,
discovery and production amounts of oil fields
generally average to a similar bell shaped
production curve. Eventually, when the field is
completely drilled out, a field's production goes
into a sharp decline as the average production of
its wells enter decline. As this decline levels off,
production can continue at relatively low rates. A
number of oil fields in the U.S. have been
producing for over 100 years.
Oil field production curves can be modified by a number of factors:
 Production may be restricted by market conditions or government regulation.
 A secondary recovery project, such as water or gas injection, can repressurize
the field and improve the production rate temporarily. However, it will not change the
total production amount over the life of the field. Eventually the field will go into a
steeper than normal decline.
 The field may undergo an enhanced oil recovery project, such as drilling of wells
for injection of solvents, carbon dioxide, or steam. This can be very expensive but
allows more oil to be coaxed out of the rock, increasing the ultimate production of the
field.

4.3. Multi-field production decline

 Most oil is found in a small number of very large oil fields.
If oil fields are discovered at a constant rate until they have all been found, the
combined production of fields will yield a curve such as the one at right. Production
starts off slowly, rises faster and faster, then slows down and flattens until it reaches
a peak. After the production peak, production enters an exponential decline,
eventually flattening out. Oil production may never actually reach zero, but eventually
becomes very low. Factors which can modify this curve include:

 Inadequate demand for oil, which reduces steepness of the curve and pushes its
peak into the future.
 Sharp price increases when the production peak is reached, as production fails
to meet demand. If price increases cause a sharp drop in demand, a dip in the top of
the curve may occur.
 Development of new drilling technology or marketing of unconventional oil can
reduce the steepness of the decline as more oil is produced than initially anticipated.

4.4. United States production decline

 Oil production in the United States has
followed the theoretical Hubbert curve. U.S. oil production reached its peak in 1970
and by the mid-2000s it had fallen to 1940s levels. In 1950, the United States
produced over half the world's oil, but by 2005 that proportion had dropped to about
8%. In 2005, U.S. crude oil imports were twice as high as domestic production.
The production peak in 1970 was predicted in 1956 by Hubbert. By 1972 all
import quotas and controls on U.S. domestic production had been removed. Oil
companies began drilling large numbers of oil wells on a nationwide scale. Despite
this, and despite the quadrupling of prices during the 1973 oil crisis, the production
decline has, to date, proven irreversible.
The actual U.S. production curve does deviate from Hubbert's 1956 curve in
some significant ways:
 When oil surpluses created a glut on the market and low prices began causing
demand and production curves to rise, regulatory agencies such as the Texas
Railroad Commission stepped in to restrain production.
 The curve peaked at a sharp point rather than gradually flattening out. This
occurred because as consumption began to approach production limits, oil
companies drilled out all their existing fields as fast as they could, and many of those
fields peaked simultaneously.
 Production fell after 1970, but started to recover and reached a lower
secondary peak in 1988. This occurred because the supergiant Prudhoe Bay field in
Alaska was only discovered in 1968, and the Trans-Alaska Pipeline System (TAPS)
was not completed until 1977. After 1988, Alaska production peaked and total U.S.
production began to decline again. By 2005, Prudhoe Bay had produced over 75% of
its oil.
 4.5. World oil production

World oil production has followed a typical Hubbert curve, rising over the past
century with only a few dips. The 1970 production peak in the U.S. caused many
people to begin to question when the world production peak would occur. The peak
of world production is known as Peak oil. By the mid-2000s, all of the world's major
oil producing countries except Saudi Arabia were producing at maximum capacity
(many having peaked in production), and some experts such as Matthew Simmons
were questioning whether even Saudi Arabia had any reserve capacity left.
Industry observers have pointed to the similarities between the global production
curve in mid-2000s and that of the United States in the 1970s.
 The oil price increases since 2003 were preceded by a decade of production
cutbacks in OPEC countries in an attempt to keep prices high despite an oil
glut. This is similar to production cutbacks in Texas and other states to
maintain prices despite an oil glut in the decade prior to the 1973 oil crisis.
 World oil prices reached record inflation adjusted highs beginning in 2008, but
new oil did not appear on the market, as the theory of supply and demand
would predict. This is reminiscent of price increases in the United States in the
 1970s when U.S. oil production started to decline despite record high prices
and record drilling by oil companies.
 There are serious doubts about whether OPEC countries really have the oil
reserves they claim. This is similar to the illusionary oil reserves that U.S. oil
companies claimed to have in the decade prior to the 1973 and 1979 oil crisis.
In the 1970s, those companies were unable to produce as much oil as they
had predicted, and production went down instead of up.

5. Implications of a world peak

Peak oil has profound economic implications, most of which are unwelcome.
There is good evidence indicating that peak oil triggered the global economic crisis;
that oil price was the limiting factor that broke the momentum as the global economy
tried to keep expanding.
The current relative collapse in oil prices, even if caused by peak oil, leads to
the political problem of convincing the general public that oil dependence should
remain a central concern when its price decreases.
If alternatives were not forthcoming, it has been speculated that the numerous
products produced with oil would become scarcer, leading to at the very least lower
living standards in developed and developing countries alike, and possibly in the
worst case to the collapse of the entire international banking system, which could not
likely sustain itself without the prospect of growth. The political situation may change
dramatically, with potential wars between countries over access to dwindling
supplies. Accordingly, inequalities between various countries and regions of the
world may become exacerbated.

We have to take into consideration the following ideas:

1. Peak Oil is more about transitioning from a world with an increasing supply of oil
to a world with a decreasing supply of oil, and less about the actual date of the peak.

Oil is a non-renewable resource, which means that oil reserves began declining after
the first barrel was produced. Over time, the combination of technological
advancements and big discoveries allowed for the extraction of larger amounts of oil,
but at some point oil production will peak and begin to decline. Numerous countries,
including the United States, have illustrated this trend. So, if we know that at some
point oil production will begin to decline, why deny the inevitable instead of preparing
for that decline?

2. The important question is not “How much oil is left?” but rather “How much oil can
be extracted at a significant energy profit?”

Howard Odum wrote in the early 1970’s that:

The true value of energy to society is net energy, which is that after the energy
costs of getting and concentrating that energy are subtracted.
Net energy represents the energy that we use to power our vehicles, our
hospitals, build our roads, fly our planes, etc. In the early 1900s, the U.S. was getting
upwards of 100 barrels of oil out of the ground for every barrel used to get that oil
(Cleveland 2005). Today, the estimates in the literature report that on average across
the globe, 18 barrels of oil are produced for every barrel used in getting that oil
(Gagnon et al. 2009). Despite the fact that today’s society produces vastly more oil
than it did in the early 1900s, it is producing less net energy per barrel. This declining
net energy is driven mainly by the fact that oil has become harder and harder to find
and extract, and/or the oil that has been found is generally of lower quality. For
example, Chevron’s Tahiti project cost 2.7 billion dollars just to construct. Meanwhile,
Petrobras is hoarding deep water rigs to develop oil projects off their coast and BP
discovered Tiber, another ultra deepwater field in the Gulf of Mexico. Each of these
will have price tags comparable to Tahiti. The point is that it doesn’t matter how much
oil these companies claim that they can recover, the question is how much of that oil
will be gained at an energy profit (i.e. that left after accounting for the cost of
extraction).

3. Increasing energy costs have preceded every major recession in the last 40 years.

Many believe that the current recession was caused, at least in part, by rising
oil prices from 2004 – 2008 (Jeff Rubin 2008, James Hamilton 2009), and although it
is difficult to show statistically that action A caused action B, data show that oil prices
and recessions are highly correlated. Over the past 40 years the same sequence of
events occurred before each recession: a spike in the price oil, followed by an
increase in the percent of GDP used to purchase oil, followed by a recession.
Everyone agrees (more or less) that oil prices collapsed because of the
enormous economic contraction that occurred in the summer of 2008. But are we
really to believe that it is pure coincidence that the price of oil was at an all-time high
when that contraction occurred? More to the point – despite a tripling of crude oil
prices from 2004 - 2008, supply of conventional crude remained relatively flat,
conditions indicative of peak oil. Focusing on whether or not the peak has occurred
distracts attention from the main conclusion of the 2004-2008 period: we have
entered an era in which the supply of oil is constrained. I contend that the WSJ has it
backwards. The economic contraction did not prevent peak oil from occurring; rather,
the peaking of global oil production was a main cause the economic contraction.

4. Oil is unique.

There is no comprehensive substitute for oil in its high energy density, ease of
handling, myriad of end-uses, and in the volumes in which we now use it.
Oil is a one-time gift bestowed upon the inhabitants of earth. There is no
substitute at the scale needed, and there is certainly no alternative energy source
that returns the same amount of net energy at the scale that oil is used. Technology
is often touted as the means by which society will surpass its need for oil, but
technology is NOT a fuel, it is simply a means by which we convert energy of one
form to another, usually more useful, form.
Other people believe that coal or natural gas will solve our problems. In fact,
the New York Times reported that the US has over 600 years of natural gas, but we
need to ask the same question about these sources as we do about oil, namely,
“How much is available at a significant energy profit?” There are other problems with
natural gas and coal as well. Coal has pollution issues, including carbon dioxide.
Natural gas is often thought of as the cleanest of the three major fossil fuels, but
almost all unconventional gas, which makes up a large part of future United States
production, is being produced in most new plays in the U.S. using a hydrofracking
process that uses upwards of two and a half million gallons (pg. 58)of dirty water per
well. This is not to say that drilling for oil is better than coal or natural gas, rather that
pursuing coal or natural gas as a solution for dwindling oil supplies is likely to create
other costly problems.

5.1. Catastrophe

Economic growth and prosperity since the industrial revolution have, in large
part, been due to increased efficiencies in the use of better and higher concentrations
of energy in fossil fuels. The use of fossil fuels allows humans to participate in
takedown, which is the consumption of energy at a greater rate than it is being
replaced. Some believe that decreasing oil production portends a drastic impact on
human culture and modern technological society, which is currently heavily
dependent on oil as a fuel and chemical feedstock. For example, over 90% of
transportation in the United States relies on oil.
Some envisage a Malthusian catastrophe occurring as oil becomes
increasingly inefficient to produce, others have learned from the examples
demonstrated in mature basins and applied those operational procedures to these
basins to preserve their operational tempo. Since the 1940s, agriculture has
dramatically increased its productivity, due largely to the use of chemical pesticides,
fertilizers, and increased mechanisation. This process has been called the Green
Revolution. The increase in food production has allowed world population to grow
dramatically over the last 50 years. Pesticides rely upon oil as a critical ingredient,
and fertilizers require natural gas. Farm machinery also requires oil.
Arguing that in today's world every joule one eats requires 5–15 joules to
produce and deliver, some have speculated that decreasing supply of oil will cause
modern industrial agriculture to collapse, leading to a drastic decline in food
production, food shortages and possibly even mass starvation. However, most or all
of the uses of fossil fuels in agriculture can be replaced with alternatives. For
example, by far the biggest fossil fuel input to agriculture is the use of natural gas as
a hydrogen source for the Haber-Bosch fertilizer-creation process.[10] Natural gas is
used simply because it is the cheapest currently-available source of hydrogen; were
that to change, other sources, such as electrolysis powered by solar energy, could be
used to provide the hydrogen for creating fertilizer without relying on fossil fuels.
 Oil shortages may force a move to lower input "organic agriculture" methods,
which may be more labor-intensive and require a population shift from urban to rural
areas, reversing the trend towards urbanisation which has predominated in industrial
societies; however, some organic farmers using modern organic-farming methods
have reported yields as high as those available from conventional farming, but
without the use of fossil-fuel-intensive artificial fertilizers or pesticides.
Another possible effect would derive from America's transportation and
housing infrastructure. A majority of Americans live in suburbs, a type of low-density
settlement designed with the automobile in mind. Commentators such as James
Howard Kunstler argue that because of its reliance on the automobile, the suburb is
an unsustainable living arrangement; the implications of peak oil would leave many
Americans unable to afford fuel for their cars, and force them to move to higher
density, more walkable areas. In effect, surburbia would comprise the "slums of the
future." A movement to deal with this problem early, called "New Urbanism," seeks to
develop the suburbs into higher density neighborhoods and use high density, mixed-
use forms for new building projects.

5.2. Rising food prices

Rising oil prices cause rising food prices in three ways. First, increased equipment
fuel costs drive higher prices. Second, transportation costs increase retail prices.
Third, higher oil prices are causing farmers to switch from producing food crops to
producing biofuel crops. The law of supply and demand predicts that if fewer farmers
are producing food the price of food will rise.

6. Facing the Future

Whether the oil peak happens over the next few months or next few decades,
it's widely acknowledged that global conventional production of petroleum will see a
sharp decline soon, with natural gas following thereafter. We know, in broad strokes,
what needs to be done to keep that decline from turning into a global economic and
political disaster, and the major recommendations - such as an aggressive shift to
alternative energies and transportation technologies, widespread adoption of higher-
efficiency building designs, greater reliance on organic/local/smart agriculture
techniques, and the like - parallel what's needed to forestall the worst effects of
global warming-induced climate disruption.

So how do we do it?
Richard Heinberg has a fascinating proposal, one that could reduce the risk of
oil wars and economic ruin. It's simple to understand, and its logic is compelling.
Heinberg, a professor at the New College of California and author of Powerdown:
Options and Actions for a Post-Carbon World, calls his proposal the Oil Depletion
Protocol, as it is a formalization of what is already happening worldwide: oil reserves
are declining, and all too soon demand will overtake production.
What makes the Oil Depletion Protocol (ODP) particularly appealing is that it
doesn't require everyone to participate to be effective. Any nation -- petroleum
producer or importer alike -- adopting the ODP would benefit. Of course, the more
nations that choose to adopt the Protocol, the better, in terms of both their particular
and the global future.
The ODP is simple and, as Heinberg notes, the exact phrasing of it is less
important than its broader concept. Producing countries will limit themselves to
producing at or below their current "depletion rate" (defined as annual production as
a percentage of the estimated amount left to produce); this would gradually slow
production, allowing the exporters to wean themselves off of oil and shift to a non-
extractive economic base. Importing countries, in turn, would act to reduce their
imports every year by a set amount; Heinberg proposes that amount should be the
current World Depletion Rate, or 2.59% annually.
At last – a reality check. Are we ready for the coming decline in oil production?
No. Can we prepare for it? Yes. That is what The Oil Depletion Protocol is all about.
The Oil Depletion Protocol may not be the best way to manage a transition to
a post-petroleum world, but it has potential. It has the advantages of being relatively
straightforward, scalable, and of clear benefit. Will it happen? Is it possible?

7. Conclusions
 Some general comments may be offered in conclusion, starting with a oil
price.

Oil outside the Middle East peaked in 1997, as was easily foreseen. It should
have heralded a gradual rise in price from growing Middle East control. But instead
there was an anomalous fall. Price collapsed in 1998 because of the interaction of
warm weather, an Asian recession, the devaluation of the rouble, events in Iraq, false
supply estimates by the IEA that prompted higher OPEC production and perhaps
some manipulation by insiders. Then, prices surged through 1999 in a staggering
300% increase, as the underlying capacity limits were breached, triggering recession.
Demand fell and prices slumped.
Spare capacity can mean many things. A closed flowing well is the only form
of spare capacity that can be restored at will. All the other elements take investment,
work and, above all, time to deliver. OPEC had very little operational spare capacity,
having to run ever faster to stand still, as it desperately tried to offset the natural
decline of its ageing fields. It will be hard pressed to meet the demands made upon it
even to maintain current world production, never mind growth.
We may look back and find that the year 2000 was the peak: a turning point
when the prosperity of the past, driven by an abundant supply of cheap oil-based
energy, gave way to decline in the future. A discontinuity of this magnitude is hard to
grasp. The poor countries of the world will bear most of the burden. But the United
States will be in serious difficulties. There is a danger of some ill-considered military
intervention to try to secure oil, of which the Afghan War may have been a foretaste.
That affair may be seen to have been more of an act of defiance to impose global
economic hegemony by military means than a calculated action to reduce the level of
so-called terrorism. The growing population pressures from declining wealth are
manifested in new migration trends as are already being felt in Europe and the United
States with human smuggling becoming a gruesome addition to the global market. As
global order disintegrates, self-sufficiency at the local level may become a priority for
survival.
An oil crisis is bad for politicians. Blaming OPEC or the oil companies will not
wash much longer. It would be better to make a proper analysis of the true position
and inform the people at large. No one blames the government for an earthquake. So
they wouldn't blame it for an oil crisis either, if they realised it was a natural
phenomenon.
"If you don't deal with reality, reality will deal with you"
But let us not be too alarmist. The roof does not fall in at peak. What changes
are people's perceptions, as they come to realise that the growth of the past is set to
become the decline of the future. It may herald the end of the US economic and
cultural hegemony - which some people might think was no bad thing. Climate
concerns may recede as the emissions, held responsible for change, dwindle. In the
face of these pressures, we should use our current high oil supply intelligently while it
lasts to ease the transition. For example, much more efficient vehicles have already
been designed, awaiting only a mass market to be introduced. [Is this an example of
dear Colin dancing on the edge of cosmeticism? The difference between a civilization
based upon the automobile and one that denies its right to exist, is quite profound in
terms of energy. An intelligent design from the beginning would never contemplate
the private vehicle as the general mode of transportation, which requires an amount
of energy to build and sustain comparable to the vast amount that it uses as fuel. It is
the degree to which we have become accustomed to this convenience pod that
thwarts imagining its obsolescence, along with that of the infrastructure based upon
it. The usage of the remaining oil to continue maintaining this private system, even if
more efficiently, is far different from accepting that the change must be greater than
that.] More could be done to penalise the wasteful use of energy.
Peak oil is a turning point for Mankind, when a hundred years of easy growth
ends. The population may be about to peak too for not unrelated reasons. The
transition to decline is a period of great tension when priorities shift to self-sufficiency
and sustainability. It may end up a better world, freed from the widespread gross
excesses of today.

References

 M. King Hubbert (1956-06). "Nuclear Energy and the Fossil Fuels 'Drilling and
Production Practice'" (PDF)

 “The End of Cheap Oil". National Geographic. June 2004

 “Peak Oil and Natural Gas Depletion: The world most serious question”
(Published June 12, 2003)

 “Can The United States Drill Its Way to Energy Security?” (from the December
2008 issue of the Journal of Energy Security)