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Peak
Oil






















Highway Expansion - Creating Tomorrows
Problems Today
Peak Oil: the point
when extraction of oil reaches its highest point and begins to decline. We can’t say with certainty when we have
reached peak oil until after the fact. The
consensus of experts – including those in oil industries – is that the
peak is within a few years or a decade or so. (Source:
“Peak Oil, http://www.peakoil.org/
9-25-05)

Top Ten Reasons Why Peak Oil Arrives Sooner Rather Than Later
by Steve Andrews, ASPO
USA
(Association for the Study of Peak Oil &
Gas)
To
Download Steve's March 2007 Top Ten Reasons PowerPoint
Presentation (6Mb) Click here

How do you
communicate the message that 2/3 of something is gone?

“Peak Oil” was
addressed in the U.S. House of Representatives recently.
“We have 25% of the world's energy
consumption but we have only 5% of the population and only 2% of the
world's oil reserves, yet we are consuming 25% of the world's energy output. Now, something is wrong
there...we are on a collision course with disaster and we have to do
something very meaningful about it.” Congressman
Sherwood Boehlert, Chairman, Committee on Science. (Source:
Congressional Record: October
17, 2005.)

Doing something about
it: What we do about it is the core of the matter. There are those who believe that more and more
oil production is the only solution; conservation and efficiency are
not in order. However, that merely uses
depletable resources more rapidly and with unacceptable environmental
consequences globally and nationally.

Alan Greenspan has
stated: "The recent surge in energy prices will undoubtedly be a drag
from now on." He believes that the
critical point could be in five years or maybe 15 years from now when
world oil production stops increasing at the same rate as demand. When that occurs, two things have to happen to
keep the economy humming, Greenspan said. Demand
will have to slow and alternative energy sources will have to be
developed - quickly. (Source:
www.peakoil.com
.November 13, 2005)
Most commodity
experts agree that high oil prices are here to stay.
The Association for the Study of Peak
Oil, created by oil executives, geologists, investment bankers, and
academics, has been warning the world of high oil prices for several
years. Matthew
Simmons, an oil industry analyst and CEO of Simmons & Company
International, has stated: "If we price oil correctly, it could
give us time to find bridge fuels, fuels to fill the gap between an oil
economy and a renewable economy. But I don't see that happening. World oil production has peaked, causing the
supply of oil to no longer keep up with demand.”

One energy investment
banker and adviser to the controversial Bush-Cheney energy plan
believes that oil is far too cheap at the moment and suggests that
$182/barrel will price oil realistically to control its demand. (Source: "Weekly WallStreet Window Newsletter” 9-24-05).
Arjun
Murti, Goldman Sachs Group analyst says crude could reach $105 a barrel
by 2009. (Source: International Herald Tribune, December
20, 2005.) The “Association for
the Study of Peak Oil-USA,” at its World Peak Oil National Conference, Denver, Colorado November 10-11, 2005, provided extensive
detailed supporting information to which the reader is referred. (Source:
www.peakoil.net/.)
See also http://www.peakoil.com/sample/ & http://www.aspo-usa.com/ for more information
on Peak Oil.
Peak
Oil Summary Presentation
Hirsch Peak Oil Presentation
A World Addicted to Oil Presentation
2006 Peak Oil Presentation to the US
Congress
2005 Top 50 Oil Producing Nations
Excel Spreadsheet
Peak Oil and Renewable Energy
Presentation
Oil
Independence Presentation
Peak Oil Summary
Presentation
Hirsch
Peak Oil Presentation
FHWA
Scenario Planning for Peak Oil and Global Warming
Unconventional
Liquid Fuels Overview
Economic
Implications of Liquid Fuel Mitigation
Geopolitics
of Peak Oil and the Macroeconomics of Multiple Petrocurrencies
Taking
Local Action
RESERVES
What They Mean and How They are Calculated
Liquified
Natural Gas: Current Trends and Future Directions
Oil
Depletion Protocol
It's
the Economy, Stupid
Public
Policy, What Works - What Doesn't
The 51st
State: Peak Oil Denial
Climate
Change: Past, Present and Future
Order
From Chaos
Energy
Independence and Global Warming
ASPO
2008 Sacramento Conference Documents
MUST SEE!
Petroleum
101
Scenario
Planning
Peak
Oil Working Paper
Randy
Udall Presentation On Climate Change
Time
to Stop Playing Russian Roulette with US Economy
Future
of Mobility
Grappling
with the Energy Risk
Biofuels:
Facts and Fallacies
Death
of the Consumption Economy
The
Economics of Credit: The Worst is Yet to Come
The
Other Resource Lack: Time and Technology
It's
Time America!
The
Party, The Hangover and the Promised Land
US
Airline Industry
Peak
Oil and the Economy
Peak
Oil and Newspapers

Courtesy of the Victoria Transport Policy Institute
Transportation
Cost and Benefit Analysis – Resource Consumption External Costs
Resource
Consumption External Costs
This chapter
describes external costs of resource consumption (particularly
petroleum and other forms of energy), and therefore benefits of
conservation and increased efficiency. These include economic and
security costs from petroleum imports, environmental and health damages
from resource
production, depletion of non-renewable resources, and economic
subsidies.
Definition
Resource
Consumption External Costs refers to costs associated with natural
resources used for the production and operation of motor vehicles, not
borne directly by users. This primarily refers to energy consumption,
but can include other natural resources, such as metals. External costs
can include environmental damage, health risks, national security costs
and risks, macroeconomic impacts on individual economies, depletion of
nonrenewable resources, and various financial subsidies. This indicates
the benefits to society of increased efficiency and conservation.
External
Costs of Resource Consumption
Consumption of
natural resources such as petroleum can impose a number of costs on
society not borne directly by their consumers, or put another way,
resource conservation and reduced dependence on imported resources can
provide a variety of benefits to society. Specific categories of these
impacts are described below.
Macroeconomic
Impacts and National Security Risks
Dependency on
imported resources imposes various economic costs and risks. These are
widely acknowledged by diverse interest groups: They are cited by the
petroleum industry to easing standards that restrict oil production, by
conservation advocates to justify energy conservation programs, and by
industries to justify subsidies for research into new energy
technologies. The following economic costs are associated with
petroleum imports:
• Energy
Security: This includes economic and military costs associated with
protecting access to petroleum resources. National security costs
associated with defending petroleum supplies in the Middle East region are estimated
to range from $6 to $60 billion annually.


• Transfer
of wealth via monopoly pricing: Petroleum imports transfer wealth
to oil producing regions. In particular price of oil over its
competitive market price (estimated at $16/BBL) can be considered an
economic cost to consuming countries. According to DeCicco and Ross
“Money spent on oil imports is mostly lost to the U.S. economy, and gasoline
purchases provide relatively few
jobs per dollar spent.” This reduces demand for U.S. goods and services,
and lowers economic growth.

• Economic
vulnerability: dependence on
imported petroleum makes a region
vulnerability to economically harmful price shocks (sudden price
increases) and supply disruptions. For example, the last three major
oil price shocks were followed by an economic recession.
• Higher
world oil prices: Because North America consumes over 25% of
total world oil production, its demand has a monopsonistic effect. High
U.S. demand increases
international oil prices (the elasticity of world oil price with
respect to U.S. demand is estimated at
0.3 to 1.1), imposing a financial cost on all oil consumers.

The economic
and political costs of energy dependence are particularly large in
regions that rely significantly on imported energy, and at times when
energy prices increase, and energy expenditures increase as a portion
of economic activity. During most of the last century the real price of
energy (adjusted for inflation) has declined, minimizing these
problems. Most experts believe that fuel prices will soon start to
increase as demand grows and easily-accessible supplies become depleted
(see box below). If this occurs the external costs of resource
consumption may increase significantly in the future.
Environmental
Damages
Resource
exploration, extraction, processing and distribution cause
environmental damages, including wildlife habitat disruption; noise air
and water pollution; and solid waste, some of which is hazardous.4 Oil
fields, refineries and strip mines are examples of these impacts.
Although resource extraction industries have changed practices to
reduce and mitigate these impacts, there are still significant residual
damages. The American Petroleum
Institute argues that regulations internalize environmental costs.

While
regulations may reduce environmental impacts, residual damages are
still external costs borne by non-users (i.e., people who consume
little petroleum) as well as users (i.e., people who consume large
amounts of petroleum products).
Human
Health Risks
Resource
exploration, extraction, processing and distribution can cause various
health risks to people, including pollution-related illnesses, and
injuries from accidents during processing and distribution.
Financial
Subsidies and Tax Exemptions To Resource Extraction Industries.
Petroleum and
mining industries benefit from various financial subsidies and tax
exemptions that increase their consumption and overprice more resource
efficient goods. Selected exemptions to broad-based taxes function the
same as if all taxpayers paid the tax and revenues were then returned
as a subsidy payment. Vehicle fuel is often exempt from general taxes.
Loper concludes that general taxes on vehicle fuel (excluding special
road taxes) are 30% lower than average general taxes.
Depletion
Of Non-Renewable Resources
World
petroleum supply is limited, and experts project that between 2005 and
2015 production will peak (see definition below), resulting in higher
energy prices, increased conflict over energy resources, and declining
resources available for future generations. Ecological economists
consider over-consuming non-renewable resources unfair to future
generations. They argue that putting prices on irreplaceable natural
resources is like auctioning the Mona Lisa to a small group; the price
would be ridiculously low since other parties, including people living
in the future, cannot bid.
Peak
Oil
Petroleum will not
suddenly run out, but it is expected to become more expensive as demand
grows and production peaks. The point beyond which depletion of
existing supply exceeds the development of new supply, is called Peak
Oil or the Big Rollover. This has already occurred in many countries,
including the United States, and is projected to
occur worldwide between 2005 and
2015.


















After oil supplies dry up, what's
Plan B?
Extreme scarcity could be
disastrous for U.S. economy
Erica Etelson
Sunday, August 26, 2007
When Hurricane
Katrina struck two years ago, Americans learned just how ill-equipped
the government is to respond effectively to natural disasters. But if
you think the government's response to Katrina was inept, brace
yourself for peak oil.
Global oil production will hit its peak
in the next few years, at which point oil prices will skyrocket and
voracious consumers like the United States, China and Europe will
quickly drain every last barrel they can afford to buy. Our per-capita
oil consumption is double that of most European nations and more than
triple Mexico's, and shows no sign of slowing. As supplies dwindle, an
economic disaster on a par with Katrina will start to unfold.
Global oil demand is at 84 million
barrels a day and rising, and there are at most a trillion barrels'
worth still in the ground, most of which is very difficult and
expensive to recover. Do the math, and you'll see that the end of oil
is, at most, 30 years away.
But long before oil actually runs out,
economists and energy analysts warn that extreme scarcity will cause
prices to soar so high that it will no longer be feasible to use
petroleum on a wide scale. It is the imminence of this supply-demand
shortfall that has people like National Petroleum Council member
Matthew Simmons and Reps. Roscoe Bartlett, R-Md., and Tom Udall,
D-N.M., worried - very worried - about our economy's ability to
withstand the end of oil.
Cheap and plentiful oil is the foundation
of our economy. Everything from food production and distribution to the
manufacture of clothing, footwear, medications and plastic goods relies
heavily on petroleum. You name it, and we need oil to produce it, ship
it and, in many cases, run it.
In February, the U.S. Government
Accountability Office dropped a quiet little bombshell: a report on
peak oil concluding that there is an urgent need for a swift,
coordinated government strategy to assess and develop alternative
energy technologies to avert "severe economic damage."
The agency concluded: "(T)he United
States, as the largest consumer of oil and one of the nations most
heavily dependent on oil for transportation, may be especially
vulnerable among the industrialized nations of the world." Stark though
its conclusion is, the GAO may in fact be understating the gravity of
the situation.
The report followed on the heels of a
2005 peak oil risk management report commissioned by the Department of
Energy, which warned of the "extremely damaging" and "chaotic" impacts
that will ensue if "intensive," "aggressive" and "expensive" mitigation
measures are not put in place at least 10 years ahead of time. Both
reports landed with a dull thud and have been dutifully ignored. In
other words, there is no Plan B.
Depending on whom you ask, the impacts of
peak oil range from dire to catastrophic: At best, get ready for a
crippling recession and widespread inflation. At worst, we face severe
global food shortages that threaten wide-scale starvation and an
overall breakdown of social and economic institutions. And if history
is any guide, we can expect a series of military invasions into every
remaining oil hot spot in the world - invasions that may, by the way,
require even more fossil fuels than we could possibly expropriate by
force.
Because oil companies and OPEC nations
are notorious for overstating their reserves to manipulate the market,
it is impossible to predict when exactly the world will start feeling
the crunch. As award-winning New York Times reporter Peter Maas wrote
in 2005, "Because we do not know when a supply-demand shortfall might
arrive, we do not know when to begin preparing for it, so as to soften
its impact; the economic blow may come as a sledgehammer from the
darkness."
But here's a little hint: Crude oil
futures hit an all-time high of $78.21 per barrel on July 31. Prices
cannot go much higher without us beginning to feel the foreshocks of a
peak oil catastrophe. Oh, and by the way, natural gas (which provides
42 percent of California's power) is running out, too. One day, even
coal will be gone. How much longer are we going to wait before we
figure out how to survive without fossil fuels?
The United States has reacted to the
threat of peak oil and gas with all the alacrity of its response to
climate change. It is ignoring the looming crisis for as long as it
can, just waiting for that sledgehammer to land its first blow.
Eventually, when a recession hits, tax revenue will plummet, and the
government will have nowhere near the money it needs to build an
alternative energy and transportation infrastructure. Every year that
goes by without an intensive mobilization to build an oil-independent
economy diminishes our odds of surviving the end of oil.
States, too, seem to have their heads in
the sand. California, considered a leader in efforts to reduce carbon
emissions, just cut funding for mass transit by $1.3 billion for the
fiscal year. Like most states, it ignores the urgent need to build a
transportation network that does not rely on fossil fuels.
At this point, you might be asking
yourself: When oil becomes scarce, how will I get food? That's a very
good question. Here are a few more: Will my garbage get picked up? How
will my water district purify and deliver water and treat sewage
without petrochemicals? What if I need an ambulance? What if my home is
one of the 7.7 million that rely on oil for heating? Which of my
medications are made out of petrochemicals? How will I get to work?
Will I even have a job anymore?
But don't just ask yourself. Ask your
elected officials, your public utility district and your grocer. Ask
the U.S. Postal Service, Federal Express and American Airlines. Ask GM.
If you have one, ask your financial adviser or stockbroker which
companies will still be in business after peak oil hits. Odds are, he
or she will give you a blank stare.
While the United States blindly carries
on with business as usual, countries such as Sweden, Iceland and
Ireland are taking steps to assess and mitigate peak oil impacts.
Oil-rich Iran has begun rationing and has already cut oil consumption
by 25 percent. But here at home, demand for oil is ever on the rise,
and there is no talk of conserving reserves for essential goods and
services or to develop an alternative energy infrastructure.
Instead, we are on course to squander
every last drop on long solo commutes, leisure travel, mountains of
plastic junk and the senseless transglobal shipment of unsustainably
grown food.
That's where local government comes in.
Small but growing numbers of municipalities are initiating a process
that federal and state leaders should have begun 30 years ago, when
domestic oil reserves peaked. They are, in short, figuring out Plan B.
In May, Oakland appointed an Oil
Independent Oakland by 2020 Task Force. In June 2006, Portland, Ore.,
formed its own Peak Oil Task Force, which got busy fast: By March of
this year, it had released its first major report, urging the city to
"act big, act now," even without further study or analysis. The report
prompted the city to pass a resolution to accelerate oil and gas
conservation measures to halve Portland's fossil fuel consumption.
Last year, San Francisco passed a
resolution to assess the city's vulnerability to oil depletion and to
develop a transition plan. Other cities, from Austin, Texas, to
Bloomington, Ind., are confronting the stark reality and trying their
best to figure out how to soften the blow.
Cities are looking at options such as
local food cultivation, urban redesign to minimize transportation
needs, locally controlled electricity, rainwater catchment systems (to
ensure local access to water for food cultivation), energy-efficient
mass transit, and the preparation of emergency plans for sudden and
severe food, water and energy shortages. They are embracing
bio-regional sustainability - a concept once dismissed as an ecotopian
fantasy that is suddenly starting to look like our last best hope.
But cities cannot solve the peak oil
problem on their own. They don't have the revenue needed to build
light-rail networks and wind farms or to store massive grain reserves.
During a recession, they will be in no position to guarantee income
supports for millions of laid-off workers. But the more they do now,
while they still have a revenue stream, the better off their residents
will be.
If the peak oil doomsday scenarios are to
be averted, it will require coordinated action at every level of
government, by every sector of the economy and by every community and
citizen in the nation. We are heading into a political era in which the
need to come together to invent and support life-sustaining social and
economic systems will trump all else.
Some tout alternative energy technologies
as the silver bullet that will save us from a peak oil crisis. But
there is a broad consensus among energy analysts that it will be
decades before such alternatives are available for wide-scale
implementation. Moreover, some of the alternatives with the strongest
political backing, including ethanol and liquefied coal, may cause even
more severe global warming than petroleum has.
The United States needs to slam the
brakes on fossil fuel consumption. As if arresting climate change
weren't enough of a reason for immediate |